21MBA4M2 - Module 3-1
21MBA4M2 - Module 3-1
21MBA4M2
MODULE 3
Syllabus: Module 3
Advertising:
1.) What is advertising?
According to Kotler –
The role of advertising can be analyzed from five different angles: manufacturers;
middlemen; sales force; customers, and society.
Some of the importance of advertising are: -
B) Benefits to Customers
1) Enhanced Knowledge
2) Planning before Shopping
3) Reasonable Prices
C) Benefits to Salesman
1) Less Time
2) Easy Convincing
3) More Coverage
4) Ready to Receive
D) Benefits to Society
1) Improved Standard of Living
2) Creates Employment Opportunities
3) Solves Societal Problems
4) Encourages Media.
“The work of a tailor is to collect the raw material, find matching threads, cut the cloth
in desired shape, finally stitch the cloth and deliver it to the customer.”
An Advertising Agency is just like a tailor. It creates the ads, plans how, when, and
where it should be delivered and hands it over to the client. Advertising agencies are mostly
not dependent on any organizations.
These agencies make all the efforts to sell the products of the clients. They have a group
of people experts in their particular fields, thus helping the companies or organizations to reach
their target customers easily and simply.
The first Advertising Agency was William Taylor in 1786 followed by James “Jem”
White in 1800 in London and Reynell & Son in 1812.
Types of advertising:
Advertising activities can be categorised into above the line, below the line, and through
the line advertising according to their level of penetration.
• Above the line advertising include activities that are largely non-targeted and have a
wide reach. Examples of above the line advertising are TV, radio, & newspaper
advertisements.
• Below the line advertising include conversion focused activities which are directed
towards a specific target group. Examples of below the line advertising are billboards,
sponsorships, in-store advertising, etc.
• Through the line advertising include activities which involve the use of both ATL &
BTL strategies simultaneously. These are directed towards brand building and
conversions and make use of targeted (personalised) advertisement strategies.
Examples of through the line advertising are cookie-based advertising, digital
marketing strategies, etc.
Alternatively, Advertising can also be classified as below,
1. Print Advertising - The print media has been used for advertising since long. The
newspapers and magazines are quite popular modes of advertising for different
companies all over the world. Using the print media, the companies can also promote
their products through brochures and fliers. The newspaper and magazines sell the
advertising space and the cost depends on several factors. The quantity of space, the
page of the publication, and the type of paper decide the cost of the advertisement. So
an ad on the front page would be costlier than on inside pages. Similarly, an ad in the
glossy supplement of the paper would be more expensive than in a mediocre quality
paper.
2. Broadcast Advertising - This type of advertising is very popular all around the world.
It consists of television, radio, or Internet advertising. The ads on the television have a
large audience and are very popular. The cost of the advertisement depends on the
length of the ad and the time at which the ad would be appearing. For example, the
prime time ads would be costlier than the regular ones. Radio advertising is not what it
used to be after the advent of television and Internet, but still there is specific audience
for the radio ads too. The radio jingles are quite popular in sections of society and help
to sell the products.
3. Outdoor Advertising - Outdoor advertising makes use of different tools to gain
customer’s attention. The billboards, kiosks, and events and tradeshows are an effective
way to convey the message of the company. The billboards are present all around the
city but the content should be such that it attracts the attention of the customer. The
kiosks are an easy outlet of the products and serve as information outlets for the people
too. Organizing events such as trade fairs and exhibitions for promotion of the product
or service also in a way advertises the product. Therefore, outdoor advertising is an
effective advertising tool.
4. Covert Advertising - This is a unique way of advertising in which the product or the
message is subtly included in a movie or TV serial. There is no actual ad, just the
mention of the product in the movie. For example, Tom Cruise used the Nokia phone
in the movie Minority Report.
5. Public Service Advertising - As evident from the title itself, such advertising is for
public causes. There are a host of important matters such as AIDS, 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.
12. Modern ad agencies perform a wide variety of functions over and above advertising
activities, like marketing consultancy, research, new product development, etc. It
deals with almost all the marketing areas.
All companies can do this work by themselves. They can make ads, print or advertise
them on televisions or other media places; they can manage the accounts also. Then why
do they need advertising agencies? The reasons behind hiring the advertising agencies by
the companies are:
1. The agencies are expert in this field. They have a team of different people for
different functions like copywriters, art directors, planners, etc.
2. The agencies make optimum use of these people, their experience and their
knowledge.
3. They work with an objective and are very professionals.
4. Hiring them leads in saving the costs up to some extent.
1. Full-service Agencies
▪ Large size agencies.
▪ Deals with all stages of advertisement.
▪ Different expert people for different departments.
▪ Starts work from gathering data and analysing and ends on payment of bills
to the media people.
2. Interactive Agencies
▪ Modernized modes of communication are used.
▪ Uses online advertisements, sending personal messages on mobile phones,
etc.
▪ The ads produced are very interactive, having very new concepts, and very
innovative.
3. Creative Boutiques
▪ Very creative and innovative ads.
▪ No other function is performed other than creating actual ads.
▪ Small sized agencies with their own copywriters, directors, and creative
people.
4. Media Buying Agencies
▪ Buys place for advertise and sells it to the advertisers.
▪ Sells time in which advertisement will be placed.
▪ Schedules slots at different television channels and radio stations.
▪ Finally supervises or checks whether the ad has been telecasted at opted time
and place or not.
5. In-House Agencies
▪ As good as the full-service agencies.
▪ Big organization prefers these types of agencies which are in built and work
only for them.
▪ These agencies work as per the requirements of the organizations.
There are some specialized agencies which work for some special advertisements.
These types of agencies need people of special knowledge in that field. For example,
advertisements showing social messages, finance advertisements, medicine related ads, etc.
Services offered by an Advertising agency:
1) Attracting clients
• Advertising agency needs clients (advertisers). Without them, it cannot survive.
2) Account Management
• Within an advertising agency the account manager or account executive is tasked
with handling all major decisions related to a specific client.
• The account manager works closely with the client to develop an advertising
strategy.
3) Creative Services
• Advertising agency put the advertising-plan into action under its creative function.
Creation of ads is the most important function of an ad agency. Generally, it
involves activities like:
• Copy writing, drawing photographs, Making illustrations, layouts, an effective ad
message, etc.
• These jobs are done by experts like copy writers, artists, designers, etc. These
people are highly skilled and creative. They make an advertisement more appealing.
Attractive ads help to increase the sales of the product.
4) Market Research
• Full-service advertising agencies employ market researchers who assess a client’s
market situation, including understanding customers and competitors, and also are
used to test creative ideas.
• Advertising agency gathers information related to the client's product. It collects
following information about a product under its research function:
• Features, quality, advantages and limitations of a product, Present and future market
possibilities, Competition in the market, Situation in the market, Distribution
methods, Buyers' preferences, so on
• Ad agency analyses (studies) all this collected information properly and draws
conclusions for its research. It helps in planning an advertising campaign, selecting
proper media and creation function.
5) Media Planning
• Advertising agency helps an advertiser to select a proper media (ad platform) to
promote his advertisement effectively.
• Media selection is a highly specialized function of an ad agency. It must select the
most suitable media for its client's ad.
• Advertising agency plans the entire ad campaign of its client. Advertising planning
is a primary function of an ad agency. It is done when its research function is
completed. That is, after analysing the client's product, its competitors, market
conditions, etc. It is done by experts who use their professional experience to make
a result-oriented advertising-plan.
• Once an advertisement is created, it must be placed through an appropriate
advertising media.
• Each advertising media, of which there are thousands, has its own unique methods
for accepting advertisements, such as different advertising cost structures (i.e., what
it costs marketers to place an ad), different requirements for accepting ad designs
(e.g., size of ad), different ways placements can be purchased (e.g., direct contact
with media or through third-party seller), and different time schedules (i.e., when
ad will be run). Understanding the nuances of different media is the role of a media
planner, who looks for the best media match for a client and also negotiates the best
deals.
6) Advertising budgetting
• Advertising agency helps an advertiser to prepare his ad budget. It helps him to use
his budget economically and make the best use of it.
• Without a proper advertising budget, there is a risk of client's funds getting wasted
or lost.
7) Coordination
• Advertising agency brings a good coordination between the advertiser, itself, media
and distributors.
8) Sales promotion
• Advertising agency performs sales promotion. It helps an advertiser to introduce
sales promotion measures for the dealers and consumers. This helps to increase the
sales of the product.
9) Public relations
• Advertising agency does the public relations (PR) work for its clients. It increases
the goodwill between its clients and other parties like consumers, employees,
middlemen, shareholders, etc. It also maintains good relations between the client
and media owner.
10) Non-advertising functions
• Branding: These firms widen the marketing scope beyond your products or
services. They are focused on your company – specifically on establishing,
cultivating and maintaining a strong public image or “brand” for your business in
the marketplace.
• Direct marketing: These agencies focus on “direct response” media – which are
communications tactics that have a built-in way for consumers to respond to you.
This can include mail pieces such as letters or postcards, email marketing that drives
consumers to your website, and/or telephone marketing in which trained callers
phone a predetermined set of prospective customers.
• Social media: A hot subset of digital marketing agencies, these firms focus on using
blogs, Facebook, Twitter, LinkedIn, Tumblr and other social media to communicate
with customers. These agencies monitor social networks regularly. Establishing and
maintaining online relationships with customers and prospects is a priority for them.
• Public relations: These firms focus on helping the public understand your company
and its products. Creating a strong image of your company to the outside world is a
major focus for them. Their tactics can include press releases, events, media talk
shows, articles and columns in trade publications.
11. Scalability:
Think about your long-term needs and whether the agency can scale its services to
accommodate your growth.
Ultimately, the selection of an advertising agency should align with your business goals,
values, and marketing objectives. Thoroughly researching and considering these criteria will
help you make an informed decision and choose an agency that can best support your
advertising needs.
Evaluation of Advertising Agencies:
It's important to evaluate advertising agencies carefully, whether you are seeking to
engage an agency or reviewing the relationship with your existing agency. Among the
important factors to evaluate are the agency's experience in your sector, quality of creative
work, range of services, quality of the account team and commitment to your business. For
small companies, an advertising agency represents an extension of your own marketing
department, so the quality of the relationship is another important factor to evaluate.
The process of agency evaluation involves regular assessment of two aspects of
performance area-financial and qualitative. The financial assessment focuses on how the
agency conducts its business to verify costs and expenses, the number of personal hours
charged to an account and what payments are made to media and other outside service
suppliers.
Qualitative assessment explores the agency’s efforts devoted in planning, developing
and implementing the client company’s advertising campaign and an assessment of the
achievements.
Depending on the importance of advertising in a company’s marketing programme,
both informal and formal methods of assessments are used by different companies.
Some companies develop a formal and systematic evaluation method that uses a
ranking scale for creative and media services such as poor-average-excellent on a scale from 1
to 10.
Brand or Promotion managers complete the advertising agency performance
evaluation, usually once a year. These reports are reviewed with the agency at each annual
meeting.
Some large companies as may use more than one advertising agency for different
product lines. The advertising budgets for smaller companies being small, smaller agencies
may be willing to work with them and hope to grow with them.
1) Select a shortlist of agencies to evaluate. Search for suitable agencies on the website
of an association such as the American Association of Advertising Agencies. Define
your search criteria carefully; there are some 30,000 advertising agencies in the U.S.
alone, according to the website Agency Finder.
2) Assess the agencies' experience in your sector. Separate agencies with consumer or
business-to-business experience as a starting point. Review the agencies' client lists to
see what type of sector experience they have. Evaluate any sector-specific case studies
published on agency websites. Avoid agencies with clients that are direct competitors
of your company.
5) Meet the teams at shortlisted agencies and review the qualifications and
experience of the people who would be working on your account. Ensure that the
agencies do not plan to change the composition of the account team if they win your
business. Clients sometimes complain that agencies field senior people at preliminary
meetings, then hand over day-to-day account management responsibility to a junior
team. Offering you the continuing services of a senior team demonstrates the agency's
commitment to the success of your business.
6) Clarify your company’s goals. What are the main objectives you are looking to
achieve by hiring an agency? Although this is an internal activity, it will have a huge
impact on which choice you ultimately make. If your in-house marketing efforts seem
to be falling short of your ROI objectives, seeking the help of a qualified digital agency
can help eliminate any “blind spots” and provide you with additional insight on how to
optimize your online marketing efforts.
7) Evaluate their fee structure. Typically, most digital agencies will receive
compensation in the form of some percentage of your ad spend or media buys (e.g.,
pay-per-click advertising, banner or display ads, etc.). A common fee percentage range
is between 10-20 percent of total spend. This fee-based structure is one of the most
feasible methods of compensation for advertisers and marketers, as it allows them to
make more accurate predictions of what their recurring expenses will be.
8) Ask them for some case studies or recent work they’ve done for other clients that
have business goals similar to yours. If they are unable to produce a project that
provides a solid demonstration of their digital strategy, you may need to keep looking.
Seasoned agencies should have no problem fulfilling this request.
9) Check out their corporate blog. Is it up to date? Do they provide useful industry-
specific insights and information, or are they just cranking out “token posts” to keep
the blog fresh? Have they positioned themselves as innovators or thought leaders in
their industry? Do they produce other useful content such as webinars, white papers or
eBooks? The diligence and proficiency with which they market their own content will
be a good indication of how they will market yours.
10) Check out their social networking profiles. Any good digital marketing agency worth
its salt will have at least a few of their team members maintaining some type of active
presence on the prominent social media websites (e.g., Facebook, Twitter, etc.). Does
it seem like they have influence in their industry? Are they trend setters, or do they
seem to be trend followers instead? Again, you really can’t expect them to do more for
you than they’re currently doing for themselves.
Benefits of Agency Evaluation:
An agency evaluation program is designed to effectively collect and analyse
information from key stakeholders through a type of survey. The survey results help dive into
the client-agency relationship, shared responsibilities as well as assess agency performance
against Key Performance Indicators (KPIs) and/or Key Results Areas (KRAs). By opening the
lines of communication through a formalized evaluation process, clients can benefit from:
• Improving agency relationship
❖ By creating honest and constructive feedback, in which both parties feel heard,
the relationship can thrive. Both client and agency feel connected through the
discussion of common goals and responsibilities. This hones in on the notion
that the majority of clients and agencies believe that each other's successes help
drive their own business goals.
• Maximizing marketing investment
❖ Being able to assess performance, aids in ensuring the agency is working as
effectively and efficiently as possible.
• Performance improvement and visibility
❖ Agencies can identify key development needs, thus aiding in improving the
quality of work and overall service
Think about your own individual work cycle. Many of us start with goals and objectives
to guide us through our work year. We have statuses and check points along the way and often
end in an annual evaluation. Our evaluation assesses and reviews our job performance. Think
about why this is important to us as individuals. Not only does it highlight our strengths and
areas of improvement, but it also serves as a reminder of what is expected of us in the
workplace. Think about why this is important to our employers. By ensuring their employees
are staying on task, receiving open communication and remaining motivated, they are
protecting the investment on each employee (salary, benefits, etc.). A performance evaluation
serves as a formal means of open communication between the parties to help both the individual
and the company thrive.
What are the problems that arise during mediation in advertising agency
selection and how to resolve them?
Mediation during the advertising agency selection process can be a valuable step to ensure that
both the client and the agency are aligned on expectations and terms. However, problems or
disagreements can arise during this process. Here are some common issues that may occur and
ways to resolve them:
1. Budget Disagreements:
• Problem: The client and agency may have differing opinions on the budget
required for the advertising campaign.
• Resolution: Open and transparent communication is key. Both parties should
discuss their budgetary constraints, and the agency can provide a detailed
breakdown of how the budget will be allocated. If necessary, negotiations can
take place to find a middle ground.
2. Creative Differences:
• Problem: The client and agency may not agree on the creative direction or
messaging of the campaign.
• Resolution: Clearly define the goals and objectives of the campaign. Encourage
open dialogue and constructive feedback. Agencies should be willing to revise
their creative concepts based on client input while also providing their
professional insights.
3. Scope Creep:
• Problem: The scope of work may expand beyond what was initially agreed
upon, leading to potential disputes over additional costs and timelines.
• Resolution: Ensure that the scope of work is well-documented in the contract.
If changes are necessary, both parties should discuss and agree on them in
writing, including any adjustments to the budget and timeline.
4. Lack of Communication:
• Problem: Poor communication can lead to misunderstandings and frustration.
• Resolution: Establish a clear communication plan from the beginning. Define
how and when updates and progress reports will be provided. Regular meetings
and open lines of communication can help prevent misunderstandings.
5. Performance Metrics Disagreements:
• Problem: The client and agency may have different expectations regarding how
success will be measured.
• Resolution: Clearly define key performance indicators (KPIs) and success
metrics in the contract. Regularly review and assess campaign performance
against these metrics. If necessary, adjust strategies based on data and insights.
6. Timeline Delays:
• Problem: Delays in campaign execution can cause frustration and missed
opportunities.
• Resolution: Establish a realistic timeline from the outset, taking into account all
necessary tasks and approvals. Both parties should commit to meeting
deadlines. If delays occur due to unforeseen circumstances, communicate them
promptly and work together to adjust the timeline.
7. Contractual Disputes:
• Problem: Disagreements over contract terms, termination clauses, or exclusivity
agreements can lead to legal disputes.
• Resolution: Have a clear and comprehensive contract in place from the
beginning. If disputes arise, consider mediation or arbitration as a means of
resolving conflicts before resorting to litigation.
8. Cultural and Ethical Misalignments:
• Problem: Differences in values, culture, or ethical standards can lead to
conflicts.
• Resolution: Ensure that both parties understand and respect each other's values
and ethical guidelines. If there are significant misalignments, it may be best to
reconsider the partnership before it becomes a major issue.
In all cases, proactive communication and documentation are essential to resolving problems
during the agency selection process. Both the client and the agency should prioritize
transparency, professionalism, and a commitment to finding mutually beneficial solutions. If
necessary, involving a neutral third party or mediator can also help facilitate discussions and
resolutions.
1. United States:
Federal Trade Commission (FTC): The FTC is the primary regulatory body responsible
for advertising regulations in the United States. It enforces laws related to deceptive
advertising, unfair business practices, and consumer protection. The FTC issues
guidelines and takes enforcement actions against false or misleading advertisements.
2. European Union:
European Advertising Standards Alliance (EASA): EASA is a self-regulatory
organization that coordinates advertising standards and practices across Europe. It
works in collaboration with national advertising self-regulatory organizations in EU
member states.
3. United Kingdom:
Advertising Standards Authority (ASA): The ASA is the UK's independent advertising
regulator. It ensures that advertisements are legal, decent, honest, and truthful. The ASA
also covers digital advertising and social media.
4. Canada:
Advertising Standards Canada (ASC): ASC is a self-regulatory body that oversees
advertising standards in Canada. It administers the Canadian Code of Advertising
Standards and handles consumer complaints about advertisements.
5. Australia:
Australian Association of National Advertisers (AANA): AANA is a self-regulatory
body that sets advertising standards in Australia. It administers the Advertising
Standards Bureau, which handles complaints about advertisements.
6. India:
Advertising Standards Council of India (ASCI): As mentioned earlier, ASCI is a self-
regulatory body in India that regulates advertising content and promotes ethical
advertising practices.
7. China:
State Administration for Market Regulation (SAMR): SAMR oversees advertising
regulations in China. It enforces laws related to false advertising, unfair competition,
and consumer protection.
8. Brazil:
Conselho Nacional de Autorregulamentação Publicitária (CONAR): CONAR is a self-
regulatory body in Brazil that monitors and regulates advertising practices, ensuring
they are ethical and comply with Brazilian laws.
9. South Africa:
Advertising Standards Authority of South Africa (ASA-SA): ASA-SA is responsible
for regulating advertising content in South Africa. It enforces the Code of Advertising
Practice and handles complaints from consumers.
10. Japan:
Japan Advertising Review Organization (JARO): JARO is a self-regulatory
organization that oversees advertising practices in Japan, including the review of
advertisements for accuracy and compliance with industry standards.
In India, advertising is regulated by various government agencies and bodies to ensure that
advertising practices are fair, ethical, and comply with the law. Some of the key regulatory
bodies governing advertising regulations and controls in India include:
1. Advertising Standards Council of India (ASCI): ASCI is a self-regulatory
organization in India that aims to maintain high ethical standards in advertising. It
formulates and enforces a code of self-regulation for advertising content. ASCI reviews
and acts on complaints related to misleading, false, or offensive advertisements.
2. Ministry of Information and Broadcasting (MIB): MIB is a government ministry
responsible for regulating various aspects of media and broadcasting in India, including
advertisements in electronic and print media. MIB issues guidelines and regulations for
advertising on television and radio.
3. Food Safety and Standards Authority of India (FSSAI): FSSAI regulates
advertising related to food products and ensures that food advertisements do not make
false claims or mislead consumers about the quality, safety, or nutritional value of food
items.
4. Central Board of Film Certification (CBFC): CBFC, commonly known as the
Censor Board, regulates the content of films, including advertisements shown in
cinemas. Advertisements shown before movies must adhere to CBFC guidelines.
5. Drug Controller General of India (DCGI): DCGI regulates advertisements related to
pharmaceutical products and medical devices. It ensures that advertisements for
medicines do not make false claims or promote unauthorized products.
6. Press Council of India: While primarily concerned with print journalism ethics, the
Press Council of India also oversees ethical practices in newspaper advertising. It
ensures that advertisements in newspapers comply with journalistic and ethical
standards.
7. Consumer Protection Authority: Under the Consumer Protection Act, the Consumer
Protection Authority can take action against misleading advertisements that harm
consumers' interests. This authority focuses on protecting consumers from unfair trade
practices.
8. Telecom Regulatory Authority of India (TRAI): TRAI regulates advertising on
television channels and cable networks, particularly concerning issues like ad volume
and placement.
9. Securities and Exchange Board of India (SEBI): SEBI regulates advertisements
related to the financial and securities markets. It ensures that advertisements related to
investment and financial products do not mislead investors.
10. Competition Commission of India (CCI): CCI monitors and regulates advertising
practices that could be anti-competitive or deceptive, ensuring fair competition in the
market.
These regulatory bodies collaborate to ensure that advertisements in India comply with the law,
maintain ethical standards, and protect consumer interests. Advertisers and advertising
agencies are expected to adhere to these regulations to prevent misleading or harmful
advertising practices. Non-compliance with these regulations can result in penalties, fines, or
legal actions.