Ebook Advertising, promotion, and other aspects of integrated marketing communications (9th ed): Part 2 includes the following chapters: Chapter 9: overview of advertising management; chapter 10: effective and creative ad messages; chapter 11: endorsers and message appeals in advertising; chapter 12: traditional advertising media; chapter 13: online and mobile advertising; chapter 14: social media; chapter 15: direct marketing and other media; chapter 16: advertising media: planning and analysis; chapter 17: measuring ad message effectiveness; chapter 18: sales promotion overview and the role of trade promotion; chapter 19: consumer sales promotion: sampling and couponing;...
PART © Jorg Hackemann/Shutterstock.com CHAPTERS 10 11 12 13 14 15 16 17 Overview of Advertising Management Effective and Creative Ad Messages Endorsers and Message Appeals in Advertising Traditional Advertising Media Online and Mobile Advertising Social Media Direct Marketing and Other Media Advertising Media: Planning and Analysis Measuring Ad Message Effectiveness Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Advertising Management and New Media Choices P art includes nine chapters that examine advertising management and new media choices (e.g., mobile advertising, social media) Chapter presents the role and importance of advertising and functions that it performs The advertising management process and role of advertising agencies is then provided Chapter 10 describes the creative aspects of the ad management process, including the creative brief, alternative creative styles, means-end chaining, and ad strategy Chapter 11 examines the role of endorsers in advertising (“source effects”) and different message appeals in advertising Coverage includes how endorser credibility, attractiveness, and power operate, as well as how message appeals to fear, humor, music, etc work Chapter 12 provides an analysis of traditional advertising media with attention to evaluating the unique characteristics, recent changes, and strengths/ weaknesses of four major media: newspapers, magazines, radio, and television Chapter 13 discusses the use of online advertising as a media choice, including the online ad process and the dramatic growth of mobile advertising The chapter examines privacy and online behavioral targeting, as well as metrics for online ad effectiveness Chapter 14 describes the many different social media choices marketers face, including communication (e.g., social networking with Facebook, Twitter), collaboration (e.g., social news, wikis), and entertainment and multimedia options (e.g., media platforms, livecasting) Advantages and disadvantages of social media are discussed, as well as successful social media campaigns The chapter concludes with recent consumer trends and issues in social media (e.g., privacy, addiction) and measurement choices Chapter 15 covers direct (response) advertising and “other” advertising media, such as yellow-pages advertising, videogame advertising, brand placements in movies and other media, cinema advertising, and other alternative media The chapter describes where direct response advertising fits into overall direct marketing strategies Chapter 16 describes four media planning and analysis topics: target audience selection, objective specification, media-vehicle selection, and media-buying activities Chapter 17 presents the many different techniques to assess ad message effectiveness, discussing industry standards for message research, and the types of information a brand management team and its ad agency desire Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it CHAPTER MARCOM INSIGHT Overview of Advertising Management The Story of “Mad Man,” the “Elvis of Advertising” Perhaps no one has attracted as much attention in the pushed creative boundaries with some of the most advertising agency business as Alex Bogusky, described memorable, outlandish, and ambitious campaigns in affectionately as both “Mad Man” (a takeoff from the advertising These include the successful Truth anti- popular Mad Men TV series about advertising in the smoking campaign, the Mini Cooper car ads (placing 1960s) and “The Elvis of Advertising.” Alex Bogusky is a Minis atop SUVs), Burger King’s ads “Subservient designer, marketer, author, and consumer advocate; Chicken” and “The King,” and VW’s “unpimp my ride” and once was a creative director, ad executive, and campaign with “Helga” and “Wolfgang.” During his principal of the ad agency Crispin, Porter þ Bogusky time, CPþB’s success was attributed to four of their (CPỵB) He also was the chief creative director at MDC non-traditional principles: (1) get close to the client’s Partners (CPỵBs parent customers, (2) fire clients company) that are not a good match, Bogusky’s meteor- (3) be media neutral, and (4) “risky is good.” ic rise to the top of the ad industry began as the Based on his creative successes, Bogusky Crispin Porter in 1989 was inducted into the He became creative American Advertising director of the agency in Federation’s Hall of five years, partner in 1997, and co-chairman in 2008 Along the way, he © Peter Yang/AUGUST sixteenth employee at Achievement in 2002 He received an honorary PhD from the University Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Chapter Objectives After reading this chapter, you should be able to: Understand the magnitude of advertising and the percentage of sales revenue companies invest in this marcom tool Appreciate that advertising can be extraordinarily effective but that there is risk and uncertainty when investing in this practice Discuss advertising’s effect on the economy, including resolving the advertising ¼ market power and advertising ¼ information viewpoints Recognize the various functions that advertising performs of Colorado in 2009 and was awarded “Creative Explore the advertising management process from the perspective of clients and their agencies Understand the functions agencies perform and how they are compensated Explore the issue of when investing in advertising is warranted and when disinvesting is justified Examine advertising elasticity as a means for understanding the contention that “strong advertising is a deposit in the brand equity bank.” Some have argued that the ad agency business has Director of the Decade” by Adweek magazine in their moved beyond “big names” like Bogusky, due to digital “Best of 2000s” issue content in which programmers, designers, and the tech- Then, in 2008, Bogusky released his new book, nology itself should all receive credit Yet, creative direc- The 9-Inch “Diet”: Exposing the Big Conspiracy in tors certainly guide and continue to make important America, which protested fast-food corporations’ contributions to this process In Alex Bogusky’s case, supersize tendencies (The nine-inch reference was the there is certainly no mistaking the independence, critical average diameter of a dinner plate in 1970; it is now a thinking, risk taking, and consumer advocacy that he em- third larger.) As one would expect, the book did not go braced in his very successful run in a somewhat traditional over well with CPỵB clients Burger King and Domino’s and predictable agency business No doubt that this “Mad Since retiring from CPỵB and MDC Partners in Man and “Advertising’s Elvis” will be missed 2010, Bogusky has become a consumer advocate on his blog post (“Fearless Revolution”) and web TV show (“Fearless TV”) He advocates a ban on children’s advertising (especially fast food), and emphasizes transparency, sustainability, democracy, and collaboration among businesses and consumers With a partner in 2010, he launched COMMON, a network for combining and launching social ventures under a unified brand Sources: Susan Berfield, “Mad Man,” Bloomberg Businessweek, August 2, 2010, 60–63; Danielle Sachs, “Alex Bogusky, Advertising’s Elvis Tells Fast Company Why He Quit MDC and the Ad Biz,” FastCompany.com, July 1, 2010, http://www.fastcompany.com/ 1665887/alex-bogusky-resign-mdc; “Alex Bogusky,” Wikipedia, http://en.wikipedia.org/wiki/Alex_Bogusky (accessed September 2, 2011); Daniel Kiley, “The Craziest Ad Guys in America,” Businessweek, May 22, 2006, 72–80; Maureen Morrison, “A Bad Week for Crispin,” Advertising Age, March 3, 2011, 1, 23; and Creative X, “The Industry Doesn’t Need a Bogusky,” Advertising Age, January 17, 2011, http://adage.com/print/148251 233 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 234 PART • Advertising Management and New Media Choices Introduction This chapter introduces the first major IMC tool—advertising—and presents the fundamentals of advertising management An initial section looks at the magnitude of advertising in the United States and elsewhere The second major section examines the advertising management process, advertising’s effect on the economy, the functions of advertising, and the role of advertising agencies A concluding section provides a detailed discussion of the arguments favoring investments in advertising and counterarguments regarding circumstances when it is advisable to disinvest This section also explores the concept of advertising elasticity and compares it with price elasticity to determine the circumstances when a brand manager should either increase advertising expenditures or reduce prices First, however, it will be useful to define the topic of this and the subsequent chapters specifically so as to make a clear distinction between advertising and other forms of marketing communications Advertising is a paid, mediated form of communication from an identifiable source, designed to persuade the receiver to take some action, now or in the future.1 The word paid in this definition distinguishes advertising from a related marcom tool—public relations—that secures unpaid space or time in media due to the news value of the public relations content The expression mediated communication is designed to distinguish advertising, which typically is conveyed (mediated) via print and electronic media, from person-to-person forms of communication, including personal selling, word of mouth, and (usually) social media Finally, the definition emphasizes that advertising’s purpose is to influence action, either presently or in the future The idea of influencing action is in keeping with the fifth key IMC feature presented in Chapter 1: The ultimate objective of any form of marketing communications is to eventually affect behavior rather than merely its precursors such as the levels of consumers’ brand awareness and the favorability of their attitudes toward the advertised brand Companies that sell their brands to final consumers undertake most advertising activities (B2C advertising) Consumer packaged goods companies (e.g., Procter & Gamble, General Mills, Kraft Foods) are especially heavy advertisers in the B2C arena, but service providers (e.g., wireless telephone service) and consumer durables (e.g., automobiles) are heavy advertisers as well Some companies that sell directly to other companies rather than to consumers also are heavy advertisers (B2B advertising) Much of their advertising takes place in trade magazines that appeal to the special interests of practitioners who are prospects for the B2B advertiser’s products Interestingly, however, B2B advertisers also use traditional consumer media (e.g., television) to reach audiences that not typically subscribe to trade publications For example, Parker Hannifin, an industrial firm that manufactures hoses, valves, and other such products, placed advertising for their products on cable television programs that appeal to engineers, the target audience for the company’s products These included TLC’s Junkyard Wars (a program showing clever people building machines from discarded items) and the History Channel’s Modern Marvels (a program focusing on technology feats) The campaign was designed to increase engineers’ awareness of the Parker Hannifin name when a valve- or hose-purchasing need arose Interestingly, the campaign used humor to convey its point, which is a relatively atypical appeal in B2B advertising (see an example from an advertising agency in Figure 9.1) In one TV spot, for example, two engineer-type characters are seated at a sushi bar and appear to be flirting with two attractive women at the other end of the bar As one of the women uses chopsticks to lift a piece of sushi to her lips, an engineer asks his colleague, “Do you see what I see?” And the other responds, “Oh yeah.” This brief dialogue is punctuated Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it An image is a terrible thing to waste Don’t let this happen to yours www.mccom.com 972.480.8383 Advertising Public Relations Internet Marketing Image Interventions FIGURE 9.1 M/C/C Dallas, TX Photo is stock from Getty Images #200297402-001 © Andy Reynolds/Stone+/Getty Images CHAPTER • Overview of Advertising Management 235 Example of the Use of Humor in B2B Advertising by the scene changing to a research lab where a robotic arm is shown lifting a lobster out of a tank The connection between the sushi bar scene and the research lab is made clear when the campaign’s tagline appears on the screen: “Engineers see the world differently.” Parker Hannifin’s campaign celebrates engineers and engineering feats, and in so doing hopes to increase the odds that real (not TV) engineers will be more likely to recommend the use of the company’s products.2 The Magnitude of Advertising Advertising expenditures in the United States were estimated to have exceeded $300 billion in 2010.3 This amount approaches $1,000 in advertising for each of the approximately 312 million men, women, and children living in the United States Ad spending in the United States has for many years averaged approximately 2.2 percent of the country’s gross domestic product.4 Needless to say, advertising in the United States is serious business! Advertising spending is also considerable in other major industrialized countries, but not nearly to the same magnitude as in the United States Global ad spending outside the United States totaled approximately $500 billion in 2010.5 It is notable that ad spending in developing countries—particularly the so-called BRIC nations (Brazil, Russia, India, and China)—is growing at a much more Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 236 PART • Advertising Management and New Media Choices rapid rate than in the United States and elsewhere around the globe.6 See the Global Focus insert for a discussion of consumers’ trust in advertising around the globe and how advertising-related trust compares with consumers’ trust in information received from fellow consumers Several companies in the United States spend more than $2 billion annually to advertise their goods and services Recently, Procter & Gamble spent GLOBAL Which Source of Product Information Do Consumers Most Trust? Nielsen, an influential global marketing research firm, conducts an online survey biannually that assesses consumer attitudes toward a wide variety of marketing-related issues A recent survey queried Internet users about their trust in various sources of product and service information More than 26,000 participants from 47 countries around the world were asked to indicate how much they trusted information received from 15 different sources, including traditional ad media (TV, newspapers, magazines, and radio), online ads, and recommendations from other consumers The percentages of respondents indicating that they somewhat trusted or completely trusted each source of information are as follows: Recommendations from consumers Consumer opinions posted online Brand websites Editorial content (e.g., newspaper article) Brand sponsorships Television Newspapers Magazines Billboards/outdoor advertising Radio E-mail I signed up for Ads before movies Search engine ads Online banner ads Text ads on mobile phone 90% 70% 70% 69% 64% 62% 61% 59% 55% 55% 54% 52% 41% 33% 24% The results of this survey are abundantly clear: Global consumers have greater faith in information from fellow consumers than from traditional ad media, and even less so from online ads and mobile ads (although this has been increasing since 2007) Overall trust in advertising, regardless of source, varies greatly across countries Filipinos and Brazilians were the most trusting of all forms of advertising (tied at 67 percent trust), whereas Italians (32 percent) and Danes (28 percent) were the least trusting The top five and bottom five countries in terms of trust in advertising are as follows: Top Five Philippines Brazil Mexico South Africa Taiwan 67% 67% 66% 64% 63% Bottom Five Latvia Germany Lithuania Italy Denmark 38% 35% 34% 32% 28% It is apparent from these findings that consumers vary widely around the globe in terms of their trust (or lack of trust) in different sources of product and service information It comes as little surprise that information received from other consumers is the most trusted inasmuch as we actively select such information in comparison to advertisements that typically are thrust upon us whether or not we are interested in receiving such information Especially surprising is the wide differential among countries in terms of their faith in advertising The low levels of trust among European consumers are particularly intriguing Sources: The Nielsen Company, “Nielsen Global Online Survey,” April 2009; and “Trust in Advertising: A Global Nielsen Consumer Report,” October 2007 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it © Bruce Rolff/Shutterstock.com FOCUS CHAPTER • Overview of Advertising Management 237 TA B L E 9.1 Top 25 Spenders in U.S Advertising, 2010 Company Headquarters Ad Expenditures ($ million) Procter & Gamble Co Cincinnati, OH $4,614.7 AT&T Dallas, TX 2,989.0 General Motors Corp Detroit, MI 2,869.0 Verizon Communications New York, NY 2,451.0 American Express Co New York, NY 2,222.6 Pfizer New York, NY 2,124.1 Walmart Stores Bentonville, AR 2,055.3 Time Warner New York, NY 2,044.3 Johnson & Johnson New Brunswick, NJ 2,026.5 10 L’Oreal Clichy, France 1,978.8 11 Walt Disney Co Burbank, CA 1,931.7 12 J.P Morgan Chase & Co New York, NY 1,916.7 Rank 13 Ford Motor Co Dearborn, MI 1,914.9 14 Comcast Corp Philadelphia, PA 1,852.5 15 Sears Holdings Corp Hoffmann Estates, IL 1,778.6 16 Toyota Motor Corp Toyota City, Japan 1,735.7 17 Bank of America Corp Charlotte, NC 1,552.6 18 Target Corp Minneapolis, MN 1,508.0 19 Macy’s Cincinnati, OH 1,417.0 20 Sprint Nextel Corp Overland Park, KS 1,400.0 21 Unilever Rotterdam/London, U.K 1,379.2 22 Anheuser Busch InBev Leuven, Belgium/St Louis, MO 1,357.9 23 Berkshire Hathaway Omaha, NE 1,343.6 24 News Corp New York, NY 1,319.5 25 J.C Penney Co Plano, TX 1,317.0 Source: “100 Leading National Advertisers,” Advertising Age, June 20, 2011, 10 Copyright Crain Communications Inc., 2011 Used with permission $4.62 billion advertising its products in the United States; AT&T, $2.99 billion; General Motors, $2.87 billion; Verizon, $2.45 billion; Pfizer, $2.12 billion; Walmart, $2.06 billion; Time Warner $2.04 billion; Johnson & Johnson, $2.03 billion; and L’Oreal, $1.98 billion.7 Table 9.1 lists these firms along with others that constitute the 25 top-spending U.S advertisers in a recent year Although not listed in the top 25, even the U.S government (ranked number 28) advertised to the tune of $1.11 billion The government’s advertising goes to such efforts as drug control, the U.S Postal Service, Amtrak rail services, anti-smoking campaigns, and military recruiting Advertising-to-Sales Ratios In 2011, the average advertising-to-sales ratio across nearly 200 categories of B2C and B2B products and services was 3.28 percent That is, on average, the advertising spend for companies in the United States is slightly over cents out of every dollar of sales revenue (These advertising expenditures are for traditional measured media advertising.) Table 9.2 provides greater detail by illustrating ad-to-sales ratios for companies that compete in three industries—retail, Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 238 PART • Advertising Management and New Media Choices T A BL E 9.2 Advertising-to-Sales Ratios for Select Product Categories U.S Sales Revenue ($ million) U.S Measured Media Advertising ($ million) Ad/Sales Ratio (%) 313,054 903