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The Business of Advertising

The Business of Advertising. Chapter 3 Objectives. Describe the various groups in advertising. Explain what people do in ad agencies. Discuss clients and revenue. Discuss differences between local and national advertisers. Debate pros and cons of in-house agencies.

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The Business of Advertising

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  1. The Business of Advertising

  2. Chapter 3 Objectives Describe the various groups in advertising Explain what people do in ad agencies Discuss clients and revenue Discuss differences between local and national advertisers Debate pros and cons of in-house agencies Explain how advertisers organize Explain how suppliers and the media help Define the main types of ad agencies Describe industry changes

  3. The Advertising Industry:Organizations Advertisers (Clients) Agencies Suppliers Media

  4. Research Sales Accounting Communication Arts Technology Law Management The Advertising Industry:People Most are employed by advertisers, not clients

  5. Franchisees and dealers Chain retailers Independent businesses Govt. & nonprofits Advertisers:Local Directed to customers in the same geographic area

  6. Advertisers:Local Ad for Rubio’s Baja Grill showcases its unique products Insert photo 4.2, p. 99 Baja Grill Burrito Position = 2.9” horiz., 1.5” vertical Size = 4.6” TALL Resolution = 300 dpi

  7. Advertisers:Local Department structure for small advertisers with high volumes of work Insert ex. 4-1, p. 100 Department structure for small advertisers Position = 2.9” horiz., 1.5” vertical Size = 4.6” TALL Resolution = 300 dpi

  8. Regular price-line, sale or clearance Create favorable image, increase awareness, foster goodwill Recruit employees, offer services, sell merchandise Advertisers:Local Types of local advertising Institutional Classified Product

  9. Advertisers:Local Local ad for Michaels stores

  10. Advertisers:Cooperative Two key purposes Build manufacturer’s brand image Help distributors, dealers or retailers make more sales

  11. Advertisers:Regional and National A national ad for Dunkin’ Donuts

  12. Advertisers:Regional and National Regional: one or several states National: several regionsor entire country

  13. Advertisers:Regional and National Comparison of national and local advertising

  14. Advertisers:Regional and National Centralized department structure

  15. Advertisers:Regional and National Decentralized department structure

  16. Advertisers:Transnational Heinz ketchup ad from the Leo Burnett Group, Copenhagen

  17. Advertisers:Transnational Decentralized international structure Divisions have ad agencies to handle product lines Brands within a line handled by own managers Category managers for brand in each market

  18. Advertisers:Global Centralized global structure Standardized approach in all countries Extensive research to ensure ad is basic & universal

  19. Media Around the World International media Foreign media

  20. Agencies:Definition Agencyroles Develop marketing & ad plans Develop ads & promotions Purchase ad space and time

  21. Agencies An ad for Strawberry Frog arguing that a different world may justify a different agency Pub: Please

  22. Reach Full-Service Consumer BTB Specialty Boutiques Media Buyers Interactive Agencies:Types Local National Internatl Regional

  23. Accountmanagement Admin Media buying & planning Trafficcontrol Research & account planning Production Creative concepts Other services Agencies:People

  24. Agencies:People Many departments contributed to Honda’s dealer kit

  25. Agencies:Compensation • Media commissions Agency bills client full ad amount: $100,000 Ad rate-card price: $100,000 $15,000 difference is kept by the agency Agency buys ad at 15% discount: $85,000

  26. Agencies:Compensation • Media commissions • Markups Agency bills for materials plus a 17.65% markup Agency buys materials for campaign Agency bills $100,000 which is costs plus markup Materials cost $85,000

  27. Agencies:Compensation • Media commissions • Markups • Fees Incentive system Fee- commission combination Straight-fee (retainer) method

  28. Agencies:In-House Pros Cons May save money Lower creative quality Allows tighter control Less experience and talent May permit greater attention to the brand Loss of objectivity

  29. Referrals Presentations Soliciting for new business Community relations& networking Agencies:Client Relationships How agencies reach & attract new clients

  30. Suppliers Art studios &web designers Printers &related specialists Film & videohouses Researchcompanies

  31. Print Out-of-home Electronic Direct mail Digitalinteractive Media Other media

  32. Current Trends Industry consolidation Decline of the commission system Changes resulting from new media

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