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Revisited Sector Paper on: ISIC 7310 Advertising

This paper examines the history, status, classifications, turnover, and SPPIs in the advertising, market research, and opinion polling sectors. It also discusses the need to bring these sectors together and complete work on turnover and SPPIs.

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Revisited Sector Paper on: ISIC 7310 Advertising

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  1. Revisited Sector Paper on:ISIC 7310 Advertising ISIC 7320 Market Research and Public Opinion Polling • Matt Berger & Ian Richardson United Kingdom ONS • Jiří Šulc Czech Statistical Office

  2. Why are we here? • Substantial investment by VG in independent development of • SPPI’s • Turnover for the Advertising industry • Need to • Bring these together • Complete work on Turnover • Determine any recent changes in SPPI’s • Expand to Market Research and Public Opinion Polling Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  3. What we shall see • Summary of earlier VG SPPI work on Advertising only • Some details on Advertising Turnover • … and a promise to complete this work Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  4. Overview • History • Status • Classifications • Turnover • SPPI’s • And a discussion on quality Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  5. History • 1993 –French paper on model survey for Advertising (Oslo) • 2001 –Mini-papers on Advertising SPPI’s from France, Australia & UK (Örebro) • 2002 –Advertising SPPI Principal paper from France (Nantes) • 2004 –SPPI paper from Austria –Turnover paper from Spain (Ottawa) • 2005 –OECD-Eurostat SPPI guide Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  6. Status (SPPI) ISIC 7310 Advertising • OECD inventory • 26 of 38 have SPPI for at least part • More detailed queries • Sales & Leasing • 12 of 29 have SPPI for at least part • Creative component • 9 of 29 have SPPI for at least part Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  7. Classification - Industry Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  8. Classification – Products (CPA only) Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  9. Classification - Observation • ISIC (& any direct derivatives) do not provide sufficient detail • National & regional classifications split between two types of services • Sales & leasing • Creative • Reflected in SPPI & turnover practices • Even for those countries that use ISIC-based Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  10. Turnover statistics (ONS developments) • Two key variables • Sales • Commission and fees (for services where title is not held) • Sales delineated down by type of medium • Print, TV/radio, internet • Advertising agency services delineated by activity • Full service • Direct marketing • Design and concept • Other Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  11. Other turnover considerations • Measurement from Advertising establishments • Miss all secondary activity • Sales of time (and space) can follow two different models • Differ by country • Differ by establishment within country Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  12. Broker Bring together customer and media No change of ownership Service is “bringing together buyer and seller” Distributive trade Purchase time or space from media Change of ownership of time (or space) Sell to customer Change of ownership of time (or space) Service is like retail Margin industry Two different sales activities Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  13. Entities Media Agency Media Media Marketer (Sales House) Advertising agency (Creative) Customer Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  14. Entity relationship – Model 1 (Part 1) Media Agency Media Media Marketer (Sales House) Ad campaign Advertising agency (Creative) Customer Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  15. Entity relationship – Model 1 (Part 2) Media Agency Media Negotiating - buyer and seller Media Marketer (Sales House) Advertising agency (Creative) Customer Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  16. Entity relationship – Model 2 (Part 1) Media Agency Media Media Marketer (Sales House) Ad campaign Advertising agency (Creative) Customer Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  17. Entity relationship – Model 1 (Part 2) Media Agency Media Media Marketer (Sales House) Change of ownership Advertising agency (Creative) Customer Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  18. Service Producer Price Indices (SPPI’s) • Separate indexes for creative and sales activity • Further refinement by type of medium Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  19. SPPI’s for creative advertising services • Pricing methods usually methods based on working time • Productivity issue acknowledged • Labour activities grouped by medium, function and expertise • US use model pricing • Future use in Netherlands Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  20. SPPI’s for sales and leasing • Different indexes for different media • Typical methods: • Pricing of repeated services • e.g. Price per ½ page • Average unit values • e.g. Turnover divided by number of pages Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  21. Typical specifications • Single medium • Allow for discounts • Transaction not list prices • Incorporate “size of placed advertisement” • Length of commercial • Size of press advertisement • “Banner” size on WWW • Incorporate “size of audience” • TV viewers • Radio listeners • Web page views • Media circulation Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  22. Germany – press Spain – radio Czech Republic – internet Many countries do this US does not Examples Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  23. Constant Quality & Size • Size of the advertisement • Important to success of advertising campaign • Limited resource for producer • And can be controlled or changed by the producer • Need to be controlled when considering either the producer or the consumer perspective • Of the “space” or “time” Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  24. Constant Quality & Audience • Number of viewers, or readers, or listeners • Important to success of advertising campaign • Important to producer • Valued by customers • Economic activity of producer aimed to increase audience static • Or at least not decrease • TV or Radio broadcaster • Newspaper publisher • Need to be controlled when considering either the producer or the consumer perspective • Of the broadcast or publication Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  25. Sales and leasing of advertising • Service is not the media production • Advertising sales are a brokering or margin type service • We are considering the service of “selling advertising space and time” • Not broadcasting or publishing • So does this matter? Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  26. Bottle of beer 750mL 330mL Quality is not the same! Some non-advertising examples to consider first Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  27. 30 second time slot on TV 13:00 Monday 18:00 Friday 21:00 Saturday 03:00 Sunday Are the qualities of the products the same? Viewing time And now some advertising examples Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  28. Viewers for a given time slot on TV 15% audience share 5% audience share Are the qualities of the products the same? Viewing time And now some advertising examples Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  29. Selling a bottle of beer (retail service) 750mL 330mL Are the qualities of the service of selling the same? But now look at some associated services Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  30. 30 second time slot on TV 13:00 Monday 18:00 Friday 21:00 Saturday 03:00 Sunday Are the qualities of the Service of selling the same? Service of selling advertising time Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  31. Viewers for a given time slot on TV 15% audience share 5% audience share Are the qualities of the Service of selling the same? Service of selling advertising time Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  32. Different for the producer of the program Different for the media broadcaster Different for the customer But is selling the air-time a different service? Compare “Is selling a 330mL beer different from a 750mL?” Differences in quality – 5% vs. 15% viewers Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  33. Regarding audience figures • The audience figures are important to the customer and the media outlet • And clearly a quality indicator for each of them • But of what relevance are they to the quality of the (third party) advertising sales & leasing agency? • The advertising sales agency has no economic activity associated with changing the size of the audience • Different from “direct mail” advertising • Question to VG – what shall we do? Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

  34. Questions? • Thank you Matt Berger Ian Richardson United Kingdom ONS Jiří Šulc Czech Statistical Office Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

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