VER

1
Chapter 2
The Structure of the Advertising Industry
Advertisers, Agencies, and Support Organizations
2
The Ad Industry in Transition Trends and
Transformations

• Consolidation and globalization
• Budget fragmentation
• Interactivity
• Media evolution
• Media clutter
• New Communication/
• distribution channels

Ch 2 The industry 2
3
The Worldwide Advertising Industry

• U.S expenditures
• 250 billion
• Global expenditures
• 450 billion

Ch 2 The industry 3
4
Structure of the Advertising Industry
Ch 2 The industry 4
5
Advertisers

• Manufacturers and Service Firms
• Procter Gamble, MCI

• Trade Resellers
• Sears, McDonalds

• Government
• Federal, State, Local

• Social Organizations
• United Way, Nature Conservancy

Ch 2 The industry 5
6
In addition to companies, the Government Makes
extensive use of advertising
7
Agencies

• Full-Service
• Creative Boutique
• Interactive
• In-House
• Media Buying and Planning Services
• Promotion Agencies
• Direct Marketing

• E-commerce
• Sales Promotion Agencies
• Event Planning Agencies
• Design Firms
• Public Relations Firms

Ch 2 The industry 7
8
Advertising agencies make extensive use of
advertising to acquire new clients
9
Full Service Agency

• Account Services
• Marketing Research Services
• Creative and Production Services
• Media Planning and Buying Services
• Administrative Services

Ch 2 The industry 9
10
Agency Compensation

• Commissions around 15 of airtime fees.
• Markup Charges production cost fixed .
• Fee Systems hourly rates, or by project.
• Pay-for-Results tightly-specified objectives.

Ch 2 The industry 10
11
External Facilitators

• Marketing and Advertising Research Firms
• Consultants
• Production Facilitators
• Information Intermediators
• Software Firms

Ch 2 The industry 11
12
Media Organizations

• Broadcast
• TV, radio
• Print
• Magazines, direct mail, newspapers
• Interactive Media
• CD-ROMs, online shopping
• Support Media
• Outdoor, directories, Sponsorship
• Media Conglomerates
• AOL Time Warner, Viacom, ATT

Ch 2 The industry 12