McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 4

The Scope of

Advertising: From Local

to Global

4-2

Chapter Overview

Introduces the people and groups

who work in advertising

4-3

Chapter Objectives

Explain how advertisers organize

Define the main types of ad agencies

Discuss how agencies get clients, make

money

Explain what people do in ad agencies

Debate the pros/cons of an in-house agency

Examine factors that affect agency-client

relationships

Describe the various groups in advertising

and their relationships

Explain how the media and suppliers help

4-4

The Advertising Industry:

Organizations

Advertisers

Agencies

Media

Suppliers

4-5

The Advertising Industry:

People

Sales

Research

Accounting

Management

Most often employed by advertisers, not clients:

Computer science

Writers

Artists

Musicians

Photographers

Performers

LegalCinematographer

s

4-6

Advertisers: Local

Directed to customers in the same geographic area

Independent

businesses

Govt. & nonprofits

Franchisees and

dealers

Chain retailers

4-7

Advertisers: Local

An ad for Rubio’s Baja Grill showcases its unique products

4-8

Advertisers: Local

Typical structure of

small advertisers with high

volumes of work

4-9

Regular price-line, sale, or clearance

Types of Local Advertising

Create favorable image, increase

awareness, foster goodwill

Recruit employees, offer

services, sell merchandise

ClassifiedInstitutionalProduct

4-10

Local Advertisers: Integrators

DirectMarketing

SalesPromotion

MediaAdvertising

PublicRelations

IntegratedApproach

4-11

Advertisers: Cooperative

Vertical Co-op Horizontal Co-op

Firms in the same business or part of town advertise jointly

National brand association

Manufacturer provides complete ad & shares costs

Professional quality ads

Expands advertising budget

4-12

Advertisers: Regional and

National

Top 10 advertisers in the U.S. Ranked by total U.S. advertising in 2008

4-13

Advertisers: Regional and

NationalRegional: one or

several statesNational: several regions

or entire country

4-14

Advertisers: Regional and

National

Comparison of national and local advertising

4-15

Centralized Department

Structure

4-16

Decentralized Department

Structure

4-17

Decentralized International

Structure

• Divisions are responsible for their own product lines, marketing, and profits

• Each division has an advertising dept. to coordinate sales and promotion across brands

• The corporate advertising dept. provides information and guidance

4-18

Centralized Global Structure

• Assumption that product use and needs are universal

• Standardized approach in all countries

• Extensive research to ensure ad is basic and universal

4-19

Agencies: Defined

AgencyRoles

Develop marketing & ad plans

Develop ads & promotions

Purchase ad space and time

4-20

Agencies: Types

SpecialtyBoutiques Media Buyers

Interactive

Full Service

Consumer

BTB

ReachLocal National

Regional

Global

International

4-21

Agencies: People

Traffic Control

Administration

Media Management

Account Management

Other Services

Creative Concepts

Research, Acct planning

Production

4-22

Agencies: Compensation

Ad ratecard price:

$100,000

Agencybuys adat 15%

discount:$85,000

Agencybills client

full ad amount:$100,000

Agency keeps

$15,000difference

Media Commissions

4-23

Agencies: Compensation

Markups

Agencybuys

materialsfor

campaign

Materialscost

$85,000

Agencybills for

materials plus a

17.65%markup

Agency bills

$100,000(cost plus markup)

4-24

Agencies: Compensation

Fees

Fee-commissioncombination

Straight-fee(retainer)method

Incentive system

4-25

Agencies: In-House

Pros

May save money

Allows tighter control

May allow greater attention to the brand

Lower creative quality

Less experience and talent

Loss of objectivity

Cons

4-26

Agencies: Client

Relationships

ReferralsPresentations

Community relations& networking

Solicitation

Finding and Attracting New Clients

4-27

Client-Agency Relationship

Stages

DevelopmentPre-

relationshipTerminationMaintenance

4-28

Client/Agency Relationship

Factors

Communication

Conduct

Chemistry

Changes

The Four Cs

4-29

Suppliers

Art studios &web designers

Printers &related specialists

Film & videohouses

Researchcompanies

4-30

Media

Out-of-home

Digitalinteractive

Electronic

Print

Direct mail

Other

4-31

Media Around the World

McDonald’s honors an Islamic observance