Chapter 15

Advertising

Defining Advertising

• Advertising is any form of nonpersonal presentation and promotion of ideas, goods, and services usually paid for by an identified sponsor

Functions of Advertising

• Serves a marketing function by helping companies that provide products or services sell their products

• Educational: people learn about products and services

• Economics: encourages competition, and product improvements, leads to lower prices

• Reaches a mass audience, thereby reducing the cost of personal selling and distribution

• Social function: it displays material and cultural opportunities available in a free-enterprise society

Types of Advertising

• Who is the target audience?

• Consumer advertising: targeted to people who buy the goods and services for personal use

• Business-to-business advertising: aimed at people who buy products for business use

• Example 1, Example 2

Business to business

• Trade: advertising good/services to wholesalers and retailers, who then resell the products

• Industrial: advertising items used in the further production of good/services.

• Professional: advertising aimed at doctors, lawyers, nurses -- those who might influence the buying process in their industry

• Agricultural: advertising aimed at farmers, i.e. equipment, feed, fertilizer, etc.

Types of Advertising

• Geographic focus: National, international, regional/local?

• Example 1 , Example 2, Example 3

• Local: Example 1, Example 2

• Purpose: primary demand & selective demand ads

Types of Advertising

• Primary demand: promotion of a particular product category, rather than a brand. Example: Got Milk campaign

• Selective Demand: used by companies to sell their particular brand of something. Example: Apple v. PC

• Direct Action: usually contains a toll-free number or website “call to action” to get consumers to act quickly. Example: ShamWOW

• Indirect Action: Works over time to build a company’s image and create awareness. Example: Apple Think Different campaign

History

• First advertisement was in 1840 – a handbill that announced a prayer book for sale (England)

• Advertising made its way to the colonies from English settlers

• Ben Franklin was an early pioneer

History

• The impact of increasing industrialization from the end of the Civil War to the beginning of the 20th century was apparent

• Railroads linked all parts of the country, enabling Eastern manufacturers to ship their goods to the West

• US population doubled• Invention of new media (telegraph, telephone,

radio) improved communication• Economic production increased, people had

more disposable income

History• The advertising agency

was born: organization that provides advertising services to clients

• 1920s: radio becomes an advertising medium

• WWII, ad budgets were cut

• 1957: many stories surfaced that advertising was a form on mind control; concept of subliminal advertising

• By the 1960s, ad agencies were big business

History

• 1970s: bad economy prompted a return to more direct selling techniques and efficient media buying

• 1980’s and 1990’s: Cable TV opens many ad options; rise of the infomercial; global marketing and the trend towards specialized advertising to select audiences

• 2000’s: Internet advertising, viral marketing; TiVo and DVRs change the landscape of TV advertising

Advertising Industry

• Three main components of the advertising industry:

1.advertisers

2.advertising agencies

3.the media

Advertisers

• National advertisers: sell their products/services to customers all across the country (Coca-Cola, McDonalds)

• Retail advertisers (local advertisers): sell their products/services to customers in one city or trading area

Agencies

• Full service agency: handles all parts of the advertising process for clients; do all planning, creating, producing and placing of ads.

• Media Buying Service: buys radio and TV time, and resells it to advertisers and advertising agencies. Sells spots to an advertiser, orders the spots on various stations, monitors the station to see if the spots ran

• Creative boutique: organization that specializes in the actual creation of ads.

Media

Evaluated along four dimensions1.Reach: how many people get the message?2.Frequency: how often is the message

received?3.Selectivity: Does the medium actually reach

potential customers4.Efficiency: How much does it cost to reach a

certain number of people (also called “cost per thousand people”

The Campaign

A typical campaign consists of:

• Choosing the marketing strategy

• selecting the main appeal or theme

• translating the theme to various media

• producing the ads

• buying space and time

• executing and evaluating the campaign

Marketing

• Positioning: fitting the product/service to one or more segments of the broad market in such a way as to set it apart from the competition without making any change in the product

Research

• Helps agencies and their clients make informed decisions about their strategy and tactics

• Formative research: done before the campaign, to guide creative effort

• Message research: pre-tests the message developed for the campaign

• Tracking studies: examine how the ads perform during and after the actual campaign

Advertising in the digital age

• Online ads began in 1994 – HotWired (companion site to Wired magazine) advertised about a dozen sponsors on their website

• Consumers are more often making choices to avoid advertising (OnDemand programming, TiVo, DVR, streaming TV shows with fewer advertisements than on a network, purchasing commercial free TV shows on iTunes or DVD, using ad blocker software online)

Viral advertising

• A technique, by which companies try to create messages that are so compelling, interesting, funny or suggestive that consumers willingly share them with others

• Boston, ATHF• Boston, more• The Blair Witch Project• Paranormal Activity• Evian Roller Babies

Social Impact: Viral Videos

• A viral video is a video that becomes popular through the process of Internet sharing, typically through video sharing websites, social media and email

• When the video being passed around is a type of advertisement, this subverts the typical consumer behavior of avoidance of exposure to advertising

• Can be a very powerful (and inexpensive) way to generate exposure and/or brand impressions

Viral Videos

• Not always sanctioned by a company to use for advertisement

• Companies will often create “viral videos” to create buzz about their products or services – whether or not it looks like an official advertisement isn’t always clear

• PETA, Miller Lite, Honda, Levi’s, JCPenney’s

YouTube/Viral Video Examples

• Lonelygirl15 (2006)• Charlie Bit My Finger Leave Britney Alone (2007)• Don’t Tase Me Bro (2007)• RickRoll (2008)• Susan Boyle (2009)• OK Go (2009)• JK Wedding Entrance Dance - YouTube (2009)• The Top 10 Viral Videos of 2010

 - Video - TIME.com

YouTube/Viral Video Examples

• The Top 10 Viral Videos of 2011 | TIME.com

• 'Gangnam Style' to 'Kony 2012:' This year's top viral videos - CNN.com

• 2013: The Harlem Shake [BEST ONES!]