2 The Ad Industry Objectives 1 2 3

2 The Ad Industry

Objectives 1. 2. 3. 4. 5. Know Current Intustry Trends Industry Structure Role of Agencies/Compensation Identify External Players Role of Media Conglomerates

Trends Affecting the Advertising & Promotion Industry 1. The “Undoing” of Agency Consolidation & Globalization 2. Media Proliferation & Consolidation 3. Media Clutter & Fragmentation 4. Consumer Control: e-Search, Blogs & DVRs (e. g. , Ti. Vo)

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The Worldwide Advertising Industry U. S expenditures: • >$250 billion Global expenditures: • $550 billion

Structure of the Advertising Industry

Advertisers Manufacturers & Service Firms • Procter & Gamble, MCI Trade Resellers • Sears, Mc. Donald’s Government • Social Organizations • United Way, Nature Conservancy Federal, State, Local

n addition to companies, the Government Makes extensive use of advertising

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 & long-term • Identify the target market(s) that are most likely to respond favorable to the brand • Identify & manage the supply chain/distribution system that will most effectively reach the targets • Be committed to using advertising & other promotional tools to grow the brand

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

Advertising agencies make extensive use of advertising to acquire new clients

Full Service Agency Services 1. Account Services 2. Marketing Research Services 3. Creative & Production Services 4. Media Planning & Buying Services 5. Administrative Services

Agency Compensation 1. Commissions: around 15% of airtime fees—in flux 2. Markup Charges: production cost + fixed % 3. Fee Systems: hourly rates, or by project 4. Pay-for-Results: tightly-specified objectives

External Facilitators • Marketing & Advertising Research Firms • Consultants: Creative, Media, Database • Production Facilitators • Software Firms: web tracking, fulfillment

Media Organizations • Broadcast – TV, radio • Print – Magazines, direct mail, newspapers • Interactive Media – CD-ROMs, online shopping • Support Media – Outdoor, directories, Sponsorship • Media Conglomerates – AOL Time Warner, Viacom, AT&T

Target Audiences • • Household consumers Businesses Professionals Government Organizations

Review/? s 1. Know Current Industry Trends 2. Industry Structure 3. Role of Agencies/Compensation 4. Identify External Players 5. Role of Media Conglomerates