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Arens|Schaefer|Weigold Chapter Three The Business of Advertising Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Learning Objectives • List the various groups in the advertising business and explain their relationships • Discuss the differences between local, national, and transnational advertisers • Explain how advertisers organize themselves to manage their advertising both here and abroad 3-2 Learning Objectives • Define the main types of advertising agencies • Describe the range of tasks people perform in an ad agency and an inhouse advertising department • Relate how agencies get new clients and how they make money 3-3 Organizations in Advertising Advertisers Advertising agencies Suppliers Media 3-4 Local Advertising • Advertising by businesses within a city or county directed toward customers within the same geographic area • Types of local advertisers – Dealers or franchisees of national companies – Stores that sell a variety of branded merchandise – Specialty businesses and services – Governmental and nonprofit organizations 3-5 Local Advertising • Advertising manager: Performs all the administrative, planning, budgeting, and coordinating functions • Types – Product advertising – Sale advertising – Institutional advertising – Classified advertising 3-6 Local Advertising • Local advertisers and IMC – Integrated marketing communications (IMC): Building and reinforcing mutually profitable relationships with the stakeholders and general public • Developing and coordinating a strategic communications program via various media • Local advertisers and social media – Connecting with a local community through social media can be very effective 3-7 Exhibit 3.4 - Differences Between Local and National Advertisers 3-8 Transnational Advertisers • Multinational corporations: Operate and invest throughout many countries and make decisions based on availabilities worldwide – Global marketers: Use a standardized approach to marketing and advertising in all countries • Localized approach – Adaptation of products, packages, and advertising campaigns to suit each market 3-9 Types of Agencies: Geographic Scope Local agencies Regional agencies National agencies International agencies 3-10 Types of Agencies: Range of Services Full-service advertising agency General consumer agency Business-to-business B2B agency 3-11 Types of Agencies: Specialized Services Creative boutiques Media-buying service Interactive agency 3-12 Tasks Performed in an Agency • • • • • • • • Account management Research and account planning Media planning and buying Creative concepts Advertising production Traffic management Additional services Agency administration 3-13 Compensations Received by Agencies • Media commission: Paid by a medium to recognized advertising agencies for advertising placed with it • Markup: Source of agency income gained by adding some amount to a supplier’s bill • Fees – Fee-commission combination, straight-fee method, and incentive system 3-14 Methods Used to Gain Clients Referrals Presentations Networking and community relations Soliciting and advertising for new business 3-15