Advertising theory (third edition) part 1

part one AN INTRODUCTION TO ADVERTISING chapter 1 The Evolution of Advertising 2 chapter 2 The Environment of Advertising 26 chapter 3 The Business of Advertising 56 part two UNDERSTANDI

How advertisers know you’re watching their ads

Four advertisers who spend more money on sponsorship than Nike

HOW

USED ADVERTISING

TO BECOME ONE OF THE

WORLD’S MOST VALUABLE BRANDS

COKE

Chapter One

Michael F Weigold William F Arens

CHIEF PRODUCT OFFICER, SVP PRODUCTS & MARKETS     G SCOTT VIRKLER

VICE PRESIDENT, GENERAL MANAGER, PRODUCTS & MARKETS     MICHAEL RYAN     

VICE PRESIDENT, CONTENT DESIGN & DELIVERY     BETSY WHALEN

MANAGING DIRECTOR     SUSAN GOUIJNSTOOK

BRAND MANAGER     MEREDITH FOSSEL

DIRECTOR, PRODUCT DEVELOPMENT     MEGHAN CAMPBELL

LEAD PRODUCT DEVELOPER     KELLY DELSO 

 PRODUCT DEVELOPER     KELLY I PEKELDER

MARKETING MANAGER     ELIZABETH SCHONAGEN

DIRECTOR OF DIGITAL CONTENT     KRISTY DEKAT

DIGITAL PRODUCT ANALYST     KERRY SHANAHAN

DIRECTOR, CONTENT DESIGN & DELIVERY     TERRI SCHIESL

PROGRAM MANAGER     MARY CONZACHI

CONTENT PROJECT MANAGERS     KERI JOHNSON, KAREN JOZEFOWICZ, SUSAN TRENTACOSTI

BUYER     LAURA FULLER

DESIGN     EGZON SHAQIRI

CONTENT LICENSING SPECIALISTS     ANN MARIE JANNETTE, SHANNON MANDERSCHEID

COVER IMAGE     © SHUTTERSTOCK/TISCHENKO IRINA

COMPOSITOR     APTARA®, INC.

PRINTER     LSC COMMUNICATIONS

M: ADVERTISING, THIRD EDITION

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121 Copyright © 2018 by McGraw-Hill Education All rights reserved Printed in the United States of America Previous editions © 2015, 2012 No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 0 LMN 21 20 19 18 17 16

ISBN 978-1-259-81594-2

MHID 1-259-81594-3

All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.

Library of Congress Cataloging-in-Publication Data

Names: Arens, William F., editor | Schaefer, David H., editor | Weigold, Michael F., 1958- editor.

Title: M : advertising / William F Arens, David H Schaefer, Michael F Weigold.

Description: Third Edition | Dubuque : McGraw-Hill Education, [2018] | Revised edition of M : advertising, 2015.

Identifiers: LCCN 2016052117| ISBN 9781259815942 (alk paper) | ISBN 1259815943 (alk paper)

Subjects: LCSH: Advertising.

Classification: LCC HF5821 M13 2018 | DDC 657—dc23

LC record available at https://lccn.loc.gov/2016052117

The Internet addresses listed in the text were accurate at the time of publication The inclusion of a website does not indicate an

endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites.

advertising, third edition

CHIEF PRODUCT OFFICER, SVP PRODUCTS & MARKETS     G SCOTT VIRKLER

VICE PRESIDENT, GENERAL MANAGER, PRODUCTS & MARKETS     MICHAEL RYAN     

VICE PRESIDENT, CONTENT DESIGN & DELIVERY     BETSY WHALEN

MANAGING DIRECTOR     SUSAN GOUIJNSTOOK

BRAND MANAGER     MEREDITH FOSSEL

DIRECTOR, PRODUCT DEVELOPMENT     MEGHAN CAMPBELL

LEAD PRODUCT DEVELOPER     KELLY DELSO 

 PRODUCT DEVELOPER     KELLY I PEKELDER

MARKETING MANAGER     ELIZABETH SCHONAGEN

DIRECTOR OF DIGITAL CONTENT     KRISTY DEKAT

DIGITAL PRODUCT ANALYST     KERRY SHANAHAN

DIRECTOR, CONTENT DESIGN & DELIVERY     TERRI SCHIESL

PROGRAM MANAGER     MARY CONZACHI

CONTENT PROJECT MANAGERS     KERI JOHNSON, KAREN JOZEFOWICZ, SUSAN TRENTACOSTI

BUYER     LAURA FULLER

DESIGN     EGZON SHAQIRI

CONTENT LICENSING SPECIALISTS     ANN MARIE JANNETTE, SHANNON MANDERSCHEID

COVER IMAGE     © SHUTTERSTOCK/TISCHENKO IRINA

COMPOSITOR     APTARA®, INC.

PRINTER     LSC COMMUNICATIONS

M: ADVERTISING, THIRD EDITION

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121 Copyright © 2018 by McGraw-Hill Education All rights reserved

Printed in the United States of America Previous editions © 2015, 2012 No part of this publication may be reproduced or distributed in

any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including,

but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 0 LMN 21 20 19 18 17 16

ISBN 978-1-259-81594-2

MHID 1-259-81594-3

All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.

Library of Congress Cataloging-in-Publication Data

Names: Arens, William F., editor | Schaefer, David H., editor | Weigold, Michael F., 1958- editor.

Title: M : advertising / William F Arens, David H Schaefer, Michael F Weigold.

Description: Third Edition | Dubuque : McGraw-Hill Education, [2018] | Revised edition of M : advertising, 2015.

Identifiers: LCCN 2016052117| ISBN 9781259815942 (alk paper) | ISBN 1259815943 (alk paper)

Subjects: LCSH: Advertising.

Classification: LCC HF5821 M13 2018 | DDC 657—dc23

LC record available at https://lccn.loc.gov/2016052117

The Internet addresses listed in the text were accurate at the time of publication The inclusion of a website does not indicate an

endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information

presented at these sites.

part one

AN INTRODUCTION TO ADVERTISING

chapter 1 The Evolution of Advertising 2 chapter 2 The Environment of Advertising 26 chapter 3 The Business of Advertising 56

part two

UNDERSTANDING THE TARGET AUDIENCE

chapter 4 Targeting and the Marketing

Mix 86

chapter 5 Communication and Consumer

Behavior 116

part three

THE PLANNING PROCESS

chapter 6 Account Planning and Research 142 chapter 7 Marketing, Advertising, and IMC

Planning 166

part four

THE CREATIVE PROCESS

chapter 8 Creating Ads: Strategy and Process 190 chapter 9 Creative Execution: Art and Copy 212

part five

REACHING THE TARGET AUDIENCE

chapter 10 Print Advertising 240 chapter 11 Broadcast, Cable, Digital, and Satellite Media:

Television and Radio 264

chapter 12 Digital Interactive Media 290 chapter 13 Out-of-Home, Direct-Mail, and Promotional

Products 312

part six

INTEGRATING MARKETING COMMUNICATIONS ELEMENTS

chapter 14 Media Planning and Buying 336 chapter 15 IMC: Direct Marketing, Personal Selling,

Packaging, and Sales Promotion 362

chapter 16 IMC: Public Relations, Sponsorship,

and Corporate Advertising 392

Endnotes 414 Index 430

© Brand X Pictures/PunchStock RF

contentsSOCIETY AND ETHICS: THE EFFECTS

OF ADVERTISING 23

MY AD CAMPAIGN 1–A OVERVIEW 6

MY AD CAMPAIGN 1–B TOOLS FOR TEAMWORK 20

CHAPTER 2 THE ENVIRONMENT OF

of Advertising in Perspective 33

THE SOCIAL IMPACT OF ADVERTISING 34

Deception in Advertising 34 Subliminal Advertising 35 Advertising and Our Values 36 The Proliferation of Advertising 36 Stereotypes in Advertising 37 Offensive Advertising 37 The Social Impact of Advertising in Perspective 38

SOCIAL RESPONSIBILITY AND ADVERTISING ETHICS 39

Advertisers’ Social Responsibility 39 Ethics of Advertising 40

CURRENT REGULATORY ISSUES AFFECTING U.S ADVERTISERS 41

Freedom of Commercial Speech 41 Tobacco Advertising 42 Advertising to Children 42

Advertising and the Marketing Process 8

ECONOMICS: THE GROWING NEED FOR

ADVERTISING 9

Principles of Free-Market Economics 9

Functions and Effects of Advertising

in a Free Economy 10

THE EVOLUTION OF ADVERTISING

AS AN ECONOMIC TOOL 12

Early Advertising 12

The Industrial Age and the Birth of Agencies 14

The Golden Age of Advertising 16

The Postindustrial Age 17

The Global Interactive Age: Looking at the

Twenty-First Century 19

© Don Farrall/Getty Images RF

MY AD CAMPAIGN 3–B CREATING LOCAL

ADVERTISING 63

ETHICAL ISSUES IS RONALD MCDONALD BAD FOR KIDS?

ARE PARENTS? 79

MY AD CAMPAIGN 3–C AGENCY REVIEW 81

MY AD CAMPAIGN 3–D WAYS TO BE A BETTER

THE MARKET SEGMENTATION PROCESS 91

Types of Markets 91 Segmenting the Consumer Market: Finding the Right Niche 92

Segmenting Business and Government Markets:

Understanding Organizational Buying Behavior 100 Aggregating Market Segments 101

FEDERAL REGULATION OF ADVERTISING IN THE UNITED

STATES 44

The Federal Trade Commission 45

The Food and Drug Administration 47

The Federal Communications Commission 49

The Patent and Trademark Office and the Library of

Congress 49

STATE AND LOCAL REGULATION 50

NONGOVERNMENT REGULATION 50

The Better Business Bureau 51

The Advertising Self-Regulatory Council 51

Regulation by the Media 52

Regulation by Consumer Groups 52

Self-Regulation by Advertisers and

THE ADVERTISING INDUSTRY 59

The Organizations in Advertising 59

The People in Advertising 59

THE ADVERTISERS (CLIENTS) 59

Local Advertising 59

Regional and National Advertisers 64

Transnational Advertisers 67

Media around the World 69

THE ADVERTISING AGENCY 70

Types of Agencies 71

WHAT PEOPLE IN AN AGENCY DO 73

How Agencies Are Structured 76

How Agencies Are Compensated 77

The In-House Agency 78

THE CLIENT–AGENCY RELATIONSHIP 80

How Agencies Get Clients 80

Factors Affecting the Client–Agency Relationship 80

THE SUPPLIERS IN ADVERTISING 82

Art Studios and Web Designers 82

Printers and Related Specialists 82

Film and Video Houses 82

Research Companies 83

THE MEDIA OF ADVERTISING 83

CURRENT TRENDS 83

MY AD CAMPAIGN 3–A UNDERSTANDING YOUR

ADVERTISING AND THE PROMOTION (COMMUNICATION) ELEMENT 115

THE MARKETING MIX IN PERSPECTIVE 115

ETHICAL ISSUES BRAND NICHING MAY CAUSE BRAND

The Consumer Perception Process 123 Learning, Persuasion, and the Role of Involvement in the Ways That Consumers Process Information 125 The Consumer Motivation Process 130

INTERPERSONAL INFLUENCES ON CONSUMER BEHAVIOR 132

Family Influence 132 Societal Influence 132 Cultural and Subcultural Influence 134

THE PURCHASE DECISION AND POSTPURCHASE EVALUATION 137

DIFFERENT RESPONSES FROM DIFFERENT PRODUCTS 139

ETHICAL ISSUES IS IT MARKETING OR IS IT

EXPLOITATION? 136

MY AD CAMPAIGN 5 UNDERSTANDING WHAT CONSUMERS

LOOK FOR IN A PRODUCT 138

THE TARGET MARKETING PROCESS 104

Target Market Selection 104

The Marketing Mix: A Strategy for Matching Products to

Markets 105

ADVERTISING AND THE PRODUCT ELEMENT 106

Product Life Cycles 106

ADVERTISING AND THE PRICE ELEMENT 111

Key Factors Influencing Price 111

ADVERTISING AND THE DISTRIBUTION (PLACE)

part four THE CREATIVE PROCESS

CHAPTER 8 CREATING ADS: STRATEGY AND

PROCESS 190

THE CREATIVE TEAM: ORIGINATORS OF ADVERTISING CREATIVITY 192

CREATING GREAT ADVERTISING 193

The Resonance Dimension 194 The Relevance Dimension 195

FORMULATING CREATIVE STRATEGY: THE KEY TO GREAT ADVERTISING 195

Writing the Creative Strategy 195 Elements of Message Strategy 197

HOW CREATIVITY ENHANCES ADVERTISING 198

What Is Creativity? 198 The Role of Creativity in Advertising 199 Understanding Creative Thinking 200

THE CREATIVE PROCESS 201 THE EXPLORER ROLE: GATHERING INFORMATION 201

Develop an Insight Outlook 202 Know the Objective 202 Brainstorm 202

THE ARTIST ROLE: DEVELOPING AND IMPLEMENTING THE BIG IDEA 202

Task 1: Develop the Big Idea 202 Task 2: Implement the Big Idea 205 The Creative Pyramid: A Guide to Formulating Copy and Art 206

THE JUDGE ROLE: DECISION TIME 209 THE WARRIOR ROLE: OVERCOMING SETBACKS AND OBSTACLES 209

MY AD CAMPAIGN 8 THE CREATIVE BRIEF 196 ETHICAL ISSUES DOES SEX APPEAL? 208

Creative Concept Research 149

Pretesting and Posttesting 150

STEPS IN THE RESEARCH PROCESS 151

Step 1: Analyzing the Situation and Defining the

Problem 151

Step 2: Conducting Secondary Research 152

Step 3: Establishing Research Objectives 153

Step 4: Conducting Primary Research 154

Step 5: Interpreting and Reporting

the Findings 160

IMPORTANT ISSUES IN ADVERTISING RESEARCH 161

Considerations in Conducting Primary Quantitative

Research 161

Collecting Primary Data in International Markets 165

MY AD CAMPAIGN 6–A RESEARCH 153

MY AD CAMPAIGN 6–B METHODS FOR PRETESTING

CHAPTER 7 MARKETING, ADVERTISING,

AND IMC PLANNING 166

THE MARKETING PLAN 168

The Importance of Marketing Planning 168

The Effect of the Marketing Plan on IMC 169

Top-Down Marketing Plans 169

Bottom-Up Marketing: How Small Companies Plan 175

THE IMPORTANCE OF RELATIONSHIP MARKETING 175

The Importance of Relationships 176

Levels of Relationships 176

USING IMC TO MAKE RELATIONSHIPS WORK 178

IMC: The Concept and the Process 179

The Dimensions of IMC 181

The IMC Approach to Marketing and Advertising

Planning 181

The Importance of IMC to Advertising 182

THE ADVERTISING PLAN 182

Reviewing the Marketing Plan 182

Setting Advertising Objectives 182

Determining the Advertising Strategy 185

Allocating Funds for Advertising 186

Methods of Allocating Funds 188

MY AD CAMPAIGN 7–A DEVELOPING THE

SITUATION ANALYSIS 170

MY AD CAMPAIGN 7–B DEVELOPING A BRAND

STRATEGY 174

ETHICAL ISSUES A WAR OF COMPARISONS 177

MY AD CAMPAIGN 7–C THE SWOT ANALYSIS 178

MY AD CAMPAIGN 7–D DEVELOPING ADVERTISING

OBJECTIVES 187

MY AD CAMPAIGN 7–E WAYS TO SET ADVERTISING

MY AD CAMPAIGN 9–D DESIGN PRINCIPLES 226 ETHICAL ISSUES IMITATION, PLAGIARISM, OR

FLATTERY? 227

MY AD CAMPAIGN 9–E WRITING EFFECTIVE COPY 229

MY AD CAMPAIGN 9–F CREATING EFFECTIVE RADIO

The Pros and Cons of Magazine Advertising 243 Special Possibilities with Magazines 243

HOW MAGAZINES ARE CATEGORIZED 246 BUYING MAGAZINE SPACE 248

Understanding Magazine Circulation 248 Reading Rate Cards 250

USING NEWSPAPERS IN THE MEDIA MIX 252

Who Uses Newspapers? 253 The Pros and Cons of Newspaper Advertising 253 How Newspapers Are Categorized 253

Types of Newspaper Advertising 255

HOW ADVERTISERS BUY NEWSPAPER SPACE 256

Understanding Readership and Circulation 256 Co-ops and Networks 260

Insertion Orders and Tearsheets 261

PRINT MEDIA AND NEW TECHNOLOGIES 261

MY AD CAMPAIGN 10–A THE PROS AND CONS

CHAPTER 11 BROADCAST, CABLE, DIGITAL, AND

SATELLITE MEDIA: TELEVISION AND RADIO 264

THE MEDIUM OF TELEVISION 266

Broadcast TV 267 Cable TV 267 Satellite TV 268

TV Audience Trends 268 The Impact of Social Media and Streaming 271

CHAPTER 9 CREATIVE EXECUTION: ART AND

COPY 212

DELIVERING ON THE BIG IDEA: THE VISUAL AND THE

VERBAL 215

THE ART OF CREATING PRINT ADVERTISING 215

Designing the Print Ad 215

The Use of Layouts 215

Advertising Design and Production: The Creative and

Approval Process 215

Principles of Design: Which Design Formats

Work Best 218

The Use of Visuals in Print Advertising 222

PRODUCING GREAT COPY IN PRINT ADVERTISING 224

Headlines 224

Subheads 227

Body Copy 228

Slogans 230

Seals, Logos, and Signatures 231

CREATING GREAT COPY IN ELECTRONIC MEDIA 232

Writing Radio Copy 232

Writing Television Copy 232

THE ROLE OF ART IN RADIO AND TV ADVERTISING 234

Developing the Artistic Concept for

Commercials 234

Formats for Radio and TV Commercials 234

Outlining a TV Commercial 237

WRITING FOR THE WEB 238

MY AD CAMPAIGN 9–A PRODUCT FACTS FOR

Viral Marketing 307 Programmatic Advertising 308 Mobile-Specific Advertising 308

PROBLEMS WITH DIGITAL INTERACTIVE AS AN ADVERTISING MEDIUM 308

USING THE DIGITAL INTERACTIVE IN IMC 309

ETHICAL ISSUES IT’S NOT ALWAYS NICE TO SHARE 301

MY AD CAMPAIGN 12 USING FACEBOOK AND GOOGLE 310

CHAPTER 13 OUT OF HOME, DIRECT-MAIL, AND

Regulation of Outdoor Advertising 321

Mobile Billboards 327 Digital Signage 327 Mall Advertising 327 Augmented Reality 328 Guerrilla Marketing 328

DIRECT-MAIL ADVERTISING: THE ADDRESSABLE MEDIUM 328

Types of Direct-Mail Advertising 329 Using Direct Mail in the Media Mix 331

COMPONENTS OF DIRECT-MAIL ADVERTISING 332 PROMOTIONAL PRODUCTS 334

MY AD CAMPAIGN 13–A THE PROS AND CONS

Gross Rating Points 282

BUYING TELEVISION TIME 282

Selecting Programs for Buys 282

Negotiating Prices 282

THE MEDIUM OF RADIO 283

Who Uses Radio? 283

The Use of Radio in IMC 284

Radio Programming and Audiences 284

Satellite Radio and Portable Music Devices 285

BUYING RADIO TIME 286

Types of Radio Advertising 286

CHAPTER 12 DIGITAL INTERACTIVE MEDIA 290

THE EVOLUTION OF DIGITAL INTERACTIVE MEDIA 292

The Internet 293

The Web 294

Digital Interactive Today 295

MEASURING THE DIGITAL AUDIENCE 297

How People Access Digital Media 298

How People Use Digital Media 298

Media Planning Tools 298

The Promise of Enhanced Tracking 299

Seeking Standardization 300

BUYING TIME AND SPACE IN DIGITAL INTERACTIVE 302

Pricing Methods 302

The Cost of Targeting 303

Stretching Out the Dollars 303

TYPES OF DIGITAL INTERACTIVE ADVERTISING 304

CHAPTER 15 IMC: DIRECT MARKETING, PERSONAL

SELLING, PACKAGING, AND SALES PROMOTION 362

THE IMPORTANCE OF RELATIONSHIP MARKETING AND IMC 365

UNDERSTANDING DIRECT MARKETING 366 THE ROLE OF DIRECT MARKETING IN IMC 367

The Evolution of Direct Marketing 368 The Impact of Databases on Direct Marketing 369 The Importance of Direct Marketing to IMC 370 Drawbacks to Direct Marketing 370

TYPES OF DIRECT MARKETING ACTIVITIES 371

Direct Sales 371 Direct-Response Advertising 372

PERSONAL SELLING: THE HUMAN MEDIUM 374

Types of Personal Selling 374 Advantages of Personal Selling 375 Drawbacks of Personal Selling 375 The Role of Personal Selling in IMC 376 Gathering Information 376

Providing Information 376 Fulfilling Orders 376 Building Relationships 378

TRADE SHOWS 378 PRODUCT PACKAGING 380

Environmental Issues in Packaging 380 Government Impact on Packaging 380 Package Manufacturing 381

When Should a Package Be Changed? 381

THE ROLE OF SALES PROMOTION IN IMC 382

The Positive Effect of Sales Promotion on Brand Volume 382

The Negative Effect of Sales Promotion on Brand Value 383

SALES PROMOTION STRATEGIES AND TACTICS 384

Giving Brands a Push with Trade Promotions 384 Using Consumer Promotions to Pull Brands Through 387

MY AD CAMPAIGN 15–A DEVELOPING A PLANS

BOOK 377

MY AD CAMPAIGN 15–B CREATING EFFECTIVE SALES

PROMOTIONS 383

CHAPTER 16 IMC: PUBLIC RELATIONS,

SPONSORSHIP, AND CORPORATE ADVERTISING 392

THE ROLE OF PUBLIC RELATIONS 395

The Difference between Advertising and Public Relations 396

Advertising and PR in the Eyes of Practitioners 396

THE PUBLIC RELATIONS JOB 397

PR Planning and Research 397 Reputation Management 397

The Role of Media in the Marketing Framework 343

The Media Planning Framework 343

DEFINING MEDIA OBJECTIVES 345

Audience Objectives 345

Message-Distribution Objectives 345

OPTIMIZING REACH, FREQUENCY, AND CONTINUITY: THE

ART OF MEDIA PLANNING 348

Effective Reach 348

Effective Frequency 349

DEVELOPING A MEDIA STRATEGY: THE MEDIA MIX 349

Factors in the Media Strategy: The Five Ms 350

Factors That Influence Media Strategy Decisions 350

Stating the Media Strategy 353

MEDIA TACTICS: SELECTING AND SCHEDULING MEDIA

VEHICLES 353

Criteria for Selecting Individual Media Vehicles 353

Buyer Purchase Patterns 356

Stating the Media Strategy 357

The Synergy of Mixed Media 357

Methods for Scheduling Media 357

Computers in Media Selection and Scheduling 358

THE ROLE OF THE MEDIA BUYER 359

ETHICAL ISSUES MEET SOCIAL MEDIA AND THE WEB 342

MY AD CAMPAIGN 14 DEVELOPING MEDIA OBJECTIVES

AND STRATEGIES 356

© McGraw-Hill Companies, Inc./Mark Dierker, photographer

Other Public Relations Activities 399

Public Relations Tools 402

SPONSORSHIP AND EVENTS 404

The Growth of Sponsorship 404

MY AD CAMPAIGN 16–A CORPORATE BLOGGING 401

MY AD CAMPAIGN 16–B HOW TO WRITE A NEWS RELEASE 402

MY AD CAMPAIGN 16–C THE CLIENT PRESENTATION 406

MY AD CAMPAIGN 16–D HOW TO SELECT EVENTS FOR

chapter one

• Added an opening paragraph describing chapter

coverage (in all chapters)

• A new vignette focused on Shakira’s Activa ad

• Updated the section that uses Coke to demonstrate

the benefits of branding

• Updated the timetable of advertising history

• Simplified the historical eras to focus on five: early age,

industrial age, golden age, postindustrial age, and

global interactive age

• Updated the references to Internet tools that enhance

teamwork

• Updated the table of global marketers to reflect most

recent data available

chapter two

• Extensively edited the text to clarify important

economic and social issues

• Elaborated on privacy issues for Internet consumers

• Updated the discussion of the Advertising

Self-Regulatory Council (formally the National Advertising

Review Council)

chapter three

• Updated McDonald’s opener to include recent

innovations and company performance

• Updated the statistics on top advertisers and top

media companies

• Updated the Rubio’s story to include the company’s

use of social media

• Updated the trends in the advertising industry

chapter four

• Greater focus on marketing to Millennials

• Updated statistics on consumer behavior throughout

• Revised the Target chapter opener

• Significantly changed and improved sample Target ads used throughout the chapter

• Improved coverage of the collaborative nature of advertising creative work

• Revised exhibit featuring some of advertising’s greatest big ideas

chapter nine

• New opening vignette on a campaign described as

“one of the best” of the 21st century, “Dumb Ways to Die.”

third edition

changes to the

• Updated material on the use of computers in

production

• More material on creating copy for digital media

• Streamlined and tightened copy throughout the

chapter

chapter ten

• Removed the material on advertising production to

reduce textbook length and the number of chapters

Material is still available online and in custom versions

• Updated four exhibits and numerous media statistics

throughout the chapter

• New chapter opener on the plight of newspapers

chapter eleven

• Updated the Hyundai chapter opener

• Updated content on top network advertisers

• Added coverage of Hulu and other cable-cutter

platforms

• Updated the exhibit on most viewed cable networks

• New exhibit on top advertising categories

• Updated the exhibit on commercial costs

• Significantly updated coverage of radio

• Updated the exhibit on spot radio spending

• Added new content on social media generally and

Facebook advertising specifically

• New exhibit on market share of top social sites

• Revised and updated information on search engine

ads

• Added a new exhibit on digital ad spending by format

• Deeper discussion about behavioral tracking

chapter thirteen

• Updated exhibits and numerous statistics throughout the chapter

• Enhanced the discussion of mall advertising

• Added new material on guerrilla marketing

chapter fourteen

• Updated media spending statistics in Exhibit 14–1

• Added new material on media-buying firms

• Added a new exhibit comparing spending on all media options

• Added new exhibit showing rising costs for smaller audiences on network primetime shows

chapter fifteen

• Updated the GEICO opening vignette

• Enhanced the description of database marketing

• Updated the exhibit on the largest direct-response agencies in the United States and numerous statistics throughout the chapter

• Enhanced discussion of direct-response digital interactive media

• Further clarified the distinctions among contests, sweepstakes, and games

chapter sixteen

• Updated Netflix vignette to the present

• Updated three exhibits and numerous statistics regarding sponsorships

• Added a public relations example of working conditions in Apple’s Chinese factories

• Added several examples of sports marketing sponsorships

• Integrated David Ogilvy’s opinions about corporate advertising into the text (formerly in a text box)

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advertising

continued on p 4

past in which ad agencies created campaigns without giving much thought to how advertisements worked with other marketing com-munications For example, an agency might have created a com-mercial for a car brand without both-ering to learn about the brand’s public relations activities or spon-sorship commitments Those days are long gone Today, advertising is considered one tool in the market-ing communications toobox

To see why advertising works better when guided by IMC, it might help to reflect on a recent campaign for Activia, a yogurt brand When first introduced several years ago, Activia ran ads featuring actress Jaime Lee Curtis speaking about the digestive benefits of the the product

In this chapter you will learn what

advertising and integrated

market-ing communications (IMC) are and

learn how advertising differs from

other forms of marketing

communi-cations Next you’ll find out about

the functions and effects of

adver-tising in free economies and

dis-cover how advertising developed in

the U.S Finally, you will consider

adverting’s impact on society.

You probably have a pretty good

idea what advertising is But IMC is a

term you might not have heard

be-fore So what is IMC, and why do

ad-vertising professionals need to

know about it? IMC is the modern

practice of coordinating and

inte-grating brand messages from a

vari-ety of sources The IMC approach

contrasts with practices from the

But in 2014 Activia launched a new campaign featuring pop star Shakira.1

A long commercial featuring the singer, soccer, and world-hunger ran during the World Cup The campaign was intended to drive fans to the web

LO1-2 Define advertising and distinguish

it from other forms of marketing communications.

LO1-3 Explain the role advertising plays

in business and marketing.

LO1-4 Illustrate the functions of advertising in a free-market economy.

LO1-5 Discuss how advertising evolved with the history of commerce.

LO1-6 Describe the impact of advertising

on society.

to rewatch and share the video with their friends Which

they did, in record numbers.2

Many who watch the video (you can see it here: https://

vimeo.com/98017010) may wonder if it can truly be called

an advertisement The Activia name is shown early, then is

referenced only through actors in the video drawing circles

on their stomachs And while an English language version

was created, most viewers watched the Spanish-language

version

The changes in Activia’s marketing efforts perfectly mirror

broader new approaches in the advertising world It also

helps to demonstrate the importance of IMC for

advertis-ers Let’s see how

The “old” Jamie Lee Curtis ads relied heavily on paid media,

particularly television They targeted an older audience,

including many Baby Boomers (people born between 1946

and 1964) The primary focus of the campaign was the United States, a large consumer market

The new ad ran on television but was really meant to encourage consumers to watch on the Web, where they could share it with friends The Shakira video targets a younger and more global audience, especially Millennials (people born between 1980 and 2000) in Latin and South America The “ad” in this case looks exactly like a music video, so much so that some critics found it confusing.3

Whether or not older audiences found the Shakira Activia

ad confusing, it was a hit with younger viewers In fact, it became the most shared advertisement in history and global Activia sales, which had been flat, once again grew

keting calls, or e-mails These are just a few of the many communication tools that companies and organizations use to initiate and maintain contact with their customers, clients, and prospects You may simply refer to them all as “advertis-ing.” But, in fact, the correct term for these various tools is

type of marketing communication

So, then, what is advertising?

At the beginning of the twentieth century, Albert Lasker, often regarded as the “father” of modern advertising, defined adver-tising as “salesmanship in print, driven by a reason why.”5 But that was long before the advent of radio, television, or the smartphone More than a century later, our planet is a far differ-ent place The nature and needs of business have changed, and

so have the concept and practice of advertising

How would you define advertising? There are many kinds of marketing communications, but not all qualify as advertising Let’s start with a definition and then distinguish advertising from these other marketing messages

an identifiable source, designed to persuade the receiver to take some action, now or in the future.

Let’s take this definition apart and analyze its six core

com-ponents Advertising is, first of all, a type of communication

It is actually a very structured form of communication, ploying both verbal and nonverbal elements that are com-

em-posed to fill specific space and time formats determined by

the sponsor

Second, advertising is typically directed to receivers, or people who are attractive to the advertiser These people could be

their personal use Or they might be businesspeople who buy fleets of cars for commercial or government use The messages are delivered via media, such as television or the Internet, rather than through direct, personal contact between a seller and a buyer Advertising is, therefore, a kind of nonpersonal, or mass, communication

Third, advertising is paid for by sponsors GM, Walmart,

Activia, and your local fitness salon pay the newspaper or the radio or TV station to carry the ads you read, see, and hear But

global marketers Television ads, which

have been growing more expensive even

as they reach fewer people, are being

used in a different way Social media is

an important part of nearly every big

campaign And the 30-second spot is

declining in importance as a way to

per-suade consumers to try new brands or remain loyal to

old ones

The story also shows the power of IMC Activia integrated

messages that included the Shakira commercial, the online

video, the support of a world-hunger campaign, and the

sponsorship of World Cup soccer Doing all of this together

could have confused consumers Instead, these activities

resonated with the target audience because the messages

were carefully designed to work together ■

LO1-1 Define integrated marketing communications and explain

its importance.

Throughout this text, we will discuss the importance of

inte-grated marketing communications (IMC): the coordination and

integration of brand messages from a variety of sources

Marketers today realize that it is no longer possible to reach

and effectively persuade their audiences with traditional media

alone—television, radio, magazines, newspapers, direct mail,

and outdoor They need to combine and coordinate those

com-munications tools with public relations, personal selling, sales

promotion, and digital media to mount an effective marketing

campaign

The next section focuses on one important type of IMC

com-munication: advertising, Advertising is a messaging option

over which a company has the greatest control As such, it is

likely to remain an important component of almost every major

IMC campaign. 

LO1-2 Define advertising and distinguish it from other forms of

marketing communications.

WHAT IS ADVERTISING?

You are exposed to hundreds and maybe even thousands of

commercial messages every day They appear in many

forms—TV commercials, websites, and social media

messages—or in the form of product placements in TV

shows, coupons, sales letters, event sponsorships,

telemar-marketing

various efforts and tools companies use to communicate with customers and prospects, including newspaper ads, event sponsorship, publicity, telemarketing, digital ads, and coupons, to mention just a few.

mediated form of communication from an identifiable source, designed to persuade the receiver to take some action, now or in the future.

buy products and services for their own, or someone else’s, personal use.

some sponsors don’t have to pay for their ads The American Red Cross, United Way, and American Cancer Society are among the many national organizations whose public service

their nonprofit status Likewise, a poster on a school bulletin board promoting a dance is not paid for, but it is still an ad—a structured, nonpersonal, persuasive communication

Fourth, advertising is mediated, meaning it reaches us through

a channel of communication referred to as a medium An vertising medium is any nonpersonal means used to present an

ad-ad to its target audience Thus, we have rad-adio ad-advertising, television advertising, newspaper ads, Google ads, and so on

Overview [1–A]

Welcome to My Ad Campaign, a valuable feature of this text My Ad

Cam-paign should be useful in any of the following situations:

• Your instructor has asked students in your class to work on part or all of

an ad campaign, either individually or in groups.

• You are doing an internship and want practical advice on how to help

your internship sponsor.

• You want to try to apply the concepts and ideas that you are reading

about in this book in the real world.

Professors approach advertising projects differently Some ask students to

create ads for a real product, although they never actually communicate

with the company that makes the product Some assign a fictional brand in

a real product category Perhaps your professor has offered your talents to

a client, such as a small local business or firm You may even have to find a

client yourself by making inquiries in your community Finally, your

instruc-tor may ask you to help a charity or nonprofit with its advertising No matter

which of these things is the case, the good news is that developing an

ad-vertising campaign follows a similar path And the My Ad Campaign feature

is designed to help guide you through the process.

Let’s begin with some definitions An advertising campaign involves the

creation and placement of a series of messages that are unified by an

under-lying theme The messages should help to promote a brand, product,

ser-vice, organization, or idea They are typically designed to resonate with a

group called a target audience Campaigns usually have specific objectives,

such as increasing product awareness or persuading people to try a service

or donate money And to ensure that the target audience receives them,

messages appear in various media, such as newspapers, radio, or websites

You may not do all of these activities but in most cases you will get a chance

to do some serious thinking, planning, and creative brainstorming.

We can make our definition of a campaign a bit more concrete by

thinking back to the opening vignette of this chapter Activia is a yogurt

brand that may help with better digestive functioning The company

wanted to reach a younger, more diverse audience than it had in previous

years And it wanted to do so in a way that is credible to that audience.

If your team had been asked to change Activia’s advertising approach,

what would you have proposed? Activia’s real agency stopped relying so

much on U.S TV ads with a spokesperson known best among Baby

Boom-ers Instead, it created a commercial featuring a young pop star especially

popular with Hispanic audiences The commercial did not run as frequently

as ads did during the old campaign Instead, it was intended to encourage

Hopefully you’ve inferred from all of this that advertising is very tegic Lots of planning takes place long before ads are created So while you may be itching to create some advertisements for your client right off the bat, you have lots of work to do before you begin creating ads The strategy of the new Activia campaign focused on reaching a younger au- dience in Latin and South America It was also based on the belief that standard 30-second commercials don’t work especially well with that audience Finally, the campaign believed that younger people would

stra-“get” the Activia connection to the Shakira video That’s strategic ing, and in this case it proved successful On a much smaller scale and with far less resources, you will face similar challenges My Ad Campaign

think-is designed to help you to meet them.

In subsequent chapters, we’ll help you learn to develop a deeper derstanding of your brand or client, develop a plan for marketing and advertising activities, conduct research so that you can better under- stand your target audience, formulate media strategy, and design effec- tive advertisements Finally, you’ll learn how to implement evaluation programs to test whether your ads were successful By the end of the semester, you won’t be a top advertising professional But you’ll have some real experience in the art and science of developing an ad cam- paign And that’s a great start!

The My Ad Campaign topics are listed below You may find it useful

or necessary to jump around among them as you develop your own campaign.

1 Overview/Tools for Teamwork

2 Your Campaign Assignment

3 Understanding What Your Client Wants

4 Segmenting the Audience

5 Understanding Your Customer and Product

6 Conducting Marketing and Advertising Research

7 Situation Analysis, Objectives, and Budgets

8 The Creative Brief

9 Developing the Creative Product

10 Magazine and Newspaper Advertising

11 Television and Radio Advertising

12 Digital Interactive Media

13 Out-of-Home, Direct Mail and Specialty Advertising

14 Developing Media Objectives and Strategies

15 Developing a Plans Book

public service

announcements

serving the public interest,

often for a nonprofit

organization, carried by the

media at no charge.

medium, referring to communications vehicles paid to present an advertisement to their target audience Most often used

to refer to radio and television networks, stations that have new reporters, and publications that carry news and advertising.

When you tell somebody how much you like a product, that’s sometimes called

Although WOM is a communication dium, it has not generally been considered

me-an advertising medium However, the ularity of social media, such as Facebook and Snapchat, is forcing advertisers to re-consider this belief Historically, advertis-ers have used the traditional mass media

pop-(the plural of medium)—radio, TV, papers, magazines, and billboards—to send their messages Modern technology enables advertising to reach us efficiently through a variety of addressable media (like direct mail) and interactive media (like Face-book) Advertisers also use a variety of other nontraditional media such as bill-boards, directories, and direct mail, to link with their audience

news-Fifth, most advertising is intended to be

persuasive—to ultimately motivate the

au-dience to do something What, exactly? Ads can persuade people to try new things,

or to stay loyal to brands they already use Some ads try to convince people to increase their usage of a product they already buy Ads can try to get people to vote for a can-didate or support a ballot initiative Some

ads even try to get people to do less of

something, for example to use less water or energy Getting people to change their be-havior is not easy, and we’ll see in subse-quent chapters that there are intermediate goals that ads target which can later lead to behavior change

In addition to promoting tangible goods

such as oranges, iPods, and automobiles, advertising helps publicize the intangible

shops, bill collectors, and bakeries ing is sometimes used to advocate a wide variety of ideas, whether economic, political,

Advertis-Even nonprofits use advertising to communicate information This ad for adoptuskids.org was created

by the Advertising Council, a nonprofit organization that produces, distributes, and promotes

campaigns that are each sponsored by  a federal government agency or a nonprofit organization

Source: AdoptUSKids and The Advertising Council

informal, unpaid,

person-to-person manner, rather than

by advertising or other forms

of traditional marketing.

broadcast media that reach very large audiences Mass media include radio, television, newspapers, magazines, and billboards.

such as suits, soap, and soft drinks.

benefits that may or may not be physical, that are temporary in nature, and that come from the completion of a task.

religious, or social viewpoints that advertising may attempt to sell.

Of all the business functions, marketing is the only one tended to bring in revenue Without revenue, of course, a com-pany cannot pay its bills or earn a profit So marketing is very important.

in-What Is Marketing?

Over the years, the concept of marketing has evolved based on the supply of and demand for products Because we need to

understand marketing as it relates to advertising, we will use

the American Marketing Association’s definition:

for creating, communicating, delivering, and exchanging ings that have value for customers, clients, partners, and society

offer-at large 6

We focus in Part 2 on marketing and consumer behavior What’s important to understand now is that marketing is a

satis-fying consumer needs This process is typically broken down into the 4Ps of the marketing mix: developing products,

pricing them strategically, distributing them so they are

avail-able to customers at appropriate places, and promoting them

through sales and advertising activities (see Exhibit 1–1) The ultimate goal of the marketing process is to earn a profit for the firm by exchanging products or services with customers who need or want them And the role of advertising is to promote—to inform, persuade, and remind groups of customers,

or markets, about the need-satisfying value of the company’s goods and services

Advertising and the Marketing Process

Advertising helps the organization achieve its marketing goals

So do market research, sales, and distribution And these other marketing specialties all have an impact on the kind of adver-tising a company uses An effective advertising specialist must have a broad understanding of marketing in order to know what type of advertising to use in a given situation

Companies and organizations use many different types of vertising, depending on their particular marketing strategy The

advertising should be, in what markets the advertising should appear, and what goals the advertising should accomplish The

religious, or social In this book the term product encompasses

goods, services, and ideas

Finally, an ad identifies its sponsor This seems obvious The

sponsor wants to be identified, or why pay to advertise? This

part of the definition of advertising distinguishes it from

product placements, an increasingly prevalent way to

pro-mote a product Product placements occur when a brand is

featured in a show, story, or film in exchange for

compensa-tion of some kind Whereas it is clear that an ad has a

spon-sor, product placements are often made to look natural and

unobtrusive, so that audiences can’t be sure they are seeing a

promotion. 

1 What are the six key components of the

definition of advertising?

2 Which of these components do product

placements not fulfill?

check yourself ✓

good or service a company

sells.

organizational function and

a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

actions or methods aimed

at satisfying consumer needs profitably.

elements, called the 4Ps (product, price, place, and promotion), that every company has the option of adding, subtracting, or modifying in order to create

a desired marketing strategy.

marketing

of how the company is going to accomplish its marketing objectives.

LO1-3 Explain the role advertising plays in business and

marketing.

THE ROLE OF ADVERTISING

IN BUSINESS

In Chapter 5 we discuss in more detail how advertising helps

inform and persuade consumers, but first let’s consider

adver-tising’s role in business Every business organization performs

a number of activities, typically classified into three broad

divisions:

• Operations (production/manufacturing)

• Finance/administration

• Marketing

Today, business and tising are undergoing dramatic changes To under-stand the nature of these changes and why they’re taking place, we need to look at how advertising has evolved We’ll explain how the changing economic environ-ment has influenced the evolution of advertising through the centuries Then, in Chapter 2, we’ll look at how advertising in-fluences the economy and society and, as a result, is often an object of controversy and criticism.

adver-Principles of Free-Market Economics

The United States and other Western nations embrace nomic practices that are often described as capitalism In capi-talist economies, goods and services are created and sold by private organizations (there are exceptions, for example, the Post Office) In other economic systems, government plays are larger role in determining what is made and sold Capitalism is based on the notion of free-market competition While there is

eco-no such thing as perfect competition, there are four

fundamen-tal assumptions of free-market economics that a market-driven society strives to achieve:

1 Self-interest People and organizations generally act in their own self-interest People always want more—for less Com- panies are free to try to meet consumer demand, creating competition between self-interested sellers advertising to self-interested buyers The outcome is a greater diversity of products and a high incentive for companies to develop new products.

2 Complete information The more information buyers and ers have about what products are available, at what quality, and at what prices, the more efficient the competition The outcome is better quality products and lower prices for all. 

sell-3 Many buyers and sellers Having a wide range of sellers sures that if one company does not meet customer needs, another will capitalize on the situation by producing a more market-responsive product Similarly, having a wide range of buyers ensures that sellers can find customers who are inter- ested in the unique products they are able to produce at a fair price When a seller has a monopoly (it is the only provider of

en-a product or service), it cen-an gen-auge consumers with high prices (this is why we have antitrust laws).

and define what response the advertiser is seeking—what that

audience should notice, think, and feel We will discuss the

de-velopment of marketing, advertising, and media strategies later

in the text

We’ve defined marketing as a set of exchanges that create value

for the parties involved At a broader level these exchanges

create an economy This suggests that it is helpful to consider

the economic dimension of advertising and how advertising has

evolved as both an economic and a societal tool

E X H I B I T 1 – 1 Advertising is one of several activities that fall under the promotion component of

the marketing mix

Marketing Strategy Define a target market and marketing mix

Product Price Distribution

(Place) PromotionAdvertising PromotionSales PersonalSelling MarketingDirect

Sponsorships and Events

Public Relations

advertising strategy

The advertising objective declares what the advertiser wants to achieve with respect to consumer awareness, attitude, and preference Advertising strategy describes how to get there It consists of two substrategies: the creative strategy and the media strategy.

1 What is the ultimate goal of marketing?

2 What are the 4Ps of the marketing mix and

under which does advertising fall?

3 What guidance does marketing strategy give to

advertising planning?

check yourself ✓

LO1-4 Illustrate the functions of advertising in a free-market

economy.

ECONOMICS: THE GROWING

NEED FOR ADVERTISING

Economics has driven the growth of advertising since its earliest

beginnings and has made advertising one of the hallmarks of the

free-enterprise system As English historian Raymond Williams

wrote, advertising is “the official art of a capitalist society.”

distributed signs to vendors so that the Coca-Cola logo was ble everywhere both outside and inside the shop To us, this cam-

visi-paign demonstrates another function of advertising: to induce

consumers to try new products and to suggest reuse.

Through the early part of the twentieth century, Coca-Cola wasn’t the dominant force we know today Competitors such as Pepsi and the now-defunct Moxie cut into Coca-Cola’s market

4 Absence of externalities (social costs) Sometimes the sale or

consumption of products may benefit or harm other people who

are not involved in the transaction and didn’t pay for the

prod-uct In these cases, government sometimes uses taxation and/

or regulation to compensate for or eliminate the externalities

(Second-hand cigarette smoke hurts people who don’t smoke

In addition, the health risks of smoking may drive up insurance

costs for nonsmokers This is why Congress has placed

restric-tions on tobacco advertisers.)

Now, given these basic assumptions, let’s see how advertising

fits into the scheme of a free-market economy

Functions and Effects of Advertising

in a Free Economy

For any business, advertising may perform a variety of

func-tions, and, when executed correctly, its effects may be

dra-matic How does advertising serve as a marketing tool? There

are seven functions we can identify To illustrate them, let’s go

back to the beginnings of Coca-Cola in 1886, when druggist

John Pemberton was still mixing the syrup in his lab

Pemberton’s business partner and bookkeeper, Frank

Robin-son, suggested the name “Coca-Cola” to identify the two main

flavors (coca leaves and kola nuts) and because he thought that

“the two Cs would look well in advertising.”7 Robinson created

a logo that is now instantly recognizable around the world and

is one of Coca-Cola’s more valued assets Later, a distinctive

bottle shape became the standard throughout the company The

proprietary curvy bottle helped customers differentiate

Coca-Cola from other drinks The creation of the Coca-Coca-Cola logo and

contour bottle demonstrates one of the most basic functions of

source and to differentiate them from others (The functions

and effects discussed here are listed in Exhibit 1–2.)

When Pemberton first began selling Coca-Cola at Jacobs’s

Pharmacy, he needed to let people know what it was Today we

associate the word cola with a cold, bubbly beverage, but in

1886 the people of Atlanta didn’t automatically make the same

connection Therefore, Pemberton and Robinson added the

sug-gestion drink before Coca-Cola on the signs that they placed in

front of the drugstore.8 Ads let readers know why they should

drink it (because it is “delicious, exhilarating, refreshing and

invigorating”), how much it cost, and where they could get it

Here is another basic function of advertising: to

communicate information about the product, its

features, and its location of sale.

Asa Candler bought the Coca-Cola Company and

developed its market on a grander scale He mailed

thousands of coupons for free drinks to Atlanta

residents and handed out more on the street To

cover the costs of samples, the company gave free

syrup to the soda fountains that sold the beverage

Later, the free sample campaign went along

when-ever Coca-Cola entered a new market Candler also

Coca-Cola was first served at a small pharmacy in Atlanta in 1886 The word drink was added to signs to let people know it was a beverage

Source: Library of Congress Prints and Photographs, LC-USZ62-39705

E X H I B I T 1 – 2 Functions and effects of advertising as a marketing tool.

• To identify products and differentiate them from others.

• To communicate information about the product, its features, and its place of sale.

• To induce consumers to try new products and to suggest reuse.

• To stimulate the distribution of a product.

• To increase product use.

• To build value, brand preference, and loyalty.

• To lower the overall cost of sales.

For more than 140 years, the Coca-Cola Company has used a variety of media to communicate this message to diverse audiences Why? To achieve a

significant function of advertising: to lower the

over-all cost of sales For the cost of reaching just one

pros-pect through personal selling, companies can reach thousands of people through media advertising The aver-age cost to make a face-to-face field sales call is about

$300.10 Multiply that $300 by the nearly 20 million people who watch a top-rated prime-time TV show, and the cost comes to a mind-boggling $6 billion However, for only $500,000 Coca-

Cola can buy a 30-second TV commercial during a Sunday

Night Football telecast and reach the same 20 million people.11

Through advertising, marketers can talk to a thousand pects for only about $25—less than 10 percent of what it costs

pros-to talk pros-to a single prospect through personal selling

share Outside forces also threatened the entire

industry; sugar rationing during both

world wars was especially

damag-ing Before the United States

be-came involved in World War II,

Coca-Cola executives preempted

a repeat of the setbacks the

com-pany suffered during World War

I rationing They persuaded the

government to give troops

Coca-Cola to boost their

mo-rale The D’Arcy advertising

agency gathered endorsements

from U.S officers to support the

company’s bid to become an

offi-cial military supplier—and

there-fore be exempt from rationing The

War Department agreed to the plan,

and Coca-Cola created 64 bottling plants near the front lines The

risky investment had great returns When the soldiers returned

home, they preferred Coke by eight to one over Pepsi.9

Coca-Cola blended patriotism with another of the important functions

of advertising: to increase product use.

harm caused by the sale or consumption of products to people who are not involved in the transaction and didn’t pay for the product.

function that identifies products and their source and differentiates them from all other products.

© BananaStock/PunchStock RF

For more than 120 years, Coca-Cola has effectively built and maintained strong brand preference and loyalty among its customers Coke’s campaigns confirm that drinking Coca-Cola makes our lives happier

© Michael Siluk/The Image Works

Advertising contributes to a free economy.

As soft drinks became a staple throughout the United States,

Coca-Cola began campaigns outside the country to change

bev-erage consumption globally The first international Coca-Cola

bottling plants were established in Canada, Cuba, and Panama in

1906; today the company bottles Coke in more than 200

coun-tries Coca-Cola franchise bottlers around the world can tweak

the recipe to match local tastes Bottlers and distributors also

supplement Coke advertising with their own promotions

Through various activities, Coca-Cola has succeeded in

accom-plishing yet another function of advertising: to stimulate the

distribution of a product, in this case, on a global level.

In a free-market economy, when one company starts to make

sig-nificant profits, other companies immediately jump in to compete

Over the years, to battle the constant competitive threat,

Coca-Cola has funded ongoing marketing communications campaigns

to accomplish yet another function of advertising: to build value,

brand preference, and loyalty Blind taste tests conducted in the

1980s showed that many people liked the taste of Pepsi better

than that of Coke However blind preference has never knocked

Coca-Cola from the top spot A century and a half of consistently

upbeat marketing communications has made its mark Coca-Cola

advertising, such as its current campaign, “Taste the Feeling,” has

always promoted a common voice and a common theme:

Coca-Cola makes life’s relaxing moments even better

Now, considering this brief synopsis of Coca-Cola history, how does Coke’s advertising fit with the basic assumptions

of a free-market economy? How has Coke’s advertising helped make the soft drink available to more people at lower

crafts such as pottery making or basket weaving could trade for food and goods The creation of money facilitated ex-changes In turn, the need to call attention to a product or service that someone offered led to the earliest need for ad-vertising At first, merchants hung carved signs in front of their shops so passersby could see what products were being offered Most people couldn’t read, so the signs often used symbols, such as a boot for a cobbler This period was called

ex-tended from the beginning of recorded history to roughly the start of the nineteenth century.12

During the preindustrial age, several important developments enabled the eventual birth of modern advertising The Chi-nese invented paper and Europe had its first paper mill by

1275 In the 1440s, Johannes Gutenberg invented the printing press in Germany The press was not only the most important development in the history of advertising, and indeed com-munication, but it also revolutionized the way people lived and worked

The introduction of printing meant people no longer had to rely on their memories for record keeping Some entrepre-neurs bought printing presses, mounted them in wagons, and traveled from town to town, selling printing This new tech-nology made possible the first formats of advertising—post-ers, handbills, and signs—and, eventually, the first mass medium—the newspaper In effect, the cry of the vendor could now be multiplied many times and heard beyond the immediate neighborhood

In 1472, the first English ad appeared: a handbill tacked on church doors in London announcing a prayer book for sale

cost? How did it inform them about where they can buy Coke?

Has the freedom to advertise contributed to the competitive environment? What externalities might have had a positive or neg-ative impact on the Coca-Cola Company’s efforts to success-fully market its beverages?

Perhaps you can see from this one example how advertising contributes to a free economy But if

it’s so good, then why didn’t advertising take off until the

twen-tieth century? (For a time line of advertising history, see

Ex-hibit 1–3.) Why wasn’t it developed and used for the last

several thousand years of recorded history?

preindustrial age

Period of time between the

beginning of written history

and roughly the start of the

nineteenth century, during

which the invention of

paper and the printing

press and increased literacy

gave rise to the first forms

Thousands of years ago, people devoted most of their efforts

to meeting basic survival needs: food, clothing, shelter They

lived in small, isolated communities where artisans and

farm-ers bartered products and services among themselves

Distri-bution was limited to how far vendors could walk and

“advertising” to how loud they could shout Because goods

weren’t produced in great quantity, there was no need for

advertising to stimulate mass purchases There were also no

mass media available for possible advertisers to use (See

Exhibit 1–3.)

Early Advertising

Civilized living became possible when people learned to

farm The resulting prosperity and stability led to cities,

which were centers of commerce People who practiced

An early form of advertising Until the advent of public schooling, most people couldn’t read—so signs featured symbols of the goods or services for sale, such as the chair on this cabinetmaker’s sign in Williamsburg, Virginia

© Pat & Chuck Blackley/Alamy

E X H I B I T 1 – 3 Timetable of advertising history.

3000 BC Written advertisement

offering “Whole gold coin” for

runaway slave “Shem.”

500 BC Political and trade graffiti

on Pompeii walls.

AD 1 First uppercase lettering

appears on Greek buildings.

1455 First printed Bible.

1472 First printed ad in English

tacked on London church doors

1544 Claude Garamond, first

“typefounder,” perfects a roman typeface that bears his name and is still used today

1650 First newspaper ad offers

reward for stolen horses

1662 London Gazette offers first

advertising supplement

1704 First ads in America

published in the Boston Newsletter.

1841 Volney B Palmer becomes

first “newspaper agent”

(advertising agent) in America

1844 First magazine ad runs

1869 Francis W Ayer founds ad

agency bearing his father’s name,

N W Ayer & Sons, in Philadelphia

He initiates first “for commission”

ad contract (1876), first market survey for an ad (1879), and first on-staff creative services (art in

1890, copywriting in 1892)

1888 Printers’ Ink is first U.S

publication for ad profession.

1900 Psychologists study the

attention-getting and persuasive qualities of advertising

1905 First national ad plan is for

the “Gillette Safety Razor.”

1911 First “truth in advertising”

codes are established by what is now called the American Advertising Federation (AAF).

1920s Albert Lasker, “father” of

modern advertising, calls

advertising “salesmanship in print.”

First ad testimonials by movie stars

appear Full-color printing is

available in magazines

1922 First radio ad solves radio’s

need for financing

1924 N W Ayer produces first

sponsored radio broadcast, the

“Eveready Hour.”

1930 Advertising Age magazine is

founded

1938 Wheeler-Lea amendments to

FTC Act of 1938 grant FTC further

power to curb false ad practices.

1946 America has 12 TV stations

broadcasting to the public

1947 Lanham Trademark Act

protects brand names and slogans

1948 46 TV stations are operating

and 300 others are awaiting FCC approval

1950 First political ads, by Gov

Dewey of New York, appear on TV

1950s David Ogilvy’s “Hathaway

man” and “Commander Whitehead”

become popular ad personae.

1960s Doyle Dane Bernbach’s

“Think small” ad for American Volkswagen becomes one of the most famous ads of the decade, establishing a strong market position for the smallest European import The agency’s slogan for Avis, “We’re only No 2, so we try harder,” is also very successful

New York’s Madison Avenue becomes known worldwide as the center of the advertising world and features the best in advertising creativity

1967 First Super Bowl is telecast

Cost of a 30-second spot: $40,000.

1971 Armed services begin first

advertising for the new volunteer” military (“Be all that you can be in the Army”)

“all-1972 The Ad Age article

“Positioning: The Battle for Your Mind” by Al Ries and Jack Trout details the strategy of positioning that dominates the 1970s

1973 Oil shortages begin period of

“demarketing,” ads aimed at slowing demand

1970s (late) Growth in

self-indulgence, signified by popularity

of self-fulfillment activities, spurs some agencies into making infomercials.

1980s Ad agency megamergers

take place worldwide

1982 First edition of Contemporary

Advertising is published

1984 The Internet (government

controlled since 1973) is turned

over to the private sector

1986 Marketing Warfare by Al Ries

and Jack Trout portrays marketing

in terms of classic warfare manual

written by General Clausewitz in

1831

1989 Tim Berners-Lee invents the

World Wide Web, allowing surfers

to browse the Internet.

1990s A recession leads marketers

to shift funds from advertising to sales promotion

1994 Media glut leads to market

fragmentation; network TV is no longer sole medium for reaching total marketplace Ad professions adopt integrated marketing communications (IMC) as the new strategy to build market relationships

1997 AOL launches Instant

Messenger (AIM), allowing online chat and opening the door to social networking

1998 Google begins answering

search queries.

2000 The Internet is the

fastest-growing new ad medium since TV, with 400 million users

2002 A general economic slump

hammers ad spending

2005 Online advertisers spend

$8.32 billion to reach the 170 million wired U.S residents

2007 The iPhone takes social

media mobile

2007 U.S ad agency revenue

surges 8.6% to $31 billion, led by double-digit growth in digital advertising

2009 Broad global recession leads

to cutbacks in ad expenditures.

2010 The Old Spice Guy viral

campaign achieves 113 million online views

2012 Google captures over 30% of

the $100 billion digital advertising market

2013 Growth in global advertising

is 3.5%, led by mobile advertising, expanding by 67%

2013 The Man of Steel movie

collects $160 million in product placements, paid by 100 promotional partners

2015 YouTube is watched daily by

more people, ages 18-49, than any cable network

2016 Fiftieth Super Bowl is

telecast Cost of a 30-second spot:

$4.8 million (see 1967 above).

production, led to interest in mass marketing techniques such

as  advertising to inform new markets of the availability of products

During the industrial age, which lasted roughly until the end of

World War II (1945), manufacturers were principally concerned with production The burden of marketing fell on wholesalers Ad-vertising to consumers was the job of the lo-cal retailer and the large mail-order catalog companies like Montgomery Ward and Sears Roebuck Only a few innovative manufactur-ers foresaw the usefulness of mass media ad-vertising to stimulate consumer demand for their products

For Americans, the profession of advertising

began when Volney B Palmer set up ness in Philadelphia in 1841 He bought up large volumes of advertising space at dis-count rates and then resold the space to ad-vertisers at a higher rate, pocketing the difference The advertisers usually prepared the ads themselves

busi-In 1869, Francis Ayer formed an ad agency in Philadelphia and, to make it sound more credible, named it after his father

N W Ayer & Sons was the first agency

to charge a commission based on the

“net cost of space” and the first to duct a formal market survey In 1890, Ayer became the first ad agency to oper-ate as agencies do today—planning, cre-ating, and executing complete ad campaigns in exchange for media-paid commissions or fees from advertisers In

con-1892, Ayer set up a copy department and hired the first full-time agency copywriter

The technological advances of the dustrial Revolution enabled great changes in advertising Photography, in-troduced in 1839, added credibility and

In-a new world of creIn-ativity Now In-ads could show products, people, and places

as they really were, rather than how an illustrator visualized them

In the 1840s, some manufacturers began using magazine ads to reach the mass market and stimulate mass consump-tion Magazines permitted advertising

on a national scale with high-quality reproduction

The telegraph, telephone, typewriter, phonograph, and later, films, all let

Two hundred years later the first newspaper ad was

pub-lished, offering a reward for the return of 12 stolen horses

Soon newspapers carried ads for coffee, chocolate, tea, real

estate, medicines, and even personal ads These early ads

were still directed to a very limited

num-ber of people: the customers of the

cof-feehouses where most newspapers were

read

By the early 1700s, the world’s population

had grown to about 600 million people,

and some major cities could support larger

volumes of advertising This caused a shift

in advertising strategy Samuel Johnson,

the famous English literary figure,

ob-served in 1758 that advertisements were

now so numerous that they were

“negli-gently perused” and that it had become

necessary to gain attention “by

magnifi-cence of promise.” This was the beginning

of puffery in advertising.

In the American colonies, the Boston

Newsletter began carrying ads in 1704

About 25 years later, Benjamin Franklin, the “father” of

adver-tising art, made ads more readable by using large headlines and

considerable white space In fact, Franklin

was the first American known to use

illustrations in ads

The Industrial Age and

the Birth of Agencies

In the late-1700s, the Industrial

Revolu-tion began in England and by the early

1800s it had reached North America By

using machines to mass-produce goods

with uniform quality, large companies

increased their productivity For the first

time, it cost people less to buy a product

than to make it themselves As people

left the farm to work in the city, mass

urban markets began to emerge This

further fueled market development and

the growth of advertising

By the mid-1800s, the world’s

popula-tion had doubled to 1.2 billion Suddenly,

producers needed mass consumption to

match the high levels of manufactured

goods Breakthroughs in transportation—

the railroad and steamship—made it

easier to distribute products beyond a

manufacturer’s local market Mass

con-sumption demands, in concert with

the  surpluses achievable by mass

With the need for mass consumption came the increasing need for

advertising to inform new markets of the availability of

products.

It wasn’t until 1729 that Ben Franklin, innovator of advertising art, made ads more readable by using larger headlines, changing fonts, and adding art

This 1767 ad announces the availability of Stage Waggons to carry passengers from Powles Hook Ferry to Philadelphia

Radio was born at about this same time and rapidly became the nation’s primary means of mass communication and a pow-erful new advertising medium World and national news now arrived direct from the scene, and a whole new array of family entertainment—music, drama, and sports—became possible Suddenly, national advertisers could quickly reach huge audi-ences In fact, the first radio shows were produced by their sponsors’ ad agencies Fresh mass markets were developed for new brands of consumer luxury and convenience goods we re-fer to as consumer packaged goods.

people communicate as never before In 1896, when the

fed-eral government inaugurated rural free mail delivery,

direct-mail advertising and mail-order selling flourished

Manufacturers now had an ever-increasing variety of products

to sell and a new way to deliver their advertisements and

products to the public

Public schooling helped the nation reach an unparalleled

90 percent literacy rate Manufacturers gained a large reading

public that could understand print ads The United States

thus entered the twentieth century as a great industrial state

with a national marketing system propelled by advertising

With the end of World War I, the modern period in

advertis-ing emerged

In the 1920s, the United States was rich and powerful As the

war machine returned to peacetime production, society

be-came consumption driven The era of salesmanship had

ar-rived and its bible was Scientific Advertising, written by the

legendary copywriter Claude Hopkins at Albert Lasker’s

agency, Lord & Thomas Published in 1923, it became a

clas-sic and was republished in 1950 and 1980 “Advertising has

reached the status of a science,” Hopkins proclaimed “It is

based on fixed principles.” His principles outlawed humor,

style, literary flair, and anything that might detract from his

basic copy strategy of a preemptive product claim repeated

loudly and often.13

In 1890, N W Ayer & Sons became the first agency to operate as

agencies do today—planning, creating, and executing complete ad

campaigns for advertisers This 1899 Ayer ad for Uneeda biscuits (catch

the play on words) was one of a series of popular ads of the times.

Source: National Biscuit Company (Nabisco)

In the early twentieth century, the Industrial Revolution was in full force Factories were producing products like Ford automobiles, not just for Americans, but also for overseas markets, as this ad shows

© Mary Evans Picture Library Ltd/age fotostock

period of time from the mid-1700s through the end

of World War II when manufacturers were principally concerned with production.

consumer packaged

consumer products packaged

by manufacturers and sold through retail outlets Generally these are goods such as food and beverages, health and beauty care, cleaning products, and detergents that get used up and have to be replaced frequently.

© Classic PIO/Fotosearch RF

By the middle of the 20th century, advertisers knew it was important to tell consumers why they should prefer a particular brand over its competitors This 1958 ad for Hanes underwear gives consumers several benefits to think about

© Vintage Skivvies

product

differentiation

Manufacturers portraying

their brands as different

from and better than similar

competitive products

through advertising,

packaging, or physical

product differences.

period from the end of the Second World War (1945) through 1979 It reflected the “Mad Men” era, the growth of large national agencies, and societal concern about the effects of advertising.

unique selling proposition

benefits that make a product different than any other The reason marketers believe consumers will buy

a product even though it may seem no different from many others just like it.

Strategy of identifying groups

of people or organizations with certain shared needs and characteristics within the broad markets for consumer

or business products and aggregating these groups into larger market segments according to their mutual interest in the product’s utility.

The greatest expansion of any medium up

to that time occurred with the tion of television in 1941 After World War II, TV advertising grew rapidly, and in time achieved its current status

introduc-as the largest advertising medium in terms of revenues

During the postwar prosperity of the late 1940s and early 1950s, consum-ers tried to climb the social ladder by buying more and more modern prod-ucts Advertising entered its golden era A creative revolution ensued in which ads focused on product features that implied social acceptance, style, luxury, and success Giants

in the field emerged—people such as Leo Burnett, David Ogilvy, and Bill Bernbach, who built their agencies from scratch and for-ever changed the way advertising was planned and created.14

Rosser Reeves of the Ted Bates Agency introduced the idea that every ad must point out the product’s unique selling

differentiate it from competitive ucts The USP was a logical extension of the Lasker and Hopkins “reason why” credo But as the USP was used over and over, consumers started finding it diffi-cult to see what was unique anymore.Finally, as more and more imitative prod-ucts showed up in the marketplace, all of-fering quality, variety, and convenience, the effectiveness of this strategy wore out Companies turned to a new mantra:

market-ers searched for unique groups of people whose needs could be addressed through specialized products The image era of the 1960s was a natural culmination of the

During this period, each brand sought to

sell the public on its own special

qual-ities Wheaties became the

“Break-fast of Champions” not because of

its ingredients but because of its

advertising Manufacturers

fol-lowed this strategy of product

seek-ing to portray their brands as

different from and better than

the competition by offering

consumers quality, variety, and

convenience

On October 29, 1929, the stock

market crashed, the Great

De-pression began, and advertising

expenditures plummeted In the

face of consumer sales resistance

and corporate budget cutting, the

advertising industry needed to

im-prove its effectiveness It turned to

re-search Daniel Starch, A C Nielsen,

and George Gallup had founded

re-search groups to study consumer

atti-tudes and preferences By providing

information on public opinion, the

per-formance of ad messages, and sales of

advertised products, these companies

started a whole new business: the

mar-keting research industry The United

States would not fully emerge from the

Great Depression until after the greatest

struggle the world had ever known, the

Second World War

The Golden Age of

Advertising

World War II (1945) lasted until about

1979 The United States economy

emerged relatively unscathed from the

horrors of the war, which had left large

parts of Europe and Asia in ruins

ment and alarmed by dependence on vital natural resources During the energy shortages of the 1970s and 1980s, a new term, demarketing, appeared Producers of energy started us-

ing advertising to slow the demand for their products Ads

asked people to refrain from operating washers and dryers ing the day when the demand for electricity peaked In time, demarketing became a more aggressive strategic tool for ad-vertisers to use against competitors, political opponents, and social problems For example, many organizations today ac-tively seek to demarket the use of tobacco

dur-creative revolution Advertising’s emphasis

shifted from product features to brand image

or personality as advertisers sought to align

their brands with profitable market segments

Cadillac, for example, became the worldwide

image of luxury, the consummate symbol of

success

But just as me-too product features killed the product

differen-tiation era, me-too images eventually killed the market

segmen-tation era With increased competition, a new kind of

advertising strategy evolved in the 1970s, where competitors’

strengths became just as important as the advertiser’s Jack

Trout and Al Ries trumpeted the arrival of the positioning era

by insisting that what really mattered was how the brand

stacked up against the competition in the consumer’s mind—

how it was positioned

What really mattered was how the brand stacked up against

the competition in the consumer’s mind.

Demarketing is used to dampen demand for products, especially those that create unwanted costs for society This public service message uses the metaphor of a fish hook to convey the dangerous addictive qualities of alcohol

Source: CGSS/ANPAA

from its competitors by associating that brand with a particular

set of needs that ranked high on the

con-sumer’s priority list Thus, it became a

more effective way to use product

differ-entiation and market segmentation The

most famous American ads of the

position-ing era were Volkswagen (“Think small”),

Avis (“We’re #2”), and 7Up (“The

unc-ola”) Product differentiation, market

seg-mentation, and positioning are all very

important concepts to understand, so we

will discuss them further in Chapter 4

While this was all going on in the United

States, across the Atlantic a new generation

of advertising professionals had graduated

from the training grounds of Procter &

Gamble (P&G) and Colgate-Palmolive and

were now teaching their international

cli-ents the secrets of mass marketing

The Postindustrial Age

Beginning around 1980, the

change People became truly aware of

dangers of consumption for the

environ-The collapse of the Soviet Union ended the Cold War and with

it the need for a defense-driven economy Companies were

anxious to develop the untapped markets

in the former Warsaw Pact states To expand their power globally, big multina-tional companies and their advertising agencies went on a binge, buying other big companies and creating a new word in the

financial lexicon: megamerger.

By now European and Asian advertising had caught up with the United States TV was the hot medium, and agencies fo-cused on growth, acquisitions, and supe-rior creative executions For several years, Young & Rubicam in New York and Dentsu in Japan alternated as the largest advertising agency in the world Then two brothers in London, Charles and Maurice Saatchi, started acquiring agencies globally In rapid succession, a number of high-profile U.S agencies dis-appeared under the Saatchi & Saatchi umbrella Saatchi & Saatchi was sud-denly the largest agency in the world Then followed more buyouts as the big agencies from Europe, the United States, and Japan emulated the merger mania of

association of a brand’s features and benefits with a particular set of customer needs, clearly differentiating

it from the competition in the mind of the customer.

postindustrial age

Period of cataclysmic change, starting in about

1980, when people first became truly aware of the sensitivity of the environment

in which we live.

coined during the energy shortage of the 1970s and 1980s when advertising was used to slow the demand for products.

features at lower cost, consumers discovered more choices, higher quality, and lower prices.

These newly affluent consumers concerned themselves more with the quality of their lives With their basic needs met, the

baby boomers were interested in saving time and money to spend on products, services, and social causes that represented who they aspired to be

By the mid-1980s, an avalanche of ads— especially in the toiletry and cosmetics industries—was aimed at the “me” genera-tion (“L’Oréal Because I’m worth it.”) At the same time, the nation’s largest industrial concerns spent millions of dollars on corpo-rate advertising to extol their social con-sciousness and good citizenship

As the U.S economy slowed, many nies were chasing too few consumer dollars Clients trimmed their ad budgets, and many turned to more cost-effective sales promotion alternatives, such

compa-as coupons, direct mail, and direct marketing to build sales ume By 1990, advertising had lost 25 percent of its share of the marketing budget to other forms of marketing communications.17

vol-their huge multinational clients Names of agency founders

disappeared from the doors, replaced by initials and

acro-nyms: WPP Group, RSCG, TBWA, FCA, DDB Needham,

and FCB, to mention just a few.15

Then, sparked by unprecedented layoffs in

the defense industries, the global economy

fell into an economic recession The

merg-ers temporarily stopped, the business

world sucked in its collective belt, and

management turned to new theories of

To-tal Quality Management (TQM),

reengi-neering, and downsizing—theories aimed

at cutting costs and increasing efficiency

Two related economic factors

character-ized marketing in this period: (1) the

ag-ing of traditional products, with a

corresponding growth in competition, and

(2) the growing affluence and

sophistica-tion of the consuming public, led by the

huge baby-boomer generation.16

The most important factor was competition, intensified by

growing international trade As high profits lured imitators into

the marketplace, each offering the most attractive product

Hailed by Jack Trout and Al Ries as “the most famous ad of

the 60s,” this Volkswagen ad co-opted the “small” position in

consumers’ minds, giving VW ( www.volkswagen.com ) a

leadership rank for many years.

In recent years, VW has attempted to recapture the style of its 60s advertising, thus reinforcing its position for today’s consumers.

Source: Volkswagen of America, Inc.

These newly affluent consumers concerned

themselves more with the quality of their lives.

But then the bubble burst In 2001, the combination of a mild reces-sion, the collapse of the stock market, and the bust of the dot-coms all contributed to a record decline in advertising activity On September 11 of that year, terror-ists attacked the United States and suddenly all marketing and adver-tising seemed to stop—not just in the United States, but also around the world.21 Spending in the United States declined 6.5 percent to $231 billion, and overseas spending dropped 8.6 percent to $210 billion.22

A year later, though, the economy seemed to be turning around and marketers were again starting to spend money on advertis-ing By 2005, U.S advertising expenditures had reached $264 billion, more than completely recovering from the 2001 de-cline.23 But hardly anybody thought the problems were over Technology, evolving lifestyles, new fears over security, and the rising cost of reaching consumers had already changed the advertising business forever With the explosion of the Internet,

we had entered a new electronic frontier—what Tom Cuniff, VP/creative director at Lord, Dentsu & Partners, called “the second creative revolution.”24

The Global Interactive Age: Looking

at the Twenty-First Century

In the new millennium, the rest of the world has in many spects caught up to North America, thanks to improved eco-

re-As the 1990s unfolded, the traditional advertising industry

found itself threatened on all sides and suffering from

overpopulation.18 Clients demanded better results from their

promotional dollars; small, imaginative, upstart agencies

competed for (and won) some big accounts; TV viewers

ap-peared immune to conventional commercials; and an

abun-dance of new media technologies promised to reinvent

direct inducement offering extra incentives all along the marketing route—from manufacturers through distribution channels to customers—to accelerate the movement of the product from the producer to the consumer.

The recession of the early 90s slammed the advertising industry with over

13,500 layoffs However, specialists in small, regional creative shops were

able to snatch away some large accounts during this period and produce

ads for established corporations This Coca-Cola ad came from the clever

minds at Creative Artists Agency in Hollywood (a talent agency)

© The Advertising Archives

Technology, evolving lifestyles, new fears over security, and the rising cost of reaching consumers had already changed the

advertising business forever.

advertising In three short years, the advertising agency

busi-ness lost over 13,500 jobs Major clients such as Coca-Cola

defected from the big agencies, giving various portions of

their business to specialists in small, regional creative shops

and media-buying services But the setback went far beyond

the agency business Throughout the media world,

newspa-pers, magazines, and TV networks all lost advertising

dol-lars About 40 magazines went out of business during the

two-year slump.19

By the mid-1990s, U.S marketers had begun shifting dollars

back from sales promotion to advertising to rebuild value in

their brands In 1994, ad budgets surged ahead by 8.1 percent

to $150 billion nationally And throughout the rest of the

1990s, ad spending increased about 7 percent every year until

the year 2000, when U.S advertisers spent $247.5 billion, a

whopping 11.3 percent increase over the previous year.20

nomic conditions and a desire for expansion Recent estimates

of worldwide advertising expenditures outside the United States exceed $400 billion per year At present over half of the world’s media spending is occurring in 10 emerging markets The importance of advertising in individual countries depends

on the country’s level of development and national attitude ward promotion Typically, advertising expenditures are higher

to-in countries with higher personal to-incomes As Exhibit 1–4 shows, the top 10 worldwide advertisers are based in many different countries

Although the Communist countries once condemned ing as an evil of capitalism, eastern European countries now encourage private enterprise and realize the benefits of adver-tising And the United States now looks west to find its biggest economic rival In 2010, China overcame Germany and became the third largest market for media spending By 2015 China

advertis-Tools for Teamwork [1–B]

Advertising agencies look for at least three qualities in the people they

hire: talent, knowledge, and the ability to work well with others If you

are working on your campaign in a group, you’ll find those qualities—

especially the third—to be important as well.

Your campaign assignment may be the first time you’ve worked on a

group project If so, you’ll discover that working in a team is very

differ-ent from doing a project on your own.

First, you will need to coordinate everything that you do That means

each person must create schedules that accommodate not only his or her

own obligations, but those of the group Second, you will be sharing work

Tools that help you share documents, calendars, and other files will help

you produce better work and do it faster Third, you should consider the

importance of leadership in a group Your group will usually perform

bet-ter if someone is formally appointed as leader, at least in the sense of

or-ganizing meetings, maintaining a calendar, and keeping track of what has

to be done Finally, everyone is accountable Talk to your professor about

whether he or she expects peer evaluations or some other means to

as-sess differences in group member effort and performance.

Many Internet tools are now available to help improve the

coordina-tion of teams Best of all, they are free The ones I prefer are those

cre-ated by Google because they are easy to use, powerful, and integrcre-ated

(both with each other and with mobile devices) If you would prefer not to

use a Google product, I’ve tried to find equivalents where possible.

Staying Connected

E-mail, of course, remains an essential tool Your school e-mail may

work fine, or Gmail ( www.gmail.com ) is an excellent free mail service

that you will most likely never fill up (which means you never have to

delete e-mails and your inbox never gets too full) You can use “labels”

to quickly identify mail from people in your group And with “contacts”

you can set up groups of e-mail addresses to message easily and

quickly Use “tasks” to create a to-do list right in your e-mail list and link

e-mail invitations to your Google calendar Other free e-mail services

are available as well.

Creating Documents

Google Docs ( http://docs.google.com ) offers a free suite of simple yet

powerful document creation tools that includes programs for

docu-ments, spreadsheets, presentations, forms, and templates Best of all

it is easy to share some or all of the documents you create with others

and edit them simultaneously So if a group member is working on a

creative brief, he or she can share it immediately with everyone else

for edits and comments If you would prefer a non-Google solution,

Microsoft and Apple’s office suites are more collaborative than ever and offer more advanced formatting and functions tools ( www.google com/docs/about/ ).

Staying Organized

Many people find that calendars and to-do lists are essential Google has

an excellent calendar program ( www.google.com/calendar ) that one in the team can edit You can also sync the calendar with mobile devices As I indicated before, Google’s “task” program is built into gmail A more powerful program that is not quite as simple to use is Zoho Project ( www.zoho.com/projects/ ).

every-Conducting Research

Powerful tools for doing research are also available for free on the Web For secondary research purposes it is great to have a program that allows you to copy and store documents, Web pages, photos, charts, and other kinds of information A powerful and popular program is Evernote ( www.evernote.com ) Your group may also find itself collecting primary data If you need to administer a survey, consider a useful component of Google docs called “forms.” With forms you can easily create a Web- based survey and have your data recorded in a Google spreadsheet as it comes in A non-Google program that does the same thing is Survey- Monkey ( www.surveymonkey.com ).

Working Well and Staying Accountable

Learning to adapt to group projects is not easy for everyone Knowing what to expect and developing the skills to work well with others is essential For guidance, consider these thoughts from experts:

• Brian Tracy: www.myarticlearchive.com/articles/6/079.htm

• Susan Heathfield: http://humanresources.about.com/od/

• Stephen Covey: www.stephencovey.com/blog/?p=6

• Jack Welch, former CEO of GE: www.youtube.com/watch?v=l5GryYk5hV8

If you are doing peer evaluations in your class, your professor will likely have a form that you should use These types of forms can be found throughout the Web Some examples include these:

• www.uky.edu/SocialWork/crp/files/Samplepeerevaluationform.pdf

• http://chnm.gmu.edu/7tah/unitdocs/unit10/lesson5/peereval.pdf

surpassed former number two, Japan.25 Some estimates suggest

the Chinese economy has already equaled that of America.26

The explosion of new technologies in the last decade has

affected advertising considerably In the late 90s and early

2000s, cable transformed television from the most

wide-spread of mass media to a more specialized, narrowcasting

medium.27 Now fast Internet service is empowering an even more revolutionary change, TV on demand through channels like Hulu, Netflix, Amazon Prime, HBO on Demand, and YouTube Viewers are finding it convenient and preferable

to watch what they want, when they want, through cable

and Kik The power of social media are certainly not lost on advertisers, who are shifting big portions of their spending to engage the audiences that spend time there.

The growth of new media has proven massively disruptive for some traditional ones Particularly hard hit was the newspaper industry Print newspapers have seen over a decade of year-over-year ad revenue decline.29 Sev-

eral high-profile papers, including the Christian

Sci-ence Monitor and the Rocky Mountain News,

already weakened by lower ad sales, have duced publication schedules or, in some in-stances, shut down their presses completely Revenue from online publications is not replac-ing the dollars lost from print advertisers

re-Even capitalism itself has come under scrutiny, at least among young people Although capitalism is likely to remain the greatest influence on markets in the United States for the near future, the surprising success of Bernie Sanders in campaigning for the Democratic nomination for president in 2016 has been based on the support of young

adults, nearly half of whom are warm to the label socialism.30

What this means for advertising, which is often described as a tool

of capitalism, remains to be seen

In this 2016 election, Republican candidate Donald Trump feated Democrat Hillary Clinton to become president of the United States Trump’s reliance on nontraditional media, including Twitter, contrasted with Clinton’s much heavier advertising spending This too will influence marketing communications for years to come

de-Advertising has come a long way from the simple sign on the bootmaker’s shop Today it is a powerful device that announces the availability and location of products, describes their quality and value, imbues brands with personality, and simultaneously defines the personalities of the people who buy them while entertaining us More than a reflection of society and its desires,

Digital technologies have also had a huge

im-pact Tablets, smartphones, and personal devices

like the Kindle give advertisers new media for

reaching potential customers In turn, the

chal-lenges posed by these new products are attracting

a new breed of advertising professional Whereas

in the past creativity emphasized writing, design,

and idea generation, a new breed of creatives is as

likely to be trained in coding and programming

Perhaps the biggest new change in consumer media

habits is the pervasive use of of social media.28 As we

discuss in Chapter 12, this is a revolutionary way for

advertisers to reach consumers Facebook and

You-Tube are seen by over a billion users each month,

con-necting people as never before Snapchat proudly

proclaims that “on any given day, Snapchst reaches

41% of all 18 to 34 year-olds in the United States.”

Younger audiences, not as enamored of “traditional” social

media, have embraced platforms such as Snapchat, Instagram,

E X H I B I T 1 – 4 Top 10 global marketers (2014).

Source: From “200 LEADING NATIONAL ADVERTISERS,” retrieved at http://adage.com/datacenter/datapopup.php?article_id=301575

narrowcasting

Delivering programming to

a specific group defined by demographics and/or program content, rather than mass appeal Usually used to describe cable networks The opposite of broadcasting.

practice of choosing to discontinue cable service and instead watch programming on demand over Internet services such

as Netflix and others.

© Comstock/Alamy Images RF

The trend toward consumer control over media consumption is well

illustrated by Hulu For an inexpensive subscription, viewers can watch

where, when, and how they want www.hulu.com/welcome?

orig_referrer=https%3A%2F%2Fwww.google.com%2F

Source: Hulu

not capital equipment or their line of products In the heated competition of the global marketplace, their most important as-set is their customer and the relationship they have with that person or organization Protecting that asset has become the new marketing imperative for the twenty-first century In an

effort to do a better job of relationship marketing, companies

are now learning that they must be consistent in both what they say and what they do It’s not enough to produce outstanding advertising anymore They must integrate all their marketing communications with everything else they do, too That’s what

integrated marketing communications really means And that is

presenting exciting new challenges and opportunities to marketing and advertising professionals

advertising can start and end fads, trends, and credos—

sometimes all by itself.31

The endless search for competitive advantage and efficiency has

made advertising’s journey in the last 100-plus years fascinating

Now companies are realizing that their most important asset is

The distinction between content creator and content consumer is blurring

with the surging popularity of social media platforms such as Snapchat,

which in 2016 made it easier to share videos

Source: Snapchat

New technology has meant new media, manifested largely on the Internet This has opened new avenues of exposure for advertisers This website for Daum shows that beautiful layout and design are not confined to the traditional medium of print.

Source: Daum

Their most important asset is their customer and the

relationship they have with that person or

organization.

1 What are the four identified periods in the history of Western civilization and what key developments characterized each period?

2 Explain how one development during each period impacted the evolution of advertising

check yourself ✓

LO1-6 Describe the impact of advertising on society.

SOCIETY AND ETHICS:

THE EFFECTS OF

ADVERTISING

Advertising has been a major factor in improving the standard

of living in the United States and around the world By

publi-cizing the material, social, and cultural opportunities of a free

enterprise society, advertising has encouraged increased productivity by both management and labor

With just a small amount of money, for instance, you can buy a car today It may be secondhand, but from advertising you know it’s available If you earn more money, you can buy a new car or one with more luxury features You can also make a statement about yourself as an individual with the vehicle you purchase As with many products, advertising has created a personality for each automobile make and model on the market

As a free individual, you can select the product that best matches your needs and aspirations

Advertising serves other social needs besides simply

stimulat-ing sales Newspapers, magazines, radio, television, and many websites all receive their primary income from advertising This facilitates freedom of the press and promotes more complete information Public ser-vice announcements also foster growth and under-standing of important social issues and causes The Red Cross, Community Chest, United Way, and other noncommercial organizations receive continuous fi-nancial support and volunteer assistance due in large part to the power of advertising

However, advertising is certainly not without its shortcomings Since its beginnings, the profession has had to struggle with issues of truthfulness and ethics

In fact, in the early 1900s, the advertising profession was forced to mend its ethical ways Consumers suf-fered for years from unsubstantiated product claims, especially for patent medicines and health devices The simmering resentment finally boiled over into a full-blown consumer movement, which led to govern-ment regulation and ultimately to industry efforts at self-regulation

In 1906 Congress responded to public outrage by passing the Pure Food and Drug Act to protect the public’s health and control drug advertising In 1914,

it passed the Federal Trade Commission Act to tect the public from unfair business practices, includ-ing misleading and deceptive advertising

pro-Advertising practitioners themselves formed groups

to improve advertising effectiveness and promote professionalism and started vigilance committees to safeguard the integrity of the industry The Associa-tion of National Advertisers (ANA), the American Advertising Federation (AAF), and the Better Busi-ness Bureau (BBB) are today’s outgrowths of those early groups These organizations are the result of a fundamental truth: the biggest opponents of unethical advertisers are advertisers who embrace ethical and truthful communication practices

But in times of economic crisis, false and misleading advertising has invariably reappeared, perhaps out of

These public service announcements, encouraging people to look for Energy Star ratings

on computer equipment, appliances, lighting, and heating and cooling systems, are

distributed by the EPA to magazines with a request to insert them in their publications

Source: U.S Environmental Protection Agency