ADVERTISING

CHAPTER 19

ADVERTISING AND ITS PURPOSE

The average person is exposed to more than 2000 ads in one week.

There are two main types of advertising:– Promotional Advertising

– advertising designed to increase sales.– Introduces new products and explains features and

benefits.

– Institutional Advertising– attempts to create a favorable impression and

goodwill for a business.– Provides positive information about a business.

ADVERTISING DRAWBACKS

Advertising cannot focus on individual needs because the same message is conveyed to all customers.

Many forms of advertising, such as TV, is too expensive for small companies.

Advertising is inefficient--not everyone is a potential customer.

Ad messages are often very short, lacking information.

TYPES OF AD MEDIA

Media are the agencies, means, or instruments used to convey advertising messages to the public.

There are four general categories of ad media:

1) Print Media

2) Broadcast Media

3) Online Media

4) Specialty Media

PRINT MEDIA

Print Media is written advertising found in the following forms:– Newspaper– Magazine– Direct Mail– Directory– Outdoor– Transit

NEWSPAPER ADS

PROS timely--daily or weekly local, regional, or

national 55% of US adults read

paper everyday cost is relatively low per

person can target using

sections

CONS Ad life is very short

Ads are less appealing than other print media due to lack of color

MAGAZINE ADVERTISING

PROS can be classified as local,

regional, or national can be weekly, monthly, or

quarterly they can easily target their

audiences by demographic, psychographic, or geography

Longer life span Read more slowly and

thoroughly than newspapers Good print quality

CONS much more expensive

to advertise in deadlines for print are

often many months before circulation

DIRECT MAIL ADVERTISING

PROS mailing lists are assembled

from customer records or bought from direct mail specialty firms.

Can be highly selective about target

Can control the timing accurately

Wide choice of types Can use coupons or other

incentives Order form included

CONS low level of response--

usually less than 1% “Junk Mail” Cost is high per person,

including producing and printing, mailing, and maintaining lists

DIRECTORY ADVERTISING

PROS This is an alphabetical

listing of households and businesses. Ex. Phone

Relatively inexpensive and hit 98% of the population

Kept for at least a year

CONS Cannot change

message often

OUTDOOR ADS

PROS Highly visible Relatively inexpensive 24 hour a day message can reach specific

markets Great use of color,

space, size, and motion

CONS Have become limited

and banned in some states

Limited viewing time unknown audience increasing regulations

due to safety concerns

TRANSIT ADVERTISING

This uses public transportation to bring advertising messages to people.

Printed posters found inside business and commuter trains

Exterior posters on the outside of taxis and buses Station posters located near or in subways or airline

terminals

Reaches wide audience Relatively low cost per person E-Billboards are growing--TVs in transit terminals

BROADCAST MEDIA

This includes radio and television. The average person will spend about ten

years of their life watching TV and six years listening to the radio in a life span of seventy years.

People are more likely to believe info from TV than from print media.

In the US, there are over 10,000 radio and over 1,200 network TV stations.

98 million households have at least one TV

TV ADVERTISING

Can communicate a message with sound, action and color.

Prime time is 8-11 PM because millions of targeted viewers are watching.

Can demonstrate product features. Can capture attention very well. Can direct message easily--news, comedy,

history, etc. through cable stations. Very high cost per person Actual audience size is not assured.

RADIO ADVERTISING

Reaches a very wide audience. Drive time is best time advertise with most people

listening and captive. Music, slogans, jingles add excitement, drama, or

humor Can target based on style or format of the station It is a mobile medium which can be taken almost

anywhere--beach, car, jogging, etc. Ads have short life span Listeners can be easily distracted by what they

are doing

ONLINE ADVERTISING

This involves placing ads on the internet. This is the fastest growing ad medium today. Most ads are banner ads--a wide shallow

rectangle seen at the top or bottom of a web page.

Interstitial Ads--pop-up ads that either have to be clicked or closed. Annoy many people.

Easy to record how effective ad is by using a counter.

Response rate currently is about 1%

SPECIALTY MEDIA

Relatively inexpensive, useful items with an advertiser’s name printed on them.

The items are usually given away with no obligation.

Items must be practical and useful. Common items are bottle openers, calendars,

magnets, pens, pencils, memo pads, and key chains.

Generally not expensive, but sometimes large amount of waste.

SELECTION OF PROMOTIONAL MEDIA

Three basic questions need to be addressed to choose which type of media:

– Does the medium have the ability to present the product and the appropriate business image?

– Does the medium have the ability to target the desired customers?

– Does the medium have the ability to obtain the desired response rate?

The bottom line is what is the cost per person and am I reaching enough potential customers?

MEDIA COSTS

NEWSPAPER RATES--display or classified ad MAGAZINE RATES--based on circulation, quality,

size and production technique ONLINE RATES--based upon the type of format

the customer desires. Also based on the volume of monthly page views.

RADIO RATES--network radio, national spot radio, local radio. Time of day and station ratings determine cost.

TV RATES--time of day, rating of station determine. Class system(A,B,C, etc.)

COOPERATIVE ADVERTISING

This is a cost sharing arrangement whereby both a supplier and a local advertiser pay for advertising.

Examples include Coca Cola on sale at Waldbaums or Levi’s at Macy’s.

Advantages are shared ad expenses. Disadvantages are loss of control of ad

content, and the need to follow the guidelines of suppliers.

PROMOTIONAL BUDGET

There are basically four methods to determine your promotional budget:– Percentage of Anticipated Sales--based on past

performance

– All You Can Afford--pay all other expenses first

– Following the Competition--do what everyone else does

– Objective and Task--create own goals and research the best way to reach it.