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Chapter 4
The Scope of Advertising:
From Local to Global
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Overview
Introduces the people and groups
who work in advertising
4-2
Chapter Objectives
Describe the various
groups in advertising
and their relationships
Define the main types of
ad agencies
Examine factors that
affect agency-client
relationships
Explain how advertisers
organize
Discuss how agencies
get clients, make money
Explain what people do
in ad agencies
Explain how the media
and suppliers help
Debate the pros/cons of
an in-house agency
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The Advertising Industry: Organizations
Advertisers
Agencies
Suppliers
Media
4-4
The Advertising Industry: People
Most often employed by advertisers, not clients:
Research
Artists
Sales
Writers
Management
Photographers
Accounting
Musicians
Computer science
Performers
Legal
Cinematographers
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Advertisers: Local
Directed to customers in the same geographic area
Franchisees
and dealers
Chain
retailers
Independent
businesses
Govt. &
nonprofits
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Advertisers: Local
An ad for Rubio’s Baja Grill showcases its
unique products
4-7
Advertisers: Local
Typical
structure of
small
advertisers
with high
volumes of
work
4-8
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
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Local Advertisers: Integrators
Direct
Marketing
Sales
Promotion
Integrated
Approach
Media
Advertising
Public
Relations
4-10
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
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Advertisers: Regional and National
Top 10 advertisers in the U.S.
Ranked by total U.S. advertising in 2008
4-12
Advertisers: Regional and National
Regional: one or
several states
National: several regions
or entire country
4-13
Advertisers: Regional and National
Comparison of national and local advertising
4-14
Centralized Department Structure
4-15
Decentralized Department Structure
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Decentralized International Structure
• Divisions are responsible for their own product lines,
marketing, and profits
• Each division has an advertising dept. to coordinate
sales and promotion across brands
• The corporate advertising dept. provides information
and guidance
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Centralized Global Structure
• Assumption that product use and needs are universal
• Standardized approach in all countries
• Extensive research to ensure ad is basic and universal
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Agencies: Defined
Develop marketing & ad plans
Agency
Roles
Develop ads & promotions
Purchase ad space and time
4-19
Agencies: Types
Local
National
Regional
International
Global
Reach
Full
Service
Consumer
BTB
Boutiques
Specialty
Media Buyers
Interactive
4-20
Agencies: People
Account Management
Traffic Control
Administration
Media Management
Production
Creative Concepts
Research, Acct planning
Other Services
4-21
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
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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)
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Agencies: Compensation
Fees
Feecommission
combination
Straight-fee
(retainer)
method
Incentive
system
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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
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Agencies: Client Relationships
Finding and Attracting New Clients
Presentations
Solicitation
Referrals
Community relations
& networking
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Client-Agency Relationship Stages
PreDevelopment Maintenance Termination
relationship
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Client/Agency Relationship Factors
Chemistry
Communication
The Four Cs
Conduct
Changes
4-28
Suppliers
Art studios &
web designers
Printers &
related specialists
Film & video
houses
Research
companies
4-29
Media
Print
Out-of-home
Electronic
Direct mail
Digital
interactive
Other
4-30
Media Around the World
McDonald’s honors an Islamic observance
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