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Seminar 228.443:AdvertisingDr. Teri Shaffer

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Introduction to Advertising Types of advertising Advertising industry Advertising trends

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What Is Advertising?

Paid, nonpersonal communication Identified sponsor Using mass media To inform, persuade, or remind An audience

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InteractiveAdvertising

InteractiveAdvertising

Public ServiceAdvertising

Public ServiceAdvertising

InstitutionalAdvertising

InstitutionalAdvertising

Business-to-Business

Advertising

Business-to-Business

Advertising

Brand Advertising

Brand Advertising

Retail or LocalAdvertising

Retail or LocalAdvertising

PoliticalAdvertising

PoliticalAdvertising

Direct-ResponseAdvertising

Direct-ResponseAdvertising

DirectoryAdvertising

DirectoryAdvertising

Types of Advertising

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Brand Advertising

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Brand Advertising

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Brand Advertising

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Retail Advertising

&

Institutional Advertising

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Retail Advertising

&

Brand Advertising

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Retail Advertising

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Retail Advertising

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Political Advertising

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Directory Advertising

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Direct-Response Advertising

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B2B

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Institutional Advertising

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Institutional Advertising

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Public Service

Advertising

(PSA)

or

AdvocacyAdvertising

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Public Service Advertising

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Interactive Advertising

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Comparative Advertising

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Advertising & Demand

Competitive brand advertising Comparative advertising Build secondary demand Pioneering advertising Build primary demand

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Pioneering Advertising

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Pioneering Advertising

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Advertising Industry

US Government StatisticsUs Bureau of Labor Statistics

395,200 people employed in US $300 billion globally

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Five “Players” of Advertising

– Advertiser

– Advertising Agency

– Media

– Vendors

– Target Audience

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1st Player

The Advertiser

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Advertising Age

http://www.adage.com Leading National Advertisers Major brands with ad spending

> $94.4 million in 1998

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Leading National Advertisers (1998) General Motors Corp. Proctor & Gamble Co. Phillip Morris Cos. DaimlerChrysler Sears, Roebuck, & Co. Ford Motor Co. AT&T Corp. Walt Disney Co. PepsiCo Diageo

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Domestic Spending by Category (1999) Automotive Retail Movies & media Financial Medicines & pharmaceuticals Telecommunications Food Restaurants & fast-food Airline & ship travel; hotels & resorts Direct response companies

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Top Advertisers in Austria (1998) Proctor & Gamble Co. Unilever BML-Konzern SPAR Mobilkom Austria AG Mars Inc. Henkel Volkswagen Max. MobilTelekom Service Ost. Lotterien

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Top Global Marketers (1999) Proctor & Gamble Co. Unilever Nestle Volkswagen Ford Motor Co. General Motors Corp. Toyota Motor Co. Coca-Cola Co. Peugeot Citroen L’Oreal

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2nd Player

The Advertising Agency

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Advertising Agency

Account management Creative department Media Research & strategic planning

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Account Management

Represents agency to client Client relationship Knowledge of client’s business

– Competitive actions– Consumer trends

Helps set goals & budget Coordinates day to day work

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Creative Department

Creates ideas, images, & words make up commercials and ads

Copywriters Art directors Oversee print or broadcast production

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Media Department

Planning– Plan media schedule

Buying– Execute media plan

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Research

Strategic planning Consumer research How does consumer interact with

brand? How does brand fit into consumer

lifestyle? Pretest and posttests

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Example

1995 campaign for California Milk Processors Advisory Board

Declining sales from 1980 to 1993

Result? Increased sales

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Paying the Agency

Commission system Fees

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Commission

Rebates offered by media advertising agencies (15%)

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Commission System Agency creates commercial for

advertiser Agency contacts TV station for air time TV station bills ad agency

Cost of air time $ 10,000Less 15% (1,500)Due $ 8,500

Agency bills advertiser $10,000

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Fee-based Compensation

May vary according to departments or levels of salary

Or flat hourly rate Charges for out-of-pocket expenses,

travel, etc. Media charges are net of commissions

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Advertising Age (1998)Charges Over Time 1982 71% commissions 8% fees 21% combination

1997 35% commissions 58% fees 7% combination

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Full Service Agencies

Four major staff functions– Account management– Creative– Media planning and buying– Research

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Top Ten Agency Brands (1999)

Grey Advertising (NY) J.Walter Thompson Co. (NY) McCann-Erickson Worldwide (NY) FCB Worldwide (NY) Leo Burnett USA (Chicago) Euro RSCG Worldwide (NY) Young & Rubicam Inc. (NY)

BBDO Worldwide (NY) DDB Worldwide Communications (NY) Ogilvy & Mather Worldwide (NY)

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World Top Advertising Organizations (1999) Omnicom (NY) Interpublic Group of Cos. (NY) WPP Group (London) Havas Advertising (France) Dentsu (Tokyo) B Com3 Group (Chicago) Young & Rubicam Inc. (NY) Grey Advertising (NY) True North (Chicago) Publicis SA (Paris)

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Agencies on the Internet

TBWA/Chiat/Day

– http://www.chiatday.com/ Fallon McElligott

– http://www.fallon.com/ Bozell Worldwide

– http://www.bozell.com/

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Agencies On The Internet

A comprehensive list of ad agencies can be found at the following address

– http://www.digitaldirectory.com/ adagencies.html

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Limited Service Agencies or Specialized Agencies

Functions– Creative, media buying, etc.

Audiences– Minority, youth, etc.

Industries– Healthcare, computers, B2B, etc.

Communication Tool– Direct marketing, interactive, etc.

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Top 100 US Interactive Agencies (1999) MarchFirst Digitas iXL Grey Interactive Sapient Corp. Modern Media Aspen Interactive OglivyInteractive Luminant Worldwide Corp. AppNet

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In-House Agencies

Perform most of the functions of outside agency

Example: Large retailers

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Why an In-House Agency?

Savings Faster response Specialization Control

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Problems with In-House?

Lack of initiative due to noncompetitive environment

Inability to keep up with marketplace Less objective

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From The Internet

The Advertising Agency Contract

--http://www.smartbiz.com/ sbs/arts/cwa4.htm

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3rd Player

The Media

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The Media

Channels of communication that carry message from advertiser to audience

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Media Organizations

Sell space in print media Sell time in broadcast media Sell space/time in electronic media Assist in media selection and analysis Help w/ad production

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Top Leading Media Co. (1998) Time Warner (NY)

AT&T Corp. (NY) CBS Corp. (NY) Walt Disney Co. (NY)

NBC TV (General Electric, Fairfield, Conn)

News Corp. (Sydney)

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4th Player

Vendors

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Vendors Freelancers/consultants Market researchers Freelance copywriters and graphic artists Photographers Songwriters Printers Direct-mail production houses Telemarketers Public relations consultants

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5th Player

The Target Audience

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Target Audience

Kellogg cereal?

Consumer Purchaser

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Current Issues

Interactive advertising Integrated marketing communications Globalization Consumer power, relationship

marketing, permission marketing, and customization

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Examples Peapod Mass customization

– Levi’s Original Spin