ADVERTISING MANAGEMENT

In the next five sections of the Principles of Marketing Tutorials we begin an in-depth look at
each promotional mix item. In this tutorial we present the first of a two-part examination of
advertising with a discussion of basic concepts and trends. Our coverage of advertising
continues in our next tutorial, Managing the Advertising Campaign, where we look at what
decisions are needed to carryout a successful advertising campaign.

In this tutorial we cover several fundamental issues in advertising including examining what
advertising is and why it is important to the marketing organization. We also look at
managing the advertising effort by comparing in-house management to that offered by
advertising professionals, such as advertising agencies. Finally, the tutorial identifies
different types of advertising and addresses trends facing the advertising industry.

What is Advertising?
Advertising is a non-personal form of promotion that is delivered through selected media
outlets that, under most circumstances, require the marketer to pay for message placement.
Advertising has long been viewed as a method of mass promotion in that a single message
can reach a large number of people. But, this mass promotion approach presents problems
since many exposed to an advertising message may not be within the marketer’s target
market, and thus, may be an inefficient use of promotional funds. However, this is changing
as new advertising technologies and the emergence of new media outlets offer more
options for targeted advertising.

Advertising also has a history of being considered a one-way form of marketing

communication where the message receiver (i.e., target market) is not in position to
immediately respond to the message (e.g., seek more information). This too is changing.
For example, in the next few years technologies will be readily available to enable a
television viewer to click a button to request more details on a product seen on their favorite
TV program. In fact, it is expected that over the next 10-20 years advertising will move away
from a one-way communication model and become one that is highly interactive.

Another characteristic that may change as advertising evolves is the view that advertising
does not stimulate immediate demand for the product advertised. That is, customers cannot
quickly purchase a product they see advertised. But as more media outlets allow customers
to interact with the messages being delivered the ability of advertising to quickly stimulate
demand will improve.

Importance of Advertising
Spending on advertising is huge. One often quoted statistic by market research firm
ZenithOptimedia estimates that worldwide spending on advertising exceeds (US) $400
billion. This level of spending supports thousands of companies and millions of jobs. In fact,
in many countries most media outlets, such as television, radio and newspapers, would not
be in business without revenue generated through the sale of advertising.

While worldwide advertising is an important contributor to economic growth, individual

marketing organizations differ on the role advertising plays. For some organizations little
advertising may be done, instead promotional money is spent on other promotion options
such a personal selling through a sales team. For some smaller companies advertising may
consist of occasional advertisement and on a very small scale, such as placing small ads in
the classified section of a local newspaper.

But most organizations, large and small, that rely on marketing to create customer interest
are engaged in consistent use of advertising to help meet marketing objectives. This
includes regularly developing advertising campaigns, which involve a series of decisions for
planning, creating, delivering and evaluating an advertising effort. We will cover advertising
campaigns in greater detail in our next tutorial.

Advertising Agency Functions

Professionals at advertising agencies and other advertising organizations offer a number of
functions including:

 Account Management – Within an advertising agency the account manager or

account executive is tasked with handling all major decisions related to a specific
client. These responsibilities include locating and negotiating to acquire clients. Once
 the client has agreed to work with the agency, the account manager works closely
with the client to develop an advertising strategy. For very large clients, such as large
consumer products companies, an advertising agency may assign an account
manager to work full-time with only one client and, possibly, with only one of the
client’s product lines. For smaller accounts an account manager may simultaneously
manage several different, though non-competing, accounts.
 Creative Team –The principle role of account managers is to manage the overall
advertising campaign for a client, which often includes delegating selective tasks to
specialists. For large accounts one task account managers routinely delegate involves
generating ideas, designing concepts and creating the final advertisement, which
generally becomes the responsibility of the agency’s creative team. An agency’s
creative team consists of specialists in graphic design, film and audio production,
copywriting, computer programming, and much more.
 Researchers – Full-service advertising agencies employ market researchers who
assess a client’s market situation, including understanding customers and
competitors, and also are used to test creative ideas. For instance, in the early stages
of an advertising campaign researchers may run focus group sessions with selected
members of the client’s target market in order to get their reaction to several
advertising concepts. Researchers are also used following the completion of an
advertising campaign to measure whether the campaign reached its objectives.
 Media Planners – Once an advertisement is created, it must be placed through an
appropriate advertising media. Each advertising media, of which there are thousands,
has its own unique methods for accepting advertisements, such as different
advertising cost structures (i.e., what it costs marketers to place an ad), different
requirements for accepting ad designs (e.g., size of ad), different ways placements
can be purchased (e.g., direct contact with media or through third-party seller), and
different time schedules (i.e., when ad will be run). Understanding the nuances of
different media is the role of a media planner, who looks for the best media match for
a client and also negotiates the best deals.

Types of Advertising
If you ask most people what is meant by "type" of advertising, invariably they will respond
by defining it in terms of how it is delivered (e.g., television ad, radio ad, etc.). But in
marketing, type of advertising refers to the primary "focus" of the message being sent and
falls into one of the following four categories:
 1. Product-Oriented Advertising
2. Image Advertising
3. Advocacy Advertising
4. Public Service Advertising

Types of Advertising: Product-Oriented

Most advertising spending is directed toward the promotion of a specific good, service or
idea, what we have collectively labeled as an organization’s product. In most cases the goal
of product advertising is to clearly promote a specific product to a targeted audience.
Marketers can accomplish this in several ways from a low-key approach that simply
provides basic information about a product (informative advertising) to blatant appeals that
try to convince customers to purchase a product (persuasive advertising) that may include
direct comparisons between the marketer’s product and its competitor’s offerings
(comparative advertising).

However, sometimes marketers intentionally produce product advertising where the target
audience cannot readily see a connection to a specific product. Marketers of new products
may follow this "teaser" approach in advance of a new product introduction to prepare the
market for the product. For instance, one week before the launch of a new product a
marketer may air a television advertisement proclaiming "After next week the world will
never be the same" but do so without any mention of a product or even the company behind
the ad. The goal is to create curiosity in the market and interest when the product is
launched.

Types of Advertising: Image

Image advertising is undertaken primarily to enhance an organization’s perceived
importance to a target market. Image advertising does not focus on specific products as
much as it presents what an organization has to offer. In these types of ads, if products are
mentioned it is within the context of "what we do" rather than a message touting the benefits
of a specific product. Image advertising is often used in situations where an organization
needs to educate the targeted audience on some issue. For instance, image advertising
may be used in situations where a merger has occurred between two companies and the
newly formed company has taken on a new name, or if a company has received recent
negative publicity and the company wants to let the market know that they are about much
more than this one issue.

Types of Advertising: Advocacy

Organizations also use advertising to send a message intended to influence a targeted
audience. In most cases there is an underlying benefit sought by an organization when they
engage in advocacy advertising. For instance, an organization may take a stand on a
political issue which they feel could negatively impact the organization and will target
advertisements to voice their position on the issue.

Types of Advertising: Public Service

In some countries, not-for-profit organizations are permitted to run advertisements through
certain media outlets free-of-charge if the message contained in the ad concerns an issue
viewed as for the "greater good" of society. For instance, ads directed at social causes,
such as teen-age smoking, illegal drug use and mental illness, may run on television, radio
and other media without cost to organizations sponsoring the advertisement.

Managing the Advertising Campaign

In this part of our Principles of Marketing Tutorials we continue our discussion of advertising
by taking a closer look at the decisions involved in creating an advertising campaign.
Whether a marketer employs a professional advertising agency to handle its advertising
campaign or chooses to undertake all advertising tasks on its own, a successful campaign
requires a number of important decisions including:
1. Setting the Advertising Objective
2. Setting the Advertising Budget
3. Selecting Media for Message Delivery
4. Creating a Message
5. Evaluating Campaign Results

For major consumer products companies that spend large sums to promote their products
each of these decisions will be intensely evaluated.
On the other hand, smaller companies with limited budgets may be forced to focus what
little money they have on only one key decision, such as selecting media, and give less
attention to other areas. In either case, knowledge of all advertising campaign decisions is
important and should be well understood by all marketers.

Setting the Advertising Objective

As we noted in the Promotion Decisions tutorial, marketing promotion, which includes
advertising, can be used to address several broad objectives including: building product
awareness, creating interest, providing information, stimulating demand and reinforcing the
brand. To achieve one or more of these objectives, advertising is used to send a message
containing information about some element of the marketer’s offerings. For example:
 Message About Product – Details about the product play a prominent role in
advertising for new and existing products. In fact, a very large percentage of product-
oriented advertising includes some mention of features and benefits offered by the
marketer’s product. Advertising can be used to inform customers of changes that take
place in existing products. For instance, if a beverage company has purchased the
brands of another company resulting in a brand name change, an advertising
message may stress "New Name but Same Great Taste".
 Message About Price – Companies that regularly engage in price adjustments, such
as running short term sales (i.e., price markdown), can use advertising to let the
market know of price reductions. Alternatively, advertising can be used to encourage
customers to purchase now before a scheduled price increase takes place.
 Message About Other Promotions – Advertising often works hand-in-hand with other
promotional mix items. For instance, special sales promotions, such as contests, may
be announced within an advertisement. Also, advertising can help salespeople gain
access to new accounts if the advertising precedes the salesperson’s attempt to gain
an appointment with a prospective buyer. This may be especially effective for a
 company entering a new market where advertising may help reduce the uncertainty a
buyer has about a new company.
 Message About Distribution – Within distribution channels, advertising can help
expand channel options for a marketer by making distributors aware of the marketer’s
offerings. Also, advertising can be used to let customers know locations where a
product can be purchased.

Setting the Advertising Budget

Setting an advertising objective is easy, but achieving the objective requires a well-thought
out strategy. One key factor affecting the strategy used to achieve advertising objectives is
how much money an organization has to spend. The funds designated for advertising make
up the advertising budget and it reflects the amount an organization is willing (i.e., approved
by high-level management) to commit to achieve its advertising objectives.

Organizations use several methods for determining advertising budgets including:

 Percentage of Sales – Under this approach advertising spending is set based on

either a percentage of previous sales or a percentage of forecasted sales. For
example, an organization may set next year’s advertising budget at 10% of this year’s
sales level. One problem with this approach is that the budget is based on what has
already happened and not what is expected to occur. If the overall market grows
rapidly in the following year, the 10% level from the previous year may be well below
what is necessary for the company to maintain or increase its market share.
Alternatively, companies may consider allocating advertising funds based on a
percentage of forecasted sales. In this way advertising is viewed as a driver of future
sales and spending on advertising is linked directly to meeting future sales forecasts.
However, since future sales are not guaranteed, the actual percentage spent may be
considerably higher than expected if the sales forecast is greater than what actually
occurs.
 What is Affordable – Many smaller companies find spending of any kind to be
constraining. In this situation, advertising may be just one of several tightly allocated
spending areas and, thus, the level spent on advertising may vary over time. For
these companies, advertising may only occur when extra funds are available.
 Best Guess – Companies entering new markets often lack knowledge of how much
advertising is needed to achieve their objectives. In cases where the market is not
well understood, marketers may rely on their best judgment (i.e., executive’s
experience) of what the advertising budget should be.
Selecting Media for Message Delivery
With an objective and a budget in place, the advertising campaign will next need to focus on
developing the message. However, before effort is placed in developing a message the
marketer must first determine which media outlets will be used to deliver their message
since the choice of media outlets guides the type of message that can be created and how
frequently the message will be delivered.

An advertising message can be delivered via a large number of media outlets. These range
from traditional outlets, such as print publications, radio and television, to newly emerging
outlets, such as the Internet and mobile devices. However, each media outlet possess
different characteristics and, thus, offer marketers different advantages and disadvantages.

The characteristics by which different media outlets can be assessed include the following
seven factors:

1. Creative Options
2. Creative Cost
3. Market Reach of Media
4. Message Placement Cost
5. Length of Exposure
6. Advertising Clutter
7. Response Tracking

Note that a detailed discussion of different media outlets for delivering an advertisements
can be found in the Types of Advertising Media tutorial.

Selecting Media: Creative Options

An advertisement has the potential to appeal to four senses – sight, sound, smell and touch.
(It should be noted that promotion can also appeal to the sense of taste but generally these
efforts generally fall under the category of sales promotion which we will discuss in a later
tutorial.) However, not all advertising media have the ability to deliver multi-sensory
messages. Traditional radio, for example, is limited to delivering audio messages while
roadside billboards offer only visual appeal. Additionally, some media may place limits on
when particular options can be used. For instance, some search engines or websites may
only accept graphical-style ads, such as images, if these conform to certain large
dimensions and limit small advertising to text-only ads.

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