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The Structure of the Advertising Industry:

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  1. The Structure of the Advertising Industry: Advertisers, Agencies, Media Companies, and Support Organizations Marketing 3344

  2. Trends Affecting the Advertising and Promotion Industry • The “Undoing” of Agency Consolidation and Globalization—or not • Media Proliferation, Consolidation, and “Multiplatform” Media Organizations • Media Clutter and Fragmentation • Consumer Control: Blogs and TiVos • Web 2.0

  3. Scope of the Advertising Industry • U.S. Advertising Spending>$300 B • Worldwide Advertising Spending >$600B

  4. Structure of the Advertising Industry

  5. Manufacturers and Service Firms Procter & Gamble, Verizon Advertisers Trade Resellers Sears, McDonald’s Government Federal, State, Local Social/Not-for-profit Organizations United Way, Nature Conservancy

  6. Ad in Context Example In addition to companies, the government makes extensive use of advertising.

  7. The Role of the Advertiser in IBP • Describe the value that the firm’s brand provides • Describe the brand’s position in the market • Describe the firm’s objectives for the brand in the near-term and long-term

  8. The Role of the Advertiser in IBP • Identify the target market(s) that are most likely to respond favorable to the brand • Identify and manage the supply chain/distribution system that will most effectively reach the targets • Be committed to using advertising and other promotional tools to grow the brand

  9. Advertising Agencies: Full-Service Creative Boutique Interactive In-House Media Specialists Agencies • Promotion Agencies: • Direct Marketing/ Database • E-commerce • Sales Promotion • Event Planning • Design Firms • Public Relations Firms

  10. Ad in Context Example Advertising agencies make extensive use of advertising to acquire new clients.

  11. Full Service Agency Services • Account Services • Marketing Research Services • Creative and Production Services • Media Planning and Buying Services • Administrative Services

  12. Agency Compensation • Commissions: • around 15% of airtime fees—in flux • 16 2/3 percent for outdoor media • web media is all negotiated • Markup Charges: • production cost + fixed % • Fee Systems: • hourly rates, or by project • Pay-for-Results: • tightly-specified objectives

  13. External Facilitators • Consultants Creative, Media, Database • Production Facilitators • Software Firms Web tracking, fulfillment

  14. Media Organizations • Broadcast • TV, radio • Print • Magazines, direct mail, • Newspapers, specialty • Interactive Media • Internet, interactive broadcast, • iPod, Cell Phone • Support Media • Outdoor, directories, sponsorship, • Point-of-purchase, branded entertainment • Media Conglomerates • Time Warner, Disney, Turner

  15. Target Audiences • Household Consumers • Businesses • Professionals • Government Organizations