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Chapter Three
The Business of Advertising
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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