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Concept and definition of advertisement – Social, Economic and Legal Implications of
advertisements – setting advertisement objectives – Ad. Agencies – Selection and remuneration
– Advertisement campaigns – case studies.
Table of Contents
Definition of Advertising(2)........................................................................................................................... 2
1.1 Introduction to advertising .................................................................................................................. 2
1.2 Key Concepts of Advertising(8) ......................................................................................................... 3
1.3 Creative idea ....................................................................................................................................... 3
1.4 The Key Players(8) ............................................................................................................................. 3
1.5 Roles of Advertising(8)....................................................................................................................... 4
1.6 Features of advertising(16) ................................................................................................................. 5
1.7 Major Advertising Decisions ............................................................................................................. 6
1.8 Scope of advertising(16) ..................................................................................................................... 6
1.9 The most commonly used Advertising Techniques(16) ..................................................................... 8
1.10 Steps in Advertising Process ............................................................................................................. 9
1.11 Objectives and Importance of Advertising(16) ............................................................................... 10
1.12 Importance of Advertising .............................................................................................................. 11
1.2 Social, Economic and Legal Implications of advertisement(16) ........................................................... 12
1.2.1 Economic role of Advertising ........................................................................................................ 12
1.2.2 Social role of Advertising: ............................................................................................................. 13
1.2.3 Social Implications of advertising.................................................................................................. 14
1.2.4 Positive social effects of advertising(8) ......................................................................................... 14
1.2.5 Negative social effects of advertising(8)........................................................................................ 15
1.2.6 Economic Implications of advertising ........................................................................................... 19
1.2.7 Positive economic effect of advertising ......................................................................................... 20
1.2.8 Negative economic effect of advertising ....................................................................................... 22
1.3.1 Ethics in Advertising(16) .................................................................................................................... 23
1.4 Advertising Myths ................................................................................................................................. 25
1.5 Advertising Agencies(2) ........................................................................................................................ 26
1.5.1 Role of Advertising Agencies(2) ................................................................................................... 26
1.5.2 Types of advertising agencies.(16) ................................................................................................ 27
1.5.3 Functions of advertising agency(16) .............................................................................................. 28
1.6 Steps in choosing advertising agencies(16) ......................................................................................... 30
1.5.5 Methods of agency compensation (16) ............................................................................................. 31
1.6.1 Setting advertisement objectives(8) .................................................................................................. 34
How Does Persuasion Differ Today? ............................................................................................... 35
1.7 Types of advertising objective(8) .......................................................................................................... 36
1.8 Advertising Campaign Management (2) ............................................................................................... 38
1.8.1 The following three elements are the heart of an advertising campaign(2) ................................... 38
1.8.2 Types of Ad campaigns(16) ....................................................................................................... 39
Definition of Advertising(2)
According to American Marketing Association, “Advertising is any paid form of nonpersonal presentation of ideas, goods or services by an identified sponsor”.
1.1 Introduction to advertising
Advertising simply put is telling and selling the product. Advertising Management
though is a complex process of employing various media to sell a product or service. This
process begins quite early from the marketing research and encompasses the media campaigns
that help sell the product. Without an effective advertising management process in place, the
media campaigns are not that fruitful and the whole marketing process goes for a toss. Hence,
companies that believe in an effective advertising management process are always a step ahead
in terms of selling their goods and services.
The average person is exposed to more than 600 advertisements per day. This situation
represents a tremendous challenge for marketers. To be effective, an ad must first be noticed.
Next, it must be remembered.
When a company is trying to sell their product by trying to make/convince you to buy
their product , in other words they are trying to make as much money as possible.
Advertising and/or information that is presented in a biased way. It`s also meant to
influence the way we think and/or persuade us.
Ex: Adolf Hitler, Saddam Hussein, George Bush
The term ‘advertising’ is derived from the original Latin word ‘advertere’ which means
‘to turn’ the attention. Every piece of advertising turns the attention of the readers or the
listeners or the viewers or on the onlookers towards a product or a service or an idea. Therefore,
it can be said that anything that turns the attention to an article or a service or an idea might be
well called as advertising.
Money Spent on Media
75% - Media buys
15% - Creative work (agency)
10% - Ad production
1.2 Key Concepts of Advertising(8)
The logic and planning behind the ad
Advertisers develop ads to meet objectives
Advertisers direct ads to identified audiences
Advertisers create messages that speak to the audience’s concerns
Advertisers run ads in the most effective media
1.3 Creative idea
• The central idea that grabs the consumer’s attention
Creativity drives the entire field of advertising
Effective ads adhere to the highest production values in the industry
Clients demand the best production the budget allows
Communication channels that reach a broad audience
How to deliver the message is just as important coming up with the creative idea of the
1.4 The Key Players(8)
1. Advertiser (client)
– Uses advertising to send out a message about its products
– Initiates the advertising effort by identifying a marketing problem
– Approves audience, plan and budget
Hires the advertising agency
2. Agency
Has a strategic and creative expertise, media knowledge, workforce talent, and
negotiating abilities
• Advertising department
• In-house agency
3. Media
– The channels of communication that carry the message to the audience
– Are also companies or huge conglomerates
– Mass media advertising can be cost effective because the costs are spread over the
large number of people the ad reaches
4. Supplier
– Assist advertisers, agencies, and the media in creating and placing the ads
– Vendor services are often cheaper than those in-house
1.5 Roles of Advertising(8)
1. Marketing
The process a business uses to satisfy consumer needs by providing goods and services
Product category
Target market
Marketing mix
2. Communication
– Can reach a mass audience
– Introduces products
– Explains important changes
– Reminds and reinforces
– Persuades
3. Economic
– Moves from being informational to creating demand
– Advertising is an objective means for providing price-value information, thereby
creating a more rational economy
4. Societal
– Informs consumers about innovations and issues
– Mirrors fashion and design trends
– Teaches consumers about new products
– Helps shape consumer self-image
– Perpetuates self-expression
1.6 Features of advertising(16)
Advertising provides information
The basic purpose of advertising is to provide information about products/services to
prospective buyers. The details of products such as features, uses, prices, benefits,
manufacturer's name, and instructions to be followed while using the product are given in the
advertisements. The advertising message and brand name are also given. The information
supplied gives education and guidance to consumers and facilitates correct selection of goods
by them.
Paid form of communication
The advertiser has to pay to the media for giving publicity to his advertising message. He pays
for the advertisement and naturally he decides the size, slogan, etc. given in the advertisement.
Advertising is a form of paid communication.
Non-personal presentation
Advertising is non-personal in character as against salesmanship which is personal (face to face
communication) in character. In advertising, the message is given to all and not to one specific
individual. This rule is applicable to all advertising media including press. However even in
advertising target consumers or target market can be selected for making an advertising appeal.
Gives publicity to goods, services and ideas
Advertising is basically for giving information to consumers. This information is always related
to the features and benefits of goods and services of different types. Advertising gives new ideas
to consumers as its contents are meaningful. The aim is to make the ideas popular and thereby to
promote sales. For example, advertising on family planning, family welfare, and life insurance is
useful for placing new ideas before the people.
Basically for persuasion
Advertising aims at persuasion of potential customers. Advertising attracts attention towards a
product, creates desire to have the same and finally induces consumers to visit the market and
purchase the same. Advertising has psychological impact on consumers. It influences the buying
decisions of consumers.
Target oriented
It is possible to make intensive advertising by selecting a specific market or specific segment of
consumers (e.g. children, housewives, etc.) for the purpose of advertising. This selection of a
specific market is called target market. Advertising becomes effective and result oriented when it
is target oriented. The waste in advertising can be minimized through such target oriented
Creativity-the essence of advertising
Advertising is a method of presenting a product in an artistic, attractive and agreeable manner.
This is possible through the element of creativity which is the essence of advertising. Creativity
can be introduced by creative people (professionals) in the field of advertising. They introduce
new techniques for introducing creativity. Without creativity, advertising will be like a body
without a soul.
1.7 Major Advertising Decisions
1.8 Scope of advertising(16)
Advertising has a wide scope in marketing and the social system. This scope has been described
on the basis of activities included under advertising and their forms and systems, objectives and
Advertising carries a message of the product. The message may be visual or oral. It is designed
in a systematic and psychological manner to influence the prospective customer and formulated
on the basis of need, environment and objectives.
A large number of advertising media, with their respective advantages, disadvantages, costs, and
benefits are available. The selection of a medium should be made on the basis of the type of
customers to be approached, and the capacity of the organization to bear the cost.
Advertising covers the attributes of the product. The merchandise, i.e., the product and services
to be sold, has its advantages and disadvantages. The advertiser should demonstrate the
attributes of the product and avoid the criticism of a similar product of the competitors
Advertising functions
Advertising creates demand, promotes the marketing system, helps middleman, presents the
image of the organization, and performs some other functions as will. No producer can think of
sales without advertising. Salesman and sales manager can expect some results only when there
is advertising.
The advertiser helps the people understand the merits and demerits of his product. He controls
the message and media to benefit society. A slight negligence on the part of the advertiser can
destroy his image and the values of society. He has to be very cautious in selecting his
advertising messages and methods. Costs and benefits are also compared before a particular
medium of advertising is adopted.
Advertising has certain definite objectives, viz., increased sales, creation of awareness and
interest, sustaining the established product, introducing a new product, helping middlemen help
the public at large. These objectives are fulfilled by different advertisers. The main objectives
of advertising are to inform, to persuade and to remind customers about the want-satisfying
attributes of the products advertised.
Advertising assists in the performance of certain activities by the advertiser. The activities
included under advertising are mass communication, carrying messages, developing impressions
and image building. It is an informative, persuasive and reminding communication.
1.9 The most commonly used Advertising Techniques(16)
• Ideal Kids
The kids on commercials are always are perfect looking and wearing the latest styles . That is to
try to make younger kids buy the toy, because “it will make them like those kids in the
Ex: Barbie commercials, Hot wheels
Heart Strings
These ads draw you into a nice/sweet story that makes you feel good, you see a family being nice
to each other and helping each other. It makes you feel nice and want to buy the product.
Ex.: Hallmark, Wal-Mart
Family Fun
This technique makes it look like you just have to buy the product the commercial is trying to
sell. If you do, your family will be happy.
Ex.:Game board commercials
Sounds Good
Music and sound effects are put in commercials to add to the “excitement” of the commercial,
particularly ads aimed at kids. The little songs you hear are just a another way to make you think
of the product, because the songs sometimes gets stuck in your head.
Ex.: McDonald’s
This technique makes the product look more exciting than it really is. The advertisers will add
fast beat music or dramatic music and will flash images across the screen.
Ex.: Movie commercials
Cartoon Characters
By having a fun looking cartoon character representing a product kids remember the product.
Ex.: Cereal commercials, we all know Tony The Tiger and Toucan Sam and the cereals that they
Bandwagon makes it look like everyone is buying the product. It gives the impression that you’ll
be a “loser” or will be out of style if you don’t buy the product.
Ex.: Gap
This technique is when advertisers make a product look bigger or smaller than it really is. They
do this by doing close ups to make the product look big and long shots to make the product look
Omission is when advertisers don’t tell you the whole story. Like “Part of a balanced breakfast”
is saying that it’s part and not mentioning that the breakfast would still be healthy without it.
Ex.: Breakfast commercials
Facts and Figures
This technique is when advertisers use facts and statistics to make the product look reliable.
Ex.: Asprin, “This Asprin relieves pain 10 times faster than the leading brand.”
In this technique the advertisers hope that if they repeat the commercial over and over people
will buy it. Also the advertisers will repeat the same message over and over again during the
short commercial.
Ex: Bowflex, Tide
Product Placement
Companies that sell clothes will put their name on the product, so the person wearing it will be
advertising the company. This also goes for other things other than clothes. Advertisers also put
their brand name in lyrics in songs, music videos, movies, etc….
Ex: Roots
Star Power
Star Power is when the company pays celebrities to tell you what to eat or wear, etc… An
advertisers thinking is that if a celebrity tells you it’s good you will think it’s good and buy it.
Ex: Wayne Gretzky:Ford, McDonald’s, David Beckham:Pop commercials
1.10 Steps in Advertising Process
The following are the steps involved in the process of advertising:
1. Step 1 - Briefing: the advertiser needs to brief about the product or the service which has
to be advertised and doing the SWOT analysis of the company and the product.
2. Step 2 - Knowing the Objective: one should first know the objective or the purpose of
advertising. i.e. what message is to be delivered to the audience?
3. Step 3 - Research: this step involves finding out the market behavior, knowing the
competitors, what type of advertising they are using, what is the response of the
consumers, availability of the resources needed in the process, etc.
4. Step 4 - Target Audience: the next step is to identify the target consumers most likely to
buy the product. The target should be appropriately identified without any confusion. For
e.g. if the product is a health drink for growing kids, then the target customers will be the
parents who are going to buy it and not the kids who are going to drink it.
5. Step 5 - Media Selection: now that the target audience is identified, one should select an
appropriate media for advertising so that the customers who are to be informed about the
product and are willing to buy are successfully reached.
6. Step 6 - Setting the Budget: then the advertising budget has to be planned so that there
is no short of funds or excess of funds during the process of advertising and also there are
no losses to the company.
7. Step 7 - Designing and Creating the Ad: first the design that is the outline of ad on
papers is made by the copywriters of the agency, then the actual creation of ad is done
with help of the art directors and the creative personnel of the agency.
8. Step 8 - Perfection: then the created ad is re-examined and the ad is redefined to make it
perfect to enter the market.
9. Step 9 - Place and Time of Ad: the next step is to decide where and when the ad will be
shown.The place will be decided according to the target customers where the ad is most
visible clearly to them. The finalization of time on which the ad will be telecasted or
shown on the selected media will be done by the traffic department of the agency.
10. Step 10 - Execution: finally the advertise is released with perfect creation, perfect
placement and perfect timing in the market.
11. Step 11 - Performance: the last step is to judge the performance of the ad in terms of the
response from the customers, whether they are satisfied with the ad and the product, did
the ad reached all the targeted people, was the advertise capable enough to compete with
the other players, etc. Every point is studied properly and changes are made, if any.
If these steps are followed properly then there has to be a successful beginning for the product in
the market.
1.11 Objectives and Importance of Advertising(16)
Advertising is the best way to communicate to the customers. Advertising helps informs the
customers about the brands available in the market and the variety of products useful to them.
Advertising is for everybody including kids, young and old. It is done using various media types,
with different techniques and methods most suited.
Let us take a look on the main objectives and importance of advertising.
Objectives of Advertising
Four main Objectives of advertising are:
Brand switch
Switching back
1. Trial: the companies which are in their introduction stage generally work for this
objective. The trial objective is the one which involves convincing the customers to buy
the new product introduced in the market. Here, the advertisers use flashy and attractive
ads to make customers take a look on the products and purchase for trials.
2. Continuity: this objective is concerned about keeping the existing customers to stick on
to the product. The advertisers here generally keep on bringing something new in the
product and the advertisement so that the existing customers keep buying their products.
3. Brand switch: this objective is basically for those companies who want to attract the
customers of the competitors. Here, the advertisers try to convince the customers to
switch from the existing brand they are using to their product.
4. Switching back: this objective is for the companies who want their previous customers
back, who have switched to their competitors. The advertisers use different ways to
attract the customers back like discount sale, new advertise, some reworking done on
packaging, etc.
Basically, advertising is a very artistic way of communicating with the customers. The main
characteristics one should have to get on their objectives are great communication skills and very
good convincing power.
1.12 Importance of Advertising
Advertising plays a very important role in today’s age of competition. Advertising is one
thing which has become a necessity for everybody in today’s day to day life, be it the producer,
the traders, or the customer. Advertising is an important part. Lets have a look on how and where
is advertising important:
1. Advertising is important for the customers
Just imagine television or a newspaper or a radio channel without an advertisement! No,
no one can any day imagine this. Advertising plays a very important role in customers
life. Customers are the people who buy the product only after they are made aware of the
products available in the market. If the product is not advertised, no customer will come
to know what products are available and will not buy the product even if the product was
for their benefit. One more thing is that advertising helps people find the best products for
themselves, their kids, and their family. When they come to know about the range of
products, they are able to compare the products and buy so that they get what they desire
after spending their valuable money. Thus, advertising is important for the customers.
2. Advertising is important for the seller and companies producing the products
Yes, advertising plays very important role for the producers and the sellers of the
products, because
Advertising helps increasing sales
Advertising helps producers or the companies to know their competitors and plan
accordingly to meet up the level of competition.
 If any company wants to introduce or launch a new product in the market,
advertising will make a ground for the product. Advertising helps making people
aware of the new product so that the consumers come and try the product.
 Advertising helps creating goodwill for the company and gains customer loyalty
after reaching a mature age.
 The demand for the product keeps on coming with the help of advertising and
demand and supply become a never ending process.
3. Advertising is important for the society
Advertising helps educate people. There are some social issues also which advertising
deals with like child labour, liquor consumption, girl child killing, smoking, family
planning education, etc. thus, advertising plays a very important role in society.
1.2 Social, Economic and Legal Implications of advertisement(16)
Every coin has two sides”
Advertising is praised but also criticized by critics in their own ways. Advertising has many
positive impacts along with its negative pictures. As the President of American Association of
Advertising Agencies, John O’ Toole has described advertise is something else. It is not related
to studies, but it educates. It is not a journalist but gives all information. And it is not an
entertaining device but entertains everyone.
1.2.1 Economic role of Advertising
Value of Products:
The advertised products are not always the best products in the market. There are some
unadvertised products also present which are good enough. But advertising helps increase value
for the products by showing the positive image of the product which in turn helps convincing
customers to buy it. Advertising educates consumers about the uses of the products hence
increasing its value in minds of the consumers. For e.g. mobile phones were first considered as
necessity but nowadays the cell phones come with number of features which makes them mode
of convenience for consumers.
Effect on Prices:
Some advertised products do cost more than unadvertised products but the vice versa is also true.
But if there is more competition in the market for those products, the prices have to come down,
for e.g., canned juices from various brands. Thus some professional like chartered accountants
and doctors are not allowed to advertise.
But some products do not advertise much, and they don’t need much of it and even their prices
are high but they are still the leaders in market as they have their brand name. e.g., Porsche cars
Effect on consumer demand and choices:
Even if the product is heavily advertised, it does not mean that the demand or say consumption
rates will also increase. The product has to be different with better quality, and more variety than
others. For E.g., Kellogg’s cornflakes have variety of flavors with different ranges to offer for
different age groups and now also for people who want to loose weight thus giving consumers
different choices to select from.
Effect on business cycle:
Advertising no doubt helps in employing more number of people. It increases the pay rolls of
people working in this field. It helps collecting more revenues for sellers which they use for
betterment of product and services. But there are some bad effects of advertisements on business
cycle also. Sometimes, consumer may find the foreign product better than going for the national
brand. This will definitely effect the production which may in turn affect the GDP of the country.
The economic aspects are supported by the Abundance Principle which says producing more
products and services than the consumption rate which helps firstly keeping consumers informed
about the options they have and secondly helps sellers for playing in healthy and competitive
atmosphere with their self interest.
1.2.2 Social role of Advertising:
There are some positive and some negative aspects of advertising on the social ground. They are
as follows.
Deception in Advertising:
The relation between the buyers and sellers is maintained if the buyers are satisfied with what
they saw in advertise and what they got after buying that product. If seller shows a false or
deceptive image and an exaggerated image of the product in the advertisement, then the relation
between the seller and buyers can’t be healthy. These problems can be overcome if the seller
keep their ads clean and displays right image of the product.
The Subliminal Advertising:
Capturing the Minds of the consumers is the main intention of these ads. The ads are made in
such a way that the consumers don’t even realizes that the ad has made an impact on their minds
and this results in buying the product which they don’t even need. But “All ads don’t impress all
consumers at all times”, because majority of consumers buy products on basis of the price and
Effect on Our Value System:
The advertisers use puffing tactics, endorsements from celebrities, and play emotionally, which
makes ads so powerful that the consumers like helpless preys buy those products.
These ads make poor people buy products which they can’t afford, people picking up bad habits
like smoking and drinking, and buy products just because their favorite actor endorsed that
product. This affects in increased the cost of whole society and loss of values of our own selves.
Some ads are so offensive that they are not acceptable by the buyers. For example, the ads of
denim jeans showed girls wearing very less clothes and making a sex appeal. These kinds of ads
are irrelevant to the actual product. Btu then there is some ads which are educative also and now
accepted by people. Earlier ads giving information about birth control pills was considered
offensive but now the same ads are considered educative and important.
But at the last, there are some great positive aspects which help
Development of society and growth of technologies
Gives choices to buyers with self interest
Welcomes healthy competition
Improving standard of living.
Give information on social, economical and health issues.
1.2.3 Social Implications of advertising
The source of controversy over advertising stems from the way it is used by advertisers. In
accomplishing the sales of communication objectives of marketers; advertising influences social
values, life styles, and society’s tastes. It is criticized for being untruthful or deceptive, offensive
or in bad taste and exploits vulnerable groups.
It is generally agreed that advertising exerts a powerful social influence and is criticized for
encouraging materialism in society. Advertising is blamed for manipulating consumers to buy
things for which they have no real need, depicting stereotypes, and controlling the media.
Advertising is a social institution as it represents social life and living. It is so much a part of our
social life that we breathe advertising like air. It is the warp and the woof of society. It is a great
persuasive factor. It appeals, seeks favor by providing latest information. It is the chisel to
shape our tastes and the pattern to mold our opinions. It is a guide and a friend on wise
spending. It generates gainful employment opportunities and raises the standard of living. It
reduces the tax burden for the citizens by raising the national income.
1.2.4 Positive social effects of advertising(8)
Advertising has contributed to the development of social welfare by disseminating information
and encouraging the growth of material utilities, production, consumption and socio-economic
Advertising provides sufficient information pertaining to new products, their uses and the
satisfactions they ensure. Information on improved old products is communicated to consumers
who purchase goods for the satisfaction of their needs. A significant amount of advertising is
essentially informational advertising. It is very difficult to separate informational advertising
from persuasive advertising. It is interesting to note that advertising characterized as highly
informational is often extremely persuasive as well.
Material utilities
Advertising reduces the cost of production, for it encourages large – scale production which
flows from a higher demand created by advertisements. Product qualities are improved.
Advertising has encouraged free choice. It provides product utility by bringing buyers,
producers and marketers together.
Advertising has facilitated increased production. The availability of raw materials for
production, new techniques of mechanization and innovation have been made possible by
advertising. Higher production would not have been realized if there were no modern forms of
People have started to consume more articles than before as a result of advertising. Consumers
are well aware of the availability of different products and services. Prices are brought down
because of the competition encouraged by advertising. Consumers have the freedom of choice
when faced with persuasive advertising. It is really very difficult to force consumers to buy
anything for which they do not see any personal benefit.
Socioeconomic welfare
People of all countries have satisfied their socio-economic needs through advertisements. They
have started to consume the latest goods and services to satisfy their physical, social and
psychological needs. Investment and production have increased the material welfare of the
1.2.5 Negative social effects of advertising(8)
The source of controversy over advertising stems from the way it is used by advertisers. In
accomplishing the sales or communication objectives of marketers, advertising influences social
values, lifestyles and society’s tastes. It is criticized for being untruthful or deceptive, offensive
or in bad taste and exploits vulnerable groups.
Deceptive advertising
Advertising should win the confidence of consumers to perform its job effectively. Deception
indicates that it is not true. There should not misinterpretation to make it appear that it is true.
Misrepresentations of fraudulent representations, ambiguous statements and misleading
interpretations are considered as deception
Harmful effects
Advertising has harmful effects on society. Sex, nudity, bad habits, stereotype culture, etc., are
employed in advertising. Its harmful effects have been considered under taste, appeal
intrusiveness and children.
Many people have criticized advertising on the ground that it is often in bad taste. It has adverse
effects on culture and social traditions. The bad taste is indicated in the presentation techniques
of advertising. Nudity has spoiled many people. Taste is a reflection of the prevailing standards
of society.
The appeal to sex and drugs has become the most adverse aspect of advertising. Fear appeals
have also been made by advertising, which have often been criticized by people.
Advertising repeats several messages and becomes uninteresting and non-appealing. Repetition,
if not appealing, it resorted to influence the people. Emotional attack generates some irritation in
the minds of the people. Advertising exposes several messages which are undesirable. The
informative elements are often replaced by stimulus which influence people in the wrong
Advertising makes an adverse impact on children, who are more susceptible to deception
because they lack the perceptual defense of adults. They are unable to assess the advantages and
disadvantages of advertising. Many advertisers have used this innocence on children to create a
particular impression for new products. Children then constrain their parents to purchase the
articles advertised.
Confuses the people
Advertising creates confusion in the minds of the people. Multiple and repetitive advertisements
irritate people. Consumers do not take a rational decision. They are biased by unethical and
emotional advertising.
Power of advertising
Advertising has the potential to manipulative consumers. It exposes a large number of persons to
particular stimuli. Advertisers use this power in their own interests. Consumer welfare and
interest may not be given much importance.
Proliferation of brands and diversity
Advertising encourages unnecessary differences in the brands of products. Consumers are
confused by such advertisements. The proliferation of brands and the diversification of products
may not be necessary; but these develop because of multiple advertising.
Uniformity and conformity
Uniformity and conformity refer to the people’s desire to buy products similar to those purchased
by their relatives and acquaintances.
Interpersonal and group relationship
Advertising destroys interpersonal relationships, and develops interpersonal relationships, and
develops group relationships. The individual has no place in an advertising campaign.
Advertising creates unnecessary comparison between two products
Forceful selling
Advertising leads to forceful selling by exploiting the sentiments and desires of consumers.
Methods employed to sell forcefully are
Motivation research
Emotional appeal
Unwanted products
Inferior quality
Motivation research
Motivation research uncovers hidden motives of consumers, and has become a powerful tool for
the expansion of the market. Consumers are exploited, and their hidden desires are exploited
without their knowledge. Their purchasing decisions and thinking habits are exploited by
Emotional appeal
Advertisers understand the emotions and sentiments of the people. They use them to induce
prospective buyers to buy their products. Emotional appeals have changed the buying habits of
the people. The prospectus are confused by emotional advertisements and often ignore the
rationale of purchasing habits
Advertising is acceptable as an information tool but is criticized for its persuasive matter.
Producers should be rational in their approach. But
It has been observed that producers are using persuasive advertising to influence the people
Unwanted products
Advertisers try to sell those goods, which are not required by consumers. They have the power
to awaken desires, add the subconscious wants, and create wants not really felt by consumers.
Inferior quality
Advertising helps sell inferior products. Many worthless products have been sold under heavy
advertising. Producers have to be careful only, they should advertise; the quality products.
Message problems
Advertising uses some messages which are irrelevant to the requirements of the people. The
medium may be radio, television or a newspaper; but the content of advertising is often
disgraceful. Many advertisers have been denied true expression of facts by these media.
Advertisers, if they use moderate and ideal messages, may be unable to influence people. If they
use emotional and sexy materials, they foster the growth of undesirable activities in society.
Many people are hurt by these advertisements, which distort the values of society. The message
should not carry a view which against the interests of people. Message conflicts create a
problem. Only those messages should be selected which are acceptable to the masses
Moral influence
The advertising message is, in many cases, unrealistic. Advertising changes consumer values
and attitudes to objects other than the advertised product, i.e., to immorality, violence and sex.
In any case, the established culture is distorted by advertising. Different moral influences are:
Advertising motivates the people in such a way that people have come to believe that their
success is evaluated primarily in terms of their possessions. They have started to believe that
their importance is measured by the degree of material possessions.
Aesthetic standards
Advertising has been criticized on the ground that it perverts aesthetic standards. Culture, art
and philosophy are discarded by advertising to achieve higher sales of products. The present
way of advertising is an assault on arts-painting, music and drama. Advertising carries
information to the people
Stereotype culture
Advertising promotes stereotype culture. Movies, literature and drama have been pressed into
service by advertising. Advertising has upgraded certain sections of people and degraded others.
Children and women have been the victims of stereotype advertisements.
Advertising had become a source of entertainment. The functions and uses of a commodity are
shown in the form rapid jumps, chasing, galloping – all in a pleasant form. Children and people
become accustomed to such entertaining programmes. They look upon them as a way of life.
False values
Advertising sometimes takes people to a fairy land. The viewers and readers of advertisements
try to realize their dreams. In the absence of realistic situations, they do not attain their
objectives. Dissatisfaction and frustration develop in society. The exiting culture and traditions
are distorted by the false values portrayed by advertisers. People start feeling that the existing
culture and society are incapable of assisting them to realize their dreams. A cultural distortion
takes place.
1.2.6 Economic Implications of advertising
Advertising is the subsystem of economic system of a nation. Advertising in developing country
like India, plays an important role in economy. Advertising stimulates a healthy economy. It
also helps create financially healthy consumers who are more informed, better educated, and
more demanding. As a result, consumers now demand manufacturers be held accountable for
their advertising.
Advertising has various positive and negative economic aspects. It helps the producer in
reducing production-cost, distribution cost, facing competition. It helps the consumers in
widening their choice and knowledge of products and services
Economy is benefited by advertising as it helps in promoting economic growth. Critics of
advertising argue that advertising has negative effect also. The main negative economic effects
are-advertising discourages competition, creates monopoly and results in higher prices
1.2.7 Positive economic effect of advertising
Effect on production cost
Advertising creates demand and expands market size, this necessitates mass production. Mass
production results in various economies of scale, e.g., better utilization of fixed-expenses,
availability of good quality raw material at lower prices, availability of better technology and
machinery. All this results in lower per unit cost of production.
Effect on distribution cost
Production cost is one aspect of cost picture, the other aspect is distribution cost. Advertisement
cost is a part of selling and distribution cost. Advertising results in reduction of personal selling
expenses as buyers are already aware and have detailed knowledge of the product and they come
to purchase the product at their own. Moreover less selling efforts are required by salesmen of
the organization is selling well advertised products. Hence lesser personal-selling is required.
Thus, with the increase in sales, per unit selling distribution cost comes down.
Effect on prices
The supporters of advertising argue that advertising helps to reduce prices. Advertising results in
reduction of per unit production-cost and per unit selling and distribution cost. So, for increasing
market-share and attracting customers, advertiser reduces prices. It is clear from the examples of
reduction in prices of competitive products, viz., television, computers, mobile phones, airconditioners, etc.
Effect on demand
In case of new products, advertising creates primary demand by educating the audience
regarding uses of the product. Even in case of existing product, the audiences are made to
realize the need of product through rational and emotional appeals. So advertisements create
For example, number of persons using cars, T.V, Air-conditioners and mobile phones etc., has
increased. Hence advertising creates demand
Effect on competition
Advertising promotes competition among different brands of the same product. The company
offering good quality products at reasonable price often gets advantage in the competition.
Through advertisements, company can communicate message regarding its good quality,
reasonable price, sale promotion schemes to target customers. When one advertiser launches
such schemes, other advertisers also follow him. It promotes competition.
Effect on consumer choice
Advertising has favorable effect on consumer-choice. Advertising gives information about
various brands, products available in the market, their features, price, place or availability, etc.
consumer can make comparative study of all such choices to purchase most suitable product.
Effect on national income
Advertising promotes demand, increases productive and industrial activities, promotes growth in
agriculture, growth in service sector, increase in exports, etc. all this results in increase in
national income. It also promotes standard of living of masses.
Advertising and creation of utility
Advertising creates time, place and perception utility. In case of seasonal products, it creates
time utility by creating demand even in off-season period. It creates place utility by creating
demand even in those market areas where the product was not sold earlier. It creates perceptionutility by making positive image of the product in the minds of audience. Advertising also helps
the distributors, salesmen in saving their time, as now they don’t have to waste much time in
providing detailed information to prospective customers. It also saves the time of consumers in
making purchase decision.
Effect on employment
Advertising has created both direct and indirect employment to various person in the society.
Nowadays, advertising is recognized as a big industry. It provides direct employment to persons
engaged in various jobs like-copywriters, artists, graphic designers, painters, singers, models,
musicians, actors, ad executives, various persons working in ad-agencies, media and outdoor
advertising, etc. At present, lakhs of people are working in advertising, industry.
Effect on product quality
Advertising promotes competition and every advertiser wants to succeed in this competition.
Advertisers know that for long-term success in business and for effective rational advertising,
good quality production is must. For this, advertisers spend lot of resources on research and
development-work to improve product quality.
Effect on standard of living
Advertising has reduced the cost of production and distribution, promoted competition and thus
related in price reduction. It has promotes demand. Now middle-income people use such goods
which were earlier consumed only by rich society. Consumer has wider choice now and can
procure best products at lower prices. Advertising persuades the people to buy more and more
goods and services to raise their standard of living. Thus, advertising has led to increased
standard of living.
1.2.8 Negative economic effect of advertising
Advertising is not productive
It is true that advertising does not produce any tangible goods. But all productive work need not
necessarily result in tangible goods. On the other hand, it renders a very valuable service.
Services are always intangible. The service rendered by advertising is highly necessary
especially when one has to choose from among the thousands of products which are similar in
most respects. Advertising facilitates choosing which, in turn, leads to satisfaction.
Advertising forces people to desire and buy things, which, in fact, are not within their means
It is true that advertising arouses interest for buying. But there is no physical force exerted on
customers to buy things.
Advertising simply multiplies the needs
It just takes business from one concern and gives it to another. For example, people today are
acquainted with the uses of soap, tooth-paste and talcum powder. When a new kind of talcum
powder is introduced, advertising will help to shift the demand from one product in favor of
Monopoly argument
Advertising usually lays emphasis on brands. This emphasis makes the consumers to become a
slave of a particular brand.
Restricts entry of new business units
Huge advertising expenses by existing firms in the market restrict the entry of new units.
Existing firms have already created brand-popularity and new entrants ( particularly small size
units) cannot compete with popular brands
Reduces consumer choice
By repeated advertising and more persuasion, advertisers have controlled the minds of
consumers by showing repeated emotional appeals, viz., pride, status, prestige, etc. consumers
cannot think of other brands, so heavy advertising of some brands has pre-occupied the minds of
1.3.1 Ethics in Advertising(16)
Ethics means a set of moral principles which govern a person’s behavior or how the activity is
conducted. And advertising means a mode of communication between a seller and a buyer.
Thus ethics in advertising means a set of well defined principles which govern the ways of
communication taking place between the seller and the buyer. Ethics is the most important
feature of the advertising industry. Though there are many benefits of advertising but then there
are some points which don’t match the ethical norms of advertising.
An ethical ad is the one which doesn’t lie, doesn’t make fake or false claims and is in the
limit of decency.
Nowadays, ads are more exaggerated and a lot of puffing is used. It seems like the advertisers
lack knowledge of ethical norms and principles. They just don’t understand and are unable to
decide what is correct and what is wrong.
The main area of interest for advertisers is to increase their sales, gain more and more customers,
and increase the demand for the product by presenting a well decorated, puffed and colorful ad.
They claim that their product is the best, having unique qualities than the competitors, more cost
effective, and more beneficial. But most of these ads are found to be false, misleading customers
and unethical. The best example of these types of ads is the one which shows evening snacks for
the kids, they use coloring and gluing to make the product look glossy and attractive to the
consumers who are watching the ads on television and convince them to buy the product without
giving a second thought.
Ethics in Advertising is directly related to the purpose of advertising and the nature of
advertising. Sometimes exaggerating the ad becomes necessary to prove the benefit of the
product. For e.g. a sanitary napkin ad which shows that when the napkin was dropped in a river
by some girls, the napkin soaked whole water of the river. Thus, the purpose of advertising was
only to inform women about the product quality. Obviously, every woman knows that this
cannot practically happen but the ad was accepted. This doesn’t show that the ad was unethical.
Ethics also depends on what we believe. If the advertisers make the ads on the belief that the
customers will understand, persuade them to think, and then act on their ads, then this will lead
to positive results and the ad may not be called unethical. But at the same time, if advertisers
believe that they can fool their customers by showing any impractical things like just clicking
fingers will make your home or office fully furnished or just buying a lottery ticket will make
you a millionaire, then this is not going to work out for them and will be called as unethical.
Recently, the Vetican issued an article which says ads should follow three moral principles –
Truthfulness, Social Responsibility and Upholding Human Dignity.
Generally, big companies never lie as they have to prove their points to various ad regulating
bodies. Truth is always said but not completely. Sometimes its better not to reveal the whole
truth in the ad but at times truth has to be shown for betterment.
Pharmaceutical Advertising - they help creating awareness, but one catchy point here is that the
advertisers show what the medicine can cure but never talk about the side effects of that same
thing or the risks involved in intake of it.
Children - children are the major sellers of the ads and the product. They have the power to
convince the buyers. But when advertisers are using children in their ad, they should remember
not to show them alone doing there work on their own like brushing teeth, playing with toys, or
infants holding their own milk bottles as everyone knows that no one will leave their kids
unattended while doing all these activities. So showing parents also involved in all activities or
things being advertised will be more logical.
Alcohol - till today, there hasn’t come any liquor ad which shows anyone drinking the original
liquor. They use mineral water and sodas in their advertisements with their brand name. These
types of ads are called surrogate ads. These type of ads are totally unethical when liquor ads are
totally banned. Even if there are no advertisements for alcohol, people will continue drinking.
Cigarettes and Tobacco - these products should be never advertised as consumption of these
things is directly and badly responsible for cancer and other severe health issues. These as are
already banned in countries like India, Norway, Thailand, Finland and Singapore.
Ads for social causes - these types of ads are ethical and are accepted by the people. But ads like
condoms and contraceptive pills should be limited, as these are sometimes unethical, and are
more likely to loose morality and decency at places where there is no educational knowledge
about all these products.
Looking at all these above mentioned points, advertisers should start taking responsibility of self
regulating their ads by:
design self regulatory codes in their companies including ethical norms, truth, decency,
and legal points
keep tracking the activities and remove ads which don’t fulfill the codes.
Inform the consumers about the self regulatory codes of the company
Pay attention on the complaints coming from consumers about the product ads.
Maintain transparency throughout the company and system.
When all the above points are implemented, they will result in:
making the company answerable for all its activities
will reduce the chances of getting pointed out by the critics or any regulatory body.
will help gain confidence of the customers, make them trust the company and their
1.4 Advertising Myths
Advertising is considered as the best tool to make people aware of the product a company wants
to sell. This is the best way to communicate with the audience and to inform them about the
product but with a proper media selection and of course timing. But there are some myths which
have been creating problems in the path of successful advertising. We have tried to clarify some
misinterpretations about the ifs and buts of the advertising industry.
Advertising Myths
1. Advertising works only for some business
Wrong. Advertising works for each and every company or business it only it is executed
properly. But due to bad advertising, many ad campaigns fail to work in desired way and
the people think that advertisements are not their cup of tea. They must understand one
simple rule of advertising – it should be for right people at right time through right
medium on right place.
2. Advertising is only needed when business is slow
Wrong. Who said that the big and successful brands don’t advertise their products?
Advertising is a continuous process with some renovations whenever needed. But, yes,
when the business really is going slow or at its low, the advertising will have to be heavy
and more in number. This will help the product to improve its market value and make
people aware of the product.
3. If the product is not selling, advertise it
This is just not true. Just think about it. If you are selling a product which is not at all in
vogue, and no one is using it, how will it get clear from the shelf. You need to understand
the need of customers and then sell the product. Advertise doesn’t mean selling anything
you want but it means selling what customers wants.
4. Advertise creates needs
No. The people already had cassettes to play and listen to music they liked when they
didn’t have the option of CDs. It is technology which came in, and it was only then CDs
were advertised and sold. Advertise only replaces the old things with new, it doesn’t
creates needs.
5. Advertise effects persist for decades
It’s the quality of the product which persists. Advertise no doubt helps increasing sales of
the product and stays in memory of the people, but minds are captured by the product
6. Humor in ads
Sometimes humour gets in the way of delivering message properly to the consumers but
not every time it creates problems. Many of the times it helps people to remember the ad
and the product and helps creating a positive attitude towards the advertise.
7. Creativity is the most important factor
The ad should be no doubt creative enough to attract consumers but it not the only selling
factor. There has to be good message to deliver, best media selection, and best quality of
the product to make the product and ad both successful.
8. Advertising costs so much
Advertise needs money but one has to also consider the results in forms of increased
sales, increased reputation in industry, recognition for product and also increased market
value of product which advertisements brings along. Lets consider advertising as
investment and not expense.
Thus these are the most common myths of the ad industry which are working as hurdles in the
way of bright future of advertisers and advertising and we need to overcome these hurdles and
1.5 Advertising Agencies(2)
“The work of a tailor is to collect the raw material, find matching threads, cut the cloth
in desired shape, finally stitch the cloth and deliver it to the customer.”
Advertising Agency is just like a tailor. It creates the ads, plans how, when and where it should
be delivered and hands it over to the client. Advertising agencies are mostly not dependent on
any organizations.
These agencies take all the efforts for selling the product of the clients. They have a group of
people expert in their particular fields, thus helping the companies or organizations to reach their
target customer in an easy and simple way.
The first Advertising Agency was William Taylor in 1786 followed by James “Jem” White in
1800 in London and Reynell & Son in 1812.
1.5.1 Role of Advertising Agencies(2)
1. Creating an advertise on the basis of information gathered about product
2. Doing research on the company and the product and reactions of the customers.
3. Planning for type of media to be used, when and where to be used, and for how much
time to be used.
4. Taking the feedbacks from the clients as well as the customers and then deciding the
further line of action
All companies can do this work by themselves. They can make ads, print or advertise them on
televisions or other media places; they can manage the accounts also. Then why do they need
advertising agencies? The reasons behind hiring the advertising agencies by the companies are:
The agencies are expert in this field. They have a team of different people for different
functions like copywriters, art directors, planners, etc.
The agencies make optimum use of these people, their experience and their knowledge.
They work with an objective and are very professionals.
Hiring them leads in saving the costs up to some extent.
1.5.2 Types of advertising agencies.(16)
1. Full service Agencies
 Large size agencies.
 Deals with all stages of advertisement.
 Different expert people for different departments.
 Starts work from gathering data and analyzing and ends on payment of bills to the
media people.
2. Interactive Agencies
 Modernized modes of communication are used.
 Uses online advertisements, sending personal messages on mobile phones, etc.
 The ads produced are very interactive, having very new concepts, and very
3. Creative Boutiques
 Very creative and innovative ads.
 No other function is performed other than creating actual ads.
 Small sized agencies with their own copywriters, directors, and creative people.
4. Media Buying Agencies
 Buys place for advertise and sells it to the advertisers.
 Sells time in which advertisement will be placed.
 Schedules slots at different television channels and radio stations.
 Finally supervises or checks whether the ad has been telecasted at opted time and
place or not.
5. In-house Agencies
 As good as the full service agencies.
 Big organization prefers these type of agencies which are in built and work only
for them.
 These agencies work as per the requirements of the organizations.
There are some specialized agencies which work for some special advertisements. These types of
agencies need people of special knowledge in that field. For example, advertisements showing
social messages, finance advertisements, medicine related ads, etc.
1.5.3 Functions of advertising agency(16)
A central function of ad-agency is planning, preparing and placing advertisement.
Planning function includes collecting information about clients, its products, its market, its
competitor, media and taking various decisions related to ad for client. Preparing function
includes writing, designing and producing the ad. Placing function includes contacting media for
time and space and delivering the ad in appropriate form to media. Detailed review of functions
of ad-agency is as follows:
Contacting clients
Ad-agency’s first and foremost task is to contact and select clients who are desirous of
advertising their products or services. The preference in choosing the clients is given to those
firms which are financially sound, make good quality products and services and have efficient
management. If financial position of client is sound, agency will not find it difficult to recover
the bills. Agency should not choose a client who is the main competitor of its existing client,
because the agency-client relationship is very intimate and confidential, e.g., an agency having
Pepsi as its client will not take the work of Coke as both are competing brands.
Advertising planning
Another function of advertising agency is planning the ad for its clients. For this, the agency has
to perform following tasks:
Study of client’s product to identify its inherent qualities in relation to competitor’s
Analysis of present and potential market for the product
Study of trade and economic conditions in the market
Information about season when maximum sale can be made
Information about level of competition, competitor’s spending on advertising
Knowledge of channels of distribution, their sales, their methods of operation, etc.
Formulation of advertising plan
Creative function
According to David Ogilvy, “Creative function is the most important of all advertising functions.
The copywriters, artists, art-directors and graphic-specialists are referred as creative people”.
These creative specialists conceive new ideas with regard to ad-message, layout of ad-copy, etc.
This creative function helps on designing original and unique ad-copy
Developing and preparing advertising copy
Ad-agency is a specialized organization and involves specialists such as: writers, artists, marketanalysts, website-designers, animators, graphic-designers, researcher, film director etc. These
persons help to prepare effective ad-copy for its clients. Ad-copy is generally of two types:
Ad-copy for print-media
Ad-copy for broadcast media
1) Ad-copy for print media
It requires creative ability, technical knowledge, artistic skills, writing skills, photography
and technical processes involved in printing. Ad-agency provides specialized services or
preparing effective print-ad-copy.
2) Ad-copy for broadcast media
Ads for audio-visual media like T.V. need different types of skills for developing an
effective ad-copy. For this, ad-agency needs services of film-directors, models, artists,
actors, script-writers, musicians. Such ads need effective and impressive voice, attractive
faces, etc.
Approval from client
After that the ad-copy is prepared, it is shown to client for his approval. In case any changes are
suggested by the client, the same may be incorporated to his satisfaction. Then after
incorporating the necessary changes, final approval is taken from client.
Media selection and media scheduling
Another important function of ad-agency is selecting appropriate media for its clients. Various
factors like media cost, media circulation, media coverage, nature of product, nature of
customers, ad-budget of client, needs of clients, etc., are considered by ad-agency for selecting
media for its clients.
Ad-agency helps its clients in selecting media, allocating the client’s ad-budget and in planning
media-scheduling. In media scheduling date and time of issuing ad in the media is decided.
After obtaining approval from client, the advertising copy is handed over to media for its
execution. The employees of ad-agency check, whether media has actually given the ad at the
decided time, place, date or not.
Evaluation function
The next major function of ad-agency is to evaluate the effectiveness of advertisement for the
benefits of its clients. In case of any deficiency is felt, necessary changes should be made for
future advertising campaign with the approval of client.
Marketing function
The advertising agency also performs marketing functions, such as selecting target-customers,
designing products, packages, developing channels of distribution, determining prices, new
product development, conducting marketing research, sales promotion, publicity, improving
public relations, etc.
Research function
It includes continuous research regarding different media, their circulation, media-cost, entry of
new newspapers/magazine, collecting information about rating of various TV programmes,
serials so that time of ad can be decided, i.e., giving the ad in popular TV programmes. Adagency also performs research function for its client’s product and market
Accounting function
Accounting function of agency includes checking bills received from media, cash discount
allowed by media, billing to client, collection of dues from clients, making payment to media,
payment to outside professionals like-writers, film-producers, models, making payment for
purchasing advertising materials, salary to staff, etc.
1.6 Steps in choosing advertising agencies(16)
Before making any contact with an advertising agency, it is important to identify and prioritize
various corporate goals. Goals provide a sense of direction for the company’s leaders, for the
agency account executive, and for the creative advertising. Without clearly understood goals, it
becomes virtually impossible to choose an agency, because company leaders may not have a
clear idea what they want to accomplish. Unambiguous goals help to ensure a good fit between
the company and the agency.
Selection criteria
The second step in selecting an agency is to finalize the process and refine the criteria that will
be used. Even firms that have experience in selecting agencies must establish the process and
criteria in advance. The objective is to reduce biases that may enter into the decision process.
Emotions and other feelings can lead to biased decisions that are not in the company’s best
interests. Although good chemistry between the agency and the firm is important, this aspect of
the choice comes later in the process, after the list has been narrowed down to two or three
Reference requests
Once the initial screening is complete, it is time to request references from those agencies still in
the running for the contract. Most agencies Willingly provide lists of their best customers to
serve as references. A good strategy the company can use is to obtain references of firms that
have similar needs. Also, when possible it helps to obtain names of former clients of the agency.
Finding-out when they switched can provide valuable information. Often changes are made for
legitimate reasons. Discovering an agency’s client retention rate helps to reveal how effective
the firm has been in working with various clients. Poor service is the reason a firm switches
advertising agencies
Oral and written presentations
The next step in the selection process is to request an oral and written presentation by the
finalists. The agency should be willing to provide a formal presentation addressing a specific
problem, situation, or set of questions. These presentations reveal how each agency would deal
with specific issues that arise as a campaign is prepared. This helps client companies to ascertain
whether the agency uses tactics and methods that are acceptable
Meeting key personnel
During the presentation phase, the opportunity exists to meet with the creatives, media buyers,
account executives, and any other personnel who will be working with an account. Chemistry
between employees of the two different firms is important. The client companies leaders should
be convinced that they will work well together and that they feel comfortable with each other.
Whenever possible, a client company’s leaders should visit the advertising agency’s office as
part of the evaluation process. Often agencies use people called “heavy hitters” to win contracts,
but then turn the account over to other individuals in the agency after signing the deal. Visiting
the agency’s office provides an opportunity to meet every person who might work on the
account. Talking with these individuals generates quality information about how the account
will be handled.
Selection and contract
The final step of the process is to make the choice and to notify all finalists of the decision. A
contract is drawn-up with the advertising agency to specify all terms and activities, and letters
are written to agencies that did not win the bid. Many times, these agencies contact the company
seeking information about why they were not chosen. It is in the interest of both organizations to
remain cordial and professional, even when a contract is not given, because they may do
business in the future.
1.5.5 Methods of agency compensation (16)
Most of the advertising agencies claim commission from the media for selling-out their space or
time to the advertisers. They may also collect remuneration for the advertisers for planning and
designing their advertisements, i.e, some advertisers may like to remunerate advertising agencies
on the basis of results secured by them for the advertisers
The most traditional method for compensating advertising agencies for their services is through a
commission system. The agency is paid a fixed commission (usually it is 15%) from the media
on any advertising space or time purchased for the advertiser. The rates for outdoor media are
slightly higher. This is simple system to determine the amount of commission.
Agency compensation method of paying agency services
Assume an agency prepares a full-page magazine advertising and arranges to place the
advertising on the back cover of a magazine at a cost of Rs.100000. The agency places the order
for the space and delivers the advertising to the magazine. Once the advertising is run, the
magazine will bill the agency for Rs.100000 less the 15 percent (Rs.15000) commission. The
media will also offer a 2 percent cash discount for early payment, which the agency may pass
along to the client. The agency will bill the clientRs.100000 less the 2 percent cash discount on
the net amount, or a total of Rs.98300.
Media bills agency
Costs of magazine 100000
Less 15% commission -15000
Cost of media space
cash -1700
Agency pays media
Cost for magazine
Agency income
Fee arrangement
There are two basic types of fee arrangement systems. In the straight or fixed fee method, the
agency charges a basic monthly fee for all of its services and credits to the client any media
commissions earned. Agency and client agree on the specific work to be done and the amount
the agency will be paid for it. Sometimes agencies are compensated through a fee-commission
combination, in which the media commissions received by the agency are credited against the
Cost-plus agreement
Under a cost-plus system, the client agrees to pay the agency a fee based on the costs of its work
plus some agreed–on profit margin. This system requires that the agency keep detailed records
of the costs it incurs in working on the client’s account. Direct costs plus an allocation for
overhead and a markup for profits determine the amount the agency bills the client.
Incentive-based compensation
Many clients these days are demanding more accountability from their agencies and tying
agency compensation to performance through some type of incentive-based system. While there
are many variations, the basic idea is that the agency’s ultimate compensation level will depend
on how well it meets predetermined performance goals. These goals often include objective
measures such as sales or market share as well as more subjective measures such as evaluations
of the quality of the agency’s creative work. Companies using incentive-based systems
determine agency compensation through media commissions, fees, bonuses, or some
combination of these methods.
Percentage charges
When the agency purchases various services from outside providers, they do not allow the
agency a commission and to cover up administrative costs and a reasonable profit for the
agency’s efforts, a mark-up of ‘percentage charges’ for such services is added to the bill. These
services may include market research, artwork, photography, printing and other services
Speculative basis
Though speculation is a marked feature of risky and uncertain business areas, it is resorted to
vary rarely in advertising field. Under this method, the agency speculators the future trends of
the business of the client and plans to charge accordingly. Every business house is to undergo
the periods of ups and downs both in short-term and long-term periods. The agency charges very
little during the period of crises or may not charge at all. Once the client turns the corner and is
in sunshine, it will recover even what is lost during dark phase. This policy is liked by many
clients as agency goes in tune with the company’s ups and downs as a real friend.
Client agency relationship
Client agency relationship means relationship between advertising agency. Friendly relationship
with full trust and confidence is must to get the maximum from advertising agency and it can
also work with free hand. Advertising agencies have enabled many small business units to grow
into large ones. Nowadays almost all advertisers rely on advertising agency for its expert
services, creative skills, objective thinking, etc. Advertising agencies render professional services
according to the needs of clients. As competition increases, companies demand more from their
advertising agencies. Now involvement of top management of client has increased in advertising
Client agency relationship is under more stress and strain than ever before. Moreover,
advertisers are also not satisfied about the commission system of compensating advertising
agencies. In this system, advertising agency usually receives 15 per cent commission from the
media, and thus advertisers feel that agency is recommending them costly media just to earn a
higher commission. Some clients tend to change agencies when another agency gives better
services. Client agency relationship is a professional relation and not emotional relation. If
client-agency relation remains smooth and cordial then there will be lesser client turnover.
Client turnover means a client leaves the present advertising agency and switches over to another
advertising agency. Client turnover is neither beneficial for agency nor for client itself.
1.5.6 Principles of effective client agency relationship(8)
The major principles of effective client agency relationship are as follows:
Not to advertise for immediate competitive unit
Client’s prior approval for all advertising expenditure
Prompt payment
Passing-down cash discount to clients
Not to blame agency for media lapses
Good services
Trust and confidence
Written agreement
Frequent contact between agency and client
1.6.1 Setting advertisement objectives(8)
Introduction to advertising objectives
Objectives are those endpoints towards which every activity of an organization is
oriented. Without setting objectives, it is very difficult to control and manage any activity.
Setting the goals or objectives is the starting point of management. Advertising is an important
activity of marketing management. For effective advertising, setting the objectives of
advertising is very important. Well-defined objectives serve as standards with which actual
performance can be measured. The objectives should be measurable and should provide
effective criteria for decision – making.
Advertising is mainly for promoting the sales. Increase in sales is the ultimate objective of
advertising. Through advertising customers are attracted and persuaded to buy the advertiser’s
product. Advertising communicates the message regarding product, price, place of availability,
sale promotion schemes, etc. such communication informs and reminds the target audience
about the advertiser’s product and persuades the target audience to buy the advertiser’s product.
So ultimately advertising helps to increase sales.
According to Philip kotler, “The objectives of advertising are to inform, to persuade and to
remind the target audience about the advertiser’s product.
Informative advertising
Informative advertising is a sales and marketing approach that focuses on the task of attracting
consumers by educating them on the nature and benefits of products, along with identifying the
benefits derived from choosing to purchase those products. Typically, this approach focuses
attention on what a given product has to offer in terms of quality and practical use rather than
comparing the product to similar goods or services available in the marketplace. Advertising of
this type is often used with newer products, making it easier for potential customers to quickly
and easily learn what the product is, what it does, and why it would be worth the time and effort
to give the product a try.
Advantage to informative advertising is that the approach tends to provide examples of when
and how to safely make use of a product. For example, pharmaceutical companies will include
information in print and other types of media ads that make consumers aware that it is not
recommended to take a certain product while pregnant, driving a car, or operating heavy
machinery. In like manner, companies who produce alcoholic products will typically inform
readers that driving after enjoying the products is discouraged. Along with equipping consumers
with knowledge on what they may and may not do after using a product, this approach also helps
to minimize the potential for lawsuits that would otherwise develop if those types of warnings
were not included in the advertising effort.
Persuasive advertising
According to Perloff (2003), persuasion can be defined as "a symbolic process in which
communicators try to convince other people to change their attitudes or behaviors regarding an
issue through the transmission of a message in an atmosphere of free choice."
The key elements of this definition of persuasion are that:
Persuasion is symbolic, utilizing words, images, sounds, etc
It involves a deliberate attempt to influence others.
Self-persuasion is key. People are not coerced; they are instead free to choose.
Methods of transmitting persuasive messages can occur in a variety of ways, including
verbally and nonverbally via television, radio, Internet or face-to-face communication.
How Does Persuasion Differ Today?
While the art and science of persuasion has been of interest since the time of the Ancient Greeks,
there are significant differences between how persuasion occurs today and how it has occurred in
the past.
In his book The Dynamics of Persuasion: Communication and Attitudes in the 21st Century,
Richard M. Perloff outlines the five major ways in which modern persuasion differs from the
1. The number of persuasive message has grown tremendously. Think for a moment
about how many advertisements you encounter on a daily basis. According to various
sources, the number of advertisements the average U.S. adult is exposed to each day
ranges from around 300 to over 3,000.
2. Persuasive communication travels far more rapidly. Television, radio and the Internet
all help spread persuasive messages very quickly.
3. Persuasion is big business. In addition to the companies that are in business purely for
persuasive purposes (such as advertising agencies, marketing firms, public relations
companies), many other business are reliant on persuasion to sell goods and services.
4. Contemporary persuasion is much more subtle. Of course, there are plenty of ads that
use very obvious persuasive strategies, but many messages are far more subtle. For
example, businesses sometimes carefully craft a very specific image designed to urge
viewers to buy products or services in order to attain that projected lifestyle.
5. Persuasion is more complex. Consumers are more diverse and have more choices, so
marketers have to be savvier when it comes to selecting their persuasive medium and
Remainder advertising
A marketing strategy typically consisting of brief messages sent with the objective of reminding
a target consumer group about a product or service or of introducing a new theme into an
existing marketing program. Reminder advertising might be used by a business that has already
invested considerable resources in initially promoting their product or service and still wishes to
maintain its competitiveness.
Brief messages designed chiefly to keep a product in the mind of the consumer once the product
is already familiar. Reminder advertising usually follows an extensive advertising campaign, and
therefore does not elaborate on the reasons to buy the product. Common examples of reminder
advertisements are those found on matchbooks and pencils and in skywriting, as well as the more
traditional media vehicles.
Reinforcement advertising
Promotions designed to retain a customer base by reassuring purchasers they made the correct
choice. For example, a dealer or manufacturer sends former customers information about awards
and other news concerning a product that has been purchased.
A type of advertising, which is based on objectives to be achieved. It aims to convince current
customers that they made the right choice. For example, many consumer durable product ads
often depict satisfied customers enjoying special features of their newly purchased brands.
1.7 Types of advertising objective(8)
Broadly advertising has two main objectives from the advertiser’s viewpoint.
1. Sales objective
2. Communication objective
The two main objectives of advertising, gives rise to some specific objectives of advertising as
specific objectives of advertising.
Sales objective
The ultimate aim of advertising is to sell the product in the market and to raise the level of
present sales. This objective can be easily measured to evaluate the effectiveness of advertising
campaign. Where advertising is the only base of attracting customers, sales objective can be
used to evaluate advertising campaign sales, e.g., in mail orders business through direct mailadvertising, customers are attracted. So sales are in consequence of advertising. On certain
occasions, the objective of advertisement is to increase retail sale through off-season or special
festival discounts, gifts-schemes.
However, sales as an objective of advertising campaign have some limitations. These limitations
are as follows:
1) Advertising is not only the factor affecting sales:
Sales are affected by many factors. Advertising is only one of these factors. The other
factors influencing sales are price, policy, distribution policy, product features,
competitive strategies, consumer’s tastes, fashion, etc.
2) Another drawback with sales objective is that the effect of advertising on sales may occur
in the long run
If objectives of advertisement are defined in terms of sales, then the impact of advertising
cannot be measured in the short run. Advertising may create awareness, interest, and
favorable attitude for the product immediately, but the consumer may not buy the
advertised product immediately, because of financial constraint or because of being busy
now. He may buy this product after some months.
Communication objective
Advertising is a psychological process which is designed to bring positive change in the behavior
of audience and to induce them to buy the product. In other words, one of the major objectives
of advertising is to change the person’s attitude in a way that moves him closer to the product or
service being advertised. It is important for the advertiser to know how to move the target
consumers from their present state to a higher state of readiness to buy.
Advertising objectives can also be defined in terms of communication objectives, e.g., to create
brand awareness, to give knowledge about the product, to create liking, to develop brand
preference, to persuade the target audience etc. before defining advertising objectives in terms of
communication, the advertiser must know the number of target audience at each stage of
communication model. Basic communications objectives are:
1) To increase brand awareness : Target audiences are aware of the existence of advertiser’s
product in the market. They become familiar with the advertiser’s brand.
2) To increase knowledge: people know what the product has to offer, i.e., people know the
uses, qualities and details of advertiser’s product, its price, the place where it is sold, etc.
3) To create liking: people have favorable attitudes towards advertiser’s product and they
have started liking his product.
4) To induce preference: advertisement helps in modeling people’s attitude to a point of
preference for their brand over competitor’s brand. Comparative advertising plays a very
important role here. People have compared advertiser’s product with competition
products and they feel that advertiser’s product will be a better choice.
1.8 Advertising Campaign Management (2)
Managing an advertising campaign is the process of preparing and integrating a specific advertising
program in conjunction with the overall IMC message. The steps of advertising campaign
management are:
1. Review the communications market analysis.
2. Establish communication objectives consistent with those developed in a promotions
opportunity analysis program.
3. Review the communications budget.
4. Select the media in conjunction with the advertising agency.
5. Review the information with the advertising creative in the Creative Brief.
When ads are combined with other marketing efforts into a larger, more integrated effort
revolving around a theme, the program is called a promotional campaign.
According to Dunn and Barban, “An advertising campaign includes a series of ads, placed in
various media which are designed to meet objectives, and are based on analysis of marketing and
communication situations”.
1.8.1 The following three elements are the heart of an advertising campaign(2)
Targeting the audience: whom are the marketers trying to reach?
Message strategy: what do marketers say to them?
Media strategy: when and where will marketers reach them?
1.8.2 Types of Ad campaigns(16)
In the history of the world, there have only been four types of advertising campaigns that
build brands and drive sales. They are as follows:
Word hook
It is a repeatable catch phrase from ad to ad. They are catchy.
• Character hook
A character hook uses a hero, villain, or victim to embody a key attribute of a brand
• Repeatable theme
It is a situation that plays out again and again calling out the need for a company’s
• Consistent layout
It uses a unique, design look and repeats these elements at each touch point. This allows
customer to easily identify a particular company in a blink. The more distinct these
elements are from the competitors, the easier it is to stand-out from the clutter.
1.8.3 Ad campaigns in different media(16)
Print media
In terms of print media used in an advertising campaign, ads placed in newspapers and
magazines are a time-honored method of reaching the target audience. The ads usually
are designed to pique the interest of readers and entice them to learn more about the topic
of the ad. In order to ensure that the desired consumers are reached, the print
advertisements will often appear in print media that is geared toward those consumers
Electronic media
Electronic media referred more to television and radio broadcasts, that component now
includes tools such as online banner ads, text messaging, and email advertisements. With
electronic media, television and radio commercials remain a viable means of attracting
the attention of buyers and creating demand for various products and services. Short
television commercials designed to amuse as well as inform tend to make an impression
on the viewer and are highly likely to entice a significant number of consumers to
purchase the products displayed in the ad.
Other media
Along with traditional methods of creating an advertising campaign, newer tools are
making it possible to reach consumers in new ways. Many companies design advertising
campaigns to current clients that rely on such tools are text messaging or email