How to recognize advertising :

1. How to recognize advertising: • Paid communication that takes place through a medium • Message is designed to appeal to many people and reach large numbers (mass communication) • Message content and placement is under the advertiser’s control

2. The 5 key advertising strategy decisions: • Select the “target audience” • Decide what kind of advertising is needed • Select the media to be used • Decide on the main theme of the message (the copy thrust) • Decide who will do the work—in-house or an outside agency

3. Advertising in the U.S. • The U.S. accounts for about 50% of worldwide advertising spending—almost half of all advertising dollars are spent here—vs. 23% (Europe) and 22% (Asia) • Pure advertising spending is down in the U.S.—companies now spend more on sales promotion. • On average, U.S. companies spend about 2.5% of sales revenue on advertising—more for consumer goods companies, less for B2B.

4. Ad Spending by Producers

5. What kind of advertising is needed? • Product vs. Institutional Advertising • Product Adv—emphasizes a single product or group of products • Institutional Adv—promotes the overall organization and its image or reputation • Most advertising is product advertising.

6. Types of Product Advertising • Pioneer Adv—builds early or “primary” demand; is highly informative • Appropriate for Introduction and Early Growth stages of the PLC • Competitive Adv—more persuasive; makes direct or subtle comparisons to competitors; builds selective demand • Appropriate for Growth and most of Maturity • Reminder Adv—reinforces earlier themes or successes • Appropriate for Late Maturity and Decline

7. A Reminder Ad

8. Comparative Advertising • “messages that make brand comparisons by mentioning specific product names of competitors” • Formerly banned in U.S.—still illegal in lots of countries • U.S. law says all claims must be true and verifiable

9. A Comparative Ad

10. Cooperative Advertising • “a cost-sharing arrangement whereby manufacturers and middlemen (retailers or wholesalers) split advertising costs • Advertising is very expensive—allows both parties to bear some of the costs. • Media usually give local advertisers better rates than national advertisers.

11. Which media should be used? • Breakdown of Media Spending • Television—28.5% • Newspaper—23.6% • Radio—9.3% • Yellow Pages—6.4% • Magazines—5.9% • Internet—2%

12. Specialized Media • “alternative media that reach highly specialized target audiences” • Examples—Advertising on the backs of bathroom stalls; advertising on park benches and trash cans; milk carton advertising; advertising in church bulletins; advertising on barns

13. What should be the copy thrust? • “ the main theme or appeal of the message” • Use the AIDA steps to tailor messages to your audience • Attention—Interest—Desire—Action

14. Should we use an outside agency? • Agencies draw the best talent in the industry. • Agencies can buy media time at better prices. • Agencies help to maintain an objective opinion.

15. How agencies are paid: • Fees—agency receives a predetermined fee for a job or activity • Commissions—agencies receives a 15% commission on all media time/space purchased • Client who buys $100,000 in TV time—agency receives 15,000 from television station.

16. Sales Promotion • “any marketing technique that incorporates a short-term incentive to purchase—designed to stimulate action” • May be aimed at channel members or final consumers

17. Reasons behind growth of Sales Promotions • Shelf space is limited—retailers want to stock only the fastest moving brands • Retailers are emphasizing their store brands over national brands. • Scanner technology makes it easy to track the success of a sales promotion. • More ad agencies specialize in sales promotion.