chap 11 - advertising

6/13/2012
ADVERTISING
Advertising:
A paid, mediated presentation of information about
services, products or ideas with the specific goal of
influencing the consumers of the information
> Advertising is a form of promotion
- promotion: making the public aware of a
company, candidate, product, service or issue
- promotion includes advertising, public relations,
packaging, personal selling and gifts
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Importance of advertising
> Consumer economics
interaction of the supply and demand in the
advertising market
connection between advertising market and
consumer market
> Advertising and prosperity
> Advertising and democracy
> Persuasion vs. coercion
Origins of advertising
> Stepchild of technology
> Mercantile press and advertising
- mercantile newspapers served businesses
announced arrival of goods from England
real estate sales
services offered
Origins of advertising
> Development of mass advertising
- 1840s: Penny Press caused explosion in
circulation
merchants could reach thousands of readers
each day – it was the first mass advertising
papers began to sell advertising space by the
column inch
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Origins of advertising
> Development of Mass Advertising
- patent medicines (let the buyer beware)
prompted government to create truth-in
advertising laws
1906: Pure Food and Drug Act
1914: Federal Trade Commission established
1931: Food and Drug Administration
established
regulate advertising and interstate trade
crack down on false advertising
Origins of advertising
> Development of mass advertising
- rise of advertising agents
go-between for newspapers/magazines and
advertisers
could place the same ad in many publications
created the first newspaper directory
evolved into today’s advertising agencies
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Origins of advertising
> Broadcasting arrives
- radio was first instantaneous national medium
could reach millions of people at the same time
Origins of advertising
> Broadcasting arrives
- rise of advertising agencies
+ more choices for advertisers
+ agencies became full-service organizations
research audiences
advise client where to place the ad
buy ad space in newspapers, radio, TV etc.
write the ad copy
create the ad illustrations, video etc.
Origins of advertising
> Broadcasting arrives
- TV let viewers see product & hear national
message
persuasive message is much more effective
TV has the greatest growth in ad revenue
- 1980s: rise of cable TV
advertiser can reach segmented audiences
target products or campaigns to different
audiences
http://adage.com/images/random/datacenter/2009/spendtrends09.pdf
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“You don’t get it, Daddy, because they’re not
targeting you.”
Advertising agencies
> Pioneer agencies
Wayland Ayer’s N. W. Ayer & Son
> Agency compensation
Commissions
Performance
Equity
Advertising agencies
> Producing the ad campaign
+ The ad agency team
the creative side designs ads for various
media
copywriters
designers
artists
photographers
video production companies
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Advertising agencies
> Producing the ad campaign
- the ad agency team
+ the business side
media buyers
place the ads in various media
+ researchers
plan and assess the effectiveness of the
ad
Advertising agencies
> Producing the ad campaign
- the ad agency team
+ the business side
merchandise experts
oversee other forms of promotion besides
advertising
+ account executive
oversee the campaign
Placing advertisements
> Media plans
- CPM (cost per thousand)
- Audit Bureau of Circulations
- Survey organizations (e.g., Nielson & Arbitron)
- Standard Rate and Data Service
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Placing advertisements
> Traditional choices
- Newspapers
- Magazines
Shelf life
Pass-along circulation
- Radio
- Television
Ad clutter
- Online
Placing advertisements
> Other methods of advertising
 billboards
 TV informercials
 clothing logos
 yellow pages
 direct mail
 product placement in TV
and movies
New advertising platforms
> Search engines
- Google ads
Sponsored Link
Click-through fee
> Gaming
- Advergame
> Pre-movie advertising
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Brand strategies
> Brand names
> Brand images
David Ogilvy
> The future of brand names
Store brands
Branding
Brand strategies
> Does advertising make goods more expensive?
- Some say yes, cost of making the ad is passed on
to the consumer
- Others say no, ads actually lowers the price of
goods
economies of scale
mass production reduces manufacturing costs
Brand strategies
> Another factor in price is brand loyalty and the
product’s recognition
- some advertising emphasizes product quality
differentiating the product
shows how it is different and better than the
competition
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Brand strategies
> Social costs
- racking up credit card bills to buy things
advertisers tell use we for social acceptance
brand of watch or shoes or clothes
- fashion ads that encourage anorexia or early-teen
sexuality
Manipulation by advertising
> influence children’s behavior
- young children lack rational thinking abilities
can’t differentiate between program and ad
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Manipulation by advertising
> slotting
manufacturers paying for store promotions and shelf
space
Manipulation by advertising
> Advertising’s influence on journalism
- favorable treatment of major advertisers
- self-censorship to avoid offending advertiser
- “lighter” news to draw larger TV audiences
- response to consumer boycotts
Influence of advertising on consumer
behavior
> consumer behavior:
- the study of how advertising affects people
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Influence of advertising on consumer
behavior
> Two perspectives of consumer behavior:
- cognitive
rational mental process
use information in ads to make rational choices
more often found in print ads
- emotive
appeals to the emotions
more often found in TV ads
Identifying consumers as types
> Tools advertisers and ad agencies use to identify
potential customers:
- demographics
+ characteristics of the person or household
age
income
family size
marital status etc.
Identifying consumers as types
> Tools advertisers and ad agencies use to identify
potential customers:
- psychographics
+ lifestyles and activities
hobbies
movie attendance
music preferences
sports etc.
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Identifying consumers as types
> Tools advertisers and ad agencies use to identify
potential customers:
- geographics
+ where the potential buyer lives
Advertising techniques
> Lowest common denominator
- unique selling proposition
Rosser Reeves - unique selling proposition
- positioning
Advertising techniques
> Redundancy techniques
- barrages
flight or waves
- bunching
- trailing
- multimedia trailing
> Testimonials
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Advertising techniques
> Quality advertising
> Salience and
novelty
United Colors of
Benetton
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> Identity
advertising
> Source
credibility
> Classical conditioning
stimulus and response
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Top-rated commercials
No. 3: Timex watches
http://www.youtube.com/watch?v=clI3Oc1vnaM
No. 2: Coca Cola
http://www.youtube.com/watch?v=xffOCZYX6F8
No. 1: Apple computer
http://www.youtube.com/watch?v=R706isyDrqI
Advertising affects consumers in four
ways
1. make people aware of the product or service
> have to know it exists before you can buy it
2. provide price information
> look for sales in stores
> know what kind of car you can afford
> know where you can afford to buy or rent a
home
Advertising affects consumers in four
ways
3. provide information about quality
> endorsements from creditable sources
4. get people to identify the product with a certain
person or activity
> identity advertising
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Advertising affects consumers in four
ways
 same ad won’t affect all consumers
> need to create campaign with several ads
- attract different demographics
- attract different psychographics
Two types of agencies
1. full service
> offer the client all the ad-team services
2. boutique agency
> specialize in creative services
Types of advertisements
> Geographic coverage
- National
+ same ad throughout the country
Nike
Dominoes
General Motors
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Types of advertisements
> Geographic coverage
- Local
+ local businesses
sporting goods store selling Nikes
local Dominoes’ promotion
GM ad targeting S. Calif. market
Types of advertisements
> Geographic coverage
- Regional
+ zoning ads for small area of the media’s market
community news insert in LA Times
regional distribution of national magazine
cable company’s local ad slot on CNN or
A&E
- Geographic coverage affects the price of the ad
+ bigger audience = higher ad rates
Types of advertisements
> Non-commercial ads
- Business ads
influence attitude toward a business
create positive attitude
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Types of advertisements
> Non-commercial ads
- Public service ads
promote behavior and attitudes that benefit
society
many are created by the Advertising Council
Types of advertisements
> Non-commercial ads
- Political ads
+ persuade people to vote for a candidate or
support an issue
+ types of political ads
biography ads
position ads
attack ads
daisy: http://www.youtube.com/watch?v=Er5h_TXun6o
New advertising techniques
> Word-of-mouth advertising
- Buzz advertising
- Viral advertising
http://www.youtube.com/watch?v=owGykVbfgUE
> Under-the-radar advertising
- Stealth ads
- Product placement
- Infomercials
‘Zines
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Problems and issues
> Advertising clutter
> Creative excesses
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