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 e ect 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 e ciency 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 o 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 Campbell Published first ad in British colonies publisher of the Boston News Letter and ran the first advertisement in 1704 a notice from somebody wanting to sell an estate on Long Island Colonial newspapers listed cargo arriving from Europe and invited readers to come look buy Industrial Revolution