Seminar 228.443:
Advertising
Dr. Teri Shaffer
1
Introduction to Advertising
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Types of advertising
Advertising industry
Advertising trends
2
What Is Advertising?
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Paid, nonpersonal communication
Identified sponsor
Using mass media
To inform, persuade, or remind
An audience
3
Types of Advertising
Interactive
Advertising
Brand
Advertising
Public Service
Advertising
Retail or Local
Advertising
Institutional
Advertising
Political
Advertising
Business-toBusiness
Advertising
Direct-Response
Advertising
Directory
Advertising
4
Brand Advertising
5
Brand Advertising
6
Brand Advertising
7
Retail
Advertising
&
Institutional
Advertising
8
Retail
Advertising
&
Brand
Advertising
9
Retail Advertising
10
Retail Advertising
11
Political Advertising
12
Directory Advertising
13
Direct-Response
Advertising
14
B2B
15
Institutional Advertising
16
Institutional Advertising
17
Public
Service
Advertising
(PSA)
or
Advocacy
Advertising
18
Public Service Advertising
19
Interactive Advertising
20
Comparative
Advertising
21
Advertising & Demand
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Competitive brand advertising
Comparative advertising
Build secondary demand
Pioneering advertising
Build primary demand
22
Pioneering
Advertising
23
Pioneering
Advertising
24
Advertising Industry
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US Government Statistics
Us Bureau of Labor Statistics
395,200 people employed in US
$300 billion globally
25
Five “Players” of
Advertising
– Advertiser
– Advertising Agency
– Media
– Vendors
– Target Audience
26
1st Player
The Advertiser
27
Advertising Age
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http://www.adage.com
Leading National Advertisers
Major brands with ad spending
> $94.4 million in 1998
28
Leading National
Advertisers (1998)
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General Motors Corp.
Proctor & Gamble Co.
Phillip Morris Cos.
DaimlerChrysler
Sears, Roebuck, & Co.
Ford Motor Co.
AT&T Corp.
Walt Disney Co.
PepsiCo
Diageo
29
Domestic Spending
by Category (1999)
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Automotive
Retail
Movies & media
Financial
Medicines & pharmaceuticals
Telecommunications
Food
Restaurants & fast-food
Airline & ship travel; hotels & resorts
Direct response companies
30
Top Advertisers
in Austria (1998)
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Proctor & Gamble Co.
Unilever
BML-Konzern
SPAR
Mobilkom Austria AG
Mars Inc.
Henkel
Volkswagen
Max. MobilTelekom Service
Ost. Lotterien
31
Top Global Marketers (1999)
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Proctor & Gamble Co.
Unilever
Nestle
Volkswagen
Ford Motor Co.
General Motors Corp.
Toyota Motor Co.
Coca-Cola Co.
Peugeot Citroen
L’Oreal
32
2nd Player
The Advertising Agency
33
Advertising Agency
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Account management
Creative department
Media
Research & strategic planning
34
Account Management
Represents agency to client
 Client relationship
 Knowledge of client’s business

– Competitive actions
– Consumer trends
Helps set goals & budget
 Coordinates day to day work
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35
Creative Department
Creates ideas, images, & words make
up commercials and ads
 Copywriters
 Art directors
 Oversee print or broadcast production
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36
Media Department
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Planning
– Plan media schedule

Buying
– Execute media plan
37
Research
Strategic planning
 Consumer research
 How does consumer interact with
brand?
 How does brand fit into consumer
lifestyle?
 Pretest and posttests
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38
Example
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1995 campaign for
California Milk
Processors Advisory
Board
Declining sales from
1980 to 1993
Result?
Increased sales
39
Paying the Agency
Commission system
 Fees
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40
Commission
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Rebates offered by media advertising
agencies (15%)
41
Commission System
Agency creates commercial for
advertiser
 Agency contacts TV station for air time
 TV station bills ad agency
Cost of air time
$ 10,000
Less 15%
(1,500)
Due
$ 8,500
 Agency bills advertiser $10,000
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42
Fee-based Compensation
May vary according to departments or
levels of salary
 Or flat hourly rate
 Charges for out-of-pocket expenses,
travel, etc.
 Media charges are net of commissions

43
Advertising Age (1998)
Charges Over Time
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1982
71% commissions
8% fees
21% combination
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1997
35% commissions
58% fees
7% combination
44
Full Service Agencies
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Four major staff functions
–
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–
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Account management
Creative
Media planning and buying
Research
45
Top Ten Agency Brands
(1999)
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Grey Advertising (NY)
J.Walter Thompson Co. (NY)
McCann-Erickson Worldwide (NY)
FCB Worldwide (NY)
Leo Burnett USA (Chicago)
Euro RSCG Worldwide (NY)
Young & Rubicam Inc. (NY)
BBDO Worldwide (NY)
DDB Worldwide Communications (NY)
Ogilvy & Mather Worldwide (NY)
46
World Top Advertising
Organizations (1999)
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Omnicom (NY)
Interpublic Group of Cos. (NY)
WPP Group (London)
Havas Advertising (France)
Dentsu (Tokyo)
B Com3 Group (Chicago)
Young & Rubicam Inc. (NY)
Grey Advertising (NY)
True North (Chicago)
Publicis SA (Paris)
47
Agencies on the Internet
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TBWA/Chiat/Day
– http://www.chiatday.com/
Fallon McElligott
– http://www.fallon.com/
Bozell Worldwide
– http://www.bozell.com/
48
Agencies On The Internet

A comprehensive list of ad agencies can
be found at the following address
– http://www.digitaldirectory.com/
adagencies.html
49
Limited Service Agencies or
Specialized Agencies
Functions
–
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Audiences
–
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Minority, youth, etc.
Industries
–
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Creative, media buying, etc.
Healthcare, computers, B2B, etc.
Communication Tool
–
Direct marketing, interactive, etc.
50
Top 100 US Interactive
Agencies (1999)
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MarchFirst
Digitas
iXL
Grey Interactive
Sapient Corp.
Modern Media
Aspen Interactive
OglivyInteractive
Luminant Worldwide Corp.
AppNet
51
In-House Agencies
Perform most of the functions of outside
agency
 Example: Large retailers
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52
Why an In-House Agency?
Savings
 Faster response
 Specialization
 Control
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53
Problems with In-House?
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Lack of initiative due to noncompetitive
environment
Inability to keep up with marketplace
Less objective
54
From The Internet
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The Advertising Agency Contract
--http://www.smartbiz.com/
sbs/arts/cwa4.htm
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3rd Player
The Media
56
The Media
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Channels of communication that carry
message from advertiser to audience
57
Media Organizations
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Sell space in print media
Sell time in broadcast media
Sell space/time in electronic media
Assist in media selection and analysis
Help w/ad production
58
Top Leading Media Co.
(1998)
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Time Warner (NY)
AT&T Corp. (NY)
CBS Corp. (NY)
Walt Disney Co. (NY)
NBC TV (General Electric, Fairfield,
Conn)
News Corp. (Sydney)
59
4th Player
Vendors
60
Vendors
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Freelancers/consultants
Market researchers
Freelance copywriters and graphic artists
Photographers
Songwriters
Printers
Direct-mail production houses
Telemarketers
Public relations consultants
61
5th Player
The Target Audience
62
Target Audience
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Kellogg
cereal?
Consumer
Purchaser
63
Current Issues
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Interactive advertising
Integrated marketing communications
Globalization
Consumer power, relationship
marketing, permission marketing, and
customization
64
Examples
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Peapod
Mass customization
– Levi’s Original Spin
65