2
The Ad Industry
Objectives
1.
2.
3.
4.
5.
Know Current Intustry Trends
Industry Structure
Role of Agencies/Compensation
Identify External Players
Role of Media Conglomerates
Trends Affecting the Advertising &
Promotion Industry
1. The “Undoing” of Agency Consolidation &
Globalization
2. Media Proliferation & Consolidation
3. Media Clutter & Fragmentation
4. Consumer Control: e-Search, Blogs & DVRs
(e.g.,TiVo)
Google Gives us Power?
The Worldwide Advertising Industry
U.S expenditures:
• >$250 billion
Global expenditures:
• $550 billion
Structure of the Advertising
Industry
Advertisers
Advertising and Promotion Agencies
External Facilitators
Media Organizations
Target Audience
Advertisers
Manufacturers & Service
Firms
•
Procter & Gamble, MCI
Trade Resellers
•
Sears, McDonald’s
Government
•
Social Organizations
•
United Way, Nature Conservancy
Federal, State, Local
n addition to companies,
the Government Makes
extensive use of
advertising
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
Agencies
Advertising Agencies:
Promotion Agencies:
•
•
•
•
•
•
•
• Direct Marketing/
Database
• E-commerce
• Sales Promotion
• Event Planning
• Design Firms
• Public Relations Firms
Full-Service
Creative Boutique
Interactive
In-House
Media Specialists
Promotion Agencies
Direct Marketing
Advertising agencies
make extensive use of
advertising to acquire
new clients
Full Service Agency Services
1. Account Services
2. Marketing Research Services
3. Creative & Production Services
4. Media Planning & Buying Services
5. Administrative Services
Agency Compensation
1. Commissions: around 15% of airtime fees—in flux
2. Markup Charges: production cost + fixed %
3. Fee Systems: hourly rates, or by project
4. Pay-for-Results: tightly-specified objectives
External Facilitators
• Marketing & Advertising Research Firms
• Consultants: Creative, Media, Database
• Production Facilitators
• Software Firms: web tracking, fulfillment
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
Target Audiences
•
•
•
•
Household consumers
Businesses
Professionals
Government Organizations
Review/?s
1. Know Current Industry Trends
2. Industry Structure
3. Role of Agencies/Compensation
4. Identify External Players
5. Role of Media Conglomerates