The history of advertising is one that has to be psychologically understood. Sophisticated advertising elements introduced over the years have changed motivational research to define consumer behavior, media analysis to reach targeted consumers, and creative strategy to enhance selling messages. Advertising is a communications tool that functions most efficiently in combination with centralized exchange: when goods and services are no longer sold directly between buyers and sellers, but are handled by merchants as intermediaries. Advertising was needed to make potential consumer aware of the availability of goods. In an economy in which supply > demand, advertising created demand by introducing new products or suggesting how consumers can solve some problem with existing products.
The beginning of the fulfillment of democratic ideas created a more literate society. This created more of a need and support for newspaper and magazines. The Industrial revolution swept across America allowing for more efficient manufacturing of goods and mass production of newspapers and magazines. This created a bigger worker class who urbanized and needed more information. Railroads and telegraphic communication would begin to pave the way for brands to better communicate. National brands began to emerge and changed the structure of advertisement. Products are now differentiated and consumers were gaining loyalty to one brand. The availability of branded goods, ability to provide national distribution, and a growing middle class with income to spend provided a market for more products. This supported the growth of advertisement industry.
Advertising’s modern era would arise in research and responsibility. In early advertising, they was a lack of an ethical framework for creating promotional message and a reliable research to measure advertising effects. Used to be that people are responsible for discerning truth from falsehood themselves so little need for regulation of information. The public called for greater consumer protection by late 19th century (mainly in medicines). Research at this time often provided unreliable information and sometimes spread false fear of the power of subliminal advertising and motivational research.
The earliest known evidence of Advertising can be found on Babylonian clay tablets from 3000 B.B. Inns in England were the first to use hoarding-first printed outdoor signs, the forerunner of modern outdoor advertising. The foundations of modern advertising can be divided into 4 parts:
- The premarketing era: from start of product exchange to the 18th century. During this time, buyers and sellers communicated very primitively. They used clay tablets, town criers, tavern signs, or primitive printing.
- Mass communication era: from the 1700s to the early 20th century, advertisers were increasingly able to reach large segments of the population through mass media. Used mass newspapers and national magazines, radios, and brands began to differentiate.
- Research era: in recent years, from 1920s to now, advertisers increasingly have been able to identify narrowly defined audience segments through sophisticated research methods. Early research emphasizes info on broad demographics such as age, sex, and geography. Now it takes lifestyles and motivation into account.
- Interactive era: communication will increasingly become controlled by consumers who will determine when and where they can be reached with promotional messages.
People no longer have to watch commercials. Advertisers have to become more sensitive to feedback. Advertisers have to be more focused on keeping people’s trust to have successful advertising. In today’s world, there is now the move to creativity in advertising. Originally, ad companies were media space brokers (buy bulk space from newspapers and reselling small space allotments to advertisers). By the end of 20th century, persuasive advertising became important because serious brand competition began to take place. The shift in commodity goods to branded goods pushed strong promotional offers accompanying product advertising (this introduces the emotional appeal).
John Wanamaker of Wanamaker Department Stores began to sell products based of style and luxury rather than by utility. He hired the “first” true copy-writer, John Powers, and this began the move towards full-service advertising. John Watson from Johns Hopkins, the father of behavioral research, was hired to perform market research that attempts to determine underlying reasons of purchase behavior. Advertisers began to understand the needs and wants of consumers. Then, Alfred Sloan Jr. issued in his teachings of planned obsolescence where products are discarded not because of lost utility but lost of status. By the 1950s, almost all national companies had accepted that it was the position of a brand in consumers’ mind that sells the product rather than the superiority of utility. Brand could last forever whereas products have a life cycle and will die.
The development of print media would create a symbiotic relationship with advertising. The newspaper as an advertising medium. It would become the forerunner of modern want ads were siquis, handwritten posters in 16th and 17th century England, that sought people to fill positions. With the introduction of the rotary press, the era of the penny press began in the US, forerunner of the mass newspaper in the US. Newspapers established a model for financial support from advertising that continues for the majority of media today.
At first, magazines weren’t as successful as newspapers but when they did become successful, they could reach more people beyond the borders of a particular city. Modern consumer magazine didn’t begin until the later part of the 19th century. Many magazines were about health, fashion, and good, but later about problems in social reforms and medicine advertisement. At the time, advertising support for magazines came from already successful brands that had a national following. Magazines would become the preeminent medium for national advertisers because they offered national circulation, both editorial and advertising credibility, color availability, and an extremely low cost means of reaching millions of readers. Magazines got money from advertisers to make up for the cost of production.
Mass production, a manufacturing technique using specialization and interchangeable parts to achieve production efficiencies- began to take over America, beginning in textiles and furniture, and reached a peak with automobiles. Henry Ford adopted a successful formula where mass production was based on high volume, affordability, and mass selling through advertising. Mass production made products readily available; this improved the lifestyles and standards of living for almost all Americans. Consumption had to keep these mass producing factories fueling; to encourage such consumption, the advertising industry grew to create demand. Hence, cue advertising agencies.
Volney Palmer is generally credited with starting the first advertising agency in 1841, buying bulk newspaper space at a discount and selling it to individual advertisers for profit). In 1869, George Rowell published newspaper’s circulation estimates and started the movement toward published rate cards and verified circulation. This made it harder for space brokers to make a profit. By the end of the 19th century major companies were providing creative services, media placement, and basic research as well as developing the functions of the full-service ad agencies of the future. In 1917, the American Association of Advertising Agencies (AAAA) founded 111 charter members. Today, they have more than 5,000 members that make approximately 75 % of all advertising dollars.
By the 1930s, some companies had begun to expand overseas and began the movement of global advertising. During the rise of America, especially during the presidency of Ulysses S. Grant, the excesses of big businesses and the advertising that contributed to the environment of immorality (think Mad Men) forced the public and Congress to demand stricter regulation of advertising and other business practices. The pure food and drug act of 1906 was issued to protect consumers from fraudulent food producers and advertisers. did not address the problems of faulty food labels. This was not strictly enforced by the FDA either.
The federal trade commission act of 1914 came to act. The agency of the federal government empowered to prevent unfair competition and to prevent fraudulent, misleading, or deceptive advertising in interstate commerce. Today, the FTC primarily ensures that advertising claims and sales practices meet reasonable standards of honestly and truthfulness.
Advertising comes of age. Some advertising executives were trying to gain back the public trusts and stop the faulty ads so they created the American advertising federation. They launched a campaign to promote truth within the industry. This committee is now the Council of Better Business Bureaus: national organization that coordinates a number of local and national initiatives to protect consumers.
The Printers’ Ink Model Statue was intitiated. This act was directed at fraudulent advertising, prepared and sponsored by Printers’ Ink, which was the pioneer advertising magazine- was adopted and still exists today. Audit Bureau of Circulations (ABC) the organization sponsored by publishers, agencies, and advertisers for securing accurate circulation statements- which conducts its own audits and issues own circulation reports
During WWI, advertising agencies promoted patriotism, US government bonds, conservation, and other war-related activates rather than products. The iconic Uncle Sam ad to recruit soldiers was created.
During the 1920′s, radio advertisements grew as more and more people owned radios. The great depression of the 1930 turned the advertising industry into one that was deeply devastated. Basically the advertising industry had an intensified version of their involvement in WWI. Created the war advertising council in 1942 to promote WWII mobilization and evolved into the Advertising Council. This would ultimatley lead to the creation of the famous Rosie the Riveter –women in workforce ad.
Buy us bonds, Promoted rationing, etc. Advertising council: a nonprofit network of agencies, media, and advertisers dedicated to promoting social programs through advertising. Today, they produce campaigns about environmental issues to educational concern. Created Smokey the Bear and McGruff the Crime Dog.
Advertising after WWII to 1975 was a time of growth. After the war, the pent-up demand led to an unprecedented growth rate in consumer spending. Once everyone got what they needed, advertisers were called on the persuade consumers to replace the items they already have. Televisions became a household must and thus creating another portal to advertise. Almost everything increased in the US: population, disposable income, automobile registration, homes with air conditioning, etc., as well as growth in advertising. During this time, many developments would arise in advertising. Ad agencies began to negotiate commission with clients. This encouraged growth of specialized companies. Creativity (especially humor) became hallmarks during this period. Legislation limited outdoor ads along interstate highways and banned cigarette ads from TV. FTC deemed that ads can compare each other but are accountable for honest claims
Radio took a dive when TV came along. Advertising in the fragmented 1980s became a volatile business that was constantly changing and adapting to economic conditions, technology, social, and cultural environment. During this period: New technology: cable, home video recorders, specialized magazines, direct mail, home shopping, sales promotion all changed the fundamentals of advertising. Today, ad agents are more likely to know how to evaluate research and understand the psychology of consumers as well as being able to execute ads.
- Audience fragmentation: the segmentation of mass-media audiences into smaller groups because of diversity of media outlets. This time period marked the beginning of the end of the traditional mass-market strategies. Advertisers began to see consumers are individuals; this changed the way market research was carried out.
- Consolidation: as media and audiences proliferated, ownership of brand, ad agencies, and media were consolidated by a few giant firms. This created a unique dynamic as some agencies, media, and companies were acquired and combined into a giant, global conglomerate when they used to be rivals
- Credit: “buy now, pay later” mentality that plagued everyone also hit the ad. Industry. Media saw ad revenues fall, ads were harder to sell, merchants dealt with consumers looking for discounts, not fancy ads.
- America becomes a service economy
The 2000s have been marked by 2 significant developments in marketing and advertising. Defining and using new technology to reach prospects, technology allows consumers to determine when, where, and if they will invite advertisers to deliver their message. This era of permission marketing, asking consumers for permission or to opt in before sending them ads and other forms of marketing communications, requires companies to rewrite the old rules of marketing and fundamentally redefine exactly what constitutes advertising. For example, cell phones. Measuring the value of investing in various communication channels as it relates to the changes in how we reach prospects. With media fragmentation and consumers increased control over hoe, when, where they receive ad messages, marketers have to come up with new strategies such as product integration, viral marketing, and contextual internet advertising.
The change from mass media to class media has increased cost of advertising, individualized the audience, and forced advertisers to change their mind-set concerning audience measurement. Content delivery is harder to deliver when companies who used to be competitors are now all owned by the same conglomerate. Branding in the 21st century includes a return to strong branding with companies searching for new means to differentiate their products and move away from price competitors and generic brands. Finally, the globalization and diversity of the world makes it necessary to understand language, culture, economy, and political environment of countries around the world necessary for market research of the international market.
Three key points:
- Today’s advertising industry is sophisticated and is worth billions of dollars, the idea of using persuasive communication to sell is as old as trade and commerce.
- Advertising cannot be studied in the abstract. All developments in advertising of technology, research, and society as a whole must be understood.
- Today’s advertising and promotion are no longer confined to the rules of traditional media that dominated the 20th century.
Advertising and the Changing Communication Environment
Finding a cost-efficient plan for reaching increasingly in-control and demanding consumers is the major challenge of contemporary advertising Convergence: coming together or intersecting different components of some related system.
1. Technological Convergence: radio programs on computer
2. Business Convergence: (consolidation) merging companies
3. Content Convergence: primary expense, using commercial content
Dual problem: advertisers must choose a media plan from an ever-expanding number of options and they must develop advertising messages that consumers will invite to share with their time. Citizen media is referred to as the new relationship between advertisers and consumers. User-generated media (blogs) have become important in marketing plans. (free information). New technology and interactive media is a central component.
Advertising as a Communicating Tool. The fundamental principle of good advertising is that it must be built around the overall marketing plan and execute the communication elements of a more far-reaching marketing program. (ex: increasing brand awareness 25% increases growth). The Marketing Plan: Overall goal(s) of plan, marketing objective, marketing strategy, situational analysis, problems/opportunities, financial plan, research. The Advertising Plan: Prospect Identification, Consumer Motivation, Advertising Execution, The Advertising Budget and Allocation
Advertising makes proftiability based on it’s Return-on-investment (ROI): measures the efficiency of a company. How many dollars are produced for every dollar spent. Involvement based ROI measures may give advertising less than its full worth in the marketing process. Clients demand media and ad agencies to measure advertising success on the basis of effective communication rather than audience exposure. The emphasis on short-term audience involvement runs the risk of devaluing the long-term value of advertising.
Integrated Marketing is broken down into the Marketing Mix the combination of 4 marketing functions (product, price, distribution, and communication) plus advertising, used to sell a product. Communication is broken down into 4 parts:
1. Personal Selling: The most effective means of persuading but also the most expensive which makes it impractical in initial selling stages. It is used in business to business marketing as a follow-up, to close a sale, or develop a long-term relationship resulting in a sale.
2. Sales Promotion: Activities that supplement both personal selling and marketing, coordinate the two, and help to make the effective (ex: displays, coupons, giveaways). They are used to persuade distributors to carry a brand/product. They are short-term so no to lose money.
3. Public Relations: Communication with various internal and external publics to create an image for a product or corporation. One of the fastest growing sectors. It is perceived as having higher audience credibility than advertising but is viewed as a compliment not a competitor. Media controls where, when, and if product will be carried.
4. Advertising: A message paid for by an identified sponsor and usually delivered through some medium of mass communication. It is persuasive communication.
The reliance on the marketing mix strategy allows evaluations that view promotion as a coordinated mix of elements. Companies are demanding programs to speak with one voice, meaning demonstrate a consistent overall theme. Integrated Marketing Communication (IMC): The joint planning, execution, and coordination of all areas of marketing communication. More concerned with total effectiveness
Advertising: An Institutional Approach
For Consumers: Its economic role is disseminate product information that allows consumers to know that products exits, to give consumers info about competing brands, and to permit consumers to make intelligent choices among product options. Its social and cultural (inadvertent) role in communicating not only product information but also social values. Advertising can create that Need driven behavior usually to solve a problem. It can be utilitarian (buy new car for transportation) and hedonistic (buy new car to impress neighbor). Advertising’s role is to provide info as efficiently and economically as possible to potential buyers. Introducing new products/services
What Advertising Does For Business
Primary role of advertising include contributing to new-product launching, increasing consumer brand loyalty for existing brands, and maintaining the sales of mature brands. Exchange theory suggests that market transactions will take place only to the extent that both buyers and sellers see value in the process. Built on positive mutual relationships.
What Advertising Does For Society
Advertisers convey subtle messages about society by the manner in which their advertising portrays products and services. Challenges for contemporary marketing are monitoring changes so that a company is aware of what is happening in a society, creating products and services compatible with changing values, and designing marketing messages that reflect and build on the values target markets and individual customers hold. Advertising benefits society by providing revenues to support a diverse and independent press system protected from government and special interest control.
Advertising to Diverse Publics
Regardless of its intended recipients, advertising communicates messages to various groups and individuals who in turn interpret these messages in the context of their own interests. A single advertisement might be directed to a number of publics:
1. Distribution Channel: The various intermediaries, like retailers, that control the flow of goods from manufactures to consumers.
2. Employees: most important assets of any company. Advertising messages may mention quality workmanship that goes into a product and feature employees in it.
3. Current and Potential Customers: building brand awareness to attract new customers and enhancing brand loyalty to current customers.
4. Stockholders: high brand awareness and company’s good reputation contribute to maintaining higher stock prices.
5. The Community at Large: local companies use advertising to be viewed as a “good neighbor” It’s important to keep ALL publics in mind during advertising
The Components of Advertising Strategy
Brand Name: the written or spoken part of a trademark. One of the most valued assets of a company. 1/3-1/2 of value comes from brand name. Brands represent attitudes and feelings about products. Familiarity is enhanced by emphasizing consumer benefits
Brand Extension: As new companies enter the global marketplace, brand will take on even more importance as a competitive tool to differentiate one product from another. Brand Extension: new product introductions under an existing brand to take advantage of brand equity. As opposed to brand innovation. Advantages: Saving money by not needing to build awareness for a new and unknown brand name, Adding equity to an existing brand name (upon success). Disadvantages: Damaging a core brand in the minds of loyal consumers with a failed introduction, Losing marketing focus on your existing brand and/or diluting marketing efforts and budget across several brands, Brand identity is crucial to a product’s success
Fulfilling Perceived Needs: Successful products are those that solve a consumer problem better an/or more economically that an available alternative. The marketer’s fundamental task is not so much to understand the customer as it is to understand what jobs the customers need to do and build products that serve those specific purposes. For example, consumers didn’t say they wanted a microwave oven, they said they were tired/hungry and didn’t want to cook dinner for 45 minutes.
Assessing Needs: A key ingredient in determining product success is reliable research. Conjoint Analysis: a research technique designed to determine what consumers perceive as a product’s most important benefits. it can prevent costly analysis mistakes when companies emphasize product characteristics that are of little value to consumer.
Sales, Revenues, and Profit Potential have 4 major approaches used by established companies to achieve long-term revenues and profits. Emphasizing and expanding new-product niches to reach current customers. For example, Walmart attempting to increase customer base by advertising and trying to win over a more fashion based customer. Emphasizing profits over sales volume. Ex: Henry Ford deciding to produce cars to satisfy customer base, not just to fill a factory and thus prevented bankruptcy. Emphasizing short-term market share rather than profitability. Customer tracking—are all customers created equal? Ex: rewarding most profitable customers (with coupons free gifts) and discouraging less-valuable buyers (buy use of restrictive return policies). Advertisers are focusing on the role of advertising in maintaining sales and market share as a goal of equal importance to increasing sales.
Product Timing: Advertising timing involves the interaction between stages of product development and probability of marketplace acceptance.
Product Life Cycle: the process of a brand moving from introduction to maturity, and eventually, to either adaptation or demise. Product Introduction and the advertising that accompanies it are among the most important decisions that determine long-term success of a company. Key is not to spot new trends but to creatively develop new products/services to take advantage of them. No matter how good a product is, it can rarely be forced on consumers before they are ready to accept it. Market timing may be a matter of doing something first rather than doing something different. Timing is often strategic, involving long-term decisions by both customers and marketers. It can also be tactical, involving sales related to specific events or occasions. It is also a major factor in the everyday function of advertising. Placing TV commercials in primetime/daytime/latenite, 30 seconds/1min etc.
Product Differentiation: is the circumstance in which a target audience regards a product as different from others in a category. Differences may result from tangible attribute of physical product or intangible element of the product’s brand image. Meaningful product differentiation exists only if consumers perceive it as an important distinction. If there is no real perceived differences among brands, products are viewed as interchangeable. Brands built on exclusive product attribute have an advantage . One of the most important elements of differentiation is keeping an open mind about how to achieve it. Often involves minor changes in either a product or the position communicated by the advertising. Problems arise when companies strictly focus on function. Product differentiation is also a mean of target marketing. Advertisers have an obligation to promote meaningful differences. Price is dictated by favorable consumer perceptions of the value of a product. Closely related to product differentiation.
Value Gap: a positive gap between the price of a product and the value the average consumer assigns to the product. The greater the gap the more insulated the product is from price competition. Price defines who a company’s competitors are. Yield Management: a product pricing strategy used to control (or even out) supply and demand. The goal is to neither lose sales by offering price-sensitive customers merchandise at too high a cost nor lose profits by selling goods below what premium buyers would pay. Pricing strategy can be both a means of market entry for new products and a means of product differentiation for mature products. The pricing strategy for a brand determines to a significant degree the type of marketing strategy that can be used and the success that advertising will have in promoting and selling a specific brand
Variations in the Importance of Advertising
The role that advertising plays in a company’s promotional strategy depends on a number of factors. Each Corporate preference for various segments of marketing communication channels will differ in especially taking advantage of the Internet. High sales volume tends to lower advertising-to-sales ratios. Consumers need to be reminded of brand, not “sold” on it. There are industries with a number of competing firms and extensive competition. Product categories with widespread competition and little perceived product differentiation. Reversing sales or market share declines. Smaller companies have to spend more money in advertising to compete with larger companies.
Advertising and the Marketing Channel
The marketing channel illustration is an important aspect of marketing. Industrial good manufacturers are a manufacturer of finished product and wholesalers, retailers, and consumers. A well-organized channel creates efficiencies through specialization in the movement of the channel. Effective communication, including advertising, is crucial of for market channel efficiency. The technology of the Internet has changed the longtime relationships among various elements of the marketing channel. For example, travel agents have phased out and digital cameras are now taking over the film industry. Mainly marketing and communication channels have changed. It has not changed the fundamental decision-making process, but the way we communicate. Regardless of its audience, effective advertising must be successful on 2 levels: (1) communicating (2) carrying out marketing goals.
There are different forms of directness and duration in relation to advertising. How much of the total selling job should be accomplished by advertising and over what time frame must be planned. Advertising is designed to produce an immediate response by a product purchase that is called direct action, short-term advertising. Advertising used as a direct-sales tool, but designed to operate over a longer time frame is called direct action, long-term advertising. Indirect advertising affects the sales of a product over the long term by promoting general attributes of the manufacturer, not specific product characteristics. Long-term advertising is hard to measure.
Advertising to the Consumer
National Advertising: refers to advertising by the owner of a trademark product brand or service sold through different distributors or stores. It tends to be general in terms of product information. National advertisers have begun to identify and reach more narrowly defined market segments and in some cases individual consumers. The Internet has allowed specifically tailored messages to consumers based on individual lifestyle and product usage.
RetailAdvertising: advertising by a merchant who sells directly to the consumer. Includes price information, service and return policies, store locations, and hours of operation. Most important change in retail advertising is consolidation. Customers are now doing more and more “one-stop shopping” rather than patronizing several independent retailers. There are significant ramifications for newspaper and local radio stations. Dramatic advertising spending shifts as retailers move to national promotional plans with decline in ad pages. Manufacturers find themselves competing with in-store brands.
End-Product Advertising: branded ingredient advertising building consumer demand by promoting ingredients in a product. End-Product Advertising began in 1940’s with DuPont and Teflon nonstick coatings. Successful end-product advertising builds consumer demand for an ingredient that will help in the sale of a product encourages companies to use these ingredients in their consumer products. Consumers must be convinced that it offers and added value to the final product. Extensive advertising is required to make consumers aware. Successful advertisements are those that create meaningful differentiation for consumer purchase decisions.
Direct-Response Advertising: is any form of advertising done in direct marketing. Uses all types of media: direct mail, TV, magazines, newspapers, and radio (replaces “mail-order advertising”). Benjamin Franklin was credited with the 1st direct-sales catalog published in 1744. Largest sector is direct mail, which accounts for 1/3 of the total. Fastest growing area is Internet advertising that is providing a catalyst for future growth.
Advertising to Business and Professions
Business-to-business (B2B) is one of the fastest-growing categories of advertising and it requires a much different strategy. Personal selling, telemarketing, and other forms of direct response, and the Internet are the methods most often used. Messages tend to be more fact oriented with little emotional appeal and are addressed to specific industries and job classifications within those industries. Profit oriented appeals are very common. B2B purchase decisions tend to have distinct differences compared to typical consumer purchases. Purchase decisions made by companies frequently involve many people. Organizational and industrial products are often bought according to precise technical specifications that require significant knowledge. Impulse buying is rare and the dollar volume of purchases is often substantial.
Categories of Business Advertising
Trade Advertising: directed to the wholesale or retail merchants or sales agencies through whom the product is sold. It emphasizes product profitability and the consumer advertising support retailers will receive from manufacturers. Promotes products/services that retailers need to operate their businesses. The objectives are to gain additional distribution, increase trade support, and announce consumer promotions.
Industrial Advertising: addressed to manufactures who buy machinery, equipment, raw materials, and the components needed to produce the goods they sell. Directed at a very small, specialized audience. Rarely seeks to sell a product directly. The purchase of industrial equipment is usually a complex process that includes a number of decision makers. Often introducing product or gaining brand awareness.
Professional Advertising: directed at those in professions such as medicine, law, or architecture who are in a position to recommend the use of a particular product or service to their clients. Primary difference is the degree of control exercised.
Institutional Advertising: advertising done by an organization speaking of its work views, and problems as a whole, to gain public goodwill and support rather then to sell a specific product. Sometimes called public relations advertising. Objectives are establishing a public identity, explaining a company’s diverse missions, boosting corporate identity and image, gaining awareness with target audiences for sales across a number of brands, and associating a company’s brands with some distinctive corporate character.
Idea Advertising: used to promote an idea or cause rather than to sell a product or service. Idea advertising is often controversial. The increasing ability of media to narrowly target audiences, by ideology as well as product preference, will make this type of advertising prevalent in the future.
Service Advertising: advertising that promotes a service. Feature tangibles personalized in some way with testimonials of good service. Feature employees as an important aspect of the company and how they develop trust with customers in a service message featuring real employees. Stress quality. Advertisements should emphasize consistency and high levels of competency by using words like caring, professional, and convenient in ads.
Government Advertising: In the past 20 years, the growth of government services and programs has resulted in a greater use of traditional advertising by government agencies. Millions of dollars are spent each year.
Brands are a company’s most valuable assets. The product is not the brand, the product is manufactured and a brand is created. Orlando is a brand and has to compete with other cities for convention revenues. Product may change overtime, but the brand remains.
“A brand represents the most powerful link between the offer and consumer.”– Antonio Marazza Landor
Every product, service, and PR Company with a recognized brand name stands for something slightly different from anything else in the same product category.
“A brand for every intent and purpose, is a promise that it will help the user make money, look better or feel great.-Allen Adamson
For example, Dove promises women they will feel gorgeous and Volvo vows to deliver your family safely. Manufacturers have to offer the best deal to wholesalers to get their products distributed creating a squeeze of profits. The result is that some manufactures decided to differentiate their products form the competition giving their products names then obtained patents to protect their exclusivity and used advertising to take the news about them to consumers over the heads of the wholesalers and retailers.
In the mid 1880’s during the rise of great brands such as Maxwell house coffee in 1873 and Budweiser in 1876, advertising was going through its first true paradigm shift from making a connection in the mid 19th century to the disconnection caused by technology.
“Branding is about the idea that should be the organization principle and it should inform everything you do to help consumers grasp your brand promise in whatever channel you’re using to reach them.”-Michael Mendenhall
In the digital age, it is absolutely critical to understand the value of each branding channel and its relevance to a particular audience. In today’s digital world, your brand and brand organizations must perform, behave, and satisfy the consumer’s needs as they expected. Integrated marketing communications is the integration of all communications culminates from a single strategic platform and will generate a significantly greater return on the communication investment than would be the case with traditional independent media executions. IMC refers to all the messages directed to the consumer on behalf of the brand.
Brand equity: the values of how people such as consumers distributors, and salespeople think and feel about a brand relative to its competition. The most important factor in the determining the actual value of a brand is its equity in the market.
Young & Rubicam: brand asset valuator [BAV] is a diagnostic tool for determining how a brand is performing relative to all other brands. BAV demonstrates that brands are built in a very specific progression of four primary consumer perceptions of differentiation, relevance, esteem and knowledge.
- Differentiation is the basis for choice as the essence of the brand and source of margin.
- Relevance relates to usage and subsumes the five P’s of marketing related to sales.
- Esteem deals with consumer respect, regard and reputation and relates to the fulfillment of perceived consumer promise.
- Knowledge is the culmination of brand-building efforts and relates to consumer experiences. A brands vitality lies in a combination of differentiate and relevance [lack of relevance reason fads come and go]. The components of brand stature are esteem and familiarity. BAV is based on the fact that almost every successful brand began by being very simple according to Steve Owens. A market is a group of people who can be identified by some common characteristic, interest or problem (use a certain product to advantage, can afford to buy it, and be reached through some medium).
Steps for creating advertisements for a brand
- Brand Equity Audit Analysis
- Market context of what is our market and with whom do we compete; what are other brands and product categories; are products highly differentiated. This question helps us understand the statue and role of brands in a give market
- Brandy equity weaknesses and strengths: brand awareness, brand sensitivity, and brand loyalty
- Brand equity descriptions of the personal relationship between the consumer and the brand provide the most meaningful description of brand equity.
First, review all the available research to get as close a feeling as possible on how consumers view the brand and how they feel about it. You must analyze in depth our brands and its competitor’s communications over a period of time. Provide a clear summary of the current communication strategies and tactics of our brand and of key competitors. Include an analysis of all integrated communication in relation to brand equity [assessment of problems and opportunities]
Strategic options drawn on the conclusions form the analysis of communication objectives [primary goal of message], Audience [who speaking to], Source of business [where customers going to come from], Brand position and benefits [benefits of brand to build equity], Marketing mix [mix of advertising], Rationale [how plan effects brand equity].
Do brand equity research for proprietary, qualitative research. Determine which elements or elements of brand equity must be created, altered, or reinforced to achieve our recommended strategy and how far we can stretch each of these components without risking the brands credibility.
Make a Creative Brief as a short statement that clearly defines our audience, how consumer think or feel and behave; what the communication is intended to achieve, and the promise that will create a bond with the consumer. Synthesize all the information and understanding into an action plan for the development of all communication or the brand.
- Key observations-most important market factory that dictates the strategy.
- Communications objective-primary goal the advertising aims to achieve.
- Consumer insight-consumer hot button our communication will trigger.
- Promise-what the brad should represent t in the consumers mind.
- Support-reason the promise is true].
- Audience-who we are speaking and how they feel about the brand.
- Mandatory-items used as compulsory constraints]. There isn’t only one approach to developing an integrated strategic plan for a brand.
Avrett, Free and Ginsbergs planning cycle:
- Brand market status
- Brand mission
- Strategic development
- Creative exploration
- Brand valuation
- Brand vision-some other typical steps agencies and clients take in the planning process:
- Current brand status [evaluate brands over all appeal]
- Brand insight [agency use a series of tools designed to help it develop insights to better understand the customers view] 3. Brand vision [strategic planners look or the consumers hot button to identify the most powerful connection between brand and consumer]
- Big idea [creative expression of the brand vision – foundation of all communication briefs]
- Evolution [essential aspect of communications planning is accountability] the consumer has to be an important part of the strategic planning process. How the advertiser engages consumers is critical to the process.
“Just do it” -Scott Bedbury, brand builder for Nike
A great brand is in it for the long haul. By using a long-term approach a great brand can create economies of scale by which you can earn solid margins over the long term. A great brand can be anything [almost any product offers an opportunity to create a frame of mind that is unique]. A great brand knows itself [keep the brand vital by doing something new and unexpected related to the brands core position]. A great brand invents or reinvents an entire category [brand aims to dominate their entire category ex: Disney, Apple, Nike]. Great brand taps into emotions [it is an emotional connection that transcends the product]. A great brand is a story that’s never completely told [stories create the emotional contest people need to locate themselves in a larger experience]. A great brand is relevant with ideas that need to satisfy peoples wants and perform the way they want. Advertisers need to have a clear understanding of the product and consumer wants and needs when making strategic advertising strategies’. The developmental stage of a product determines the advertising message. As products pass though the stages, the manner in which advertising presents the product to consumers depends largely on the degree of acceptance the product has earned with its life cycle. It is the degree of acceptance that determines the advertising stage of the product.
Pioneering Stage: the advertising stage of a product in which the need for such a product is not recognized and must be established or in which the need has been established but the success of the commodity in filling that need has to be established. Advertising in the pioneering stage must show that methods once accepted as the only ones possible have been improved and that the limitations long tolerated as normal have now been overcome.
Purposes of the Pioneering stage of a products life cycle:
- Educate consumers about the new product or service
- To show that people have a need they did not appreciate before and that the advertised product fulfills that need
- To show that a product now exist that is actually capable of meeting a need that already had been recognized but previously could not have been fulfilled
- Many new products are simply advertisers trying to get a piece of the pie in an established product category [ during the past 25 yrs almost 60% of companies on fortune 500 list have been replaced]
- Companies’ success is based on the fact that they created new markets or reinvented existing ones [ex: Procter and gable introduced tide, the first disposable diaper and the first shampoo conditioner combo]. New ideas travel through cultures at much slower rates, especially if the ideas require throwing something away and replacing it with something else, relearning skills, or coordination by large independent organizations.
Pioneering expense: in the early introduction of a new product, heave advertising and promotional expenses are required to create awareness and acquaint the target with the product benefits. Usually the main advantage of being a pioneer is that you become the leader with a substantial head start over others [Aleve emerging as original pain reliever before aspirin, Tylenol. Advil].
COMPETITIVE STAGE [the advertising stage a product reaches when its general usefulness is recognized but its superiority over similarly brands has to be established in order to gain preference]. In the short term, the pioneer usually has an advantage of leadership that can give dominance in the market. Generally in the early competitive stage, the combined impact of many competitions, each spending to gain a substation market position, creates significant growth for the whole product category [if the pioneers grown, it can more than make up for the earlier expense associated with its pioneering efforts]. The purpose of competitive stage advertising is to communicate the products position or differentiate it to the consumer; the advertising features the differences of the product.
RETENTIVE STAGE [the third advertising stage of a product, reached when its general usefulness is widely known, its individual qualities are thoroughly appreciated and it is satisfied to retain its patronage merely on the strength of its past reputation]. The chief goal of advertising may be to retain those customers by making a brand name for themselves. Ad goal is to maintain market share and ward off consumer trial for the products. Generally products in the retentive stages are at their most profitable level because developmental costs have been amortized, distribution channels established and sales contacts made
REMINDER ADVERTISING: it simply reminds consumers that the brand exists [usually highly visual and is the basically name advertising giving little reason to buy the product]. If your product is alone in the retentive stage, this is cause for alarm because it ma mean the product category is in decline and competition sees little future in challenging you for consumers. Advertisers goal in the retentive stage is to maintain market share and ward off consumer trial for the products. Products in the retentive stage do not successfully cut back on their advertising expenditures but they adopt different marketing and promotional strategies than those used in the pioneering and competitive stages. Generally products in the retentive stage are at their most profitable levels because developmental costs have been amortized, distribution channels established and sales contracts made.
The Advertising spiral is an expanded version of the advertising stages of products providing a point of reference for determining which stage or stages a product has reached at a given time in a given market and what the thrust of the advertising message it should be. Advertising spiral parallels the life cycle of the product. The development of the new types of products or categories does not take place frequently. In using the advertising spiral we deal with one group of consumers at a time. Advertising depends on the attitude of that group toward the product. Pioneering and competitive advertising could be going on simultaneously. Products in the retentive stage usually get the least amount of advertising. As long as the operation of a competitive product does not change, the product continues to be in the competitive stage despite any pioneering improvements [once the principle of this operation changes the product itself enters the pioneering stage]. Whenever a brand in the competitive stage is revitalized with a new feature aimed at differentiating it, pioneering advertising may be needed to make consumer appreciate the new feature. A product can coast for only a short time before declining. No business can rely only on its old customers over period of time and survive. The retentive stage is the most profitable one for a product and can go 2 ways after:
- The manufacturer determines that the product has outlived its effective market life and should be allowed to die [manufacturer quits advertising it and withered other types of support]. The product will gradually lose market share but remain profitable to cuts in spending
- The advertising spiral does not accept the fact that product must decline and product seeks to expand the market into a newer pioneering stage
The newer pioneering stage attempts to get more people to use the product. Ways to enter the stage: making a product change or complete overhaul of a product, such as a radical model change for an automobile. Smart advertisers will initiate a change in direction of their advertising when their product is enjoying great success [show new ways of use]. A product entering the new pioneering stage is actually in different stages in different markets. Longtime consumers will perceive the product to be in the competitive or retentive stage. New consumers will perceive it as being a pioneer
The newest pioneering stage focuses on getting more people to use this type of product. Products in this stage are faced with new problems and opportunities. The advertising focus on the newer pioneering stage must be on getting consumers to understand what the product is about advertising in the newer competitive stage to get more people to buy the brand. A product may try to retain its consumers in one competitive area while at the same time seeking new markets with pioneering advertising aimed at other groups. The life cycle of a product or brand may be affected by many conditions.
Immersive media is one that is involved and fun. Environments (real or virtual) create involvement and exploration. Social tie-in should be used with real place ads. For example, Lays potato chips put chips on ceilings on subways. Some of the best games have been the Monopoly online street games that used Google maps. Facial Profiling where they pickup your body movements. Remote tests are ones that you can actually use a remote car control. Events are the best hands down though. For example, Sony Viao Pc. Other Virtual Places too. Games that have smart phone capabilities. IPhone baby that gets prevented. Pranks: Ex. “Dexter” treatment KEY POINTS: Not information delivery, but involvement. Should be user directed where you explore to do things. This will help connects brand/ product to everyday life and personal experience.
Planning and Context: Single ads not seen in isolation and create a bunch of ads. Campaigns. Other ads for product/ service. Ads for your product in other media. Ads for competitor product/service. Integrated Marketing Communications (IMC). All the above + non-advertising media and mentions of product. New coverage, lawsuits, etc. Campaigns. Many separate ads but need continuity/ relationship. Similarities in Ads. Visual Similarity. Similar appearance: Layout, typeface, and style of image. Verbal Similarity: Content: key points and same “voice.” Aural Similarity: Music/song, Announcer’s voice, and sound design. Attitudinal Similarity: Perspective: stance towards. Brand personality
Integrated Marketing Communications: A strategic plan to connect all communication activities, Built around existing, compelling story/ situation. Campaign criteria extended throughout all marketing communications. They include public relations, events, packaging, direct response, digital, promotions, and sponsorships.
Gatorade Replay: KEY POINTS, Campaign continuity need to have 4 similarities. IMC. Media presence.
ROLE OF ADVERTISING
What is effectiveness? Cause you to buy, persuade, pressure, and cause. They need to be POWERFUL. Behaviorism. Needs, urges, and instincts we cannot control. Food, water, shelter. Romance, fear, aggression. Conditioning: Can be controlled by others, Classical: modification of involuntary reflex behavior. Behaviorist view on Advertising: Create stimuli (ad) to condition responses that benefit the product, Overt (very sexual), and subliminal
Theory of Representation. Symbolism. Isolated textual characteristics= specific meaning. Persuade You to Buy: NOT Powerful and Rationalism: Needs and wants are individual, known, and controllable “enlightenment” individual.
Rationalist View on Advertising delivers dependable information. Theory of Representation is Denotation: clear reason why and Pressures You to Buy. It can be POTENTIALLY Powerful and create Culturalism. Born into and taught general ways of understanding the world. Commonsense “natural.” “Pressure” can be Negative. For Example, if you don’t want to be alone buy this produce. Positive one would be one to have more friends. Culturalist View on Advertising: uses existing pressures in the benefit of campaign. Theory of Representation. Signification: Meaning not in the message, made through associations, Textual and social, Learn and internalize the meaning of particular association, Ads use and remake meanings.
Legal Environment includes what laws and regulations that determine what advertisers can and cannot do. It opens up communications (rationalism) to broaden the range of ideas and debates. It can also expand market economy and democratic society. However it limits Communications (behaviorist). One needs to enforce standards of truthfulness and morality and to protect the economy and society.
Sources of the legal environment are the Supreme Court, regulations created by elected officials, first amendment issues.
Kinds of speech are commercial speech that promotes a commercial transaction (ads). There can be political speech that advocates a cause or point of view. A corporate speech is one that has paid publications of points of views and same protections as political speech. Commercial speech less protected (more regulations) than political speech because: Hardier: getting word out is necessity. Falsehood verifiable.
New York Times vs. Sullivan: Paid advertising that advocated a point of view, the New York Time was not liable, and Lead to corporate speech.
Central Hudson Four-Part Test: s the message eligible for the first amendment protection? Is the government interest asserted in regulating the expression substantial? Does the proposed regulation advance the regulatory interest? Is the proposed regulation narrow enough? If the answer is YES, to all 4, the regulation is constitutional. Elected/ Appointed Government Officials:
Local councils, state/national legislatures, federal trade commission. Early 20thCentury Towards Regulations was a time when Agencies concerned with truthfulness, Industry sought regulations to enhance its value, and the Pure food and drug act of 1906. Correct false messages, not product.
Federal Trade Commission was established in 1916 to Protect consumers from deceptive and unsubstantiated ads. Remedies include to Stop/ change ads, Pay fines, Public correction ads, and Deceptive Advertising likely to mislead. Representation, omission, or practice must be “material.”
Legal vs. Ethical. Legal Realm: DECEPTION while the Ethical Realm is MANIPULATION. Pressures of where Ads can be legal, but still unethical. Defining Ethics and Moral Conduct “What is the right thing to do?”
Ethical Dilemmas: Advertising in Schools, Pressures: budget, money, and revenues. Forms: signs, product contracts, lesson books. Channel One: Lend satellite dish, VCRs, and TV sets, In exchange for 12-minute newscasts and 2-minute ads. Fast Food. Ethics in the Workplace. Ethically Impaired and “Moral Myopia”: Nearsighted and rationalize their ideas
“Moral Muteness” is where one can see ethical dilemmas, but don’t say anything. Compartmentalization is workplace ethics vs. person life. The client is always right. Ethics is bad for business
Ethically Active: Agencies that openly encourage ethical actions, Recognize moral issues. The Steps to take are Recognition, Communications, Saying No, and Moral imagination, KEY POINTS. Don’t forget the Legal Realm of Behaviorism: protect people and Rationalism: dependable information. The Ethical Realm is only addressed fully by culturalism and Recognition of pressures.
CHALLENGING THE AGENCY
The Agency Organization Model since 1870s was an exclusive, skilled professional. Produces-led paradigm. Model is less and less adequate today: Consumer-led paradigm, Web 2.0, Immersive, participatory execution, and The “New Agency.” From professional to crowd sourced From originators to coordinators, Current Situation, Change from producer-led to consumer- led in: Manufacturing and design, Marketing, and form of advertising.
. Change today in: Advertising work, Structure of agency, and Fan Communities. Fan Communities: Facebook Groups (620 million), Identification. Who connects communities together? Who I think I am? (“My identity”) How I can connect to other like-minded people? (Identifying with others). Early forms: Intrinsic, family/clan, race, nationality, and religion. Modern Forms: can decide for self, religious converts, politics. Popular culture: fans, sport fans, and media. Multimedia. Crowd Sourced Advertising: Allowing individuals to create advertisements. Victors and Spoils: Competitive participation, client judges, and Paid for results as well as for “reputational score” of community.
Giant Hydra: Management team coordinates, Creative collaborations to develop ideas, Client oversees process and chooses best.
Zoopa: Work independently, Compete for awards
MOFILM: Aspiring filmmakers, Completion, and Client judges.
PRINCIPLES IN THE REAL WORLD
Major Principles of Advertising in the real world. Strategy: all good effective advertising has a strong strategic basis. Media: best media choices are creative choices. Creative: the best campaigns have fresh, original, imaginative executions. Advertising in Society: study not only ads, but industry and society, then go back and study emergence of all 3 over time. Normative vs. Historical. Normative: Guidelines or ideals, How things “should” operate, Systematic, and consistent.
Historical: The “real world”, How things are actually done, Irrational, unpredictable. Normative is what we learn in class, historical is more real world, learning on the job. What Goods are Principles? Justification for practice, Tools to generate options, Ammo for arguing your case, and explaining your choices to people.
Digital and Direct-Response Advertising *Virtually every advertiser is using the techniques of direct response as a key ingredient of marketing strategies.
A relatively inexpensive, quick, targeted, measurable, and easily available interactive medium. A combination if interactive audio with video capabilities that can engage a customer. Among the most flexible media with an ability to change messages immediately in reaction to market and competitive conditions
Early failures made some advertisers cautious about exploring the unique possibilities offered by this medium. Some consumers are still reluctant to use the Internet as a means of buying products and services; they are timid to give their credit card numbers over the Internet even though secure sites are available. There are so many websites that it makes it difficult for consumers to know what is available or have much time to spend with any single site.
Direct Contact with Consumers
Marketers have moved towards a more personal relationship with their consumers. They have progressed steadily from mass marketing wherein prospects were reached relatively indiscriminately at the lowers possible CPM to: Category marketing (broad demographic targeting. Ex: women aged 18-34), Niche marketing (more narrow categories. Ex: women aged 18-34 with children), Group or community marketing (groups with common interests. Ex: tennis players). While this was happening, the competitive market was reducing the distinction among its brands resulting in: Price competition with shrinking profit margins for sellers and A reliance on trusted brands to provide customers with a perception if consistent quality.
Customer relationship marketing (CRM): a management concept that organizes a business according to the needs of the consumer. From the standpoint of customers, it is clear that the audience feels empowered by interactive media, and they use this empowerment in a proactive manner. Customers are also embracing online couponing, entering sweepstakes online, and participating in other targeted sales promotion activities. Customers respond to promotions tailored to their interests and businesses are happy to avoid the expense of waste circulation. Although CRM sacrifices some control to customers, there are 5 advantages:
More effective cross selling and upselling from current customers. Higher customer retention and loyalty. Higher customer profitability. High response to marketing campaigns. More effective investment of resources. The use of interactive technology allows businesses to deal with the unique purchasing, lifestyle, and behavioral histories of each customer – businesses now have the capability of one-to-one marketing. The end results are that the consumer gains better value and the company engenders continued customer loyalty.
Advertising and Digital Media
It is estimated that in 2009 almost 74% of the U.S. population – or more than 22 million citizens – use the Internet. There are five primary types of advertising in digital media: search, online display, email marketing, social media marketing, and mobile marketing.
- Search: search, or keyword advertising, dominates all forms of digital advertising. Marketers can bid through auction systems on words or phrases related to their offering – advertisers only pay the search engine a fee when consumers click on sponsored links. This is a viable option for small advertisers with limited budgets.
- Online display: the second-largest type of digital advertising – include banners, buttons, microbars, skyscrapers, etc. these ads can be static, animated, or contain video, but most contain the direct-response feature of a link to the advertiser. Click-through rate (CTR) is the traditional measure of success for online display ads. CTR = number of clicks / number of times it is seen. CTR fails to consider a display ad’s influence on branding and other forms of marketing communication. Display ads are monetized in several ways, but cost-per-impression (CPM) still represents the industry norm – CPMs on ad networks range from $.60 to $1.10.
- Email marketing: “the rock star of direct marketing because it is the most cost-effective and most trackable.” Click-through is higher for consumer products and financial services. Marketers are moving from mass-emailings too much more targeted and personable approaches by using demographic data. New vocabulary for online marketers:
- Spam: online advertising messages that are usually unsolicited by the recipient
- Opt-in: a form of permission marketing in which online customers are sent messages only after they have established a relationship with a company. Only consumers who have granted permission are contacted.
- Opt-Out: procedures that recipients use to notify advertisers that they no longer wish to receive advertising messages. A term usually associated with online promotions.
- Congress passed the Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM) Act of 2003 which establishes requirements for those who send commercial email and gives consumers the right to ask e-mailers to stop spamming them.
- Social media marketing: includes blogs, social network sites, chat rooms, message boards, podcasts, and video and sharing sites. There are two primary ways to advertise on Facebook: set up a profile page and actively enlist friends and fans to sign up, and then send bulletins about special events and discounts, OR companies can run traditional online display ads on member pages. They can target audiences based on the information Facebook users provide on their profile. Advertisers on Facebook can choose to pay-per-click or pay by the number of impressions generated. Advertisers use video-sharing sites like YouTube as well. The Internet makes it possible for advertisers to run edgier and more consumer-produced content than they would be able to run in the broadcast media. Advertisers are finding ways to leverage the popularity of social media in such a way as to engage customers rather than making them feel as though the advertiser is invading their personal space
- Mobile Marketing: advertisers see the potential in mobile but must tread carefully because research shows that consumers are annoyed by unwanted mobile solicitations. Smartphone apps are a marketer’s dream because advertisers can use mobile in creative ways to deliver value and advertising to users while developing new customer databases.
- Digital as a complement to other media: digital advertising can stand-alone but it is most often used as a complementary role in integrated campaigns. TV seems to work well with online messages because the medium’s high credibility can build brand equity among large groups of prospects very quickly. Many online promotions must deal with three groups of prospects: the first and largest are the surfers and casual users à web advertising must gain attention quickly, the second group is the entertainment/information-oriented regular users of a site à looking for an interactive activity and will return to a website often if it provides the entertainment and information they seek, the third group is those who are actively in the market for a product/service àthe site should provide relevant, up-to-date product information.
Branding accomplishes two goals in the online world:
It gains awareness for the website itself:
“dot-coms” is a generic designation that refers to companies engaged in some type of online commerce.
Branding is important for the companies that want high visibility on the web.
A number of companies have found that traditional advertising works better than online messages to encourage website visits. *
The Role of Digital Media and Marketing: there are a number of uses for the internet and commercial websites:
As a source of direct sales
As a source of advertising-supported communication
As a source of marketing and promotion information
As builders of consumer engagement
Digital Media and Marketing Research: clearly one of the primary benefits of internet marketing is the ability to gain information about individual buying habits and product preferences. However, one of the emerging advantages of internet technology is the ability to collect market research quickly and inexpensively from a larger respondent base than might be possible with conventional research methodology – a marketer can now sample globally. Some dangers associated with conducting research online is that online survey participants are typically younger and less tech-phobic than other members of the population.
Privacy concerns: the FTC has launched a number of inquiries about online policies and practices. The FTC advocates 4 elements for online privacy policies:
1. Disclosure of what information is collected
2. Choice for customers to opt-out
3. Access by consumers to their personal information
4. Security standards for information use and access
Digital branding, audience, and Daypart: although the internet provides problems for multinational companies attempting to execute localized strategies on a global basis, it offers a number of major advantages as well. For example, companies can provide information about their products as well as receive orders from their customers in other countries without incurring additional expense. 13 – 24 year olds spend 16.7 hours/week online and 13.6 hours watching television.
Direct Response Marketing: direct-response marketing has embraced many of the techniques and technologies of interactive media, but it would be a mistake to think that traditional means of direct response from direct mail and infomercials are going away in the near future.
Direct Response – Pros:
Has the potential to reach virtually any prospect on a geographical, product use, or demographic basiDirect response is a measurable medium with opportunities for short-term, sales-related response. Direct response allows advertisers to personalize their messages and build ongoing relationships with prime target audiences that are often impossible in traditional mass media vehicles.
Direct Response – Cons: Higher cost per contact is a major problem with many forms of direct response, especially direct mail. Expenses in printing, production, and postage all have increased significantly in recent years. To keep up with an increasingly mobile population, prospect lists must be updated constantly at considerable expense to advertisers. Public and government concerns with privacy issues have become a major problem for the direct-response industry. Internet marketers, in particular, are facing restrictive legislation and regulations at both the state and federal levels that have limited their ability to reach new prospects through certain types of contacts.
There are three objectives of direct response marketing:
1. Direct orders. Includes all direct-response advertising that is designed to solicit and close a sale. All the information necessary for the prospective buyer to make a decision and complete a transaction is provided in the offer.
2. Lead generation. Includes all direct-response advertising that is designed to generate interest in a product and provide a prospective buyer with a means to request additional information about an item or to qualify as a sales lead for future follow-up
Traffic generation. Includes all direct-response advertising conducted to motivate buyers to visit a business to make a purchase. The advertisement provides detailed information about a produc but usually no order form.
Three Important Features of Direct Response:
Direct response is targeted communication
Direct response is measurable
The message of direct response is personalThe growth of direct-response is directly attributable to a changing marketplace. We have moved from a manufacture-driven economy to one that is dominated by huge retailers.
Database Marketing: using computer technology, businesses are sorting through large amounts of data to look for new consumer insights, market segments, and patterns of behavior. This more sophisticated research and data cross-checking is called data mining. It allows companies to enhance profitability by examining how they have been successful in the past and apply those lessons in the future. A number of predictive models (called behavior maps) are used by businesses to predict future purchases. Data warehouses are centralized company-wide data storage and retrieval systems. The key to CRM and the benefits of database marketing is to provide information that allows a company to maintain the loyalty and profitability of its customers. The primary element in data mining is that the end result is a relationship that us beneficial to both the company and the consumer.
Television and direct response marketing: Direct-response television (DRTV) comes in a variety of formats, but the most familiar are the short-form spot (30 seconds to 2 minutes) and the program-length infomercial. DRTV marketers are designing their messages with a twofold purpose: (1) immediate sales response and (2) bringing prospects to a company’s website in order to have them bookmark the site and become regular customers. The most used forms of DRTV are:
1. The traditional 30 second format with a tagline allowing consumers to order merchandise.
2. The 2 or 3 minute commercial
3. The infomercial: long-form television advertising that promotes products within the context of a program-length commercial. Regardless of its format, DRTV has certain inherent advantages as an advertising tool:
It shows the product in use and provides opportunities for product demonstrations in realistic circumstances
DRTV can create excitement for a product.
DRTV offers immediate results. Within 15 minutes of a commercial spot, a company will receive 75 percent of its orders. Because most DRTV spots are not time sensitive, they can be scheduled in fringe dayparts for significant discounts. In addition, production costs of most DRTV are less than traditional television commercials. DRTV complements retail sales. DRTV is a great technique for testing various product benefits and measuring sales response. Direct-response advertising is sold both on a paid and per inquiry (PI) basis. PI advertising can be very beneficial, especially to companies with good products but little capital.
Television shopping networks: a number of major retailers and designers use home shopping networks to sell their products to this niche consumer market. These networks will continue to grow and occupy a larger place in general retailing.
Radio and Direct Response: Despite its targeted audiences and niche programming, radio has not been a major player in direct-response marketing. Although the economic promise of “visual” radio is in the near future, for the present, radio can serve as a valuable supplement for a variety of direct-response marketers. The combination of low commercial rates and tightly targeted audience composition can saturate prime prospects with frequently occurring ads.
Magazines and Direct response: it is in the area of business and trade publications that direct response is especially important. Magazines with editorial objectives geared specifically toward some particular business or profession can be extremely beneficial to direct-response marketers. Despite the importance of B2B magazine direct-response, consumer magazines also can provide an important means of reaching prospects. Magazine direct response provides the intimacy of direct response with the traditional advertising virtues of magazines.
Catalogs: one of the oldest and most popular forms of direct-response selling. The role of the internet is a chief concern of catalogers that mail billions of catalogs each year. Another challenges id the increasing number of companies that are entering the ranks with either catalog sales or internet sales. Virtually every cataloger has a strong e-commerce site. The internet may offer catalog companies relief from catalog related production and postage costs that account for a large percentage of their total operating costs. As catalogers begin to take advantage of online options, they are discovering that their basic marketing techniques must be adapted to these new channels. One of the primary challenges involves dealing with the customer-controlled online environment and finding ways of encouraging prospects to visit the cataloger’s website. There are a number of keys to the successful process of moving a person from a prospect to a buyer: The right product. Generally, catalogers have a hard time moving merchandise that is easily obtainable at retail outlets so there has been increased consideration to the uniqueness of products. Product differentiation is always important, but it is doubly so for catalog products Exciting creative execution. People can’t try out what they see so the sales story has to be conveyed in attention-getting messages that grab the imagination of the reader Reach a targeted group of prospects. Waste circulation is more expensive in direct marketing sp every effort has to be made to keep it to a minimum. Fulfillment of customer service. The process of successful selling doesn’t end with a single purchase. Catalogers must establish a means of database management that will allow product inventory management as well as a means of determining the quality of customers on a lifetime value basis.
Direct mail advertising: because of the rising expenses associated with direct mail, it is anticipated that direct mail’s share of direct-response advertising will decrease in the future. One of the problems facing direct mail is that the sheer volume of mail coming to households makes gaining a competitive advantage very difficult. This challenge is all the more reason that direct mailers must take steps to reach targeted prospects with an interesting message and a worthwhile product. There are a number of organizations involved in the direct-mail list process:List brokers: in direct-mail advertising, an agent who rents the prospect lists of one advertiser to another advertiser. The broker receives a commission from the seller for this service.
List compilers: usually a broker who obtains a number of lists from published sources and combines them into a single list and then rents them to advertisers.
List managers: promotes client’s lists to potential renters and buyers. The primary job for the list manager is to maximize income for the list owner by promoting the list to s many advertisers as possible.
Service bureaus: one of the primary jobs of the service bureau is to improve the quality of lists. This is called list enhancement and one of the most important steps is the merge/purge. This is a system used to eliminate duplication by direct-response advertisers who use different mailing lists for the same mailing. Mailing lists are sent to a central merge/purge office that electronically picks out duplicate names. Saves mailing costs, especially important to firms that send out a million pieces in one mailing. Also avoids damage to the goodwill of the public.
Lettershop: a firm that not only addresses the mailing envelop but also is mechanically equipped to insert material, seal and stamp envelopes, and deliver them to the post office according to mailing requirements.
Response lists: lists of prospects who have previously responded to direct-mail offers. These lists are more productive and the rental charges are higher than for compiled lists.
List protection: the most common list abuse is multiple mailings beyond an agreed-upon limit. To monitor this, the list owner will include a number of fictitious names that can be tracked to see the number of mailings àthis is known as list decoying. The much greater problem is that the mailing offer may be too closely competitive with the list owner’s products (want profit, not competition)
Testing direct-mail advertising: the most commonly tested e-mail elements in descending order of importance – subject lines, calls to action, design, body copy, offers, and timing The key elements in testing direct mail are the list, the offer, and the creative presentation. Direct-mail testing can be expensive so it is important to concentrate on major elements that normally determine the success or failure of a mail campaign. It is extremely crucial to research validity to test only one element at a time.
Other direct-mail techniques:
Package insert: these messages, called bounce-back circulars, are delivered to customers who are proven direct-marketing users. The cost is much less than solo mailings because the sales message is being delivered as part of another package
Ride alongs: direct mail pieces that are sent with other mailings, such as bills. Same advantage as package inserts except they are going to a company’s loyal customers with whom a company has a proven and recent sales relationship.
Statement stuffers: these cost nothing to deliver because the mailing expense is being incurred anyway. They are at least seen, because everyone eventually gets around to opening their bills. Most recipients are credit qualified and have already dealt with the company before or they would not be getting a statement.
Ticket jackets: airline, bus line, train ticket jackets; companies such as car rental firms find these to be an ideal way to reach their prime target audience.
Cooperative (joint) mail advertising: high postage costs result in advertisers joining together and dividing up the cost among them. Two major drawbacks: it is extremely impersonal and it is difficult to reach specific customers through joint mailings with the same precision that marketers would have with their own lists.
Chapter 22 – The Complete Campaign
Today’s advertisers usually create campaigns that fit into their integrated marketing communication program. They don’t create only an ad by itself. The four components (creative brief, brand equity probe, strategic options and recommended plan, and brand equity audit) are synthesized into an action plan for developing all communications for a brand – it must maintain a consistent identity. Advertisers’ main concern is reaching every consumer’s “touch point.”
A campaign versus an ad: there is no magic time frame for a campaign, but generally, campaigns are designed to run over a longer period of time than an individual ad. The average length of a regional or national campaign is about 17 months, although it is not uncommon for a campaign to last 3 or 4 years – a few have lasted much longer.
Changing campaign risk: there is never a guarantee that the next campaign will be as strong, let alone stronger, than the original. Although, some believe that most successful campaigns need refreshing over time – people change, products change, and markets change. Adding online advertising to a television campaign boosts brand awareness, but the inclusion does little to impact sales. Broadcast ads upped the linking of brand to a message or value proposition by nearly 13 points, the web added 7 points. Television spots increased the ability to influence purchase decisions by nearly 6 points, whereas the web only contributed a mere 0.4 point incremental boost. The web was stronger at raising awareness and association than influencing purchasing decisions.
Campaign Diversity: many campaigns have purposely highlighted models with racially indeterminate features – “Generation E.A.: Ethnically Ambiguous.” Good advertising starts with a clear understanding of both short and long-term marketing goals
Situation Analysis: establishes a current benchmark or starting point. It has two orientations: the past and the present. The situation analysis is the first step in developing a campaign. The Product: successful advertising and marketing begin with a good product or service. At this point, we need to analyze our product’s strengths and weaknesses objectively. Among the questions usually asked are the following:
- What are the unique consumer benefits?
- What is the value of the product relative to the proposed price?
- Are adequate distribution channels available?
- Can quality control be maintained?
Prime prospect identification: the next step is to identify our prime prospects and determine if there are enough of them to market the product profitably. We also must identify the prime prospects problem: What are their needs and wants in the product or product type?
Competitive atmosphere and marketing climate: we carefully review every aspect of the competition, including direct and indirect competitors. Recognizing the market climate during the recession in 2009, Subway promoted their $5 sandwiches and the promotion was so successful it became a campaign.
Creative objective and Strategy: we begin to select those advertising themes and selling appeals rhar are most likely to move our prime prospects to action. Advertising motivates people by appealing to their problems, desires, and goals – it is not creative if it does not sell. Once we establish an objective, er are ready to implement the copy strategy by outlining how the creative plan will contribute to accomplishing our predetermined goals:
- Determine the specific claim that will be used in the advertising copy (if more than one, list in order of priority)
- Consider various advertising executions
- In the final stage of the creative process, develop the advertising copy and production
Continuity: term used to describe the relationship of one ad to another ad throughout a campaign. This similarity or continuity can be visual, verbal, aural, or attitudinal. Visual similarity: all print ads in a campaign should use the same type face or virtually the same layout format; stress continuity not sameness. Another device is for all ads in a campaign to use the same spokesperson or continuing character – strong continuity strengths communication. Verbal similarity: Great words and great strategies make great campaigns. “What can Brown do for you” UPS “Mmm mm Good” Campbell’s Aural similarity: the same sound effect can make a campaign very distinctive “This is Tom Bodett for Motel 6”. Attitudinal Similarity: some ads express a consistent attitude toward a brand and the people using it. Nike is a strong brand name and its signifies status, glamour, competitive edge – its presence and identity is so strong that many people want to connect with the brand.
Media Objectives: creative planning and media planning have the same foundations – marketing strategy and prospect identification – and they cannot be isolated from each other. Media attempts to be “media neutral.” The media plan involves three primary areas: strategy, tactics, and scheduling.
Media strategy: at the initial stages of media planning, the general approach and role of media in the finished campaign are determined:
i. Prospect identification.
ii. Timing. The media planner must consider many aspects of timing, including media closing dates, production time required for ads and commercials, campaign length, number of exposures desired
iii. Creative considerations. Media and creative teams must accommodate each other. Media has to be creative in finding a way to reach and engage consumers
Media tactics: media planner decides on media vehicles and the advertising weight each is to receive.
Media scheduling: actual media schedule and justification are develope
The promotion plan: discussed very early, and its relationship to the advertising plan is determined. Promotion activities may involve dealer displays, in-store promotions, premiums, cooperative advertising, and coupon offers
Other Integrated Elements: don’t forget the importance of every aspect of your IMC functioning as one voice. You need to maintain focus on the brand or positioning throughout the marketing mix.
Getting the Campaign approved: for approval, it is wise to present a statement of the company’s marketing goals. Next, the philosophy and strategy of the advertising are described, together with the reasons for believing that the proposed plan will help attain those objectives. Not until then are the ads or commercials presented.
Research – Posttests: the final part of a campaign entails testing its success. First, the expected results are defined in specific and measurable terms. Then, the actual research is conducted to see if these goals were met. The pretest is intended not only to provide a benchmark for the campaign but also to determine reasonable goals for future advertising.
”Glocal” describes how advertisers consider language and culture when tailoring global campaigns to populations around the world – or within the United States. American consumers prefer foreign-made goods in a number of major product categories; a significant percentage of future growth in marketing and advertising will be more concentrated in the Far East, Middle East, and Latin America as sellers seek new customers for their goods and services. Nowhere is the expansion of global marketing more apparent than in the increase in international advertising spending levels. Among the major challenges is overcoming significant anti-American opinions abroad. The roots of these attitudes are varied, but many are related to the marketing of American products.
- Exploitation: The sense that American companies take more than they give
- Corrupting influence: The view that American brands enhance thinking and behavior that clash with local customs and debase cultural or religious norms
- Gross insensitivity and arrogance: In many cultures there is a perception that Americans believe everyone wants to be like them
- Hyper-consumerism: Agencies try to find those shared attitudes which are consistent from country to country but these companies must be sensitive to the distinct differences and pride that consumer’s feel toward their national and cultural heritage.
- The Multinational Corporation: The basic motivation is to make profit and expand their customer base.
The fundamental economic model remains the same regardless of the company’s size. Another significant feature of global marketing and advertising is the paradox of a greater ability to communicate across international borders accompanied by growing nationalism and suspicion of outside influences in many countries. Whatever the reason, a growing sense of isolationism is a factor that the international marketers must weigh with care.
In some cases, isolationism can be resolved in part by greater sensitivity to other cultures, a willingness to learn local customers, and openness to new ideas. Globalization is a hybrid term meaning to adapt global marketing efforts (product and advertising messages) to local markets and cultures. Globalization can develop creation or distribution of products or services intended for a global or trans-regional markets but customized to suit local laws or customs. It is also be used electronic communication technologies, such as the Internet, to provide local messages on a global or trans-regional basis.
Glocalization seeks to emphasize the belief that international sales of a product are more likely to succeed when companies adapt the product and/or promotion specifically to a particular local. For example, Nokia launched the “kosher phone” for Orthodox Jews in Israel, and McDonald’s adjusts their menu according to local food habits.
Localized market strategies is good business and good corporate citizenship
A greater sense of local country traditions may be more important than business expertise, and even the most astute marketers sometimes misunderstand local customs. For example, Wal-Mart in German and South Korea are for those people that are one stop, quick-shoppers.
The global economy will continue to grow, fueled by the emergency of middle-class societies in an increasing number of countries. In addition, communication technology is permitting advertisers to reach prospective buyers. A growing global demand and a rising standard of living will combine to make advertising more prevalent worldwide.
China will become a leading global market. For many years, China has been known for its exports rather than its imports, but today, China is recognized for its potential as a growth market because of its size and the capacity of its growing middle class to buy goods. However, marketers have been warned to approach the market with caution because China is a very diverse as a heterogeneous market. For example, advertising within China has been compared to global marketing because of its more than 22 providences, 5 time zones, and almost 300 cities with populations greater than 1 million. As more companies around the world seek growth opportunities, entry into the Chinese domestic market will become more attractive.
A necessary element in the expansion of global business activity has been the growth of communication technology, particularly in developing regions. The introduction of satellite TV brought the possibility of reaching the majority of the world’s population with information, entertainment, and advertising. Business could expand much faster and efficiently. As impressive as satellite is, it pales in comparison to the distribution and usage of Internet technology such as social media.
No communication technology has grown at the rate of the internet (1.6 billion people use). The potential for future growth is outside the United States and Europe. The key to successful global marketing is finding those common appeals that will work on a universal basis (a mother’s love for her child).
International legal issues andmarketers face the problem of country-to-county variances in matters such as privacy and legal and regulatory standards. Online marketers must be aware that regulations differ widely from country to country. Internet promotions sent to an international audience should provide the opportunity to opt out, give honest and credible information, prohibit the use of randomly generated addresses, and set standards to prevent relaying email from computers with authorization.
America no longer dominates global commerce. It is difficult to develop rigid guidelines for global commerce because each company faces unique issues and deals with them in a variety of ways. Traditionally, a major failing of American companies going abroad (especially those with little multinational experience) has been treating a market as if consumers were homogeneous in terms of demography and product preference based on a lack of research and appalling ignorance of local cultures and traditions.
Global Marketing is aterm that denotes the use of advertising and marketing strategies on an international basis. A company should adopt a single advertising and marketing strategy throughout the world where the product development, advertising themes and media, distribution channels, and target market are identical from one country to another. See Open Happiness campaign from Coke.
European Union (EU) is thedeveloping economic integration of Europe, potentially a single market of some 500 million consumers in 2010. The North American Free Trade Agreement (NAFTA) is a treaty designed to eliminate trade barriers among the US, Mexico, and Canada; some see this as being anti-environmental and exploitative of workers and small farmers. In developing a successful multinational marketing organization, management, advertising execution and sensitivity must be addressed.
- Management: consolidating strategic management decisions at corporate headquarters and giving local managers flexibility to develop specific tactics within these general principles. A way for management to tackle the issue of creating a branding or advertising theme that can be adapted globally is to look at brands as an umbrella under which a number of related products can be marketed rather than treating each brand as a unique product. The execution of international marketing and advertising is divided into 2 camps: Agencies that are willing to tolerate dealing with a number of local agencies, or efficiencies of centralized control employing a few agencies are worth the potential loss of local character in advertising. Companies usually develop a management style that integrates both of these approaches.
- Advertising execution: international advertising and marketing strategy must adapt in some way to almost every country it enters. Problems such as language differences, media research and usage, and cultural considerations are the most often frequently seen. It can be argued that the misapplication of global marketing places the well being of the firm ahead of the consumer. Global marketing involves a number of steps requiring decisions about both products and marketing strategy. The following are some situations that are executed:
- Export both the product and the advertising to other countries
- Adapt a product and marketing plan exclusively for the international market or large geographical area
- Export the product, but change the name
- Keep the brand name and advertising strategy, but adapt the product country by country
- Keep the brand name and product, but adapt the advertising in each country (one of the more common strategies)
- Adapt both the product and the advertising to each country (the most expensive)
- Sensitivity: in recent years, multinational businesses have had to deal with numerous complaints about their operations in developing countries. Even corporations acknowledge that there is a fine line between opening new markets for their products and exploitation. More companies are demonstrating that they understand that there is an important balance to be reached between maximizing sales and profits and being a responsible marketer.
The formulation of joint ventures in the 1970s recognized the growing expertise of local advertising talent and the fact that around the world many overseas agencies were providing client services on par with major American agencies. The most significant change in international advertising on the agency side is the growing trend for clients to bring much of the marketing communication function in-house. The most significant result of this change is that multinational companies are now calling on small agencies for creative work to create multinational advertising agencies.
Advertising revenue in the US accounts for approximately 40 % of the world total, however, much of this advertising is placed by foreign-owned agencies. The primary motivation for marketers in a number of regions is to offer more growth potential in other countries than the more mature US and Western Europe economies.
The effects of integrated marketing communication on worldwide agencies has left marketers much more interested in reaching consumers by the most effective venue rather than pigeonholing their marketing communication into artificial categories of advertising and promotion, and have moved toward the decentralization of agencies. Many major multinational marketers have opted to use a number of smaller agencies rather than 1 or 2 large ones for their brands (more evident on the creative side). This provides more choice for the client and it promotes interagency competition. The downside of using a multiagency approach is the problem of keeping the brand image and positioning consistent, and there are potential difficulties with management control of diverse voices.
Research and the Multinational Consumer is changing relationships between international agencies and clients most apparently found in market research. Research for multinational brands is one of the primary areas in which centralization works far better and offers efficiencies in both cost and reliability. Marketing translation is the process of adapting a general marketing plan to multinational environments. A vital element in the translation process is the brand audit which attempts to define what a brand means to consumers worldwide, and then develop market strategies that will enhance the brand’s potential. Regardless of the function – creative, media, or research – agencies face problems in meeting the demands of clients. They must accommodate the original structure of their clients. What is needed for account management often differs from one client to another so some agencies find they need different management organizations for each client. Agencies must also figure out how to manage centrally and communicate locally – must translate broad client marketing strategies to the level of the individual customer in each country they serve.
The Multinational Advertising plan: all advertising begins with sound planning and an adherence to basic marketing strategy. All forms of marketing communication should be coordinated and integrated rather than presented as a series of unrelated advertising messages. There are two areas of primary concern to international agencies and their clients
- Creative and cultural considerations: advertisers can no longer introduce their products and depend on latent demand for sales and profits; they must look at the social and cultural implications of their advertising. Successful creative execution begins with an in-depth awareness of a country’s culture, customs, and buying habits.
- Media planning from a global perspective: the media function has suffered from three primary problems in international advertising:
- Media availability and/or usage levels
- Legal prohibitions – some of the more general restrictions common to advertising regulators throughout the world are: comparative advertising, advertising to children, internet advertising, standards of truth
- The lack of reliable audience research: Rapid expansion of efficient global communication and the expansion of global retailers have dramatically improved the ability of advertisers to reach target markets.
Advertising and Ethnic Diversity in the United States is a huge factor to take into consideration. More than 19% of US residents prefer a language other than English when at home. The task of marketing to a diverse population is made can be difficult. With a Majority-minority transition,the marketplace is changing more quickly than many companies can adapt and the ethnic makeup is constantly evolving. Race is more difficult to determine. For example, the 2000 census had almost 7 million respondents list more than one racial background. Finally, Internet and technology allows more immigrants to stay connected with their family and homeland, making assimilation and acculturation a longer process.
A Multicultural market power forcompanies is not enough to simply identify ethnic market segments, they must relate to them as well. Companies generally give greater attention to the Hispanic market than either the African American or Asian American for two reasons: because the rate of assimilation as lower and the language differences. Even after Hispanics become fluent in English, they still use Spanish on a frequent basis. How advertisers deal with U.S. diversity is a matter of sensitivity and profitability. Language does not define how a person regards his or her cultural roots – even Hispanics who speak little or no Spanish are as likely to have strong values in the Hispanic community as those who speak Spanish. The emergence of value-driven, as contrasted to language-driven, marketing strategy is a primary change in the strategy and execution of ethnic marketing. Marketers are facing a dilemma because on one hand, firms know they must acknowledge consumer diversity in order to profitably market their products, but on the other hand, there is a growing acceptance of diverse cultures that suggests the future will be one of constant borrowing from a number of cultural identities.
Marketing to various groups in Media:
Because of the relatively low-cost entry into the market, ethnic newspapers are the largest medium in terms of number of vehicles (although they are far surpassed by the audiences of ethnic-oriented television). Most ethnic-targeted publications have experienced a significant circulation and advertising increases during the past decade, with the exception of the African American press. This decline can be attributed to the civil rights movement pushed mainstream media to begin more balanced coverage of the African American community, and the fact that it is easier for major newspapers to assimilate African Americans because there is no language barrier.
The Message: marketers must tailor their messages to specific target audiences, but they must also understand that subgroups exist within ethnicities. For example, when General Motors ran a Saturn commercial in Miami with a woman in a Mexican dress dancing in front of the Alamo, the Miami Hispanic community had little or no relevance to the commercial because the overwhelming majority of them are Cuban American.
The Product: products from abroad are being introduced into the United States because companies believe there is a ready-made U.S. market of Mexican immigrants who are already familiar with the brand. They have a duel strategy of appealing to the Hispanic market and at the same time building future sales through crossover purchases from the general population.
Research: for many years, reliable ethnic research did not exist but as more companies are spending more money into advertising, they have a lot invested into making sure that each dollar spent results in profitability among their target ethnic audience.
onomic, Social, and Legal effects of Advertising
The History of Advertising Criticism
I. The Era of exaggerated Claims (1865 – 1900)
II. The Era of Public Awareness (1900 – 1965)
III. The Era of Social Responsibility (1965 – present)
A number of studies indicate that buyers support those companies and brands that have gained a reputation for being good citizens and actively promote their good works.
The Economic Role of Advertising: the primary role of advertising is communication, but there is a constant “persuasion versus information” debate that will never be resolved because of the biases of the pro-advertising and anti-advertising camps and the fact that advertising functions in both roles (persuasive and informative).
Economic Arguments in Favor of Advertising:
- Advertising provides consumers with information to make informed decisions about new products, availability of products, price, and product benefits
- Advertising supports largely unrestricted media that disseminate news and entertainment and provides employment to thousands
- By promoting product differentiation, advertising encourages continuing product improvements and the introduction of new and innovative goods and services
- Mass advertising ultimately results in lower prices
- Advertising contributes to increases in the overall economy by increasing generic as well as brand consumption
Economic Arguments against Advertising:
- The intent is to persuade, not to inform
- On a macroeconomic basis, advertising spending is largely wasted because it primarily causes consumers to switch from one brand to another without any net economic gain to society
- Many economists challenge the notion that advertising lowers product price. They charge that one of the primary goal of advertising is to insulate a brand from price competition by emphasizing emotional appeals so that price comparisons become less important to product decisions
- The high rate of product expenditures in many product categories make it difficult, if not impossible, for new products to enter the market
The fact is that there is evidence to support each of these claims and counterclaims of advertising.
The Social Role of Advertising: Perhaps the fundamental question raised in the social context of advertising criticism is whether advertising shapes and defines culture or simply mirrors and evolving society. The answer is some of both. Cultural effects of advertising on an audience include:
- Advertising’s inadvertent social role: study advertising from the viewpoint that ubiquitous, redundant messages presented by advertising through mass media created various changes in the way the audience responded to their audience. By the sheer weight of exposure, advertising sets a social agenda of what is expected, what is fashionable, and what is tasteful for a number of people.
- Advertising’s overt social role: a second, less studied area of advertising’s social and cultural roles deals with advertising as an agent of social change. That is, those campaigns whose primary objective is the promoting of a social agenda.
As products become homogenized, sellers look to advertising and brand image as the principle difference among competing products. As we discussed earlier, differentiation is not found in the product itself but in the mind of the consumer. Once a brand achieves a dominant position based on image and cultural associations, it is much more difficult for competitors to match than real product differences.
In recent years, social criticism of advertising has taken precedent over its economic effects. Some representative examples of social criticisms include privacy concerns, product placement, and advertising’s role in obesity.
Advertising Content is by far the most criticized area of advertising directed at alleged exaggeration claims where critics charge that advertising is more likely to provide misinformation, negative content, and in some cases, outright falsehoods than useful consumer information. One of the long-standing areas of advertising criticism is the portrayal of various segments of society. There is also a growing awareness that advertising should present a more realistic image of society. For example, look at Dove’s “Campaign for Real Beauty.”
Advertising of certain product categories is also criticized. Now that tobacco advertising is virtually nonexistent in mainstream media, some of the remaining products and product categories that garner most controversy are distilled spirits, condoms, and advertising to children.
Excessive Advertising receives most of its criticism directed at TV, with approximately 25% of television network time devoted to commercials. There are also many within the advertising industry that see excessive advertising as having the potential to dilute ROI. Communication research confirms that the number of messages in a commercial block and the order in which they are seen has an effect on the recall and impact of the advertisement. Excessive advertising is a concern for both the audience and the advertising industry.
Finally, Advertising’s unwanted influences can have an affect on society. Among the major theses of this school of thought are that advertising makes people buy things they don’t want or need, lowers morals, and generally exploits the most susceptible segments of society. The idea that consumers will take some action solely because of advertising is contrary to virtually every theory of communication.
The Advertising Council has the most organized efforts of social advocacy, which has for many years marshaled the advertising industry to support a number of causes – addressing issues such as racial tolerance, equal rights, job and fair housing opportunities, health awareness, and education. The council depends on volunteers across the advertising spectrum. Major agencies produce most of the advertising on a pro bono basis, and the media donate time and space to carry these advertisements and commercials. Because of the council’s success, a number of other organizations have begun advertising (MADD, Planned Parenthood). Another challenge for the council is finding the type of topics that are so prevalent in today’s society like the war on terrorism and the fight against AIDS.
Issue Advocacy Advertising isused to influence public opinion and legislation regarding a range of political issues from health care reform to energy and trade policy. Unlike most brand advertising, the tone of many of these ads is negative as groups seek to derail proposed legislation or emphasize shortcomings in an opponent’s plan. Advertising and Cause-related marketing can be seen back from 1983. In 1983, Amax sponsored a campaign promising to donate to the renovation of the Statue of Liberty each time someone used an American Express card. This initiative is considered to be the introduction of cause-related marketing. Today, large corporations are engaging in strategic philanthropy in which they market their good deeds in the same way they market their products. Most research indicates that consumers rarely make purchasing decisions solely because a company is supporting some favored cause. Some companies have refrained from cause-related marketing because they feared that consumers would view their efforts as exploitative. However, a number of studies indicate that consumers welcome the opportunity to be a part of a worthy cause, and they reward companies for their efforts. Cause-related marketing falls into transactional programs, message promotions, and licensing programs.
The theory behind the adoption of advertising as the primary source of media funding is that, by having economic support spread out over numerous advertisers, is assures that no one entity can exercise undue influence over editorial content – this wall has been breached. A number of research studies indicate that a large majority of the public believes that advertisers are influencing editorial content. When the media loses credibility with their audience, it harms both themselves and the advertisers that use them. These are some of the ways in which the relationship between advertisers and the media are changing:
- Withholding advertising as an attempt to control editorial decisions: in some cases, an advertiser may want favorable coverage of a firm, and in other instances a company demands a medium kills a story critical of another company. Such a demand can involve major ethical as well as financial decisions in part of the media.
- Advertiser-financed productions: a number of advertisers have worked with local and network television outlets to jointly produce programming – one being the family friendly forum which promotes family-friendly programming between 8 and 10 because that is when adults and children are likely to watch TV together. Few people question the motives of these companies to bring family friendly entertainment to television, but many critics see any involvement between advertising and programming as a cause for concern. The Today show was also criticized for not revealing that the companies whose brands they recommended were paying some product experts appearing on the show.
- Product placement: this has been the most prevalent editorial-promotion alliance in the past decade. It is not confined to traditional media. The popularity of video games has provided a ready-made market for the placement of products, especially those directed toward young, male audiences.
- The Advertorial: the use of advertising to promote an idea rather than a product or service.
Advertising’s Legal and Regulatory Environment
The public and the advertising industry itself agree that companies that use illegal or unethical advertising tactics should be dealt with severely. Not only is deceptive advertising wrong, but it also creates a lack of trust in all advertising, making it difficult for honest businesses to effectively promote their products and services. Constraints no advertising include laws and regulations of legally constituted bodies such as Congress and the FCC, control by the media through advertising acceptable guidelines, and self-regulation by advertisers and agencies using various trade practice recommendations and codes of conduct.
Caveat emptor is Latin for “Let the buyer bewares”; represents the notion that there should be no government interference in the marketplace. Many of the principles of caveat emptor have been rejected. Rather, both businesses and the public realize that buyers have far less information than sellers, and they must be protected by legal guarantees of the authenticity of advertising campaigns.
In 1922, in Federal Trade Commission (FTC) vs. Winsted Hosiery Company, the Supreme Court held that false advertising was an unfair trade practice. In 1938, the Wheeler-Lea Amendments broadened the scope of the FTC to include consumer advertising. One of the primary concerns of the FTC is to ensure that consumers are protected from deceptive advertising. The key to FTC enforcement is that advertisers must be able to prove the claims made in their advertising – be able to substantiate what they say. There is a 3-part test to figure out if a claim is untruthful:
- There must be a representation, omission, or practice that is likely to mislead a consumer
- The act or practice must be considered from the perspective of a consumer who is acting reasonably
- The representation, omission, or practice must be material (in other words, the claim, even if not true, must be judged to have had some influence over a consumer’s decision)
A FTC intervention in alleged deception starts with a claim of deception practices to the FTC. Then the FTC begins to investigate with a request for substantiation from the advertiser. If the FTC finds the practice to be unsubstantiated and therefore deceptive, a complaint is issued. The advertiser is asked to sign a consent decree where they stop the practice that is under investigation, but admit no guilt. If the advertiser refuses to sign a consent decree, the FTC issues a cease-and-desist order. This order can carry a $10,000-per-day fine.
Even if an advertiser agrees to abide by a cease-and-desist order, the FTC may find that simply stopping the practice does not repair past damages to consumers. They may be required to run corrective advertising to counteract the past residual effect of previous deceptive advertising (this began around the 1960s).
If a company cannot reach agreement with the FTC, its next recourse is the federal courts. It is extremely rare that cases go beyond the cease-and-desist stage.
FTC Rules and Guidelines: the FTC is responsible for enforcement and education in:
- Federal Laws passed by congress
- Formal FTC industry rules: the telemarketing sales rule means that callers are authorized to provide caller information, the used car rule is intended to prevent oral misrepresentations and unfair omissions of material facts by used car dealers, and the contact lens rule made it mandatory that patients receive copies of their prescriptions.
Among the most common areas of FTC inquiry for which guidelines have been issued are the following:
- Environmental claims, the term “free” in advertising, “Made in the USA” label, Advertising as a Contract, facts versus puffery (meaning the advertiser’s opinion of a product that is considered a legitimate expression of biased opinion), testimonials, and warranties and guarantees.
Robinson- Pitman Act: a three-part “package” that evolved over a period of almost 50 years:
- 1890 Federal Sherman Antitrust Act: designed to prevent alliances of firms conceived to restrict competition
- 1914 Clayton Antitrust Act: amended the Sherman Act; it eliminated preferential price treatment when manufacturers sold merchandise to retailers
- 1939 Robinson-Pitman Act: in turn, the Pitman Act amended the Clayton act. It requires a manufacturer to give proportionate discounts and advertising allowances to all competing dealers in a market. It protects smaller merchants from unfair competition of larger buyers. For example, a manufacturer may not limit co-op dollars to television, knowing that many retailers ion smaller markets might not have practical access to television advertising. Such an offer is known as an improperly structured program.
Slotting fees are payments to retailers by manufacturers to gain shelf space; the FTC has a continuing review of the role of slotting fees because it fears that they have the potential to prevent marketplace entry of new brands or prevent small retailers from gaining access to establish brands because of disproportionately high slotting fees.
The Federal food, drug, and cosmetic Act was passed by Congress in 1938 and established the Food and Drug Administration (FDA); it superseded the original legislation (the original prohibited interstate commerce in misbranded and adulterated foods, drinks, and drugs) and gave the FDA increased responsibility. One of the most active and controversial areas of FDA regulation is consumer prescription drug advertising. Until 1997, pharmaceutical companies could only advertise prescription drugs to doctors, and then, consumer advertising was permitted. By 2005, $5 billion was being spent on direct-to-customer drug advertising. The FDA has begun an aggressive campaign of enforcing promotional regulations, often sending formal letters of warning to drug companies. The jurisdiction of the FDA to control and regulate labeling was enhanced when Congress passed the Nutritional Labeling and Education Act of 1990. Beginning on January 1, 2006, the agency was given greater enforcement authority over labeling, and labeling information was enhanced to include data about trans-fat allergen groups, and whole grain ingredients.
Despite a more open environment for commercial messages, judicial opinions supporting commercial speech still deny full first amendment protection to advertising.
In 1980, the court articulated a set of guidelines concerning the constitutional protection that would be afforded commercial speech. These guidelines were set forth in the case of Central Hudson Gas and Electric v. Public Service Commission of NY. The court established a four-part test to determine when commercial speech is constitutionally protected and when regulation is permissible – known as the Hudson Four-Part Test:
- Is the commercial expression eligible for first amendment protection? Is it neither deceptive nor promoting of illegal activity?
- Is the government interest asserted in regulating the expression substantial? The stated reason for regulating must be of primary interest to the state rather than of a trivial, arbitrary nature
- If the first two tests are met, the court then considers if the regulation of advertising imposed advances the cause of the government interest asserted. If we assume that an activity is of legitimate government concern, will the prohibition of commercial speech further the government’s goals?
- If the first three tests are met, the court must finally decide if the regulation is more extensive than necessary to serve the government’s interest. Is there a less severe restriction that could accomplish the same goals?
Because of the unique nature of communication, it may be that the Supreme Court will never be able to issue a totally definitive decision that will cover every instance of commercial speech.
CAN-SPAM Act of 2003: the controlling the assault of non-solicited pornography and marketing act is enforced by the FTC, and established requirements for those who sent commercial email. Provisions to the act include false or misleading information is banned, deceptive subject lines are prohibited, the e-mail must give recipients an opt-out method, commercial email must be identified as an advertisement and include the senders valid physical postal address.
Advertising of professional services: one of the most controversial areas of commercial speech involves advertising by professionals; especially attorneys and health care providers.
Comparison Advertising has primary concerns. Comparative advertising runs the risk of inadvertently promoting competitive brands and/or appearing to offer credibility to them by including their names. Some comparison advertising may appear unfair to consumers and damage the reputation of the brand as well as advertising in general. Firms fear that comparative advertising claims will precipitate lawsuits by companies that think their brand is unfairly disparaged. Comparison advertising can also invite counterattacks form competitive brands.
The Advertising Clearance Process: the internal process of clearing ads for publication and broadcast, conducted primarily by ad agencies and clients. The toy is presented logically and realistically. Animation is limited to about 10 second spot. Copy must clearly disclose if parts are sold separately and if batteries are not included
Self-Regulation by Industry-wide groups serves two important purposes beyond ensuring more informative and truthful advertising by seeking to overcome the relatively poor public perception of advertising by showing that there is a concerted attempt within the industry to foster responsible advertising and strong self-regulation may ward off even stricter government control.
Better Business Bureaus areone of the best-known, aggressive, and successful organizations in the fight for honest and truthful advertising. Their primary responsibility is for truthful and non-deceptive advertising rests with the advertiser. Advertisements that are untrue, misleading, deceptive, fraudulent, falsely disparaging of competitors, or insincere offers shall not be used. An advertisement as a whole may be misleading although every sentence separately considered is literally true. Although the BBB’s have no legal authority, they are a major influence on truth and accuracy in advertising.
The National Advertising Review Council (NARC)’s primary purpose was to develop a structure which would effectively apply the persuasive capacities of peers to seek the voluntary elimination of national advertising which professionals would consider deceptive. Its objective was to sustain high standards of truth and accuracy in national advertising through voluntary self-regulation.
National Advertising Division (NAD) isthe primary investigating unit of the NARC self-regulation program. The NAD is staffed by full-time lawyers who respond to complaints from competitors and consumers and from referrals from local BBBs. They also monitor national advertising. Primary areas of challenges are product testing, consumer perception studies, taste/sensory claims, pricing, testimonial/anecdotal evidences, and demonstrations. The NAD/NARB process cannot order an advertiser to stop an ad, impose a fine, bar anyone from advertising, or boycott an advertiser or product.
The National Advertising Review Board (NARB) provides an advertiser with a jury of peers if it chooses to appeal a NAD decision.
The Children’s Advertising Review Unit (CARU) was established in 1974 to review the special advertising concerns of advertising directed to children. The CARU primarily deals with product presentations and claims, sales pressure, disclosures and disclaimers, comparative claims, endorsements and promotions by program or editorial characters, safety, and interactive electronic media.
Obesity concerns: an area of concern is food advertising and its alleged contribution to childhood obesity, demonstrates many similarities with the battle over tobacco advertising in the 1990s.
The Children’s Food and Beverage Advertising Initiative (CFBAI): launched by CBBB in 2006 to provide transparent and accountable self-regulatory guidelines for companies that advertise foods and beverages to children. The initiative’s goal is to ensure that food and beverage advertising messages directed to children younger than 12 encourage healthy dietary choices and lifestyles.
- Six Questions to Ask Before Your Next Advertising Campaign (sheehy1.com)
- On the fallacies of attribution (making customers love you) (thoughtgadgets.com)
- The chart that explains media’s addiction to print (gigaom.com)
- Old media vs the cloud: a clash of cultures (zdnet.com)
- Now hiring in Durham: Advertising Operations Coordinator (web.blogads.com)
- How to Steal ROI from Competitors Branding Efforts (slideshare.net)
- LANGUAGE: ADVERTISING: GRADE 11: How To Analyze a Print Advertisement (trippinglyonthetongue01.wordpress.com)
- Using Engagement to Track Consumer Sentiment and Trends (adrants.com)
- Facebook Advertising is Fool’s Gold (behindcompanies.com)
- Microsoft to advertisers: Drop dead (zdnet.com)
Books to read: