Download CHAPTER ONE HISTORY AND GROWTH OF ADVERTISING

CHAPTER ONE
HISTORY AND GROWTH OF ADVERTISING INDUSTRY
Advertising has been connected with the life of mankind since a long
time. It is deemed to be a 5000 years old industry in itself, though critics state
that advertising is just a function and can’t be an industry in itself. However
the massive role that advertising has come to play, especially in the market
oriented economic structure, it is undoubtedly, one of the most important
industries. Advertising has not only grown over a period of time, but it has
played the catalyst role in the growth of other industries, especially the modern
technology intensive industries. This Chapter traces the history of advertising
industry and its rapid growth over the period.
The origins of advertising lie thousands of years in the past,
Before
proceeding to go into the depth of advertising, the definition of advertising may
be stated1:
"Advertising is mass communication an advertiser pays for in order to
convince a certain segment of the public to adopt ideas or take actions of
benefit to the advertiser."
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ADVERTISING AS A TOOL OF COMMUNICATION:
Communication comes from the Latin word ‘Communis’ which means
common. When we communicate, we are trying to establish ‘commonness’
with someone. Communication is the exchange of a message between two or
more people. Everyone communicates in many different ways and for many
different reasons. So to say, we are trying to share information, an idea or an
opinion. However, we have to learn the most effective ways to express one’s
messages.
Communication always requires at least four elements:
The source (sender);
The message;
The medium; and
Destination (receiver).
Advertising is a form of communication. Advertising is one of the most
flexible and creative of the marketing communication tools.
It takes the form of –who says what, in what channel, to whom and with
what effect.
This can be explained as follows:
Who – refers to the advertiser (sender of the message),
Says what – refers to the advertising message (advertisement),
In what channel – refers to the media channels such as TV, radio etc.
through which messages are transmitted.
To whom – refers to the audience who receives message.
1
Wissen Erleben – ‘The History of Advertising’ - http://www.suchfind-spezial.de/wissenerleben/advertising/
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With what effect – signifies the response that is desired from the
audience. For instance, the retailer may expect response as ‘Buy at my
store’.
Who?
Advertiser
Says What? In What Channel?
Advertise-
Advertising
Ment
To Whom?
Audience
Media
With What Effect
Effect on Customer Behaviour
Figure 1: Communication Process in Advertising.
Source: Advertising by Vaz, Paralikar, Monteiro, Manan P., Mumbai. P. 12.
ELEMENTS OF ADVERTISING COMMUNICATION:
The elements in the advertising communication process are explained as
follows:
i.
The Sender: The sender of advertising message is the advertiser who
wants to communicate with the readers, listeners or viewers in respect of
his products or services.
ii.
The message: The message is in the form of advertisement. Through
ads, the advertiser not only provides information but also persuades
people to believe or to do something. A persuasive ad will try to
establish, reinforce or change an opinion, build a logical argument,
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touch an emotion or convince the audience about the superiority of the
product or service so advertised.
iii.
Medium: The medium of communication refers to the media of
advertising. The media are the channels of communication through
which ad messages are transmitted by the advertiser to the audience. The
most frequently used media are newspapers, magazines, radio, TV,
posters and other Outdoor media like hoarding, sandwich man etc. Each
media has its own distinct features and this is the reason that accounts
for their survival and success in the competitive media world.
iv.
The Receiver: It refers to the recipients or audience of advertising
messages i.e., readers, listeners and/or viewers. Advertising message is
directed to either mass audience or to class audience. It is the desire of
every advertiser to reach his message to maximum number of desired
audience. Again, every advertiser intends to convert audience into
prospects and prospects into buyers.
The audience also includes dealers with whom the advertiser
communicates to stock and promote the sale of his product. At times, the
advertisements are directed to professional people like doctors,
architects, professors, etc. so that they prescribe or recommend the
products promoted by the advertiser. The advertiser may also
communicate with the general public, with the government and with the
shareholders. Thus, advertising as a tool of communication serves
multiple
purposes
such
as
information
persuasion,
education,
entertainment, etc.
ADVERTISING DEFINED:
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The word advertising comes from the Latin word ‘advertere’ meaning
‘to turn the mind toward’. There are several definitions of advertising. The
American Marketing Association gives the most simple and commonly used
definition of advertising. It defined advertising as
“any paid form of non-personal presentation and promotion of ideas,
goods or services by an identified sponsor”.
The nature and characteristics of advertising can be explained as
follows: -
Paid/controlled form:
The advertiser pays for the advertisement, and therefore controls over
the advertising process i.e., what to say in the ad, where and when to put
up the ad, and so on. The feature differentiates advertising from
publicity.
Non-personal presentation:
Advertising acts as a substitute for the human salesman. It is nonpersonal mass communication technique that makes use of various
media such as print, broadcasting, posters, neon signs, direct mail,
handbills and so on.
Ideas, Goods and Services:
Today not only products are advertised but also services offered by
banks, insurance companies, airlines, hotels, educational institutions and
such other service organizations are advertised. Again, ideas are put
forward through advertising so that the target audience accepts the ideas.
For example, family welfare sponsored by the Government of India is
idea advertising.
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Identified sponsor:
In advertising, the sponsor is always identified, either by the firm’s
name or/and by brand name.
Information: Advertisements provides information about the advertised
goods, services or ideas. The ad may carry a message in respect of
product features, operating instructions, product’s price, the name and
address of the advertiser and so on.
Persuasion:
Ad not only informs the audience about the goods or ideas, but quite
often, the potential buyer needs to be persuaded to buy the product.
Again, the existing buyers need to be induced by advertising messages
to make repeat purchase.
Creativity:
A good deal of creativity and imaginations are required to create good
ads. Every great ad has a big idea that is creative and original.
Selected market:
Although advertising is non-personal presentation, it is at the same time
not designed to sell everything to everyone. Advertisers attempt to
develop their ads on the basis of their selected market or target audience.
Art, Science and Profession:
Advertising is an art because it requires creative talents and skills to
bring out effective ads. It is a science because ads are planned and
prepared on the basis of systematic information gathered through
marketing research. It is a profession because most of the advertisers
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take the help of professional ad agencies to design and develop the
message.
Element of marketing mix:
Ad is an important element of marketing mix, being part of promotion
mix, a constituent of 4 P’s of marketing mix.
SEVERAL VIEWS ON ADVERTISING:
Advertising can be viewed from many angles:
i.
It can be viewed as a form of mass communication.
ii.
It can be a force of persuasion.
iii.
It is viewed as a force to stimulate competition.
iv.
It is a mean of entertainment.
v.
It is a component of economic system.
vi.
It is a mean of financing mass media.
vii.
It is a source of employment.
viii.
It is an ambassador of public relations.
ix.
It can be viewed as a substitute of personal selling.
x.
It is a tool of marketing to stimulate demand.
xi.
It is a mean to rise of standard of living.
xii.
It is a mean of expansion of markets.
xiii.
It is a source of increased sales.
xiv.
It is a source of launching of new products.
xv.
It is a tool of consumer welfare.
xvi.
It supports the sales force.
xvii.
It helps in reach to inaccessible customer.
xviii.
It improves dealer’s relations.
xix.
It builds goodwill.
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WHAT ADVERTISING CAN DO FOR THE BUSINESS2:
- Remind customers and prospects about the benefits of your product or
service.
- Establish and maintain your distinct identity or "personality".
- Enhance your reputation.
- Encourage existing customers to buy more of what you sell.
- Attract new customers and replace lost ones.
- Slowly build sales to boost your bottom line.
WHAT
ADVERTISING
CANNOT
DO
FOR
THE
BUSINESS:-
- Create an instant avalanche of customers
- Cause an immediate sharp increase in sales
- Solve cash flow or profit problems
- Substitute for poor or indifferent customer service
- Peddle useless or unwanted products or services.
HOW ADVERTISING WORKS?
The working process of advertising is diagrammatically shown as below:
Reduce dissonance
Consumer
satisfaction
Shaping expectations
Personal selling
Advertising
2
Demand stimulation
Sales volume
www.sba.gov
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Sales Promotion
Product differentiation
Profits
ROLES OF ADVERTISING IN MARKETING MIX:
Advertising is an element of promotion. However, it not only assists in
promoting the product, but also affects the other variables of marketing mix.
This can be explained as follows:
Advertising and Product:
A product is normally a set of physical elements such as quality, shape, size,
colour, style, packaging and other features. At times, the product is so designed
that it requires careful handling and operation. Buyers must be informed and
educated on the various aspects of the product. This can effectively be done
through advertising. Advertising plays the role of information and education.
Advertising and Price:
The price is the exchange value of the product. A marketer may bring out a
very high quality product with additional features as compared to competitors.
In such a case, price would definitely be high. But buyers may not be willing to
pay a higher price. Here comes advertising. Advertising can convince buyers
regarding the superiority of the brand and thus its value for money. It is not just
enough to convince, but it is desirable to persuade the buyers. Thus, advertising
plays the role of persuasion.
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Advertising and Place:
Place refers to the stores where the goods are available. Marketer should see
that the goods are available at a convenient place and that too at the right time
when the buyers need it. A seller who can sell successfully in the local market
can enter the national and international markets. To facilitate effective
distribution and expansion of market, advertising is of great significance.
Advertising helps in effective distribution and market expansion.
Advertising and Promotion:
Promotion refers to advertising, publicity, and personal selling, public relations
and sales promotion techniques. Businessmen today face a lot of competition.
Every seller needs effective promotion to survive and succeed in this
competitive business world. Advertising can play a significant role to put
forward the claims and counter claims of the seller. Advertising can be used as
a marketing tool to face and counter the challenges of competitive players.
Thus, marketer can inform, educate and persuade the present and potential
prospects to use the product so advertised by him. Creative ads can effectively
mould customer behaviour towards the buying of a particular brand. Effective
advertising can generate repeat orders from the existing buyers and new orders
from new users and users of competing brands.
ADVERTISING INDUSTRY:
Advertising industry consists of those individuals or organizations that
are actively associated in the field of advertising. Generally, the list of active
participants includes:
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Advertisers: The advertiser may be individual or an organization that initiates
the advertising process. It is the advertiser who makes the final decision in
respect of target audience, the media of advertising, the period of ad campaign
and the size of the ad budget.
Advertising agencies: The advertising agency is an independent business
organization, composed of creative people who plan, prepare and place
advertising messages in advertising media for sellers seeking to find customers
for their goods and services.
Audience: It refers to the recipients of advertising messages, i.e., readers,
listeners or viewers. Every advertising message directed to either mass
audience or to selected class of audience. Every advertiser intends to convert
audience into prospects and prospects into buyers.
Advertising media: The media are the channels of communication through
which ad messages are transmitted or communicated to the target audience.
The advertiser may select a number of media, or he may go for a selective or
particular media, i.e., only outdoors media, as in the case of a local retailer. The
most frequently used media are newspapers, magazines, and television, radio,
posters, billboards, neon signs, handbills, and cinema, video and transit media.
In India, newspapers account for a major share of advertising revenue followed
by television and magazines.
Advertising producers: They include copywriters, artists, photographers,
typographers, layout designers, producers, editors and others. They may be
personnel from the Ad agencies or they may be hired from outside by the
agencies on job basis.
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Government authorities: The government authorities control the functioning
of the entire advertising industry. The government adopts laws and regulations
that have a direct or indirect bearing on advertising. For instance, ads of liquor
and tobacco products are not allowed on television and radio.
Others: Apart form government authorities, there are other individuals and
organizations who participate in advertising world. There are advertising clubs,
associations of advertisers and agencies, audit bureau of circulation, a number
of research firms, institutions imparting advertising skills, and so on.
WASTE IN ADVERTISING:
Waste in advertising refers to the failure of the advertising campaign to
achieve its desired objectives. The main objective of every ad is to attract the
attention of the audience and then to induce them to act upon the advertiser’s
message. If the ad fails to attract the attention and induce the audience, then
one can say that there is waste in advertising. The waste in advertising can be
due to any or many or all of the following cases:
i.
Poor planning,
ii.
Poor segmentation,
iii.
Poor positioning,
iv.
Wrong selection of advertising agency,
v.
Wrong targeting,
vi.
Poor drafting of ads,
vii.
Wrong planning of ads,
viii.
Wrong selection of media,
ix.
Sponsoring of poor programs,
x.
Wrong time selected,
xi.
Excessive advertising, and
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xii.
Conditions not conducive to use of advertising.
To minimize the wastes in Advertising, it requires in-depth planning.
Advertising works best and costs least when planned and prepared in advance.
For Example, one will pay less per ad in newspapers and magazines by
agreeing to run several ads over time rather than deciding issue by issue.
Likewise, an organization can achieve certain economies by preparing a
number of ads at once. Further, the effectiveness of advertising is measured
only over the long run, and not medium or short term. This is perhaps because
of the fact that people don't see each & every ad of the product/service rendered
by the organization. They only see some of them some of the time. The
organization must repeatedly remind prospects and customers about the
benefits of doing business with them.
CONDITIONS CONDUCIVE TO THE USE OF ADVERTISING:
Advertising is not the answer to all marketing problems. Some
advertisers make use of advertising to solve problems that are beyond its scope.
For advertising to be effective, a combination of at least some of the following
conditions must be present:
The product must be good
The product must be of good quality and meet a perceived need of the
consumers. For instance, the consumers perceive refreshment in a soft
drink but if you bring out a soft drink for digestion purpose, it may not
do well in the soft drink market, even though the quality of the digestive
drink may be very good.
The price must be right
Price is one of the important aspects of marketing mix. Generally, price
must be within a reasonable and competitive range for that type and
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quality of product. Price must not be too high, because consumers think
twice to pay a high price, nor the price must be too low, for not only the
firm may not be able to cover up its expense but also people equate too
low price to low quality.
There must be product differentiation
When a new product enters the market, it should offer unique beneficial
differentiation to the consumers. If it is very much identical to others
already in the field, then the consumers may not prefer to switch over to
the new brand and why they should? For instance, promise toothpaste
has achieved some success in the toothpaste market due to its clove oil
uniqueness; otherwise it would have failed as others did.
The product must be in line with the times
It would be difficult for advertising to sell a product that is out of times
or outdated. For advertising to achieve success, the product must not
only be of good quality and of reasonable price but it must be in line
with the times, if not ahead of times, otherwise, why people should buy
that product which is outdated or out of fashion?
The future sales cover up the cost of advertising
The firm should also take into consideration the potential sales revenue
and profit potential from the product. The future sales revenue or profit
potential should be in a position to cover up the cost of advertising. One
can advertise toothpicks in a beautiful way on TV, but is it going to pay
for itself?
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The firms must have the ability to handle increased sale
The firm should have the ability and resources to handle the increased
volume of sales, resulting from advertising. The firm should not only
have production resources but also marketing and distribution resources.
CONSTRAINTS (OR LIMITAITONS) OF ADVERTISING:
Advertising suffers from the following bottlenecks: i.
No individual adaptation is possible as it can be in case of personal
selling,
ii.
More wasted efforts are there as advertising is a means of mass
communication,
iii.
No regulation of consumer’s loss of interest,
iv.
Expensive since advertising has become a profession that needs services
of highly professional advertising agencies,
v.
Advertising is not an absolute means of promotion but is a compliment
to other promotional tools, and
vi.
Evaluation is difficult.
These constraints have no way lessened the importance of advertising
because an organization goes on campaigning as per its own requirements
and available budget.
ADVERTISING AS A CAREER
Advertising is a practice. It is a profession. The advertising industry
consists of the advertising agencies, the advertisers, the media, the ancillary
services and the free-lancers. Each of these constituents offers career options to
perspective candidates. Let us consider the career options available with each
of these constituents.
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CAREER OPTIONS IN THE ADVERTISING INDUSTRY:
The Advertiser
He can be a manufacturer or a distributor or a public sector company or
government department. It can be a voluntary agency. Technically, there are
the sponsors of the advertising. All major advertisers maintain an advertising
department. The advertising department is in charge of an advertising manager.
Many students of advertising will find the career of an advertising manager
quite appealing. He reports to the Chief Executive or Director marketing or to
divisional head.
The advertising manager in charge of advertising department has both
managerial and operational functions. He is responsible for interacting with
agencies and the media. He pays attention to outdoor ads. He takes part in
campaign planning, and media planning. He gives the necessary briefing to the
Accounts Executive of the advertising agency. He gets Point-of-Purchase
material prepared. He is the man behind Sales Promotion and Merchandising.
He maintains press relations, and PR functions. He brings out a house journal,
if there is a no PR department or corporate communications department. He is
appointed on the basis of his knowledge of advertising and journalism, his
knowledge of the industry, his management background and his marketing
background. He maintains a good client-agency relationship so essential for the
success of the campaigns.
The company’s advertising department has to decide the amount that can be
spent on advertising budgeting.
Advertising Agencies
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It is estimated that advertising industry will be worth around Rs. 12,000 crores
by the year 2002-03. Even discounting media inflation, it is a lot of business.
An advertising agency (abbreviated to ‘ad agency’) is a team of experts
appointed by clients to plan, produce and place advertising campaigns in
media.
The need for people grows in proportion to billing. It employs today 11,000
people. They are constantly in need of diversity of talents both in the creative
as well as production side.
Accounts Executive
It is the key career option in advertising agency. He is called an accounts
director when he is the member of the board. He is a link between a client and
his staff. He is brief by the marketing or sales or an advertising department of
the client. He communicates this to the agency people. He reaches out to
different clients for seeking new business. Even clients to want an agency to
work for them contact the accounts executive. This business development work
makes him virtually a marketing manager of the agency.
Copywriters:
They are the wordsmiths who do the wording of an advertisement. They are
bright and talented. They have a flair for language. They contribute to the
theme of an advertisement. Mostly, language proficient students by suitable
apprentice-ship in an existing agency take up this as a career. Creation of
successful copies for different clients establishes them in this field.
Visualizers:
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These are artists who put on paper what has been thought out by the
copywriters. They in fact design the ad. Many students good at fine art/
commercial art find this as a good career option.
Creative Director:
He co-ordinates the copy writing and the designing. He is a senior professional
who is seasoned in an existing advertising agency set-up to take on this mantle.
Alyque Padamsee prefers graduates of NID or J. J. School of Arts on the
creative side.
Production Department
Persons of diverse talents like printing technology; DTP, photography,
typography etc. can be employed here.
Media Planner
He has to allocate the advertising budget amongst media. He has to select the
appropriate media. He decides about the frequency, size and position of an
advertisement. He decides about its publication date. He receives the tear-off
copies from the media when the ad is published. He is guided by the media
research, which he undertakes, or by research undertaken by an outside agency.
Media is the most professionalised department of advertising agencies. Many
young MBAs who specialize in marketing join the media department of the
advertising agencies.
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Marketing Research
Modern agencies are integrated setups. They provide a range of marketing
services. Research data become very useful as input to the creative process.
Many MBAs, MSc (Stats) and MA (Psychology) students join the market
research departments of the advertising agencies.
The Media
Most of the media today sustain on advertising revenue. They sell space or
time. While selling space or time, they have to convince the client about the
reach of their media vehicle, the composition break-up of their readers and the
pricing of their space/time selling. They monitor their market, survey their
readers’
and
highlight
their
readers’
demographic
and
geographic
characteristics. They also maintain relationship with the media department of
advertising agencies who buy space/time on behalf of clients. Many career
options are now available in space selling/marketing departments of media for
perspective candidates.
Ancillary Services
They are needed to produce creative advertisement. A whole range of services
like studio service, photographic service, printing service etc. fall into this
category. Many career options are available for students of suitable talents. In
ancillary services, we now include models and those who provide these
models.
Free-lancers
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These are professionals who work independently and have a successful track
record. They are copywriters; jingle singers, radio announcers, artists,
Visualizers, technical writers etc.
A HIGHLY PAID PROFESSION
Advertising is a highly paid profession. It is also high profile profession
whose functionaries have high lifestyles because of high expense accounts for
entertaining clients. It gets itself elitist brand for this reason. The following
table shows the currently prevailing compensation packages being paid to few
functionaries of the advertising world.
COMPENSATION PACKAGE TO FUNCTIONARIES OF AD WORK:
Post
Creative Director
Starting Salary
Median Salary
Success Salary
(in Rs.)
(in Rs.)
(in Rs.)
10000-12000
16000 and more
40000 and more
8000-10000
9000 and more
30000 and more
Accounts Executive
7000-9000
12000 and more
30000 and more
Art Director
7000-9000
12000 and more
35000 and more
Copywriter
7000-9000
12000 and more
35000 and more
Media Planner
In many cases advertising ads value to the product and accounts for its success.
It, therefore, deserves better payments. It has to pay high salaries to attract
talents and to retain them.
DEARTH OF TALENT
The demand for the right talent in advertising is increasing day by day. There
are enough people entering this profession. But very few of them are strategic
thinkers. It is however, very difficult to meet this demand. Many organizations
find a short cut. They attract the talents employed elsewhere. This also inflates
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the already high salaries further. Besides, this is hardly the answer except in the
very short run. Playing musical chairs is a very short-term answer.
Another problem is that ad industry has a dubious image. May be by their
lifestyles, the professionals contribute to this image. The best professional
talent so far looked it down upon. However, things are changing fast. Many
candidates from elitist institutions are seriously considering advertising as a
career option. We thus, find many journalism, psychology and marketing
students going in advertising industry today. However, marketing graduates
from premier business schools are lured away by finance and banking
companies. The major cause for dearth of talent to man the positions in this
industry is a lack of formal training in this area.
FORMAL TRAINING
So far, there were very few formal courses of advertising. Mainly, it was
on-the-job training. Agencies used to run their own training programs. Foreign
collaborators also rendered assistance in training the existing manpower of the
agencies.
Management institutes and business school contributed a lot by offering
marketing diploma and degree courses. The products of these institutes started
sneaking in the media and market research departments of agencies and
advertising publicity departments of client.
Advertising Agencies Association of India (AAAI) arranges creative
workshops to impart actual work experience in the systems and creative
philosophies, which the best agencies follow in preparing campaigns. The
intake in each workshop is restricted to eight persons. The team works on
creating a total campaign (from an actual product brief, right from scratch
which, includes collection of information, positioning a product, developing an
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advertisement concept etc.). There are weekly assignments on various products
and services.
The Indian Institute of mass communications, Delhi and Sophia B. K.
Somani Polytechnic, Sophia College, Mumbai offer postgraduate courses in
mass communications. Jamia Milia Islamia, Jamia Nagar, New Delhi offers
MA in mass communications. Xavier institute of communications, St. Xavier’s
college, Mumbai offers a course in film/video production. Film and TV
institute of India, Pune offers courses related to production aspects. Besides,
the institutes offering journalism have a paper on Advertising. Mudra Institute
of communication, Ahmedabad organizes courses on advertising planning and
offers postgraduate diploma programme in communications of two-year
duration for bachelor’s degree holders in any discipline. For cartoon animation
films, Ram Manohar Biographic, Moghal Lane, Mumbai offers an intensive
training programme.
The Advertising Club of Mumbai has instituted a diploma course in
advertising. Many universities have started offering one-year PG diplomas in
advertising and marketing. At under graduate level, universities have started
offering advertising as a subject in commerce and business management
streams. Besides, on the behest of UGC, some colleges of the country have
taken
vocational
course
named
‘advertising,
sales
promotion
and
salesmanship’. It is taught at undergraduate level throughout the three-year
tenure of B. Com. Degree to the candidates opting for this curriculum. A
number of institutions under self-financing scheme, duly approved by AICTE,
New Delhi have started giving PG diplomas in Business Management having
marketing specialization. In UP, various institutions providing MBA degree
have been affiliated to newly setup UP Technical University, Lucknow.
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To promote advertising career an institute STACA center of advertising
studies was setup at NIMS, Mumbai. Until recently, it was genetic composition
alone that determined a young person’s fate in the advertising industry. The
ruling maxim was, ‘ad men are born, and not trained.’ Of late, there is a
realization that though inborn traits predispose a person to a successful
advertising career, the talents can be further honed to a professional status by a
sound training. In this context, setting up of STACA centre for Advertising
studies has made a beginning. STACA stands for standing committee on
advertising, which has been formed under the joint auspices of the Indian
Society of Advertisers (ISA), the Indian languages Newspaper Association
(ILNA) and the Advertising Agencies Association of India (AAAI). STACA
has been established in 1981.
In 1982, the realization dawned that a centre for advertising studies
should be formed. Soon after the advertising congress held in1982 at Delhi, the
profits accrued were set-aside for the purpose, though this corpus by itself was
not sufficient. Narsse Monjee Institute of Management (NIMS) was found to be
suitable venue for setting up the centre. It is a unique centre in the country,
which has launched its inaugural course- a two-year diploma in July 1993,
which will soon be upgraded to a degree course, hopefully affiliated to
University of Mumbai. The first batch of 48 students in 1995 and subsequent
batches after completing the two-year course have been absorbed by the
advertising agencies. Basically, it is a programme in account management but
at the same time, students are exposed to the creative side to make them well
rounded in advertising.
Lintas has recently initiated Lintas College of Communication to be
based in Mumbai to train people with a potential for a career in advertising.
Lintas will tap this source for its requirement of trained manpower. Some of
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these trained candidates will be available for absorption by others in the
advertising industry. The course has senior creative people from Lintas as a
faculty and the team includes Kersy Katrak, Usha Bhandarkar, Neville D’
Souza, Josy Paul Junior, Prasoon Pandey, B. R. Sharan, Cajetan Vaz, and
Amita Srivastav. The guest faculty includes Ameen Sayani, Prahlad Kakkar,
Kiran Khalap, Vikas Desai, Feroza Unwalla, Jaikrit Rawat, and R. Sridhar etc.
The theory of creative writing can be taught, but it is difficult to make one
write creatively. Its course covers all aspects of creative writing for print,
Television, radio and direct mail.
Many young people are fascinated by the ad world and think of joining
it. Advertising as a career option now means joining either the advertising
department of a business organization or most probably the advertising agency
business. Some decades back, the manpower in this line came from the
traditional guru-shishya parampara. The mentor you chose taught you the nittygritty of advertising i.e., the skills, the techniques and the rules. Apprenticeship
either under one guru or several ones was the norm. No agency today, however,
can afford to take this time consuming route of providing on-the-job training
two people who are untrained. The reason is the agency cannot wait till you
learn and be productive. This means that a trained person who is able to pick up
things faster and continues to be productive even while learning is always
preferred. Besides, the gurus are often too busy to nurture young talent.
Training gets low priority because most of the top-level people spend energy to
cope with the pace of growth.
It must be noted that ad-training institutes have to restrict themselves to
media planning, market research, client servicing and strategy formulation. The
creativity part is still best left to the gurus to nurture. Creative skills cannot be
24
taught conventionally. Any attempt to institutionalize creative thought is held
in great suspicion by ad men.
Advertising training should be broad-based consisting of knowledge of
markets, psychology, phraseology, diction, visualization, imagery, movements,
music, media, trade channels and rural background.
Advertising process in general and in a specific situation must be
understood. As the industry matures, a unified strand of advertising thought
adapted to cultural peculiarities of India may emerge. What is needed is a
formal pre-entry level training followed by agency specific model later. The
ultimate aim is to use advertising to accomplish the marketing objectives of the
firm. Learning is a continuous process and a true ad man keeps on learning.
Life in advertising as Ghosal puts it, is one of achievement and absurdity, fun
and frustration in equal measure.
Human resource availability in advertising industry is not growing at the
same pace as the business is growing. Staff turnover in advertising industry is
the highest amongst all professions, at 30 percent. Besides, there are problems
of premature aging due to high-stress nature of the job. The entry of MNCs has
further compounded the problem by luring away a number of clients servicing
people to man their marketing departments. Many ad professionals set up
Consultancy services. Creative departments are the most hit by inadequate
number of the right kind. Media planning is the next, followed by client
servicing. In fact the current estimates of shortfall place the total shortfall to be
about 2,800 people in the four metros, with Mumbai facing the biggest
problem. There are 60-70 vacancies a month, 20-30 being for the top post.
Only 30% of these are filled up. In fact the shortage in the creative departments
of agencies is so bad that sought-after professionals are beginning to work half-
25
a-day in one agency and the other half in another together earning more than
what one could bring.
QUALITIES OF ADVERTISING PEOPLE:
People in advertising should possess some of the important qualities as
mentioned below:
1.
Good communicator
2.
Innovative and creative
3.
Intelligent
4.
Social Skills
5.
Adaptability
6.
Patience
7.
Commitment
8.
Literacy and Numerical Ability
9.
Mobility
10.
Good Personality
ADVERTISING REGULATION IN INDIA
Advertising is a commercial activity whose objective is to convey
information to consumers to increase the probability that the act or think in a
way favorable to the advertiser. In other words, the objective of advertiser is to
exert influence on the behavior of those exposed to his ad message. If the
advertiser is to get back value for his money spent, his message must reach
consumers, touch them, and make the move to specific action or belief. This
means that the advertiser risks the response from the consumer, the king of the
marketing world. It may so happen that the consumer may react against the ad
message because of the certain genuine reasons. There can be consumer
resistance to ads at least in three major ways. Consumer resentment is obvious
in the following three cases:
i. Morality and tastes
According to some consumers, there are some products and services, which
should not be advertised in public. They believe that it is morally wrong to
26
advertise particular kinds of goods or services or some means of
presentation should not be used. Some consumers consider some ads as of
bad taste though the products advertised do not offend consumers. It is a
complicate issue for the advertiser because there is no consensus as to what
constitutes bad taste on ground of moral outrage. It may so happen that
what is good taste for some is likely to be of bad taste to others. Thus, use
of sex particularly fair sex in advertising is considered as a matter of bad
taste. Even the filmmakers are resorting to open kissing, violence, nudism
beyond limits though there has been censorship.
ii. Untruthful advertising
Consumer resent those ads, which they think to be untruthful. Such ads
raise the consumers’ expectations, which are false and misleading. The
concept of truth is really very elusive. In the world of ad, the truth has four
colors or degrees. These are literal truth, deceptive truth, truth exaggerated
and the whole truth. Literal truth means the statements are totally true.
There is no scope for false presentation or ambiguity or misleading. In
deceptive truth, the advertiser is literally true but yet deceptive. The third
form of truth is truth exaggerated. In this case, advertiser makes tall claims.
For instance, a textile manufacturer may claim that colors used won’t fade,
the material won’t shrink, needs no ironing and so on. In puffery, the
advertiser uses beautiful, ornamental language with dual meaning so that
the advertiser is not caught even if complaint is lodged. Normally, this
relates to warranties and guarantees and conditions attached. The fourth
category is hold truth. People expect whole truth in advertising. Therefore,
an advertiser should use commercial truth rather judicial truth. However,
the advertisers are not giving even commercial truth, because of which they
are opposed. That is why consumers take every advertisement at high rates
27
of discount. They know that there is dishonesty and untruthfulness to a
certain extent.
iii. Environment pollutant
Consumer’s resentment crops up as a result of its over-persuasiveness. This
objection stems from the fact that there is too much of advertising that
pollutes our mental environment just as noxious emanations from a factory
chimney and effluents are released to pollute the physical environment. The
people welcome ad as an educator, informer, entertainer and assistant in
decision making to a very great extent. However, today on all media there is
overcrowding, clutter ever increasing at a single shot that people are fed up.
They have developed a negative appetite and cannot digest the ads and ad
contents.
GROWTH OF ADVERTISING:
Historians date advertising to about 5,000 years. As a matter of fact it
must have originated the day human race started living in a civilized way. It is
as old as human civilization and as young as any other art. A look into the
history of advertising is useful to understand:
(a) The difference between present and past advertising.
(b) The future trends in advertising based on past and present.
The history of advertising can be grouped into three phases or periods:
Phase I (prior to 15th century)
Phase II (from 15th century to d19th century)
Phase III (from 20th century till date)
PHASE I:
28
This period relates to the pre-printing period. Advertising in ancient times was
crude as compared to present-day advertising. Information rather than
persuasion was the objective of the early advertising. In those days, three forms
of advertising were used:
1. Trade-marks:
Early craftsmen used to inscribe their individual marks on their wares such
as pots, wooden tools etc. The purpose was to give a separate identity to
their wares. As the reputation of a particular craftsman spread by word of
mouth, buyers began to look in for the reputed marks before they made their
purchase, just as we look for trademarks and brand names on products
today.
2. Signs:
The use of outdoor advertising began long ago. For outdoor purpose, the
use of signs was commonly used. Signs were in use for about 5,000 years
ago in Babylonia. In those days traders erected commercial signs on
prominent rocks along trade lanes. Excavations at Pompeii reveal that each
shop had an inscription on the wall next to the entrance to tell the passer-by,
whether the shop was a place to buy milk, meat or other merchandise.
There were signs of a cow for a dairy shop, a row of ham for a butcher shop
and so on.
3. Town Criers:
The Greek merchants were among those who made first use of town criers
to chant the arrival of shops with cargo of wines, spices and metals. The
town criers used to beat a drum or ring a bell to attract he attention of the
public before making announcement. Even today, one comes across a town
29
crier – a hawker shouting for the sale of his wares, and again, what you hear
on radio and TV is a sophisticated form of town crying.
PHASE II:
This period characterizes an important milestone in the history of advertising
and human civilization. The invention of printing press in 1438 by Johan
Gutenberg in Germany totally revolutionized communication methods for the
whole world. John Gutenberg, himself was the first person to bring out a
printed book ‘THE BIBLE’ in 1450. In 1477, William Caxton, one of the first
English publisher from London brought out the first ever printed
advertisement in the form of a handbill to advertise his religious book.
Other than handbills three other forms of advertising existed during this
period. They were:
1.
Newspapers:
As the use of Gutenberg’s press gained popularity, the next step
was the development of the newspaper .The first newspaper
advertising was in about 1525 that appeared in Germany for a
book. The first printed English newspaper appeared in d1622 called
‘The Weekly News of London’ published by Nicholas Bourne and
Thomas Archer. The first advertising in an English newspaper
appeared in 1625. It was in the form of an announcement in
‘Mercurius Britanicus’ regarding the publication of a book. The
first American newspaper ‘Boston Newsletter’ in its first issue
(April 17, 1704) carried advertising for the newspaper itself.
2.
Magazines:
Magazines were first published in the early 18th century. Till the
first half of the 19th century, ads were placed in newspapers or
30
appeared in the form of posters or handbills. Magazines gained
recognition as a medium of advertising only after the 1870s.
3.
Siquis:
Handwritten posters that appeared in England at the end of 15th
century were the forerunners of modern outdoor advertising. The
word advertising was then unknown and the advertising posters
were called ‘siquis’ meaning ‘if anyone’ because the siquis began
with the words; if anyone desires’- a phrase from ancient Rome
where public notices began with the Latin word ‘siquis’.
The birth of advertising agency had a great impact on the growth
of advertising. The first known advertising agency in America was
the one started by Volney B. Palmer in 1840 at Philadelphia. In
those days, advertising agents acted as ‘salesmen of space’ i.e. they
used to contract with newspaper and magazine publishers to sell
their space to individual advertisers for a commission of about
25%.
PHASE III:
The 20th century events added impetus to the growth of advertising, namely
the appearance of radio and TV on the communication scene. For the first
time, except for he minor use of town criers, It became possible to advertise
to illiterates.
1) Radio:
The invention of Marconi was officially introduced to the public
during the early 1920. Station KDKA of Pittsburgh was the first
station to broadcast –Harding Vs. Cox presidential election results
in Nov. 1920. Later on other stations such as NBC, CBS came on
31
the scene. The first radio advertising appeared in 1922 sponsored
by ‘Eveready Batteries’ on WEAF (New York) radio station.
2) Television:
The invention of John L. Baird was the most impressive medium of
all times, for it combines voice & vision, music & motion. In 1939,
WTMJ – TV in Milwaukee, Wisconsin (USA) was the first station
to broadcast .The first TV commercial appeared in 1949.
3) Other forms:
Several other forms of advertising appeared during the present
century such as neon signs, skywriting, video etc.
A number of organizations in the field of advertising came into
existence during the 20th century to further the growth of
advertising. These include Association of Advertising Agencies
(AAA) 1917, Audit Bureau of Circulation (ABC) 1914 etc. Such
organizations were the guiding force for similar organizations
elsewhere in the world including India.
GROWTH OF ADVERTISING IN INDIA:
The growth of advertising in India dates back to the early years of
human civilization. However, it was in 18th century advertising was officially
recognized and organized as a medium of communication, when the first
newspaper of India ‘Bengal Gazette’ was placed on the newsstand in 1780.
On July 23,1927 the first radio station was commissioned at Bombay.
However advertising on radio was very rare. Advertising prior to independence
32
was meant mainly for the British in India, rich landlords and maharajas for
mostly luxury and such other goods imported from England were advertised.
It may sound odd, given the huge sums changing hands in today’s
advertising world of India, but there was a time, 1928 to be exact, when the
ambition of an advertising agency of Bombay was to hit a target of Rs. One
lakh annually. The agency was the National Advertising Service started by J.
Jain. Another agency J.W. Thompson (now HTA) struggled to reach Rs. 3
lakh. Anyway, agencies were strange concept.
Advertising was alien to the Indian mind. No one wanted to waste
money. Incidentally, rates in The Times of India were in the range of 4 annas to
8 annas for a column inch and even this was considered ridiculous. Not that
there were no much advertising in India but Indian businessmen looked upon
pleas for advertisements with amusement. They thought advertising in
newspapers is useless when direct appeals to customers were more powerful.
And so, agencies were used mainly by foreign firms which handled imported
goods in India such as Ponds, Horlicks, Quaker Oats, Packard Cars, Maxwell
coffee, Kraft, etc. And the big stores like Army and Navy, White ways and
Evans Fraser, sometimes even handled their own advertising.
Advertising in India gained significance only after the World War II,
with the birth of Association of Advertising Agencies of India (AAAI) in
September 1945. The Audit Bureau of Circulation (ABC) was started in India
in 1948 and the Indian Society of Advertisers in 1952. The Advertising Club,
Bombay was formed in 1962.All these organizations improved and encouraged
advertising standards and growth of Indian advertising.
33
On September 15,1959 dawned a new era in the field of Indian mass
communication, for on this day, TV was introduced for the first time in India at
Delhi on experimental basis for one hour twice in a week. The Delhi
transmission was followed by Bombay transmission on October 2,1972. The
first TV commercial was transmitted on January 1.1976.
In the early 1990s Indian advertisers had the advantage of varied media
options including Hong Kong based Star TV, Zee TV, and other satellite
channels. Quite a good number of satellite channels are providing 24 hours
service and thus inviting sponsors to advertise their products and idea.
In India, there has been a phenomenal growth in advertising spending.
From around Rs. 750 million in the early seventies, it raised to about 100000
million (10000 crores) in the year 2001.It shows an increase by 125 times. As
in most other countries, the growth of advertising has come primarily from the
growth in the consumer goods sector. In the past it was common to look upon
advertising as fashion, which could, at best, cater to the upper strata of society.
Today, it is no longer a dispensable luxury but a hard fact of corporate life, a
necessary means of survival and, an essential element of any marketing mix.
The reasons for this change in attitudes are not difficult to find: The
greater choice of brands in many products- whether televisions, personal
computers, beauty creams, pressure cookers, food items and non-durables- all
jostling with each other in the market in a scramble to reach the buyers. And it
is not just the higher income strata of Indian market that is important now.
Advertisements are being designed for equally varied segments such as
children, teenagers, young working adults, young married couples, working
women, housewives, the 40 plus groups, the rural rich, etc. A rise in awareness
34
and literacy levels is bringing an increasing number of potential consumers
within the expanding reach of the print media.
The television network has not only reached distant corners of the
country, but has also provided a means of taking a brand into the living rooms
of the people. All these changes, combined with the changing social and
cultural values, have made the task of advertising not only difficult, but
complicated enough to necessitate the services of professionals and agencies
specializing in this aspect of marketing. The advertising industry has indeed
grown through these years. What has also grown is the advertiser’s increasing
concern for the value of his money.
The tables shown below will highlight the profile of advertising industry
in India since independence till date.
SIGNIFICANT GROWTH OF AD INDUSTRY IN INDIA
Year
Expenditure (in crs Rs.)
1949-50
05
1980-81
240
1985-86
612
1990-91
1000
1993-94
2200
1994-95
3500
1998-99
6700
1999-00
9200
2000-01
10000
2001-02
10500
2002-03
12000(projected)
Source: Based on survey made by MARG, Research Agency.
MEDIA WISE GROWTH OF AD EXPENDITURE (Rs. Crores.)
35
YEAR
MEDIA
1980-
1985-
1993-
1998-
1999-
2000-
2001-
81
86
94
99
00
01
02
09
60
520
2840
4000
5300
5500
146
365
1220
1600
2200
2600
2800
85
187
460
2260
3000
2100
2200
240
612
2200
6700
9200
10000
10500
TV
PRESS
OTHERS
(INCLUDING
Radio, Cinema
& Outdoor)
TOTAL
Source: A&M Research Journal
TOP 25 BIG ADVERTISING SPENDERS IN INDIA (2000-2001)
1. PROCTOR & GAMBLE
2. HLL
3. NESTLE
4. GODREJ SOAPS
5. BROOK BOND
6. PHILIPS
7. GODFREY PHILIPS
8. MRF
9. TATA TEA
10. COLGATE PALMOLIVE
11. PEPSI
12. ITC
13. MCDOWELL
14. TELCO
15. VST
16. BAJAJ AUTO
17. RELIANCE
18. DABUR
19. RANBAXY LAB.
20. ASHOK LEYLAND
21. CADBURY
22. SMI BEE PH.
23. IISCO
24. MARUTI
25. HERBERT SONS
Source: A&M Research Journal
ITEM-WISE ADVERTISING EXPENDITURE
Items
Consumer Non-durables
%age
60
36
Consumer Durables
20
Industrial Goods
10
Services
10
_______________________________________________________________
Total
100
_______________________________________________________________
Source: A&M Research Journal
TRENDS IN INDIAN ADVERTISING:
The consumer boom, coupled with the expansion of the print media and
increased television coverage caused an advertising explosion in the country. A
host of advertising agencies were set up to cater to the new demands of
companies all over India. The advertising industry became one of the fastest
growing industries in India (it was Rs. 10,000 crores in 2001). The salesoriented advertising of the late seventies gradually gave way too more
sophisticated advertising. The presentation became slicker and the sales pitch
less strident, more subtle and sophisticated. Indian advertising had at last come
of age.
In recent years, Indian advertising has also become more professional.
Formal market research studies are being taken into account in a big way to
arrive at advertising appeals or themes; at the same time media planning has
assumed greater importance due to the many media channels and vehicles now
available to the advertisers. This has given birth to the concept of ‘Total Plan’,
where advertising combines harmoniously with other elements of the
marketing mix in order to successfully market a product. In other words,
advertising is no longer looked at in isolation from other elements of the
37
marketing mix. It is increasingly being realized that advertising must be
coordinated with other aspects of a marketing strategy.
Advertising which had mainly relied on ‘creativity’ before, has
increasingly begun to take cognizance of market research to make the
advertisements more effective. At the same time, Indian advertising has to
some extent shaken off the western influence in recent years. Indian words and
phrases are being increasingly incorporated in advertisements: Even when the
advertisement is in English, there is an instance of Indian phrases, slogans or
expressions being used. For example, Hindi advertising of Khich-Khich
(Vicks), Humko Binnies Mangta ( Binnies chips), Palmolive ka Jawab Nahin
(Palmolive shaving cream) etc. have already become popular. This trend of
creativity in Indian languages is likely to continue as it enables advertisers to
reach customers in a more effective manner.
Advertising has assumed special significance for product management.
Indian advertising has undergone many changes since independence, which can
be classified into three distinct periods:
1.
The period of artistic advertisements:
This phase of Indian advertising began in the early fifties and continued
until the mid sixties. This was the period of the seller’s market in the
country – competition was more or less non-existent during this period.
Advertising was very artistic and aesthetic, and took on the form of
corporate advertising as companies seldom produced many products and
therefore, the company’s names were more or less synonymous with
their products. Also, he products advertised focused on certain product
features only. Advertising in this period was placid and non-aggressive.
The seller’s market prevalent in the country and the lack of competition
in the marketplace were responsible for this tendency.
38
2.
The period of sales-oriented advertising:
Beginning in the mid sixties, this period lasted till the late seventies and
was characterized by more aggressive, sales-oriented advertising than
ever before. The pressures of the marketplace caused this shift in
advertising tone and style. The Indian market hitherto a seller’s market
slowly changed into a buyer’s market during this period. In other words,
increasing competition led advertising to build up distinct images for
brands. Companies also realized that advertising was a long-term
investment for particular products.
3.
The period of sophisticated advertising:
This phase, in which we find Indian advertising today, set in at the
beginning of the eighties. The consumer boom in the country, together
with he spread of television coverage, revolutionized Indian advertising
in the early eighties. Indian advertising became more sophisticated and
professional; emotional values and appeals were increasingly used;
advertisement presentation was spruced up to make the advertisements
more entertaining and pleasing; and the sales pitch was made more
subtle and sophisticated. With the increase in advertising frequency
visuals were used more than words to draw the consumers’ attention and
to pitch the sales message. Also, advertising campaigns were
increasingly coordinated with other facets of the promotion mix. Thus,
in the period of sophisticated advertising, each product tries to create a
position in the prospect’s mind, and in the process takes into
consideration not only the product’s features, consumer benefits,
company’s strengths and weaknesses, but those of competitors as well.
4.
Service Advertising:
39
Services are activities, benefits or satisfactions offered for sale. They are
intangible, inseparable, variable and perishable. They therefore require
strict quality control, supplier credibility and adaptability. Personalized
services like laundry, hair grooming, beauty saloon, automotive repairs,
when advertised, place greater emphasis on the institution offering it and
the advantages in patronizing them. Banks are looking at new ways to
distribute their services e.g. use of ATMs (Automatic Teller Machines),
Telephone Banking, and Computerized Banking etc.
5.
Financial Advertising:
Public Limited Companies invites the general public to subscribe to the
share capital of the company. Some private and public limited
companies invite people to deposit money in the company as a loan or
sell bonds and debentures to the general public. Promoting capital issues
has become a very specialized segment of advertising called financial
advertising. As more and more companies tap the capital market often,
and with issue sizes becoming larger and larger, financial advertising is
receiving increasing attention. Agencies like Pressman, Concept,
Imageads,
Mercantile
and
Sobhagya
concentrate
on
financial
advertising.
6.
Global Advertising:
An identified global sponsor of a product to a global customer defines
global advertising as any paid form of non-personal presentation and
promotion of ideas, goods or services. The objectives are to keep up the
worldwide cooperate image, to reduce production and creative cost and
to avoid message confusion in international areas of media overlap.
Universal campaigns or partial adaptation of universal campaigns are
used, as a target customer is same all over the world e.g., Coke.
40
7.
Industrial Advertising:
Days are gone when industrial advertising was neglected. Best brains
were employed only to consumer advertising and industrial advertising
was left to be handled by second-rate people. Now, since there is so
much ad stake in industrial advertising, it handled by the first-rate
people.
8.
Institutional Advertising:
It is also called corporate advertising. In this form of advertising, the
institute presents its own story to build up an image of itself in the
public mind. It is a public-relations-approach advertising. Institutional
advertisements are addressed either to consumers or to other publics of
the company like suppliers, government, financial institutions etc.
9.
Advertising Research:
In order to achieve maximum effectiveness of advertising, the corporate
world has recognized the need of advertising research. It helps in finding
target audience, proper media mix, USP, target budget, proper layout,
copy and illustration, proper appeals in advertising and competitive
advertising.
41
CHAPTER TWO
THE SOCIO-ECONOMIC BENEFITS & COSTS OF ADVERTISING:
Since each activity has two sides to it, the advertising industry has both
the social as well as economic benefits and costs associated with it. The
benefits and costs may or may not be the ones that can necessarily be measured
strictly in economic terms. Further the most peculiar feature of advertising
industry is that expenditure on it by a company prompts another company too,
to go for the same. This to a lot extent has been responsible for the exponential
growth of the industry. Though, such competition to advertise and advertise
more has heavy associated costs attached to it, the advertisers feel that this is
unavoidable. Advertising has give high standards of living and employment to
society but has also been criticized because of unethical issues. This Chapter
looks into the enormous amount of expenditure incurred by companies and its
associated benefits and costs.
42
It has been long debated, whether advertising really has any economic
benefits or not. The basic debates over the economic role of advertising in
society3 may be summarized as under:
A. There is no consensus on the economic effects of advertising.
B. Some people defend advertising on the basis of claimed economic
benefits.
1. Advertising increases economic efficiency.
a. Economies of scale generated by advertising tend to lower prices.
b. Advertising encourages innovation and improvement in products by
letting consumers know about new products.
c. Advertising isn't wasteful, it makes the economy more efficient.
1) Increases competition and lowers prices.
2) Streamlines retailing through the process of "pre-selling."
3) Has a broad social benefit by subsidizing a system of "Free
Media"
d. The informative role of advertising helps consumers make rational
economic decisions.
C. Other people challenge each of these claims.
1. Their basic argument is that the economic costs of advertising over
shadow any benefits.
2. Advertising decreases economic efficiency, a unnecessary business
cost.
1) Firms advertise because they are afraid not to.
2) It is not clear that advertising does anything to substantiate its
costs.
3
Criticisms and Defenses of Advertising: The Economic Dimensions of
Advertising, pp. 15-46 Twitchell, Introduction
43
3) Often required to prevent market incursions rather than
popularize true innovations.
a) Most products are parity brands.
b) Maintaining market share isn't based on quality of a product,
but on the ability to advertise.
4) Allows inefficient, large manufacturers to dominate markets.
a) Innovative firms cannot support large advertising budgets.
b) advertising is an "entrance barrier" to markets.
5) Advertising increases rather than lowers prices.
a) Costs are hidden in the price of goods or displaced to other
areas of the economy.
6) Consumers at great personal and social expense actually
indirectly subsidize free media.
a) Costs are inefficiently displaced onto consumer goods.
b) Media content is extensively shaped and
Limited by advertising.
7) Advertising distorts the forms of communication necessary for
the market to work well.
Here is the need to deeply study the economic benefits & costs of advertising to
the society as a whole. An attempt has been made below in this direction.
ECONOMIC BENEFITS OF ADVERTISING:
Advertising is closely linked with economic development in the long run
at micro as well as macro level. Economic growth is the outcome of expansion
in demand on one hand and augmenting of resources on the other. Advertising
can play an important role in the process of economic growth by which an
economic system contributes to human development.
44
It is a necessary part of the functioning of modern market economies,
which today either exist or are emerging in most of the economies. In such a
system, advertising can be a useful tool for sustaining competition that
contributes to economic growth in the service of authentic human development
Advertising does this, among other ways, by:
Informing people about the availability of rationally desirable new products
and services;
Informing people about improvements in existing products/services;
Helping consumers make informed, prudent consumer decisions;
Contributing to efficiency and the lowering of prices; and
Stimulating economic progress through the expansion of business and
trade.
All of this can contribute to the creation of new jobs, higher incomes
and a more decent and humane way of life for all. It also helps pay for
publications,
programming
and
productions
that
bring
information,
entertainment and inspiration to people around the world.
Advertising can also perform a useful function in the dissemination of
technology and creating favorable conditions for the acceptance of innovative
approaches. Economic benefits of advertising for consumers & advertisers are
summed up separately as below4:
ECONOMIC BENEFITS TO CONSUMERS:
The three main reasons for advertising to exist may be highlighted as under:
4
Introduction to Merchandising & Advertising-(Page 5-8),Notes Texas A&M University System
45
There are economic benefits to consumers in the form of reduced search
time for products they need.
Advertising tells customers what products and services are available,
informs them about product features, details product specifications and
sometimes prices to them, and lets prospective customers know where and
when products will be available.
Helps in making available a comparative featured analysis of various
products/services available in the market so that the consumer can make the
choice most suitable to him.
This can be accomplished with rational or emotional appeals. Ads with rational
messages focus on notions that can be thought out logically by buyers.
Examples of rational messages include saving time, saving money, and making
jobs easier. Emotional appeals capitalize on peoples' feelings and are usually
used in ads for products such as jewelry, cars, and perfumes to remind people
about something related to goods and services being sold and/or the firms
offering them.
Many of the ads we see everyday have this purpose. Established products in
categories such as soft drinks, automobiles and trucks, cigarettes, and HABA
(health and beauty aids) have been on the market for several years. Product
managers advertise to keep brand names in front of consumers as many of
these products are purchased frequently.
ECONOMIC BENEFITS TO ADVERTISERS:
In many cases, advertising campaigns should be expected to stimulate
demand for the products. Demand usually can be judged by advertisers to have
increased if consumption increases while prices are maintained at constant
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