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
Direct mail
Other
4-31
Media Around the World
McDonald’s honors an Islamic observance
