ADVERTISING

ADVERTISING AND CONSUMER ECONOMIES

Advertising is a major component of modern economies.

When the Gross National Product is up, so is advertising.

When the recession hit in the early 1990ís many manufacturers and distributors pull back on their advertising expenditures.

ADERTISING AND PROSPERITY

Advertising has been a product of a plentiful society.

Advertising is a product of prosperity, while at the same time contributes to prosperity.

By dangling desirable commodities and services before mass audiences, advertising can inspire people to greater productivity.

Advertising also introduces efficiency into the economy by allowing comparison-shopping.

ADVERTISING AND PROSPERITY

Advertising took off as a modern phenomenon in the United States more than elsewhere, which has given rise to a theory that advertising and democracy are connected

Americans, living in a democracy, have always been required by their political system to have opinions. It is believed that this individuality has paved the way for advertising, much the same way people look to the mass media for information.

Advertising is also important in generating revenue for newspapers, magazines, television and radio.

ORIGINS OF ADVERTISING

Flyers were the first form of advertising.

The first type of advertising came in the form of flyers in the 1800ís.

Advertising was then placed in newspapers and magazines.

The penny press made newspapers affordable to everyone. Just as commercial media today, the penny express looked to advertisers to pick up the slack.

The Ayer agency in 1842 bought large blocks of newspaper space at a discount, broke up the space, and resold it to advertisers at a markup, usually 25%.

The Ayer agency offered an array of services that agencies still offer clients today.

  • Created ads
  • Counseled on selling products and services
  • Designed services for creating advertisements and campaigns
  • Placed advertisements in advantageous media

ADVERTISING AGENCIES

The 500 leading agencies employ 1,200 people worldwide.

The responsibilities of people who work at advertising agencies fall into several of the following broad categories:

  • Creative positions: This category includes copywriters, graphics experts and layout people. These creative people generally report to creative directors, art directors and copy supervisors.
  • Client liaison: Most of the people are account executives, who work with clients. Account executives are responsible for understanding clientís needs, communicating those needs to the entire create staff, and going back to clients with the creative staffís ideas.
  • Media buying: Agency employees called media buyers determine the most efficient media in which to place ads and then place them.
  • Market research: Agency research staffs generate information on target consumer groups, data that can guide the creative and media staffs.

MEDIA ADVERTISING PLANS

Agencies create media plans to ensure that advertisements reach the right target audience. The task is not small considering the number of media outlets.

  1. Daily newspapers
  2. Weeklies
  3. General interest magazines
  4. Radio stations
  5. Television stations
  6. Direct mail
  7. Billboards
  8. Blimps
  9. Skywriting

The most common formula for deciding which media are best is called CPM, short for cost per thousand.

If airtime for a radio advertisement costs 7.2 cents per thousand listeners, and if space for a magazine costs 7.3 cents per thousand readers, and both will reach the targeted audience, the lower CPM will be the medium of choice.

Media buyers have numerous sources of data to help them decide where advertisements can be placed for best results,

MEDIA FOR ADVERTISING

Newspapers: The hot relationship that media theorist Marshall McLuhan described between newspapers and their readers attracts advertisers. Newspaper readers are predisposed to

consider information in advertising seriously.

Magazines: As another print medium, magazines have many of the advantages of newspapers, plus a longer shelf life, which is an advertising term for the amount of time that an advertisement remains available for readers.

Radio: Radio stations with narrow formats offer easily identified targeted audiences. Time can be bought on short notice, with changes possible almost until airtime.

Television: As a moving and visual medium, television can offer unmatched impact, and the rapid growth of both network and local television advertising, far outpacing other media, indicates its effectiveness in reaching a diverse mass audience.

SATURATION ADVERTISING:

An emerging twist on advertisement placement is saturation advertising, which Chris Whittle has pioneered through some of his alternative media publications.

With this approach, an advertiser selects a media vehicle that seems right for its products or services and then buys all the ad space that is available.

Asked how he would spend General Motors $13 billion dollar advertising budget through the 1990ís, Whittle, applying the saturation idea, said he would advise GM to:

Become the sole sponsor of the summer and winter: Olympics (2.6 billion)

Buy all the ad space for one week in every newspaper and magazine and on every television and radio station, as well as every billboard and every milk carton, to advertise GM cars ($2 billion)

Hire 8,000 bright University graduates to take the 8 million people who bought Fords the previous year to a $100 lunch to explain the virtue of GM cars ($2 billion)

Build showrooms in the 300 largest indoor malls and allow shoppers to inspect the new cars without being hassled by salespeople to book a test drive ($1 billion)

Buy every commerical slot on Cable News Network for one whole year

Buy every commercial slot on ABC<NBC and CBS during the 25th Anniversary of Earth Day in 1995 and sponsor environmental programs ($200 million)

Engage film maker Steven Spielberg to create an adventure trilogy to be shown at special screenings for the 10 million people who bought a Japanese car the previous year ($200 million)

IMPORTANCE OF BRANDS AND BRAND IMAGE

Explaining the importance of image is difficult. Toothpaste is toothpaste. Whiskey is whiskey. The brand image is 90% of what the advertiser wants to sell. Both however, taste images.

LOWEST COMMON DENOMINATOR

The LCD approach is brand-name campaigns geared to the lowest common denominator, or in other words, geared to the largest possible audience.

Also known as USP, which means unique selling proposition. Create a benefit of the product, even if from thin air, and than promote the benefit authoritatively and repeatedly as if the competition does not have it.

Example: Heartburn relief is spelt R-O-L-A-I-D-S.

USPíS can be unappealing and can even insult your intelligence over and over.

POSITIONING AND MARKET SEGMENTS:

Rather than pitching to the lowest common denominator, advertising executives sometimes position their products. Positioning helps distinguish products from the LCD clamor and noise.

Example:

Johnson & Johnsonís baby oil and shampoo positioned the product for adults by featuring athletes in their advertisements.

Alka-Seltzer not just a solution for a hang over but a product to relieve stress among health-conscious, success-driven people.

REDUNDANCY TECHNIQUES:

Barrages: Scheduling advertising in intensive bursts called flights or waves.

Bunching: Promoting a product during a limited time. Example would be school supplies in August and September.

Trailing: Running a full blown ad campaign for one minute air time followed by 30 second spots.

Multimedia Trailing: Using cheap media such as radio to follow expensive television advertisements.

TREND IS TOWARD THE GLOBALIZATION OF ADVERTISING.

Most of all the super based advertising agencies are based in the Western World

Diminishes indigenous values in less developed countries; under the steamroller that is called "cultural imperialism" or "hegemony".

Some of the leading ad agencies in Canada are part of conglomerates:

  • BBDO Canada is a subsidiary of Omnicom of New York
  • Olgivy and Mather are part of the WWP Group a worldwide conglomerate with headquarters in London.
  • Young and Rubicamís head office is in New York

AGENCY CONSOLIDTION IN THE 1980ís

  1. Agencies that were running huge profits had money to spend on acquisitions
  2. Banks and other lending institutions were willing to finance heavily leveraged acquisitions.

TEN TOP ADVERTISING AGENCIES IN CANADA

See chart p. 271

GATEKEEPING REGUALTION BY THE MEDIA

The advertising industry in Canada must adhere to a variety of laws and regulations, most notably the Competition Act.

This is a federal statue that covers many different aspects of advertising in Canada.

Guidelines under the act include:

  • False and misleading advertising
  • Bait and switch advertising
  • Selling at a higher price than advertised
  • Warranties and guarantees
  • Claims and testimonials
  • Promotional contests

Fines levied under the Competition act can be steep. In 1998 the Hudson Bay Company was fined $600,000.00 for flyers saying that bicycles were on sale for a limited time, when in actuality the prices were in effect for a much longer time.

 

Advertising Standards Council (ASC)

The ASC is a self-regulatory body that oversees advertising in Canada. It administers the Canadian Code of Advertising Standards that include 15 clauses with an emphasis on the following themes:

  • Clear and accurate information on the price, availability and performance of goods and services.
  • No deceptive price claims
  • Warranties and guarantees must be fully explained.
  • Products cannot be shown encouraging dangerous use
  • Childrenís advertising should not exploit their naivete, nor should it harm them emotionally, physically or morally.
  • If the product is prohibited to those who are underage, like alcohol and tobacco, the advertising cannot appeal to underage people.
  • Advertising can not exploit violence, gender or sexuality. It should always be in good taste.

ADVERTISING CLUTTER:

At one time the National Broadcasters Association of Broadcasters in the United States had a code limiting the number of commercials, but in 1981 the Federal Communications Commission threw out the ruling saying the limiting of commercials was a monopolistic practice.

Clutter is less of an issue in print media. For example, bridal magazines can have up to 700 advertisements in each magazine