The Advertising Industry

Presentation on theme: "The Advertising Industry"— Presentation transcript:

1 The Advertising Industry
Types of Advertisers Ad Agencies Job Functions Structure Compensation Suppliers Media November 10, 2018November 10, 2018

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

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

4 Most companies blend strategies to fit their unique situations
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

5 The Worldwide Advertising Industry
Global expenditures $425 billion

6 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

7 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

8 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

9 Advertising Agency Advertising Agency: an independent business, composed of creative and business people, who develop, prepare, and place advertising in advertising media for sellers seeking to find customers for their goods or services

10 How Agencies Developed
The Early Age (Colonial Times to 1917) Space Salesmen Space Wholesalers The First Rate Directory The Agency Becomes a Creative Center

11 How Agencies Developed (continued)
The No-Rebate Age ( ) Radio Television Electronic Data Processing The Age of Negotiation ( ) Consent Decrees The Reengineering Age Integrated Services Interactive Communications

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

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

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

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

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

17 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

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

19 Other Advertising Services
This is an example of collateral promotion material that agencies produce for clients.

20 Other Advertising Services
This ad is a continuation of a concept developed by an ad agency.

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

22 The Media of Advertising
Print Newspapers – National, State, Local Magazines – Geography and Content Yellow Pages

23 The Media of Advertising
Network, Independent and Cable TV Network and Local Radio Electronic

24 The Media of Advertising
Online Services Kiosks CD-ROM Homeshopping Broadcasts Interactive Programming Internet Interactive Media

25 The Media of Advertising
Outdoor Out-of-Home Billboards Transit

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

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

28 Summary A full-service agency works on many aspects of a client’s marketing problems Many agencies are organized into four divisions Some agencies have a domestic network of offices or affiliates to service their large accounts Global marketing has led agencies to expand internationally Clients usually pay agencies by commission, fees, or a combination There are other types of advertising services beside the traditional advertising agency