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Advertising Perspectives. 3. The Advertising Industry. Types of Advertisers Ad Agencies Job Functions Structure Compensation Suppliers Media. Insert Ad Professor’s Choice. November 9, 2014. $. Advertisers (Clients). Agencies. Advertising Industry Structure. Suppliers. Media.

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Advertising Perspectives


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    1. Advertising Perspectives 3 The Advertising Industry • Types of Advertisers • Ad Agencies • Job Functions • Structure • Compensation • Suppliers • Media Insert Ad Professor’s Choice November 9, 2014

    2. $ Advertisers (Clients) Agencies Advertising Industry Structure Suppliers Media

    3. Exhibit 3-3 Rank Company Ad Spending Top 10 Advertisers in U.S. General Motors $ 4,040,000,000 Proctor & Gamble $ 2,611,700,000 Phillip Morris $ 2,201,600,000 Pfizer $ 2,142,400,000 AT&T $ 1,950,900,000 1 2 3 4 5 6 7 8 9 10 DaimlerChrysler $ 1,804,100,000 Ford Motor Company $ 1,639,800,000 Sears Roebuck $ 1,505,200,000 PepsiCo $ 1,315,700,000 Verizon Communications $ 1,312,700,000

    4. Advertising & Large Companies • Centralized • Decentralized In-House Agency Functional Services • Efficiency • Continuity Research Media Creative • Flexibility • Competition among company brands

    5. The Worldwide Advertising Industry Global expenditures $425 billion

    6. Global Advertising Most companies blend strategies to fit their unique situations • Standardized • Localized • Global brands • Efficiency / Recognition • Based on differences in each country or culture • Relevance / Understanding

    7. Exhibit 3-4 National Local Local vs. National Advertisers Focus Time Resources Building the Brand Place of Business Market Share Sales Strategy Tactics Markets Customers Long-term Short-term $$$$ $ Many Specialists Few Generalists

    8. Types of Advertising • Local Advertising (Retail) • Product Advertising • Institutional Advertising • Classified Advertising • Cooperative (Co-op) Advertising • Allowances By The Manufacturer • Pooling Resources • Government and Social Organizations

    9. Advertising Agency An independent organization of professionals who provide creative and business services to clients related to planning, preparing, and placing advertisements. Radio and TV Producers Copywriters Account Supervisors Direct-Marketing Specialists Artists Researchers Art Directors Media Buyers Public Relations Specialists Technical Staff Creative Directors Marketing Specialists Sales Promotion and Event Planners

    10. Types of Advertising Agencies • Full-Service • Business-to-Business • Creative Boutiques • Media-Buying Services • Interactive • In-House

    11. What Do Advertising Agencies Provide? • Account Services • Research and Account Planning • Creative and Production • Media Planning and Buying • Traffic Management • Marketing Services

    12. Agency Department System President Vice President Management Services Vice President Creative Services Vice President Marketing Services Vice President Account Services Accounting Media Art / Copy Account Supervisor Account Supervisor Purchasing Research Production Account Executive Account Executive Personnel

    13. Agency Group System Agency Management Group 1 (Coke Classsic) Management Director Group 3 (Toyota Camry) Management Director Group 2 (Dial Soap) Management Director Media Planning Market Research Account Service Creative Director

    14. Agency Bills Client For Agency Pays Television Agency Earns $1,000,000 $850,000 $150,000 For Television Air Time For Television Air Time Commission (15%) Agency Compensation Plans • Commissions • Around 15% of airtime fees

    15. Agency Compensation Plans • Commissions • Around 15% of airtime fees • Markup Charges • Production cost + fixed percent • Agencies add 17.65% to the cost of outside services Photographer charges $8,500 The Agency adds $1,500 (17.65%) Client is charged $10,000 for photography services

    16. Agency Compensation Plans • Commissions • Around 15% of airtime fees • Markup Charges • Production cost + fixed percent • Fee Systems • Hourly rates or by project • Commissions • Around 15% of airtime fees • Markup Charges • Production cost + fixed percent • Fee Systems • Hourly rates or by project • Incentive Systems • Tightly-specified objectives

    17. Getting Clients • Referrals • Presentations • Networking • Advertising

    18. Building the Client/Agency Relationship • Cyclical • The Prerelationship Stage • The Development Stage • The Maintenace Stage • The Termination Stage • Factors Affecting the Relationship • Chemistry • Communication • Conduct • Changes

    19. Suppliers • Art Studios / Web Design Houses • Printers • Production Houses • Research Companies

    20. Magazines Cable TV Top Media Companies by Category Newspapers TV & Radio 1 2 3 4 5 Gannett $ 3,953.0 Knight Ridder $ 2,950.3 New York Times $ 2,665.0 Advance Publications $ 2,493.3 Times-Mirror $ 2,308.2 1 2 3 4 5 CBS $ 6,160.0 NBC $ 4,900.0 Walt Disney $ 4,847.0 News Corp. $ 3,719.3 MFM, Inc. $ 1,581.4 1 2 3 4 5 Time Warner $ 3,309.3 Hearst Corp. $ 1563.2 Advance Publications $ 1,365.8 Reed Elsevier $ 968.8 Primedia $ 927.5 1 2 3 4 5 Time Warner $ 10,719.0 AT&T $ 9,872.0 Cablevision Systems $ 2,896.5 Comcast $ 2,732.8 Viacom $ 2,607.9

    21. Electronic Print Interactive Media Out-of-Home Direct Mail Other Media The Media of Advertising

    22. Print The Media of Advertising • Newspapers – National, State, Local • Magazines – Geography and Content • Yellow Pages Insert Any Ad

    23. Electronic The Media of Advertising • Network, Independent and Cable TV • Network and Local Radio Insert Picture of a Radio and a Radio Ad

    24. Interactive Media The Media of Advertising Insert Banner Ad • Online Services • Kiosks • CD-ROM • Homeshopping Broadcasts • Interactive Programming • Internet

    25. Out-of-Home The Media of Advertising Insert Billboard Eat Mor Chicken page 123 Animate to fly in after “Billboards” text 7 • Outdoor • Billboards • Transit

    26. Direct Mail The Media of Advertising • Direct Mail • Brochures and Catalogs

    27. Other Media The Media of Advertising • Premiums • Point of Purchase Displays • Product Placement • Event Sponsorship