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The Ad Industry

2. The Ad Industry. Objectives. Know Current Intustry Trends Industry Structure Role of Agencies/Compensation Identify External Players Role of Media Conglomerates. Trends Affecting the Advertising & Promotion Industry. The “Undoing” of Agency Consolidation & Globalization

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The Ad Industry

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  1. 2 The Ad Industry

  2. Objectives • Know Current Intustry Trends • Industry Structure • Role of Agencies/Compensation • Identify External Players • Role of Media Conglomerates

  3. Trends Affecting the Advertising & Promotion Industry • The “Undoing” of Agency Consolidation & Globalization • Media Proliferation & Consolidation • Media Clutter & Fragmentation • Consumer Control: e-Search, Blogs & DVRs (e.g.,TiVo)

  4. Google Gives us Power?

  5. The Worldwide Advertising Industry U.S expenditures: • >$250 billion Global expenditures: • $550 billion

  6. Structure of the Advertising Industry

  7. Advertisers Manufacturers & Service Firms • Procter & Gamble, MCI • Trade Resellers • Sears, McDonald’s • Government • Federal, State, Local • Social Organizations • United Way, Nature Conservancy

  8. In addition to companies, the Government Makes extensive use of advertising

  9. The Role of the Advertiser in IBP • Describe the value that the firm’s brand provides • Describe the brand’s position in the market Describe the firm’s objectives for the brand in the near-term & long-term • Identify the target market(s) that are most likely to respond favorable to the brand • Identify & manage the supply chain/distribution system that will most effectively reach the targets • Be committed to using advertising & other promotional tools to grow the brand

  10. Advertising Agencies: Full-Service Creative Boutique Interactive In-House Media Specialists Promotion Agencies Direct Marketing Promotion Agencies: Direct Marketing/ Database E-commerce Sales Promotion Event Planning Design Firms Public Relations Firms Agencies

  11. Advertising agencies make extensive use of advertising to acquire new clients

  12. Full Service Agency Services • Account Services • Marketing Research Services • Creative & Production Services • Media Planning & Buying Services • Administrative Services

  13. Agency Compensation • Commissions: around 15% of airtime fees—in flux • Markup Charges: production cost + fixed % • Fee Systems: hourly rates, or by project • Pay-for-Results: tightly-specified objectives

  14. External Facilitators • Marketing & Advertising Research Firms • Consultants: Creative, Media, Database • Production Facilitators • Software Firms: web tracking, fulfillment

  15. Media Organizations • Broadcast • TV, radio • Print • Magazines, direct mail, newspapers • Interactive Media • CD-ROMs, online shopping • Support Media • Outdoor, directories, Sponsorship • Media Conglomerates • AOL Time Warner, Viacom, AT&T

  16. Target Audiences • Household consumers • Businesses • Professionals • Government Organizations

  17. Review/?s • Know Current Industry Trends • Industry Structure • Role of Agencies/Compensation • Identify External Players • Role of Media Conglomerates

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