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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 watcheshttp://www.youtube.com/watch?v=clI3Oc1vnaM

No. 2: Coca Colahttp://www.youtube.com/watch?v=xffOCZYX6F8

No. 1: Apple computer http://www.youtube.com/watch?v=R706isyDrqI

Advertising affects consumers in four

ways1. 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

ways3. 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 agencies1. 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