Chapter ThreeThe Business of Advertising

Arens|Schaefer|Weigold

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Learning Objectives

• List the various groups in the advertising business and explain their relationships

• Discuss the differences between local, national, and transnational advertisers

• Explain how advertisers organize themselves to manage their advertising both here and abroad

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Learning Objectives

• Define the main types of advertising agencies

• Describe the range of tasks people perform in an ad agency and an in-house advertising department

• Relate how agencies get new clients and how they make money

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Organizations in Advertising

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Local Advertising

• Advertising by businesses within a city or county directed toward customers within the same geographic area

• Types of local advertisers– Dealers or franchisees of national

companies– Stores that sell a variety of branded

merchandise– Specialty businesses and services– Governmental and nonprofit organizations

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Local Advertising

• Advertising manager: Performs all the administrative, planning, budgeting, and coordinating functions

• Types– Product advertising– Sale advertising– Institutional advertising– Classified advertising

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Local Advertising

• Local advertisers and IMC– Integrated marketing

communications (IMC): Building and reinforcing mutually profitable relationships with the stakeholders and general public• Developing and coordinating a strategic

communications program via various media

• Local advertisers and social media– Connecting with a local community

through social media can be very effective

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Exhibit 3.4 - Differences Between Local and National

Advertisers

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Transnational Advertisers

• Multinational corporations: Operate and invest throughout many countries and make decisions based on availabilities worldwide– Global marketers: Use a standardized

approach to marketing and advertising in all countries

• Localized approach – Adaptation of products, packages, and

advertising campaigns to suit each market

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Types of Agencies: Geographic Scope

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Types of Agencies: Range of Services

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Types of Agencies: Specialized Services

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Tasks Performed in an Agency

• Account management• Research and account planning• Media planning and buying• Creative concepts• Advertising production• Traffic management• Additional services• Agency administration

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Compensations Received by Agencies

• Media commission: Paid by a medium to recognized advertising agencies for advertising placed with it

• Markup: Source of agency income gained by adding some amount to a supplier’s bill

• Fees– Fee-commission combination, straight-

fee method, and incentive system

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Methods Used to Gain Clients