Slide 1Slide 2ObjectivesThe Advertising IndustryPeople in AdvertisingLocal Advertising: Where the Action isTypical Department Structure for a Small AdvertiserTypes of Local AdvertisingSlide 9Slide 10Slide 11Slide 12Slide 13Slide 14Regional and National AdvertisersHow National and Local Advertisers DifferHow Large Companies Manage their AdvertisingTransnational AdvertisersThe Advertising AgencySlide 20Slide 21Slide 22What People in an Agency DoSlide 24Slide 25Slide 26How Agencies are CompensatedSlide 28Slide 29Slide 30In-House AgencySlide 32Client/Agency RelationshipStages in the Client/Agency Relationship© 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinChapter 4The Scope of Advertising: From Local to GlobalIntroduce the people and groups who work in advertisingObjectivesExplain how advertisers organizeDefine the main types of ad agenciesDiscuss how agencies get clients and make moneyExplain what people do in agenciesDebate the pros and cons of in-house agenciesExamine agency-client relationshipsThe Advertising IndustryAdvertisersAgenciesSuppliersMediaOrganizations in advertising include:People in AdvertisingSalesComputerScienceResearchAccountingCommunication ArtsManagementLawLocal Advertising: Where the Action isDealers or local franchises of national companiesStoresGovernment/nonprofitsSpecialty BusinessesTypes of local advertisers:Typical Department Structure for a Small AdvertiserTypes of Local AdvertisingProductAdvertisingPromotes a specific product or serviceStimulates short-term action while building awarenessTypes of Local AdvertisingProductAdvertisingRegular price-line advertisingSales advertisingClearance advertisingInstitutionalAdvertisingTypes of Local AdvertisingCreate favorable impression of the business as a wholeMakes the public aware of what the business stands forBuilds long-term good willClassifiedAdvertisingTypes of Local AdvertisingRecruit employeesOffer servicesLease or sell merchandiseCooperativeAdvertisingTypes of Local AdvertisingWholesalers, manufacturers, trade associations often provide local advertisers with ad materialsOr share ad costsCooperativeAdvertisingTypes of Local AdvertisingPurposes of co-op advertising:Build a manufacturers brand imageHelp distributors, dealers, or retailers to increase salesCooperativeAdvertisingTypes of Local AdvertisingTypes of co-op advertisingVerticalHorizontalOr severalRegional and National AdvertisersRegional AdvertisersOperate in one stateNational AdvertisersOperate in several regions or nationwideHow National and Local Advertisers DifferHow Large Companies Manage their AdvertisingLarge advertisers use some mix of two management structures: centralized and decentralizedCentralizedDecentralizedGrowingMultinationalsTransnational AdvertisersMay invest in many countriesGrowingMultinationalsGlobal marketers usea standardized approachto create global brandsThe Advertising AgencyRolesDevelop marketing and advertising plansDevelop advertisements and other promotionsPurchase advertising space and timeThe Advertising AgencyTypesLocalRegionalNationalInter-nationalThe Advertising AgencyTypesFull-service agenciesGeneral ConsumerBTBThe Advertising AgencyTypesSpecialized agenciesCreative boutiquesMedia-buying servicesInteractive agenciesWhat People in an Agency DoAccount ManagementAccount executivesAccount supervisorsResearch and planningWhat People in an Agency DoResearchAccount planningCreative ConceptsWhat People in an Agency DoCopywriterArt directorCreative directorAdvertising productionMedia planning and buyingWhat People in an Agency DoTraffic managementAdditional servicesHow Agencies are CompensatedMedia CommissionsAd ratecard price:$100,000Agencybuys adat 15%discount:$85,000Agencybills clientfull ad amount:$100,000$15,000differenceIs keptBy theagencyHow Agencies are CompensatedMedia CommissionsMarkupsAgencybuys materialsforcampaignMaterialscost$85,000Agencybills for materials plus a17.65%markupAgency bills $100,000which is costs plus markupHow Agencies are CompensatedMedia CommissionsMarkupsFeesAgencycharges a basic fee for servicesAgency keeps media com-missionsHow Agencies are CompensatedMedia CommissionsMarkupsFeesINCENTIVESAgency compensation is calculated after determining whether campaign objectives have been metIn-House AgencyAgency operated by an advertiserProsMay save moneyAllows tighter controlMay permit greater attention to the brandIn-House AgencyAgency operated by an advertiserProsConsLower creative qualityLess experience and talentLoss of objectivityClient/Agency RelationshipHow agencies get clientsReferralsPresentationsNetworking and community relationsSoliciting fornew businessStages in the Client/Agency RelationshipPrerelationshipDevelopmentRegular working