Download 4 - Trevecca Nazarene University

Chapter 4
The Scope of Advertising:
From Local to Global
William F. Arens
McGraw-Hill/Irwin
Michael F. Weigold
Christian Arens
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Overview
Introduces the people and groups
who work in advertising
4-2
Chapter Objectives
Identify the various
groups in advertising
and their relationships
Describe what
advertisers do and
detail org structure
Define the main types of
ad agencies
Explain what people do
in ad agencies
Discuss how agencies get
clients, make money
Explain how the media
and suppliers help
Describe stages in
agency/client
relationship
Describe factors that
affect agency/client
relationship
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Q. 1. What are the four distinct groups
in the advertising business?
The Advertising Industry: Organizations
Advertisers
Agencies
Suppliers
Media
4-5
The Advertising Industry: People
Most often employed by advertisers, not clients:
Researchers
Artists
Sales personnel
Writers
Managers
Photographers
Accountants
Musicians
Computer scientists
Performers
Attorneys
Cinematographers
4-6
Q. 2. What is Local Advertising?
Advertisers: Local
Advertising done by local businesses in a particular
city or county targeting customers in their
geographic area
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Advertisers: Local
An ad for Rubio’s Baja Grill showcases its
unique products
4-9
Advertisers: Local
Typical structure of
small advertisers with
high volumes of work
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Q. 3. What are the four types of Local
Advertisers?
Advertisers: Local
Franchisees and dealers
Specialty businesses
Sellers of branded
merchandise
Government and
nonprofits
4-12
Q. 4. What are the three types of Local
Advertising?
Types of Local Advertising
Product
Institutional
Classified
Regular priceline, sale, or
clearance
Create favorable
image, increase
awareness, foster
goodwill
Recruit
employees, offer
services, sell
merchandise
Ads can be created locally using local experts or
ads can be created cooperatively
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Q. 5. What are the two kinds of
Cooperative Advertising?
Advertisers: Cooperative
Vertical Co-op
Horizontal Co-op
Manufacturer
provides complete ad
& shares costs
Firms in the same
business or part of
town advertise jointly
National brand
association
Expands advertising
budget
Professional quality
ads
4-16
Q. 6. Define Regional Advertisers and
National Advertisers.
Advertisers: Regional and National
Regional: one or
several states
National: several regions
or entire country
4-18
Advertisers: Regional and National
4-19
Insert ex. 4-2, p. 103
Top 10 U.S. Advertisers
Top 10
advertisers in
the U.S. by total
U.S. advertising
in 2005
Position = 2.9” horiz, 1.5” vertical
Size = 5.7” WIDE
Resolution = 300 dpi
http://adage.com/dat
acenter/datapopup.p
hp?article_id=12791
0
4-19
Advertisers: Regional and National
Top 10 advertisers in the U.S.
Ranked by total U.S. advertising in 2006
http://www.marketingcharts.com/wp/wp-content/uploads/2009/09/tns-mi-top-10-advertisers-h1-2009.jpg
4-20
Advertisers: Regional and National
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Q. 7. What are the differences between
Regional and National Advertisers?
Advertisers: Regional and National
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Centralized Department Structure
4-24
Decentralized Department Structure
4-25
Transnational Advertising Structure
• Divisions are responsible for their own product
lines, marketing, and profits
• Each division has an advertising department to
coordinate sales and promotion across brands
• The corporate advertising department provides
information and guidance
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Global Advertising Strategy
• Assumption that product use and needs are
universal
• Standardized approach in all countries
• Extensive research to ensure ad is basic and
universal
• Appeal to basic human emotions and interests
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Q. 8. Define an Advertising Agency.
Advertising Agency
• An independent organization of creative people
and businesspeople who specialize in
developing and preparing marketing and
advertising plans, advertisements and other
promotional tools.
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Roles of Ad Agencies
Independent
Understands
global
marketing
Client
oriented
Ad
Agency
Business
staff;
creative staff
Contracts for
media space
and time
4-30
Q. 9. What are the different types of
agencies?
Agencies: Types
Reach
Range of
Services
Specialty
Local
National
Global
Regional
International
Consumer
BTB
Boutiques
Media Buyers
Interactive
4-32
Q. 10. What are the various
departments in an agency?
Agencies: People
Account Management
Account Research
and Planning
Traffic Management
Administration
Creative Concepts
Advertising Production
Media Planning and
Buying
Other Services
4-34
Ad Agency Structure
4-35
Q. 11. What is the compensation
structure in an ad agency?
Agencies: Compensation
Media Commissions
Ad rate
card
price:
$100,000
Agency
buys ad
at 15%
discount:
$85,000
Agency
bills client
full ad
amount:
$100,000
Agency
keeps
$15,000
difference
4-37
Agencies: Compensation
Markups
Agency
buys
materials
for
campaign
Materials
cost
$85,000
Agency
bills for
materials
plus a
17.65%
markup
Agency
bills
$100,000
(cost plus
markup)
4-38
Agencies: Compensation
Fees
Fee-commission combination
Straight-fee (retainer) method
Incentive system
4-39
Agencies: In-House
Pros
Cons
May save money
Lower creative quality
Allows tighter control
Less experience
and talent
May allow greater
attention to the brand
Loss of objectivity
4-40
Q. 12. How do agencies get clients?
Agencies: Client Relationships
Finding and Attracting New Clients
Presentations
Referrals
Solicitation
Community relations
and networking
4-42
Q. 13. What are the stages in the
Client/Agency relationship?
Client-Agency Relationship Stages
PreDevelopment Maintenance
relationship
Termination
4-44
Client/Agency Relationship Factors
Chemistry
Communication
The Four Cs
Conduct
Changes
4-45
Q. 14. Who are some of the suppliers
in advertising?
Suppliers
Art studios and
web designers
Printers and
related specialists
Film and video
houses
Research
companies
4-47
Q. 15. What are the various categories
of media?
Media
Print
Electronic
Digital interactive
Social
Out-of-home
Direct mail
Other
4-49
Media Around the World
McDonald’s honors an Islamic observance
4-50