Chapter 11: Advertising Chapter Insights: Advertising is integral in consumer economies, democracies and mass media •Mass media makes advertising possible •Ad agencies and the media in which they advertise are closely linked •Advertisement placement in media outlets is determined by their media reach •Branding as an advertising strategy encompasses building large product lines around a particular product or service •Advertising tactics include lowest common denominators, positioning, redundancy and testimonials •New techniques include viral advertising, word-of-mouth testimonials or "buzz" advertising, and stealth • "Advertising Outside the Box" If advertising had a guru, it would be Bob Greenberg!•the first to talk about cell phones as a new advertising medium--the "third screen"!◦Now he is into data visualization!◦encouraging advertising that invites consumers to track their own personal data and compare the ‣numbers with others!"The profound effect of seeing your stats compared to someone else's is inspiring" !•data visualization becomes part of the core customer experience--"the ultimate motivation"!•The Greenberg lesson: Advertising is all about motivating consumers!◦his R/GA agency in NY, part of the global Inter-public agency chain designed the Nike-plus website, which ◦employs data visualization!the customer's ability to compare themselves to others and to share this experience with others, he says, ‣builds loyalty and sells products!the era of entertainment that brought massive audiences to advertising messages is fast fading, Greenberg ◦says--time to think outside of the box!Ad agencies that don't find new models to reach consumers are setting themselves up for extinction!‣Greenberg's answer: Rather than ads being sandwiched into entertainment products, the ads •themselves must be the entertainment!!Importance of Advertising: Advertising is vital in a consumer economy •Without it people would have a hard time even knowing what products and services are available •Advertising, in fact, is essential to a prosperous society •Advertising also is the financial basis of important contemporary mass media • Consumer Economies In the United States, advertisers spend 2.4 to 2.9 percent of the gross domestic product to promote their wares!•When the nation's production of goods and services is up, so is advertising spending!◦The essential role of advertising in a modern consumer economy is obvious if you think about how people ‣decide what to buy!Advertising and Prosperity Advertising's phenomenal continuing growth has been a product of a plentiful society!•Advertising has no role and serves no purpose when survival is the main concern!◦prosperity=people have no only discretionary income but also a choice of ways to spend it!◦Advertising is the vehicle that provides information and rationales to help people decide how to ‣enjoy their prosperity!A Society of Choices: By presenting choices to consumers, advertising mirrors the democratic ideal of individuals choosing •intelligently among alternatives-->an emphasis on individuals making up their own minds Besides being a product of economic prosperity, advertising contributes to prosperity!◦Advertising can inspire people to greater individual productivity so that they can have more income to buy the ◦things that are advertised !advertising can introduce efficiency into the economy by allowing comparison shopping without in-person ◦inspections of all the alternatives!for 17 cents, says McGraw-Hill, an advertiser can reach a prospect through advertising!‣Although advertising does not close a sale for all products, it introduces products and makes the •salesperson's job easier and quicker!Estimates of how much the leading advertisers spend in U.S. mass media!◦Procter & Gamble-$5.2 billion!‣AT&T-$3.2 billion!‣Verizon-$3.0 billion!‣General Motors, Time Warner-$3.0 Billion !‣Disney-$2.3 Billion!‣Advertising and Democracy!Advertising first took off as a modern phenomenon in the United States, which has given rise to the theory that •advertising and democracy are connected!theory notes that Americans, early in their history as a democracy, learned to hold individual opinions to ◦participate in the political system!emphasis on individuality and reason paved the way for advertising: Just as Americans looked to mass ‣media for information on political matters, they also came to look to media for information on buying decisions!In authoritarian countries, by contrast, people tend to look to strong personal leaders, not reason, for ideas to •embrace!according to theory, this diminishes the demand for information in these non-democracies, including the kind ◦of information provided by advertising!Advertising=generates the majority of the operating revenue for newspapers, magazines, television & radio!•Without advertising, many of the media on which people in the United States rely for information, for ◦entertainment and for the exchange of ideas on public issues would not exist as we know them!Applying Your Media Literacy How is advertising an essential element in modern consumer economies?!•This is a chicken-or-egg questions: Which predates the other--advertising or prosperity?!•How does advertising empower people living in a democratic society? !•!Origins of Advertising Advertising is the product of great forces that have shaped modern society, beginning with Gutenberg's movable type, which •made mass-produced messages possible Without mass media there would be no vehicle to carry advertisements to mass audiences •Advertising also is a product of the democratic experience; of the Industrial Revolution and its spin-offs, including vast •transportation networks and mass markets, and of continuing economic growth!Stepchild of Technology !Advertising is not a mass medium, but it relies on media to carry its messages!•Johannes Gutenberg: Progenitor of advertising media!◦movable type made mass-produced advertising possible!‣first came flyers, then advertisements as newspapers and magazines were introduced!•with the introduction of radio, advertisers learned how to use electronic communication!•then came television!◦Flyers were the first form of printed advertising!◦William Caxton: Printed first advertisement!‣the British printer who issued the first printed advertisement in 1468 to promote one of his books!•John