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Advertising Agencies and their Functions

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  1. Advertising Agencies and their Functions Why do I need their help?

  2. Why Employ an Advertising Agency? • Specialized Services and Help i.e., professionals • Negotiation Skills with the Media • Coordination of Advertising and Marketing Efforts

  3. What are the Negatives of Going Outside the Firm for Ad Support? • lack of control • small company size may yield neglect • agencies can be inefficient in buying media • agencies are often compensated through a commission system the rewards high cost purchases

  4. Role of the Advertising Agency • creative services • media services • research services • account management

  5. Agency Compensation • Commissions from Media Purchases • 15% initially • can be lowered to 10% after first $10 million is spent • Hourly Fees • Markups on Cost of Services and Media

  6. Media Functions • Media Planners • perform strategic functions: when, where, frequency • Media Buyers • negotiate best prices, keep up to date info on audience profiles • availability and costs researched

  7. Vehicles vs. Media • Media • general channels of communication • i.e., newspapers, magazines, TV, radio • Vehicles • specific placement choices • i.e., Roseanne, ER, Seinfeld, Vogue, NPR programming

  8. Major Media Categories • TV • Radio • Newspapers • Magazines • Out-of-Home

  9. The Print Media Why Should I Spend My Money Here?

  10. What Are My Options? • Magazines • examples: Good Housekeeping, Time, Life • Newspapers • Local: The Tennessean • National: The Wall Street Journal

  11. Magazines- Advantages • Flexibility in readership- regional, national interest areas • Color - excellent reproduction of high quality • Authority and Credibility - can include alot of information as well as glitter • Permanence - longest shelf life of all outlets • Prestige - image of the magazine rubs off on the product!

  12. More Advantages • Audience Selectivity - most targeted option available to marketers • Selling Power - results have been documented • Cost Efficiency - minimized wasted coverage • Reader Loyalty • Pass-Along Circulation

  13. Magazines - Disadvantages • Inability to deliver mass audiences • Long Lead Times • Clutter • High CPM • Declining Circulations • Frequency Problems • Shallow Geographic Coverage

  14. Circulation Factors • Guaranteed Circulation - number expect to circulate • Primary Circulation - number people buy through subscription or newsstand • Secondary or Pass along - give it away!

  15. Circulation • Paid Circulation • must pay the subscription price to receive the magazine • Controlled Circulation • receive if can have an influential role for the advertised products

  16. Pros Mass Medium Comprehensive Scope Geographic Selectivity Timeliness Credibility Selective Attention Creative Flexibility Active Medium Cons Lack of Selectivity Short Life Span Low Production Quality Clutter Must pay for preferred position to guarantee placement Overlapping Circulation Newspaper Advertising

  17. Display Advertising includes copy, illustrations, photographs, graphics, etc. Classified Ads copy only Co-op Advertising share responsibility between channel members Public Notices Preprinted Inserts sales promotions, coupons, contests, etc. Types of Newspaper Ads

  18. Out-of-Home • Oldest Form of Advertising - often referred to as ‘outdoor advertising’ • Delivery Modes include: billboards, blimps, transit ads, etc. • Expenditures are approaching $1.7 billion

  19. Pros Poster Panels vs. Painted Bulletins Panels are silk screened - ranging in size from 6’2” by 12’’2” to 12’3” by 24’6” Painteds- directly painted and leased for 1-3 years broad reach/high frequency Geographic Flexibility Low CPM Can be a last reminder for products like fast food, shopping venues, etc. product identification is easy! Billboards

  20. Out-of-Home Negatives • nonselectivity • minimal exposure time • difficulty in measuring audience • environmental concerns • limited use of copy

  21. The Broadcast Mediums • Television • cable • network • National vs. Local • Radio • FM • AM • National vs. Local

  22. Television • Broadcast TV (Network) - 1100 Stations • UHF • VHF • Cable TV • Examples: BET, CNN, MTV, superstations • Who’s Advertising Here? • Proctor and Gamble • GM, Philip Morris

  23. Television Advantages • reach the masses • can be both local or national • most dramatic form of advertising • best suited for products that require demonstration or stimulation of emotion

  24. More TV Advantages • Prestige • highly visible firms use this medium • Impact • immediacy, demos, sound and color interaction • Creativity • Some Selectivity • Low Cost

  25. Disadvantages of TV • Very High Cost of Production • Media Time at a Premium • Selectivity and targeting Difficult • Brevity of Message • Clutter • Zipping and Zapping

  26. Selectivity Younger, more affluence audience, more innovative Very low cost Flexibility time for infomercials Testability Limited Reach Fragmentation Quality Zipping and Zapping Pros and Cons of Cable TV

  27. Types of TV Advertisements • Network Advertising • 4 major networks, erosion of audiences • convenient and efficient coverage • can buy spots , participations or sponsor • Cable Advertising • interconnect for regional coverage • syndicated programs, infomercials • Local TV Spots

  28. How Do I Buy TV? • Dayparts • decide on the time of day to air commercial • viewing highest during primetime • must choose vehicle • Dayparts • Daytime 9 a.m. - 4 p.m.. • Late Fringe 11:00p.m. - 1:00 a.m. • Remainder Early Fringe

  29. Radio • Who Listens? 96% of U.S. population • Youth the greatest audience! • Often a distraction or background noise • FM or AM • AM audiences growing faster than FM • Talk Radio!

  30. Image Transfer Selectivity Cost Efficient Timely Medium Geographically Flexible Reach and Frequency listen average 3x a day No Visuals! Segmented Audiences over Stations with Similar Formats Distraction Clutter Push Button! Pros and Cons of Radio

  31. Buying Radio Time • Networks • lack of flexibility and choice of stations • national coverage • Local Radio • spots: live or taped • local personalities can assist in credibility • Dayparts: Morning and Evening Drive Time Desirable (6-10 a.m.; 3-7 p.m.)

  32. Interactive Advertising Media • Entails reciprocal behavior • CD-Rom • Virtual Reality • The Internet • Interactive 800 numbers • Kiosks

  33. Alternatives for the Interactive Soul • CD-Rom - limited by households with the PC capability great for tourism • Virtual Reality - can visualize the product and its demonstration in 3D • Internet - growing access to the WEB - can promote products, catalogs, firms here to catch surfers