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Media Today, 4th Edition
Chapter Recaps and Study Guide
Chapter 15: The Advertising Industry
After studying this chapter, you will be able to:

Sketch the history of advertising in the United States.

Describe various types of advertising agencies and how they differ.

Analyze the process of producing and creating ads.

Discuss branding and positioning and explain their importance to advertisers.

Explain the debate between advertising’s critics and defenders about the
industry’s role in spreading commercialism and the decline of democratic
participation

Advertising is the activity of explicitly paying for media space or time in order to
direct favorable attention to certain products or services.

The rise of the advertising industry.
o Advertising is as old as selling itself, and evidence of advertising dates
back thousands of years.
o Ben Franklin was a very successful seller and writer of advertisements.
o Volney Palmer is credited with starting the first advertising agency in the
U.S. in the 1840s.
o The increased manufacturing capacity spawned by the Civil War
encouraged the development of brands and the emergence of copy and art
departments within agencies, as well as the development of the ad
campaign as a major persuasive strategy.
o The Audit Bureau of Circulation was established to verify the size of the
audiences for periodicals.
o Ads developed into two categories: reason-why ads and image ads.
o The development of radio as a major advertising medium encouraged the
establishment of representation firms that sold time on many stations
throughout the country.
o The advertising industry benefitted from the introduction of television and
the postwar economic boom of the 1950s.
o Network television executives found it more profitable to control their
own schedules and own their own programs, rather than allowing
advertisers to do so.
o Advertising agencies have shifted to a global presence and are generally
located in conglomerates called agency holding companies.
o The advertising conglomerates claim that client conflicts are avoided by
keeping the interests of competing clients separate within a single
conglomerate.
o Multiple channels of communication (media fragmentation) have made the
job of ad agencies increasingly complex and challenging.

An overview of the modern advertising industry.
o Advertising is a very big business; almost $200 billion was spent on
advertising in the U.S. in 2005.
o Advertising agencies can be divided along four dimensions: (1) businessto-business agencies versus consumer agencies, (2) general agencies
versus specialty agencies, (3) traditional agencies versus direct-marketing
agencies, and (4) agency networks versus stand-alone firms.
o The three basic functions of an ad agency are: (1) creative persuasion, (2)
market research, and (3) media planning and buying.

Production in the advertising industry.
o Production activities are closely monitored by clients and most
prominently involve creative personnel and market researchers who help
guide the creative work to reach the targeted market segment.
o Market research creates portraits of society.
o Branding involves the creation of a specific image of a product that
makes it stand out in the marketplace.
o Agencies position products by relating brands to the specific interests and
lifestyle of the targeted segment.

Distribution in the advertising industry.
o Media fragmentation has made the placement of ads an increasingly
complex and challenging agency function.
o Agencies rely on audience research firms for the specific data used to
target audiences and to place ads in an effective and efficient way.
o Research firms develop psychographic audience data that links
demographic categories to personality traits of the targeted audience.
o Research firms also provide lifestyle information about particular audience
segments.
o In-store media refers to the various ads that consumers see in retail stores.
o Media planners typically want to know: (1) What is an outlet’s reach with
respect to the target audience, and (2) How efficient is the outlet in
reaching the target compared to other outlets? (This is where cost-perthousand, or CPM, comes into the decision-making.)
o Media planners are also concerned about the environment, or the media
content, that surrounds the ads they place.

Exhibition in the advertising industry.
o The strategy of the advertising campaign determines how particular ads
are exhibited to potential consumers.
o Advertising conglomerates have developed cross-platform deals to reach
the increasingly segmented audience.
o An agency’s research division typically evaluates the success of a
campaign by several research means, including the click-though analysis
of consumer behavior on the internet.
o It is difficult to measure the effectiveness of ad campaigns.

Threats to traditional advertising.
o Consumer resistance to exposure to ads—and their use of new
technologies to avoid ads altogether—is worrisome for the industry.
o Agencies are attempting to make ads more relevant to the targeted
segments.
o Agencies are using product placement and viral marketing (buzz
marketing, environmental marketing) to get around consumer resistance
to ads.

Media literacy and the advertising industry.
o Media literate people should be aware of commercialism and
advertising’s hidden curriculum that encourages the ideological
perspective that consumption of products defines the self.
o Critics of advertising argue that ads exploit children and contribute to the
destruction of the global environment by encouraging unnecessary
consumption.
o Critics of advertising argue that advertising and democracy do not
necessarily go together, although advocates of advertising argue that it is
better to have a media system financed by ads than one financed and
controlled by government.
o Critics of advertising argue that ads foster a society of consumers, not
citizens.
o Advertising holding companies, working with media conglomerates,
generate ad clutter and reinforce the hidden ad curriculum.