Download Industry Structure

The Structure of the Advertising
Industry:
Advertisers, Agencies, Media
Companies, and Support
Organizations
Marketing 3344
Trends Affecting the Advertising
and Promotion Industry
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•
•
•
•
The “Undoing” of Agency
Consolidation and Globalization—or
not
Media Proliferation, Consolidation,
and “Multiplatform” Media
Organizations
Media Clutter and Fragmentation
Consumer Control: Blogs and TiVos
Web 2.0
Scope of the Advertising
Industry


U.S. Advertising Spending
>$300 B
Worldwide Advertising
Spending
>$600B
Structure of the Advertising
Industry
Advertisers
Advertising and Promotion Agencies
External Facilitators
Media Organizations
Target Audience
Advertisers
Trade Resellers
Sears, McDonald’s
Manufacturers and
Service Firms
Procter & Gamble, Verizon
Government
Federal, State, Local
Social/Not-for-profit
Organizations
United Way, Nature Conservancy
Ad in Context Example
In addition to
companies, the
government makes
extensive use of
advertising.
The Role of the Advertiser in IBP
• Describe the value that the firm’s
brand provides
• Describe the brand’s position in the
market
• Describe the firm’s objectives for the
brand in the near-term and longterm
The Role of the Advertiser in IBP
• Identify the target market(s) that are
most likely to respond favorable to the
brand
• Identify and manage the supply
chain/distribution system that will
most effectively reach the targets
• Be committed to using advertising and
other promotional tools to grow the
brand
Agencies
• Advertising
Agencies:
– Full-Service
– Creative Boutique
– Interactive
– In-House
– Media Specialists
• Promotion
Agencies:
‫ ־‬Direct Marketing/
Database
‫ ־‬E-commerce
‫ ־‬Sales Promotion
‫ ־‬Event Planning
‫ ־‬Design Firms
‫ ־‬Public Relations
Firms
Ad in Context Example
Advertising agencies
make extensive use
of advertising to
acquire new clients.
Full Service Agency Services
• Account Services
• Marketing Research Services
• Creative and Production Services
• Media Planning and Buying Services
• Administrative Services
Agency Compensation
• Commissions:
– around 15% of airtime fees—in flux
– 16 2/3 percent for outdoor media
– web media is all negotiated
• Markup Charges:
– production cost + fixed %
• Fee Systems:
– hourly rates, or by project
• Pay-for-Results:
– tightly-specified objectives
External Facilitators
• Consultants
Creative, Media, Database
• Production Facilitators
• Software Firms
Web tracking, fulfillment
Media Organizations
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Broadcast
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Print
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•
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Internet, interactive
broadcast,
iPod, Cell Phone
Support Media
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Magazines, direct mail,
Newspapers, specialty
Interactive Media
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TV, radio
Outdoor, directories,
sponsorship,
Point-of-purchase, branded
entertainment
Media Conglomerates
•
Time Warner, Disney, Turner
Target Audiences
• Household Consumers
• Businesses
• Professionals
• Government Organizations