MIDTERM

Midterm Taken Today

Ch 6 CONT'D

ADV

Talked about test:

Thursday -(week from today)
Intro + 6 chapter
75 questions (T/F & Multiple Choice
Bring Small Scantron & Pencils
"Review" Tuesday (2/28)
Here - Full Classtime
Leave When Done

-=-=-=-=-=-

Chapter 6

"The Eyeball Business"
- A Different kind of consumption
- Time and attention
- Media Receive payment from : advertisers, consumers, or both
- Advertiser Paid Media (100% Ad revenues)
• Television, Radio, Out-of-home (billboards), direct marketing
###
- Consumer Paid Media [tickets/subscriptions]
• Some Cable (HBO, etc.)
• Movies, CDs, concerts
• magazines
• public radio
###

Changing Habits / Chanign Media
- Old Media Models in trouble...
- Newspaper, Network TV, some Magazines
Still lots of TV, but...
- many more channels
- audiences are fragmenting
- Mass Media is losing mass
The Second Screen
- Internet/Social Media
- A powerful combination
###
The audience Taking Control
- Media becoming interactive
- Media companies losing control
- Local impact / global impact
Easy entry but...
- no easy profits
- change quick as a blink
The Third Screen

Early media History ###?

- The legend of the first mass-appeal advertising
Over 2000 years ago in N. Africa City of Cyrene
Silver coins carried a procut message, the coins advertised a local plant

Evolution / Revolution
The Printing Press
The Reformation
Thirty Years War
The American Revolution

Handbills, Almanacs, Pamphlets.
- Benjamin Franklin
• Poor Richard's Almanac
• Pennsylvania Gazette
- "Common Sense" ###

###

Early Broadcast - Television
Philo Farnsworth - teenager who invented television, developed cathode ray
1927 applies for patent, 1930 patent granted
1939 introduced by RCA at World's Fair
1946 - 10 TV stations
1949 ###

First TV ads
- Royal Crown Cola
- BBDO takes lead
1951 1.5 million TV sets
1952 - 15 million TV sets
TV networks develop

1953 - First Color TV Broadcast - RCA

Consumer & The Media
- A Media-Saturated Culture
• Nothing like it before
• Incredible richness of options
- How many messages a day?
- The Great American Time Crunch
• More time for media
• Less time for ...
- Remember - they're your eyeballs!

Media Conglomerates
From Local to Global
The First Conglomerates - local - staring with the newspaper. ## WGN


Broken Business Models
Example: The Tribune Company
- Newspaper = Dramatic declines in
• Readership
• Advertising Revenue
- Television - not so super
• Increase in clutter/competition
• decline in viewership / ad revenue
- ###

From Special to General
- Growth based on special expertise:
• Time = magazines
• Disney movies/theme parks
• CBS = broadcasting

- Opportunities Expansion:
• "Bigger Financial Fish" eat smaller ones
• Mergers also create "Bigger Fish"
• Example: ViaCom (Paramount, MTV, Nickelodeon)
• Merges with CBS (TV + Radio + billboards)

WORLD OF THE MEDIA GIANTS
• Four Very Large - primarily media
> Time-Warner
> Disney: ABC, A&E, Disney, ESPN, Miramax...
> CBS - broadcasting + Viacom (cable)
> News Corporation (FOX)
• Other "Interesting" Giants
> SONY (Entertainment + Electronics)
> NBC Universal (TV + Movies)

World of the Media Giants
Time Warner
Comcast
###
###
DirecTv

News Corporation (FOX)
Rupert Murdoch
understood power of media
Australian Newspapers
more newspapers,


"SEEMED LIKE A GOOD IDEA AT THE TIME... BUT...."

Media are becoming BRANDS
- Growing across media platforms
Driven by conglomerates ###


Media "sells eyeballs"
time and attention
###

Advertising Agencies (part 1)

Chapter 5

_Advertising agencies_
- 1843 volneypalmer
• agent for media, not advertisers
- 1864 - George P. Rowell
• "the johnny applesead of advertising"
• Rowell's American Newspaper Directory
### Printer's Ink?
- Cyrus Curtis
• Curits Publsihing, establishes commission system, this turns agencies into media sales force
- N.W. Ayer & Son was the first advertising agency
• founded 1864 by Francis W. Ayer [who didn't even have a "son"]
• key concept...
• worked for the advertiser [client]
• slogan - "keeping everlastingly at it brings success."
• lasted until 2002

Early advertising effectiveness
- new and improved media vehicles
- growing interest in new products
• food, hygiene, convenience
• services, improved products
- relatively uncluttered media
• fewer ads + ###

[these conditions were ripe for advertising to be successful]

Full-Service Agency Functions
today, "full-service" agencies provide the following:
• account management
• creative
• media planning and media placement (media buying)
• research
many adding "below the line" services - PR, sales promotion, digital/interactive

[note to know these four Agency functions]


U.S. agency business today* *ish
12,436 firms
13,508 establishments
167,422 paid employees
• US Census Bureau, 2006
• probably shrinking in current economy
• still using interns and low-cost new hires
New Your still dominates
• West Coast growth - LA & SF (imported car brands, high tech
• other unique regionals (Portland (Nike), Martin Agency (Richmond)


Major types of agency:
- Mega-agency groups
- Independant groups (national, regaional, and local
- specialized/nich agenices
- ###

1. Mega-agency groups (marin sorrell, chairman WPP)
prompted by mergers and client globalization
financial pressures
service multinational accounts
subsidiaries provide IMC service

pros of mega-agencies:
larger talent pool, negotiating clout, financial rewards, account security, competitive edge, strong partnerships, more services, international link

cons of mega-agencies:
people vs. profit
creativity vs size
conflict of interests
people business

2. national, regional, local
these are independent agencies. there are fewer national agencies - not part of mega-agency groups
regional and local agencies work with smaller clients - usually nearby. it is still relatively easy to start your own small local agency - if you have a client

example: The Richards Group which grew from small design firm. who now have Motel 6, Chick fil-A, Orkin

example: RPA (Rubin Postaer) with major accounts of Honda & Acura.

example: Cramer-Krasselt, offices in Chicago/Milwaukee/Phoenix. Major accounts: career-builder, AirTran.


3. Specialized/Niche Agencies
industries specialists
ethnic agencies
internet agencies (R/GA a digital agency)
creative boutiques and design houses (still a relatively easy way to enter the business with your own firm

example: Wexley School for Girls (Seattle)
a new approach "situational"
giant pushpins promotes Microsoft's live search maps.

other suppliers
- provide "unbundled" services (one part of what an agency does)
- media buying services
- freelancers & consultants
- production companies
- in-house or "house" agencies
- these are agencies owned by clients (examples: Target, Calvin Klein, Gap)
[in teacher's opinion, sometimes, in-house agencies work and be a little self-indulgent]
Advantages&disadvantages
pros: familiarity, specialization, fast service, cost savings, confidentiality.
cons: objectivity, resources, fresh ideas, extra cost & overhead.

Chapter 4

Happy Valentines Day

Started Class by reading article "Ads Must Reach for Content that Aspires to Bigger Ideas"



Chapter 4
Marketing: Building Blueprints for Business

Marketing & Advertisers
- Many different types of marketers
+ Packaged Goods [consumer & that's it]
+ Durable Goods [cars, washing machines, lasts a while]
+ Services [American Express Credit Card, Travel Services, not really a tangible product]
+ Retailers [Target]
+ High Tech [Goodby Silverstein's HP "Maestro" ad]
+ Other [Virgin: Part airline, part music, part everything]
but they all have similar methodologies and organizations

"Marketing is Everything"
- Marketing has become the dominant and often most critical business function
- Manufacturing techniques and resources are now less critical, often easy to obtain
- Brand equity and intellectual capital are now more critical, harder to duplicate
- Business is evolving from a manufacturing of goods to manufacture of "thinking"

"The Five P's"
Five Critical Marketing Decisions:
- Product
- Price
- Place (physical distribution)
- Promotion
+ All types of promotional activities
+ Advertising, Sales Promotions, PR, etc
- The Fifth P = People

1. PRODUCT
Product may be "tangible"
- Packaged goods
- Durable goods
###
Products are bundles of benefits

2. PRICE
Key part of "value equation" [I get $2 worth of value]
At the price, product must have some measure of "functional superiority." [something makes be belive they are superior]
Price must also contain margin
- For funding of necessary activites...
- and profit
Price can send additional signals
Can be a strategy in itself or more likely part of a strategy (low end: walmart; high end: Apple)

3. PLACE
Similar products can make different "place" decisions.
Example: Coffee (Folgers, Gevalia, Starbucks)

4. PROMOTION
A range of marketing communications (MarCom) techniques can be used:
- Advertising, Sales Promotions, Public Relations, Publicity, Internet/New Media, Direct Sales, Direct Marketing, Event Marketing, Trade Shows, Promotional Products

5. PEOPLE
Some controversy over the "Fifth P"
- Once, some said "packaging"
- One consutlant says "personalization"
- We say it's "People..."
+ Your customers
+ Your own people
‡ Work force & sales force
+ Other "stakeholder"
‡ Trade, Supplies, Stockholders


THE MARKETING MIX
The right combinations of...
- Demand (Example: Price/Supply)
- Marketing Variables (Five P Variables & Promotions)
###


Unique Cominations / Unique Maketing Strategies
Example: Early auto industry
- Ford - Product / Price
- GM - Product / Value
- GM - Multiple Brands
- Chrysler - Competitive Position

Example: Bose
- Promotion + Place
###

2 Types of Organizations
- Vertical Organization (example: Oscar Mayer KGF)
+ Traditional military "command" structure
+ Clear lines of responsibilty
+ Seems to work best when there are numerous similar products
- Horizontal Organization (example: McDonnell-Douglas)
+ More fluid "ad hoc" structure
+ Organize around needs and functions

Top Job Functions
for both types of organizations CEO, COO, CMO / CFO, CIO
Chief Executive Officer, Chief Operating Officer, Chief Marketing Officer
###


Vertical Organizations
- Category Manager
+ Veteran (in 30s)
+ Major overall responsibily
###

Horizontal Organizations
VP of Program
+ Must know the business
+ Maturity/ power / clout - 35+
Marketing Manager
+ Marketing experience, not necessarily advertising
+ Responsible for all advertising, PR, sales promotion, trade shows, etc.

ADV

### Critiqued Ads, asked questions ###


Regulation - 2 Main Purposes
Regulation - 3 Main Areas

- Purpose for advertising regulation
• To protect compettion
• To protect consumers from economic or phycical harm

- Regulatoins are concerned with
• Deceptive or unfair content
• How advetising is delivered
• Protection of susceptible groups (kids, etc)


Regulatory Power from low to high
1. natural market forces (if no good, consumers won't buy it again)
2. Organized Market Forces (boycotts, bad publicity, media pressure)
3. Media/Self-Regulatory Forces (Media Forces, NAB, Industry Groups)
4. Governmental Regulation (States, FTC, Legislation, Supreme Court)
5. Private Policy (Companies regulating their own behavior)

5 FTC Concerns:
1) Deception - must lead to "material injury"
2) Comparisons - must substantiate with statistically significant data.
3) Endorsements - must be qualified, must use product
4) Demonstrations - Must be accurately depicted
5) Bait & Switch - product must be available

4 Possilbe Remedies for Deceptive Ads
1) Consent Decree - FTC asks advertiser to stop
2) Cease & Desist - FTC gets court order to force advertiser to stop
3) Corrective Ads - FTC mandates new ads to correct false preceptions
4) Consumer REdresses - FTC mandates reimbursement

6 Government Regulatory Groups
FCA - Packaging and labeling
FCC - Broadcast advertising
Postal Service - Magazines, direct mail
ATF - Liquor labeling, advertising
Patent Office - Trademarks
Library of Congress - Copyrights

2 Industry Watchdogs
NAD (National Advertising Division)
Part of Better Business Bureau

National Advertising Review Board
Represents advertising and agencies, a division of the NAD
Compliance to these is strictly voluntary

## Questions on Regulation ### skipped

Got out of class early today!

Front Row Nerd Crew has been created. We plan to make some study sessions for this two Exam class.

Advertising & Society

Pop Quiz Today

Beginning of class discussion:
Ads in the Super bowl had been more entertaining, professor thinks marketers have lost the meaning of advertising ABOUT the product.


_Advertising & Society_
The American Economy - Three Unique influences:
"Caveat Emptor" - buyer beware
- Commerce is a two-way street
Tolerance
- Philadelphia Quakers
- Immigration of people and ideas
The Marketplace of Ideas
- Competition is OK
- This includes the media

_Power or Information?_
Market Power:
- Advertising...
• Persuades consumer to purchase one brand over another more often
• Excess brand profits
• Higher barriers to entry and more market power
• More advertising leads to greater brand loyalty
• Reduce quality/raise price
• Reduced consumer sovereignty
• Monopoly

Marketing Information:
- Advertising...
• Increased consumer knowledge
• More substitute products consumers can consider
• Lower barriers to entry by new brands
• Reduced market power for any individual brand
• Better pricing/distribution and more product innovation
• Optimal brand profits, consumer choice, and price benefits

Class Discussion Questions:
How does advertising affect the price of a new car?
How does advertising affect the price of a latté from Starbucks?
How does advertising affect the way that you spend your money?
Can ads make people buy things they don't want or need?
Can ads make people more materialistic?
Are the benefits of advertising worth the annoyance?
Ads destroy freedom of choice/ give consumers more choices?

3 Ethical Issues:
Advocacy - What does the advertising advocate?
Accuracy - How accurate is the advertising? Some of this depends on susceptibilty of the audience (i.e Children)
Acquisitiveness - ###

5 Controversial Issues:
1) Puffery - "Nothing beats a Bud" [any reasonable person recognizes that it's pretty much B.S.]
2) Decency - Sexual innuendo, violence
3) Stereotyping - Housewives, women, seniors, racial groups
4) Children - violence, dangerous acts, ###
5) Controversial Products

An Ethical Thought
"All of us who professionally use the mass media are shapers of society. We can brutalize it. Or we can help lift it onto a higher level. - Bill Burnchech

_Controversy as Opportunity_
Puffery vs. Irony
- Hulu "Alec Baldwin" (brains to mush)

Stereotyping as Context
- Dove "Real Beauty"

Social Tension Gets Attention
- Nike "If You Let Me Play"

The Story Behind "Truth"
- The Tobacco Industry's

ADV Ch 2 (continued)

Why Advertising Changed:
= Media Evolution
+ Fragmentation [ppl only have so much time to go around, no matter how much media you have access to, you've still only got 24 hrs]
• More Media Choices
• Smaller audiences
+ Media Mergers
•CBS/Viacom, NBC/Universal
+ The Environment Economy
• "Entertainment Brands"
+ Cost & Clutter
+ The Internet
• Interactivity
• Audience Control
+ New Media Companies (Google, Facebook, YouTube)
+ New Media Solutions
• Now everyone needs an online or a digital strategy. Everyone.


= Consumer Changes
+ Changing Loyalties
+ Savvier Consumers
+ More Store Brands
• Some Brands Having a Tough Time of It
• Campbell's soup. Good economy = bad business BUT then Bad Economy = good business for soup!
• Levis

= Globalization and World Brands
Multinational Marktes = Globalization
Example: Walmart comes to Germany
World Brands = Worldwide Competitors
Growth of Marketing Worldwide could mean Worldwide opportunities for You
Help Wanted Worldwide: US ###

= Competitive Changes
Global Agency Networks
Retailers as Marketers
- UPC and retailers
New Information about markets = new opportunities for new brands
Information = Increased Power, More Information > Faster
It all adds up to a more competitive world.

The New World of Marketing Communications:
- Marketing Public Relations
- Direct Marketing [direct mailings]
- Sales Promotion
- Event Marketing and Sponsorship
- More and more: "Marketing is Everything"

A New World for Advertising:
- More communication options
+ Marketing Communications = MarCom
- A Wider Range of Clients
+ Example: Professional Services
- New Ad Agency opportunities
- New Media Thinking

More MarCom Options
greater sophistication in...
- Sales Promotion
- PR & Event Marketing
- Example: Sport Marketing
Smarter Marketers doing Smarter Marketing (i.e. Starbucks, McCafé, iPhone) [Here's how it can be useful to YOU]

A Wider Range of Clients:
New Marketing Categories
- Healthcare
- "Dot Coms" & Internet Services
- Entertainment Brands
- Media Products (including digital)
New Marketing Needs
- Services: Dentists, Lawyers...
- Local retailers and media
- New Ventures

New Adv. Agency Opportunities
- Growth of the Media Function
- More marketing services
- Account planning
- Computer-based services
• In-house depts
• Improved Target marketing
• The Internet
- Problems for established firms = opportunities for bright new companies.

New Media Thinking:
Consumer Aperture - the best "window" for messages
Personal Media Network (PMN) - your own media choices
Brand Contacts - all the ways to connect with brands
Database Marketing - connecting with people one at a time
###

This is important to you!
Change is permanent and continual
The speed of change is increasing
Opportunities growing worldwide
Understanding and managing change will be a key factor in your success
So Stay Alert.







Test will be scantron (provided by professor) all multiple choice and true and false.

Talk of a study group forming...