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PRINCIPLES OF ADVERTISING LECTURES PART 1

Presentation · September 2016

DOI: 10.13140/RG.2.2.15212.59524

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 PRINCIPLES OF
ADVERTISING
Part 1: Advertising and
Marketing
LECTURES 1 - 5
by
Zane Asher Green
PRINCIPLES OF
ADVERTISING

LECTURE 1
Introduction to
Advertising
 Introductory Perspective
Rapidly Changing Media Environment
Increasingly difficult to reach target audiences & communicate
effectively
– Consumers are no longer passive recipients
– They demand more than information and there are a
myriad of sources/media they can consult/refer to while
searching for products or services
– The mass media are losing viewers, listeners, and
readers to the highly fragmented, more targeted digital
media that allows consumers to be actively engaged in the
communications process – A convenient, fulfilling,
gratifying, informative buying experience.
WHAT’S YOUR EXPERIENCE?
What are the preferred types of media that you use when you are
searching for a product or service. If you are looking for a new
cellphone, do you wait for the Sunday newspaper ads? Do you visit
cellphone dealer? Do you search online first, then go to a dealer? Do
you use the Internet to do comparison shopping or to read reviews?
2
The New Look of Advertising

Interactive, Informative, Entertaining

BUT AVOID VAMPIRE CREATIVITY
3
 Advertising Defined
The word advertising comes from the Latin word, 'advertere'
meaning "to turn the mind towards."
“Any paid form of non-personal communication
about an organization, product, service, or idea
by an identified sponsor” (American Marketing Association).
– Transmitted through mass media
– No feedback from audience
– Important for products and services aimed at mass
consumer markets
– Cost effective
The concept of advertising is the delivery of the
most persuasive product message at
the right time, in the right place, to a right
person, at the lowest possible cost. 4
Advertising Defined
"Advertising
includes those visual or oral
messages in magazines,
newspapers, movies
and letters, over radio and
television and on
transportation vehicles and
outdoor signs which are paid
by their sponsors and directed
to consumers for
purpose of influencing their
purchases and attitudes”
(Canor and Wichart).

5
 Classification of Advertising

National Advertising

Retail/Local Advertising

Primary vs. Selective

Demand Advertising
Consumers

Business-to-Business Advertising

Professional Advertising

Trade Advertising
Organizations
6
 Classification of Advertising
Consumer advertising is classified as:
1. National advertising – done by large companies on a
nationwide basis. Ads for well-known brands and
companies shown on television are an example.
2. Retail/Local advertising – done by retail and local
merchants encouraging consumers to shop at a
specific store, use a local service, or patronize a
particular establishment.
3. Primary versus selective demand advertising –
• Primary demand advertising is designed to stimulate
demand for a general product class or industry
(Debit cards).
• Selective-demand focuses on creating demand for
a specific company and/or its brands (HBL or
MCB).
7
 Classification of Advertising
Advertising to business and professional
markets includes:

1. Business to business advertising – advertising that

targets individuals who buy or influence the
purchase of industrial goods or services for their
companies.
2. Professional advertising – advertising targeted to
professionals such doctors, lawyers, engineers
and the like.
3. Trade advertising – targeted to marketing channel
members such as wholesalers, distributors and
retailers.

8
Direct Response Advertising

Direct response advertising and other

forms of direct marketing have
increased in popularity due to:
1. Changing lifestyles, particularly
two-income households with more
income, but less time to shop.
2. Availability and use of credit cards
3. Toll free telephone numbers
4. Rapid growth of the Internet
5. Increased demand for
convenience and leisure time

9
 Interactive/Internet Marketing

• Interactive media
– Internet
– CD-ROMs
– Kiosks
– Interactive television
– Smartphones

10
 Internet Advertising

What do you expect to find on most company websites?

(Products, services, “About Us,” references, news releases,
Help, and contact information are common.) What do you find
most annoying about websites? (Slow response, confusing
menus, too many links [drill downs] to find what you are
looking for, too many other advertisements, pop-up ads?)
11
 Covert Advertising

This is a unique way of

advertising in which the product
or the message is subtly /
intelligently included in a
movie or TV serial. There is no
actual ad, just the mention of the
product in the movie. For
example, Daniel Craig used the
VAIO laptop in the movie, Casino
Royale.

12
 Public Service Advertising

Such advertising is for public

causes. There are a host of
important matters such as
political integrity, energy
conservation, illiteracy,
poverty and so on all of which
need more awareness as
far as general public is
concerned. This type of
advertising has gained much
importance in recent times and is
an effective tool to convey the
message.

13
 Urban Advertising
Urban advertising is
advertising that, at its most
basic, exists in densely
populated cities. Urban
advertising often takes
advantage of setting to shock
or inspire awe in viewers.
Urban advertising also often
exists as a form of
alternative advertising,
using unconventional or
unique methods of
spreading a message.

14
 Advertising Functions
Providing Information and Education
• Advertisement supplies consumers with information about
products and services, such as making consumers aware of
specials, sales, and new lines of products and services. A
consumer also learns about the comparisons between
features, benefits and options of different products and
services.
• Government agencies usually use advertisement as a way to
educate and compel consumers to act in a specific way
(Example how to conserve gas or electricity). Advertising also
educates consumers on what products and services are out
there, how much they should pay, and what they can expect
with certain purchases (product/service reviews).
Creating Brand Identity (Most important Function)
• By selling products and services through advertisements, businesses
differentiate themselves from one another.
• The right advertising campaign builds emotional relationships
of that brand with the customers that increases its sales.

15
 Advertising Functions
Brand Value
The Most Valuable Brands in the

Rank Brand (Billions)

1 Coca-Cola $65.32
2 Microsoft 58.71
3 IBM 57.09
4 General Electric 51.57
World

5 Nokia 33.70
6 Toyota 32.07
7 Intel 30.95
8 McDonald’s 29.39
9 Disney 29.21
10 Mercedes-Benz 23.57
Strong brands have the power to command a premium
price (artificially high pricing to encourage favorable
perceptions) from consumers and from investors.
16
 Advertising Functions
Promoting Action
• With regard to direct marketing, advertising’s purpose is to
attract buyers through a call-to-action statement,
which encourages the customer to visit a store or website,
or to contact the advertiser for more information.
• With regard to marketing, advertising is essentially an
action catalyst that brings customers and products or
services together through CREATIVE ADVERTISING.
Maintaining a Consistent Customer Base
• Through advertising the business targets
its products
and services towards its customer base.
• Advertising helps reinforce the purchasing behaviors of
customers for a particular brand, and it establishes long-
term relationships with existing customers, potential
customers, vendors and stockholders.

17
 Advertising Functions
Creating New and Better Products
Advertising promotes the development of better products, and allows
consumers to have a wider variety of products, competitive pricing,
and competition entering the marketplace.
Promoting Purchase Persuasion
Powerful and captivating advertisements persuade consumers to
purchase a new product, try out services, and fulfill voids they
feel are present in their lives. In fact, persuasion is one of the
main functions of advertising, which is why many firms strive to
create powerful impact that reach customers on different levels.
Promoting Purchase Reminder
Advertising constantly reminds consumers about a product so that they
will keep buying the advertised product instead of the
competitor’s brand.
Promoting Product Dissuasion
Negative advertising that dissuades target audience from purchasing
such products and services which would not only harm them but also the
society. in general. Examples: Advertisements of various civic
authorities against alcohol, tobacco, and narcotics.
18
 Advertising & Marketing
1. Product
2. Price
3. Placement
4. Promotion
• Advertising
• Sales Promotion
• Public Relations
• Direct Marketing
• Interactive Marketing
• Personal Selling
• Events and Experiences
• Viral Marketing (Word of Mouth & Word of
Mouse)
5. People
6. Process
7. Physical Evidence
19
 Advertising & Marketing
What is Marketing?
• Marketing refers to the process of preparing your
product for the marketplace. It involves understanding
who your potential customers are and what they want to get
from your product or service.
• Colors, logo and other design elements help to align the image
of your product with the interests of your target audience. It is
marketing that defines your brand and attracts the
market share you want.
What is Advertising?
• Advertising is the process of making your product and
service known to the marketplace. It is essentially
spreading the word about what your company has to offer.
• While marketing is the way in which you convince
potential buyers that you have the right product
for them, advertising is how you communicate to
them the existence of that product.
20
 What is Marketing?
“Marketing is an activity, set of institutions and
processes for creating, communicating, delivering and
exchanging offerings that have value for customers,
clients partners and society at large.”
American Marketing Association, 2007

PREDOMINANT FOCUS OF MARKETING

1. Creating, communicating and
delivering value,
2. Focusing on customer relationships,
3. Using mass customization to deliver
products and services in response to
specific customer needs, and
4. Customer relationship management
(CRM), which involves the systematic
tracking of customers’ preference
and behavior and adjusting the
marketing program to meet their
needs. 21
 The Scion Web Site

This website is
an example of
how a company
can make a
product or
deliver a
service in
response to a
particular
customer’s
needs.

Consumers can now customize

the car they want to purchase by
selecting different options
22
 Marketing Mix
The four Ps Marketers must understand the issues
Product and options involved in each element
of the mix, and how these elements
Price can be combined to form an effective
Place marketing program.
Promotion
EXAMPLE OF PROMOTION BY REAL ESTATE FIRMS
• Real estate agents often place a sign in front of the
property to be sold in order to attract drive-by
customers.
• They also place ads in newspapers or real-estate guides,
and enter all the pertinent information into online
databases so consumers can search for the properties
that meet their individual needs.
• Larger real estate firms, or those with high-end
properties for sale, sometimes advertise them on
television as well.
23
 Coordinated Marketing Elements Build Image
HOW MONT BLANC USES 4PS
• Mont Blanc uses a classical
design and a distinctive
brand name, as well as a
high price, to position its
watches as high-quality,
high-status time pieces.
• The upscale image is
enhanced by the company’s
strategy of distributing its
products only though
boutiques, jewelry stores,
and exclusive retail shops.
• Mont Blanc’s distinctive
image is a result of
coordination of all of the
marketing mix elements.

24
 Traditional Marketing Approach
1. Many of the marketing and
promotional functions were
planned and managed
separately with different
budgets, different views
of the market, and
different goals and
objectives.
2. Many marketing activities,
such as package design,
sales promotion, and direct
The disconnected puzzle pieces
marketing services, were
demonstrate how traditional
viewed as ancillary or
approaches to marketing
secondary services and
communications viewed the
handled on a project
various IMC tools as separate
basis rather than
pieces of the puzzle, rather
integrating them into
than having them all work
the IMC program.
together.
25
 Contemporary IMC Approach
This approach seeks to have all of
a company’s marketing and
promotional activities project a
consistent, unified image
in the marketplace. It calls
for a centralized
messaging function, so
that everything a company
says and does communicates
a common theme and
positioning to all.
IMC approach is coordinated and consistent. The
connected puzzle pieces demonstrate how the various
IMC tools are coordinated with media advertising and
work together in a
seamless/smooth/unified/harmonious fashion to
create an effective communications program. 26
 Defining IMC

IMC is a strategic business

process used to plan, develop,
execute and evaluate coordinated,
measurable, persuasive brand
communication programs with
consumers, customers, prospects
employees and other relevant
external and internal audiences.

The goal of IMC is to

generate short-term
financial returns and build
long-term brand value.

27
 Contemporary Perspective of IMC
Recognized as a business process

IMC Importance of relevant

Multiple relevant audience
audiences

Demand for accountability and

Demand for accountability
measurement of outcomes

1. Recognized as a business process – rather than just a deliberate

or strategic integration of various communication activities.
2. Importance of relevant audiences – externally these include
customers, prospects, suppliers, investors, interest groups, and the
general public. Employees are an example of an internal audience.
3. Demand for accountability – increased emphasis on the outcomes
of marketing communication programs.

Thus, IMC involves more than just coordinating the

various elements of a marketing and communications
program into a “one look, one voice” approach.
28
Evolution: Reasons for the Growing Importance
of IMC
From Toward 21 century market Place

Media advertising Multiple forms of communication

Mass media Specialized media

Manufacturer dominance Retailer dominance

General focus Data-based marketing (Targeted

focus)

Low agency accountability Greater ad agency accountability

Traditional compensation Performance-based compensation

Limited Internet availability Widespread Internet availability

29
 The Role of IMC in Branding
• Brand identity is a combination of
– Name 1. With more and more
– Logo products and services
– Symbols available to consumers,
– Design developing and maintaining
brand identity is becoming
– Packaging increasingly important.
– Performance
2. Well known brands have a
– Image or associations major competitive advantage
in today’s marketplace.
3. A well-defined and
coordinated IMC plan
contributes to overall
brand identity and equity.

30
 Finding New Ways to Build Brands
• Consumers are driving the trend
– They view brands as a form of self-expression
– They know more about brands and the companies
that make them
– Doubt about corporations is at an all-time high
– They seek and share information with other
consumers via the Internet

Marketers are finding that they can no longer

build and maintain brand equity (value of having a
well-known brand name) merely by spending
large sums on money on media advertising.
Brands are becoming less about the actual product
and more about how people relate to them.
31
 Finding New Ways to Build Brands
• Get consumers Building a brand does not
involved mean saturating the media
with expensive ads.
– Apple Computer lets For instance:
consumers test 1. It doesn’t cost much to
products in store allow potential customers
– Starbucks positions to test computers and
stores as a iPods before purchasing
community them.
gathering place 2. Starbucks believes that “the
• Interaction can be the product is the experience”
and that people visit their
best marketing
cafes for the relaxed
– MySpace ambiance, the music, and
– Facebook the service they receive.
– Google 3. MySpace and Facebook
became part of popular
culture with little or no
advertising, as did Google. 32
 The Evolution of Advertising
SELF STUDY
Ancient times
Egyptians wrote sales messages on papyrus wall posters.
Political campaign ads were on the walls of Pompeii.
Rudimentary commercial advertising existed in Greece, Rome,
Arabia, Asia, Africa and South America.

The Middle Ages

Most people were unable to read, but images of clothing, shoes,
horse shoes or bags of flour on signs pointed out the tailor,
cobbler, blacksmith or miller.

17th century
As reading spread, advertising was printed on handbills.
Advertisements promoting medicines and books were printed in
weekly newspapers.

33
 The Evolution of Advertising
19th century
Advertising grew as the relative wealth of nations expanded. Advertising
developed with the rise of mass production from the late 19th century.

In 1836 in France, the newspaper La Presse printed paid advertising on

its pages. Because of the money it received for advertising, the paper
was able to lower the price it charged readers for a copy. That let it
extend its readership which increased its profitability.

The beginnings of an advertising agency was conceived by Volney B.

Palmer in Philadelphia. In 1842, he bought quantities of space in
newspapers at a discounted rate, then resold the space at higher rates to
advertisers. Palmer was only a space broker – the ad copy, artwork and
layout were prepared by the company that had something to advertise.

The first true advertising agency was N.W. Ayer & Son in Philadelphia in
1869. Ayer planned, created and placed complete advertising campaigns
for its customers.

34
 The Evolution of Advertising
20th century
Advertising became a profession with agencies as the focal point of
creative planning.

Women were responsible for purchasing for most households, so

agencies recognized their insight in the creative process. That led
advertising to become a business career choice for women. The first
American advertisement to use a sexual sales appeal, created by J.
Walter Thompson Co. for Woodbury Soap, depicted a couple with the
message, The skin you love to touch.

Advertising arrived on the air with radio in the 1920s and the
practice of sponsoring programs became popular. With the coming of
television in the 1940s, the networks sold ad time on the air to
sponsors. Cable television wired the country from the 1980s and
satellite TV emerged from the 1990s. They brought new advertising
opportunities on the expanded number of channels. Marketing on
Internet websites opened new frontiers for advertisers from the mid-
1990s.

35
The Evolution of Advertising

21st century
Advertising continues in all
mass media including
newspapers, magazines, radio,
television, billboards, classified
advertising in print and online,
in-store advertising and
websites.

36
PRINCIPLES OF
ADVERTISING
LECTURE 2
The Advertising
Environment:
Economy, Society and
Technology
 The Advertising Environment
The dynamic advertising environment creates uncertainty, threats
and opportunities for advertisers. Advertisers develop strategies
to respond to the changes in the environment in two ways:

1. Reactive Response
• When environmental elements cannot be controlled
then it is best for the organization to adjust to them.
This is basically a wait and see approach.
• Reactive strategies include approaches to respond after
external factors affect the company. For instance, if
sales decline, the response may be to increase
promotions or to clear remaining inventory ahead of a
new product launch.
• Reactive strategies can protect against wasted
investments or unnecessary risky moves that
damage current success. However, companies that rely
too much on reactive strategies may miss new or
emerging business opportunities.

2
 The Advertising Environment
2. Proactive Response
• Proactive business strategies involve advanced action
taken to avail opportunities or eliminate
forthcoming threats.
• Companies that want to try out business approaches
ahead of an environmental or economic threat
also use proactive strategies. For instance, some
companies proactively cut budgets ahead of
anticipated slowdowns in demand.
• Proactive strategies typically develop from a
company's analysis of internal strengths
and external opportunities and threats.

3
Economic Forces Impacting Advertising
Effect on the Value/Quality of Products
1. Why do most people prefer Coca-Cola to some other cola?
Why do some people prefer Gucci bags to some other
unadvertised brand? Are the advertised products functionally
better? Not necessarily. But, in the mind of the
consumer, advertising has given these brands added
value.
2. Research studies show that the positive image conveyed
by advertising may imply quality.
3. By simply making the product better known,
advertising can make the product more desirable to the
consumer. In these ways, advertising adds value to the
brand.
4. Advertising also adds value to a brand by educating
customers about new uses for a product. Kleenex
was originally advertised as a makeup remover, later as
a disposable handkerchief. AT&T first promoted the
telephone as a necessity and later as a convenience.
4
Economic Forces Impacting Advertising
Effect on the Value of Products
5. Many of our needs are emotional, social, or
psychological rather than functional. One way
we
communicate who we are (or want to be) is
through the products we purchase and
display. By associating the product with
some desirable image people want to
project, advertising offers people the
opportunity to satisfy those psychological or
symbolic needs.

5
Economic Forces Impacting Advertising
Effect on Prices
How Advertising keeps prices down?
1. Advertising increases demand that enables many
manufacturers to engage in mass production, which
in turn lowers the unit cost of products. In
this indirect way, advertising helps lower prices.
2. In retailing, price is a prominent element in
many ads, so advertising tends to hold
prices down.

6
Economic Forces Impacting Advertising
Effect on Consumer Demand
1. Advertising can help launch new products by giving
more people more “complete information”,
thereby increasing primary demand for the
entire product class.
2. Many social and economic forces, including
technological advances, the population’s
educational level, increases in population
and income, and revolutionary changes in
lifestyle, are more significant factors
affecting consumer demand than
advertising.

7
Economic Forces Impacting Advertising
Effect on Consumer Choice
1. The freedom to advertise promotes the existence
of more sellers, and that gives consumers wider
choices. This is because of the following:
• The freedom to advertise encourages businesses to
create new brands and improve old ones.
• When one brand reaches market
dominance, smaller brands may disappear
for a time.
• But the moment a better product comes
along and is advertised skillfully, the
dominant brand loses out to the newer,
better product.

8
 Social Forces Impacting Advertising
Deception in Advertising Even meaningless (but
legal) puffery might be
If a product does not live taken literally and therefore
up to its ads, become deceptive. Puffery
dissatisfaction occurs— refers to exaggerated,
and in the long term that subjective claims that can’t
is as harmful to the be proven true or false, such
advertiser as to the as “the best”, “premier”, or
buyer. “the only way to fly.”
People expect advertisers to
be proud of their products
Under current advertising law, and probably don’t mind if
the only product claims— they puff them a little. But
explicit or implied—that are when advertisers cross the
considered deceptive are those line between simply giving
that convey a false impression their point of view and
and therefore have the creating false expectations,
potential to deceive or that’s when people begin to
mislead reasonable people. object.
9
 Social Forces Impacting Advertising
Advertising Manipulates us Psychologically

Advertisers are messing with our heads—

manipulating us psychologically, and
without our consent, into buying things we
don’t want or need. This gets to the heart of
the complete information principle because
the criticism suggests that advertising does
not give consumers information upon which
to base rational decisions, but rather
manipulates us through brainwashing.
Consumers are, therefore, like captured
prey, helpless in the jaws of marketing
predators.

10
 Social Forces Impacting Advertising
Effect of Advertising on Our Value System
1. Advertising degrades people’s value systems by promoting
a hedonistic, materialistic way of life.
2. Critics claim advertising manipulates us into buying things by
playing on our emotions and promising greater status,
social acceptance, and appeal.
3. Advertisers do indeed spend millions trying to convince
people their products will make them attractive,
healthier, and more successful.
4. Most advertising we witness every day seems to suggest
that every problem we have can be solved by the
purchase of some product.
5. It causes people to take up harmful habits.
6. Some ads in fact use attractive female models to sell
products. Impressionable young women try to copy the
models in the ads, which may violate social values.
7. Children force their parents to buy products advertised on
TV and are becoming disobedient and aggressive.
11
 Social Forces Impacting Advertising
Use of Stereotypes in Advertising
A widely held but fixed and oversimplified image or idea
of a particular type of person or thing.
1. Inaccurate portrayal of women in most ads.
2. Insensitivity towards people with less than desirable
features.
3. Insensitivity towards people of certain area or those having
inadequate education.
4. Inaccurate portrayal of Pakistani culture in general.
Offensiveness in Advertising
1. Violence
2. Vulgar Language
3. Obscene ad concepts or images
4. Immoral or adult-oriented messages

Taste, of course, is highly subjective: What is bad taste

to some is perfectly acceptable to others.
12
Technological Forces Impacting Advertising
The Internet and Advertising – SELF-STUDY
1. Google search ads are online ads that appear alongside the
search engine result page when users search a keyword
query on Google. These ads are PPC, or pay-per-click ads, in
which advertisers pay for each ad click.
2. Bing ads are similar to Google ads in that they work on a
pay-per-click basis.
3. Banner ads are image-based advertisements that
often appear in the side, top, and bottom sections of
websites. They can range widely in terms of size, design,
and function.
4. Retargeting ads entice a user to visit a site by
taking into account the user’s past web history.
When a user visits a website, a retargetting campaign
cookie is attached to the visitor, taking note of what pages
and products the user visits while browsing the site.

13
Technological Forces Impacting Advertising
The Internet and Advertising – SELF STUDY
5. Facebook ads exist in many different forms, each offering
unique pros and cons for advertisers looking to market on
Facebook. For example:
• Page Post Engagement and Likes: Boost your posts to
garner more likes. Promote your page to connect with more
people who matter to your business.
• Local and Brand Awareness: Reach people in the area, or
reach people who are more likely to become customers of
your brand.
• Event Responses: Effective Facebook Ads can raise
attendance at your event.
• Video Views: Create ads that entice more people to view
your video.
• Product Catalog Promotion: Show products from a catalog
to people most likely to be interested through a targeted
audience.

14
Technological Forces Impacting Advertising
The Internet and Advertising – SELF-STUDY
6. Flash ads are banner ads that use Flash design, often featuring
interactive elements to entice users. While flash is still used
subtly in certain display ads, the playful, interactive, and
somewhat hokey flash ads that were common in the millennial
years are no longer considered a popular form of banner ad.
7. Reddit ads are advertisements featuring a headline title,
destination URL, and an optional photo.
8. Email ads are advertisements sent to users via web mail.
Email ads can be used to notify subscribers of certain
promotions, discounts, or new features, among other uses.
9. Video ads are growing in popularity as better internet speed
performance and online advancements make it fast and easy to
watch videos on the web.

15
Technological Forces Impacting Advertising
Other Forms of Advertising
1. Mobile ads are ads that appear on smartphones, tablets,
and any other mobile device. Many social media platforms,
websites, and apps offer their own unique mobile ad
options.
2. AdMob Ads are advertisements that appear within mobile
apps.
3. Ads on Satellite TV systems like DishTV and TATA Sky.
4. HD Channels on Satellite Networks have improved the
visual quality and production of ads as well.

16
Technological Forces Impacting Advertising
Special Effects in Advertising
1. Not only are visual effects fun and interesting, but they
also keep viewers looking at an advertisement. The
longer a viewer looks at an ad, the more likely the
product or service being advertised will stick in the
viewer’s mind.
2. Visual effects naturally hold our attention because
they combine reality with the fantastic. Which
image would be more likely to grab your attention: a giant bug
invading a house or a real bug walking across a kitchen floor?
3. Visual effects also help shape a viewer’s feelings about the
product or service in the ad. For example, if an ad
shows the giant bug retreating and finally dying after
being sprayed with bug spray, the viewer might feel
confident that the product can get rid of any insect.
After all, the bug spray successfully killed the giant bug.

17
Technological Forces Impacting Advertising
Special Effects in Advertising

Which of these and other effects did you spot in the

video clip? 18
 PRINCIPLES OF
ADVERTISING
LECTURE 3
The Advertising
Business & Advertising
Agencies
 The Advertising Business
planning, budgeting, coordination and
In addition to
creating advertisements, the roles, responsibilities, and
activities involved in running a successful advertising can be
broken down into three main areas:
1. Pitching to Clients (Advertisers)
2. Solving Clients’ Problems
3. Self-Promotion (Advertising Agency)

2
 The Advertising Business
Pitching to Clients (Advertisers)

1. The usual way an agency gets work is through a

pitch. A pitch is an audition, with the client giving a
brief/presentation to a number of advertising
agencies. Whichever client likes the portfolio and
brief and is assured of the capabilities of the
ad agency, the client gives the contract to the
advertising agency to address its advertising
needs.

2. After this, contracts are signed and the real work begins.
Depending on the type of agency and client, the scope of
works (SOW) will vary greatly. The agency agrees to
produce a certain amount of work for a set
amount of money and the client agrees to pay
the agency upon receipt of the work.
3
 The Advertising Business
Solving Clients’ Problems
The client presents the agency with its problems, and when it
needs solutions. The types of problems and solutions vary
greatly depending upon the client’s business and the ad
agency’s area of expertise.
How this is done is different from agency to agency, but the
basic steps are more or less the same.
1. The account/client manager (and team) meets with the
client to identify the problem that needs to be
solved.
2. The account/client manager writes a creative brief
based on that problem. This will include competitive
analysis, research, the assistance of the planner
and/or creative director, and eventually, approval
from the client.
3. The account manager briefs the creative team and
includes a timeline, budget, proposed media and
other factors.
4
 The Advertising Business
Solving Clients’ Problems
4. Thecreative team works on the project for
several days (or weeks if they’re lucky) and brings the
first round of ideas to the creative director.
5. The creative director will discard the
ideas that
are not working, and direct the team to
explore the good ideas.
6. The creative team will continue to work on the
good ideas, but bring in the production department (if
needed), account manager and other members of the
agency to make sure the work is on track. If there are
printed pieces, or a shoot is required, this is when the
production department will begin making estimates of
expenses.
7. The creative director approves the final ideas,
and the creative team presents them to the
client. 5
 The Advertising Business
Solving Clients’ Problems

8. The client will go away and discuss the ideas, before

giving feedback to the agency. This may result in a
reworking of ideas (repeat steps 3 to 7) or a green
light to move into the execution of the ideas. At this
point, a budget and timeline will once again be
approved.
9. The creative team works closely with the account team,
media buying, production, and the creative director to
produce the ads, whatever form they may take.
10. The final ads are placed in front of the client for
approval. Once the client approves, the ads are
published, be it online, in print, outdoor, on the air, or
any other media.
11.The agency will monitor the success, and ROI, of the
ads and give the feedback to the client.
12.The client pays the agency. And then the whole
process is repeated when the client requires its help.
6
 The Advertising Business
Self Promotion (Advertising Agency)

1. If the agency does great work for a client, that should be

advertising enough. But ad agencies, for the
sake of survival and success, must get out there
to win more business, and have clients
coming to them for work.
2. Ad agencies will enter their best work into the
awards shows. They will also develop a website to
showcase their successful campaigns, video
brochures and other forms of self-promotion to get
clients looking in the right direction.

7
The Advertising Functions

Advertising agency
also performs
many non-
advertising
functions:
• It determines
the media
discounts,
• It designs the
product,
• It also designs
its package,
trade marks,
labels, etc.

8
 How Agencies Gain Clients

Referrals Presentations

Solicitations

Public Relations Image, Reputation

 The Advertising Agency
Advertising Agency
An independent organization that comprises creative and
business people who specialize in:
1. Creating new promotional ideas,
2. Designing print, radio, television, and internet
advertisements,
3. Booking advertisement space and time,
4. Planning and conducts advertising campaigns,
5. Conducting research and surveys, and
6. Providing other such services that help a client
in entering and succeeding in a chosen market.

In general, advertising agencies are not considered

as agents of the advertisers, because they act as
principals/representatives for the services they
buy on behalf of their clients.

10
 Ad Agencies Have Skilled Specialists

Artists Writers Researchers

Photographers Media Analysts Other Skills

 The Advertising Agency
Types of Advertising Agencies
FULL SERVICE AGENCIES
• The full service agencies carry out research, create, plan,
produce advertisements and select media.
• Other services offered by the full service agencies include
sales training, sales promotion, event management,
package design, trade shows and public relations.

CREATIVE AGENCIES/BOUTIQUES
• Creative agencies create the actual advertisements
only. The creative agencies create interesting and
imaginative advertising themes and also produce
original and innovative advertisements.
• A client that contracts a creative agency will also have
to contract another advertising agency to carry out
other administrative functions relating to
advertising.

12
 The Advertising Agency
Types of Advertising Agencies
SPECIALIZED AGENCIES
• A Specialized agency offers its services within a certain
industry such as real estate, financial, medical and
education. OR
• It performs a particular function e.g. public relations,
research, marketing and internet. Specialized agencies
therefore concentrate on specific areas only.

IN-HOUSE AGENCIES
• In-house agencies are owned by the company. The In-house
agencies are formed and supervised by the company.
• They perform all functions relating to advertising the
company’s product as in the case of full service agencies.
• Most companies establish the in-house agencies in order to
cut the cost of advertising.
• A company may use its in house agency only or may
contract an external agency to work together with its in
house agency.
13
 Pros & Cons of In-House Agencies

+ Positive - Negative

Cost Less
savings experience

The
More Less
control In-house objectivity
Agency

Better Less
coordination flexibility
 The Advertising Agency
Types of Advertising Agencies
INTERACTIVE AGENCIES
• They offer services that other agencies do not, such as web
development and web design, internet advertising-
commerce consulting and search engine marketing.

MEDIA BUYING AGENCIES

• A media buying agency is a company that buys television
and radio time and then resells the time to other advertising
agencies and advertisers.
• Media buying agencies also assist the advertisers to plan the
media strategies.
• Media buying agencies normally buy a lot of space and time
from the various media stations thus they are given huge
amounts of discounts that enable them to sell the television
and radio time at low prices to the small advertising
agencies and clients.

15
 The Advertising Agency
Types of Advertising Agencies
SOCIAL MEDIA AGENCIES
Social media agencies do product promotion of the clients’ products
on the different social media platforms such as social networking
sites, discussion forums, blogs, microblogs and Q&A sites.
The two main services offered by social media agencies to clients
are online reputation management and social media
marketing.

HEALTHCARE COMMUNICATION AGENCIES

Health care communication agencies offer marketing and
strategic communications services for life science and
healthcare industries.

16
 Direct-Marketing Agency Activities

Direct-
Marketing
Database Agencies Media services
management

Direct
Creative
mail
Database
development,
Research management Production

17
 The Agency Compensation
Because the type and amount of service an agency performs can
vary from one client to another, a variety of methods are used to
compensate them for their services. Various ways for compensating
agencies are shown in this slide and include:
1. Commission method – traditional method, whereby the agency
receives a specified commission (usually 15%) from the media
on any advertising time or space it purchases for a client.
2. Fee, cost, and incentive-based systems:
• Fee arrangement – the agency charges a basic monthly fee
for all of its services. Agency and client agree on work to be
done and the amount to be paid. It is a widely used
method.
• Cost-Plus arrangement – the client pays a fee based on the
costs of its work plus some agreed-on profit margin (a
percentage of total costs). This method requires careful
accounting and detailed records of agency costs.
• Incentive-based – fee is based on how well the agency
meets its performance goals such as sales or market
share.

18
 The Agency Compensation
3. Percentage Charges – adding a markup to the various
services the agency purchases from outside providers.
These may include market research, artwork, printing,
photography, etc. The markup may range from 17.65
to 20 percent.

19
 PRINCIPLES OF
ADVERTISING

LECTURE 4
Marketing & Advertising
Research
 Advertising Research
MESSAGE RESEARCH
Measures of Recognition and Recall
1. Starch readership service (magazines)
• Examines reader awareness of ads in consumer magazines and
business publications
• Measures the primary objective of a magazine ad—to be seen and
read
• Respondents asked if they read an ad and what they remember
from the ad
• Readers are then classified unto following categories:

Noted—percentage who remember having previously seen the
ad in the issue being studied

Associated—percentage who noted the ad and saw or read
some part of it that clearly indicated the name of the brand or
advertiser

Read Some—percentage who read any part of the ad’s copy

Read Most—percentage who read half or more of the written
material in the ad

2
 Advertising Research
MESSAGE RESEARCH
Measures of Recognition and Recall
2. Bruzzone tests (TV)
Bruzzone test provides advertisers with a test of consumer
recognition of television commercials. Anything identifying the
brand is removed, to test whether viewers remember the
name of the advertiser. Buzztone:
• Emails 15 commercials (six frames from the commercial)
to a sample
• Each respondent is asked if they remember seeing the
commercial on TV
• If yes – more questions; If no or not sure – skip to next.
• Brand name references removed from the frames
• Also asked how the commercial made them feel (check
from a battery of adjectives); how interested they were in
it, whether they liked it, etc.
• Finally asked if they remember the brand name
3
 Advertising Research
MESSAGE RESEARCH
Measures of Recognition and Recall
3. Burke day-after recall (TV)
• Used to assess the effectiveness of test commercials
• Tested the day following the day the commercial is first
aired
• Telephone interviews
• Product / Brand cue given
• Asked if they saw the commercial and then asked to recall
all they can about it.

4
 Advertising Research
MESSAGE RESEARCH
Measures of Psychological Arousal
1. Ads that are better liked are more likely to be remembered
and to persuade.
2. Efforts are now made to measure consumer’s affective and
emotional reactions to ads through:
• Galvanometer—measures minute levels of perspiration in
response to emotional arousal
• Pupillometric tests—measure pupil dilation
• Neuroscience – brain imaging tests
3. Advertising researchers use changes in physiological functions
to indicate the actual, unbiased amount of arousal resulting
from ads.

5
 Advertising Research
MESSAGE RESEARCH Measures of Persuasion
Used when an advertiser’s objective is to influence consumers’ attitudes
toward and preference for the advertised brand through:
Ipsos-ASI Next*TV Method
1. Measures recall and persuasion of TV commercials
2. Performs ad research in more than 50 countries
3. Tests television commercials in consumers’ homes (natural
environment
4. Tells consumers to evaluate a TV program, but actually evaluating the
commercials within the program
5. Mails 30 minute TV programs (like a sitcom) to a national sample with
embedded commercial breaks
6. One day after viewing—personal contact with sampled consumers and
measure their reactions to the TV program and the advertisements
7. Measures message recall and persuasion
8. Persuasion measured by:
• Consumers’ attitudes toward advertised brands
• Shift in brand preferences
• Brand-related purchase intent and frequency

6
PRINCIPLES OF
ADVERTISING
LECTURE 5
The Marketing &
Advertising Planning
Process
 The Marketing Plan
Marketing Planning Process
Step 1: Collecting Organization’s External Environment Information
Step 2: Collecting Organization’s Internal Environment Information
Step 3: Identifying the Strengths, Weaknesses, Opportunities and
Threats (SWOT)
Step 4: Formulating Basic Assumptions about key determinants of
marketing success
Step 5: Formulating Organizational Objectives based on Steps 1 to 4
Step 6: Developing Strategies for achieving the Objectives
Step 7: Devising detailed Plans and Programs to accomplish the
Strategies and Objectives
Step 8: Evaluating progress towards achievement of Objectives
Step 9: Reviewing and Amending the Plan based on the Evaluation

Steps 1 to 3 are in fact Situation Analysis

2
 The Marketing Plan
The Outside-In Planning Approach
Requires significant data on customers
Strategic Advertising Campaign Planning Steps
Step 1: The Business Review: Similar to situation analysis, it includes what
the organization might become and has a forward looking approach.
Step 2: Customer Analysis: Uses database information on individual
customers.
Step 3: Behavioural Segmentation: Undertaken using individual market
behaviour, such as: purchase history, volume of use, place of purchase,
and product use. This information is taken from in-store scanners,
telephone records, bank / financial / credit card transactions.
Step 4: Customer Valuation: Determines the customer worth in terms of
profitability of customers through information on purchase loyalty,
occasional buyers, buyers given price-reductions, etc.
Step 5: Behavioural Objectives: Making objectives to change current
behaviour into more profitable behaviour.
Step 6: Communications Objectives: Based on message, incentive or
activity needed to maintain or change consumer behaviour.
Step 7: Spending Levels: Developing the budget of what needs to be
done.
Step 8: Tactics: Based on decisions made about strategies for
message, distribution, etc. 3
 The Advertising Plan
A professional Advertising Plan has following four parts:
1. Setting Advertising Goals
2. Targeting the Audience
3. Defining the Message
4. Developing a Plan of Action
1. Setting Advertising Goals
Review your marketing plan to be sure that the advertising plan
will be in sync/harmony with the marketing mix. Marketing plan
takes into account all modes of business strategy to increase
sales, referral and repeat business. Advertising should be a
subheading of the marketing plan, along with a website and
original content.
Create an advertising direction. Sit down with your team and
develop 1 to 5 things that need to be accomplished by the
current advertising plan. These are the marketing objectives that
advertising will target, such as broader product placement,
partnership with high-quality brands, identification with a
certain demographic, sponsorship of charity events or another
way of increasing sales through print, radio, online or television
advertising.
4
 The Advertising Plan
1. Setting Advertising Goals
Set SMARTER Goals. The easiest way to determine advertising plan
success is to set specific, measurable, achievable, time-bound,
economical and relevant goals that can be checked off/deleted/cut
off during and after the duration of the ad campaign.
2. Targeting the Audience
Know your customer base. The most important part of an any
advertising campaign is that it reaches the right audience. This
intended audience must have an interest in your product (whether
they know it yet or not) and be able to be converted into
customers for your advertising to be effective. Customers can be
separated by numerous metrics:
• Gender: men or women
• Age groups: children, teens, young adults, adults, middle-
aged adults, seniors, and retirees.
• Specific markets like single people, college students, men
and women in the military, or other types of businesses.
Don't try to please everyone. A common mistake is to try to
create a generic or standard ad that attracts every type of customer.
5
 The Advertising Plan
2. Targeting the Audience
1. Identify your target location. Focus your advertising to actually
reach the target audience. You want to be sure first that any
radio, television, or print ads that you plan to place will be
available in geographic areas that your clients live in.
2. Consider which types of media to use. Advertise in media
that the target audience interact with frequently. This can be
anything from social media to radio stations to trade journals.
3. Think about timing. You still need to advertise to consumers at
a time when they are thinking about buying. Analyze your
previous year's sales and try advertising in anticipation of
peak sales months or weeks. Develop a schedule that hits
your consumer base at just the right time of year.
4. Consider advertising frequency. Your customers may miss your
ad on radio or television if it only airs a couple of times. It's
generally better to purchase a substantial amount of airtime
on the right radio or TV station than to spread it out over
many different radio and TV channels.

6
 The Advertising Plan
3. Defining the Message
1. Determine your basic message. What do you want people
who read or hear your ad to do? This can include directing
them to your store or website, alerting them to a sale, or
introducing them to a new product or service. Whatever the
essence of your message is, be sure that it is
communicated clearly somewhere in the ad.
2. Keep it simple. Many ads lose their readers' or listeners'
attention by including too much information. Keep your
message and, if your advertisement is visual, your visual
content as short and simple as possible. This also means
that you should be specific. Avoid VAMPIRE CREATIVITY.
3. Establish your superiority over competitors. Why should
potential customers go to you rather than another
business offering with the same service or product? Think
about including statistics or reviews commenting on how
much better your products are than your competitor's.
Create value by pointing out the unique qualities of your
products or services.
7
 The Advertising Plan
4. Developing an Action Plan
1. Prepare a professional report. In the beginning, state the
goals or objectives as outlined by the marketing department.
The following are sections that you should include in the latter
pages:
• Include the demographics
• Explain your media channels you have chosen to use
• Describe your creative strategies.
• Create a calendar on a spreadsheet
2. Create a budget. This should list all your advertising options,
their cost, who you will pay and any other expenses. Be sure
not to overspend, as advertising can really eat into an operating
budget quickly. However, also be sure that you are spending
enough to have an impact on your target audience.
3. Do market research to better establish your advertising
plan. This may include testing your advertising pitch on your
target demographic using a focus group or another method.
4. Prepare the creative plan. The advertising department or agency
must create a creative plan that accomplishes the goals and
stays within budget.
8
 The Advertising Plan
4. Developing an Action Plan
5. Establish evaluation procedures. Establish metrics /
standards that will evaluate the new advertising strategies,
so that you can provide the return on investment (ROI) at the
end of your advertising campaign. Evaluation metrics can
include tracking links on your website, providing landing
pages for new leads, using scannable coupons or tracking an
increase of new customers or calls to your location.
6. Execute the plan. After the ad agency finalizes the plan of action,
it is presented/briefed to the client. After the client’s
approval it is implemented.

9
View publication stats

Making Advertising Budgets

Setting Advertising Budgets
1. Affordable method – the firm determines the amount to be spent
on the various areas such as production and operations and
then allocates what is left to advertising and promotion.
2. Arbitrary allocation – budget is set by management based on
what is felt to be necessary.
3. Percentage of sales – advertising and promotion budget is based on
the sales of product. Determined by taking either a percentage of
actual sales, or anticipated revenue from sales.
4. Competitive parity – setting budgets on the basis of what
competitors spend. Usually accomplished by matching the same
percentage of sales expenditures as competitors.
5. Return on investment – advertising and promotions are
considered investments, and the budget appropriation is based
on the returns the company feels it will generate from
advertising.
6. Objective and task Method – The firm determine the costs
associated with the specific tasks that are required to
accomplish the advertising objectives. For example, How much
will it cost to make 60% of the target audience aware of the
new product? 10