Day: September 16, 2017

The Structure of the Advertising Industry: Advertisers, Agencies, and Support Organizations

The Structure of the Advertising Industry: Advertisers, Agencies, and Support Organizations

Chapter 2 The Structure of the Advertising Industry: Advertisers, Agencies, and Support Organizations © 2006 Thomson/South-Western Trends Affecting the Advertising and Promotion Industry 1. The “Undoing” of Agency Consolidation and Globalization 2. Media Proliferation and Consolidation 3. Media Clutter and Fragmentation 4. Consumer Control: Blogs and TiVos © 2006 Thomson/South-Western Ch 2: The industry 2 The Worldwide Advertising Industry U. S expenditures: • >$250 billion Global expenditures: • $550 billion © 2006 Thomson/South-Western

Ch 2: The industry 3 1 Structure of the Advertising Industry (text Ex. 2. 5) Advertisers Advertising and Promotion Agencies External Facilitators Media Organizations Target Audience © 2006 Thomson/South-Western Ch 2: The industry 4 Advertisers Manufacturers and Service Firms • Procter & Gamble, MCI Trade Resellers • Sears, McDonald’s Government • Federal, State, Local Social Organizations • United Way, Nature Conservancy © 2006 Thomson/South-Western Ch 2: The industry 5 In addition to companies, the Government Makes extensive use of advertising 2006 Thomson/South-Western 2 The Role of the Advertiser in IBP • Describe the value that the firm’s brand provides • Describe the brand’s position in the market Describe the firm’s objectives for the brand in the near-term and long-term • Identify the target market(s) that are most likely to respond favorable to the brand • Identify and manage the supply chain/distribution system that will most effectively reach the targets • Be committed to using advertising and other promotional tools to grow the brand. © 2006 Thomson/South-Western Ch 2: The industry 7

Agencies Advertising Agencies: • • • • • • • Full-Service Creative Boutique Interactive In-House Media Specialists Promotion Agencies Direct Marketing Promotion Agencies: • Direct Marketing/ Database • E-commerce • Sales Promotion • Event Planning • Design Firms • Public Relations Firms Ch 2: The industry 8 © 2006 Thomson/South-Western Advertising agencies make extensive use of advertising to acquire new clients © 2006 Thomson/South-Western 3 Full Service Agency Services 1. Account Services 2. Marketing Research Services 3. Creative and Production Services 4.

Media Planning and Buying Services 5. Administrative Services © 2006 Thomson/South-Western Ch 2: The industry 10 Agency Compensation 1. Commissions: around 15% of airtime fees—in flux. 2. Markup Charges: production cost + fixed %. 3. Fee Systems: hourly rates, or by project. 4. Pay-for-Results: tightly-specified objectives. © 2006 Thomson/South-Western Ch 2: The industry 11 External Facilitators • Marketing and Advertising Research Firms • Consultants: Creative, Media, Database • Production Facilitators • Software Firms: web tracking, fulfillment 2006 Thomson/South-Western Ch 2: The industry 12 4 Media Organizations • Broadcast – TV, radio • Print – Magazines, direct mail, newspapers • Interactive Media – CD-ROMs, online shopping • Support Media – Outdoor, directories, Sponsorship • Media Conglomerates – AOL Time Warner, Viacom, AT&T © 2006 Thomson/South-Western Ch 2: The industry 13 Target Audiences • • • • Household consumers Businesses Professionals Government Organizations © 2006 Thomson/South-Western Ch 2: The Industry 14 5