The Agency Organization Model since 1870s was an exclusive, skilled professional.  Produces-led paradigm.  Model is less and less adequate today: Consumer-led paradigm, Web 2.0, Immersive, participatory execution, and The “New Agency.” From professional to crowd sourced From originators to coordinators, Current Situation, Change from producer-led to consumer- led in: Manufacturing and design, Marketing, and form of advertising.

. Change today in: Advertising work, Structure of agency, and Fan Communities.  Fan Communities: Facebook Groups (620 million), Identification.  Who connects communities together? Who I think I am? (“My identity”) How I can connect to other like-minded people? (Identifying with others).  Early forms: Intrinsic, family/clan, race, nationality, and religion.  Modern Forms: can decide for self, religious converts, politics.  Popular culture: fans, sport fans, and media.  Multimedia.  Crowd Sourced Advertising: Allowing individuals to create advertisements.  Victors and Spoils: Competitive participation, client judges, and Paid for results as well as for “reputational score” of community.

Giant Hydra: Management team coordinates, Creative collaborations to develop ideas, Client oversees process and chooses best.

Zoopa: Work independently, Compete for awards

MOFILM: Aspiring filmmakers, Completion, and Client judges.

The Economic Role of Advertising: the primary role of advertising is communication, but there is a constant “persuasion versus information” debate that will never be resolved because of the biases of the pro-advertising and anti-advertising camps and the fact that advertising functions in both roles (persuasive and informative).

Economic Arguments in Favor of Advertising:

  • Advertising provides consumers with information to make informed decisions about new products, availability of products, price, and product benefits
  • Advertising supports largely unrestricted media that disseminate news and entertainment and provides employment to thousands
  • By promoting product differentiation, advertising encourages continuing product improvements and the introduction of new and innovative goods and services
  • Mass advertising ultimately results in lower prices
  • Advertising contributes to increases in the overall economy by increasing generic as well as brand consumption 

Economic Arguments against Advertising:

  • The intent is to persuade, not to inform
  • On a macroeconomic basis, advertising spending is largely wasted because it primarily causes consumers to switch from one brand to another without any net economic gain to society
  • Many economists challenge the notion that advertising lowers product price. They charge that one of the primary goal of advertising is to insulate a brand from price competition by emphasizing emotional appeals so that price comparisons become less important to product decisions
  • The high rate of product expenditures in many product categories make it difficult, if not impossible, for new products to enter the market

The fact is that there is evidence to support each of these claims and counterclaims of advertising.

The Social Role of Advertising: Perhaps the fundamental question raised in the social context of advertising criticism is whether advertising shapes and defines culture or simply mirrors and evolving society. The answer is some of both. Cultural effects of advertising on an audience include:

  • Advertising’s inadvertent social role: study advertising from the viewpoint that ubiquitous, redundant messages presented by advertising through mass media created various changes in the way the audience responded to their audience. By the sheer weight of exposure, advertising sets a social agenda of what is expected, what is fashionable, and what is tasteful for a number of people.
  • Advertising’s overt social role: a second, less studied area of advertising’s social and cultural roles deals with advertising as an agent of social change.  That is, those campaigns whose primary objective is the promoting of a social agenda.

As products become homogenized, sellers look to advertising and brand image as the principle difference among competing products. As we discussed earlier, differentiation is not found in the product itself but in the mind of the consumer. Once a brand achieves a dominant position based on image and cultural associations, it is much more difficult for competitors to match than real product differences.

In recent years, social criticism of advertising has taken precedent over its economic effects. Some representative examples of social criticisms include privacy concerns, product placement, and advertising’s role in obesity.

Advertising Content is by far the most criticized area of advertising directed at alleged exaggeration claims where critics charge that advertising is more likely to provide misinformation, negative content, and in some cases, outright falsehoods than useful consumer information. One of the long-standing areas of advertising criticism is the portrayal of various segments of society. There is also a growing awareness that advertising should present a more realistic image of society.  For example, look at Dove’s “Campaign for Real Beauty.”

Advertising of certain product categories is also criticized.  Now that tobacco advertising is virtually nonexistent in mainstream media, some of the remaining products and product categories that garner most controversy are distilled spirits, condoms, and advertising to children.

Excessive Advertising receives most of its criticism directed at TV, with approximately 25% of television network time devoted to commercials. There are also many within the advertising industry that see excessive advertising as having the potential to dilute ROI. Communication research confirms that the number of messages in a commercial block and the order in which they are seen has an effect on the recall and impact of the advertisement. Excessive advertising is a concern for both the audience and the advertising industry.

Finally, Advertising’s unwanted influences can have an affect on society.  Among the major theses of this school of thought are that advertising makes people buy things they don’t want or need, lowers morals, and generally exploits the most susceptible segments of society. The idea that consumers will take some action solely because of advertising is contrary to virtually every theory of communication.

The Advertising Council has the most organized efforts of social advocacy, which has for many years marshaled the advertising industry to support a number of causes – addressing issues such as racial tolerance, equal rights, job and fair housing opportunities, health awareness, and education.  The council depends on volunteers across the advertising spectrum.  Major agencies produce most of the advertising on a pro bono basis, and the media donate time and space to carry these advertisements and commercials. Because of the council’s success, a number of other organizations have begun advertising (MADD, Planned Parenthood). Another challenge for the council is finding the type of topics that are so prevalent in today’s society like the war on terrorism and the fight against AIDS.

Issue Advocacy Advertising isused to influence public opinion and legislation regarding a range of political issues from health care reform to energy and trade policy. Unlike most brand advertising, the tone of many of these ads is negative as groups seek to derail proposed legislation or emphasize shortcomings in an opponent’s plan.  Advertising and Cause-related marketing can be seen back from 1983.  In 1983, Amax sponsored a campaign promising to donate to the renovation of the Statue of Liberty each time someone used an American Express card. This initiative is considered to be the introduction of cause-related marketing. Today, large corporations are engaging in strategic philanthropy in which they market their good deeds in the same way they market their products. Most research indicates that consumers rarely make purchasing decisions solely because a company is supporting some favored cause. Some companies have refrained from cause-related marketing because they feared that consumers would view their efforts as exploitative. However, a number of studies indicate that consumers welcome the opportunity to be a part of a worthy cause, and they reward companies for their efforts. Cause-related marketing falls into transactional programs, message promotions, and licensing programs.

The theory behind the adoption of advertising as the primary source of media funding is that, by having economic support spread out over numerous advertisers, is assures that no one entity can exercise undue influence over editorial content – this wall has been breached. A number of research studies indicate that a large majority of the public believes that advertisers are influencing editorial content. When the media loses credibility with their audience, it harms both themselves and the advertisers that use them. These are some of the ways in which the relationship between advertisers and the media are changing:

  1. Withholding advertising as an attempt to control editorial decisions: in some cases, an advertiser may want favorable coverage of a firm, and in other instances a company demands a medium kills a story critical of another company. Such a demand can involve major ethical as well as financial decisions in part of the media.
  2. Advertiser-financed productions: a number of advertisers have worked with local and network television outlets to jointly produce programming – one being the family friendly forum which promotes family-friendly programming between 8 and 10 because that is when adults and children are likely to watch TV together. Few people question the motives of these companies to bring family friendly entertainment to television, but many critics see any involvement between advertising and programming as a cause for concern. The Today show was also criticized for not revealing that the companies whose brands they recommended were paying some product experts appearing on the show.
  3. Product placement: this has been the most prevalent editorial-promotion alliance in the past decade. It is not confined to traditional media. The popularity of video games has provided a ready-made market for the placement of products, especially those directed toward young, male audiences.
  4. The Advertorial: the use of advertising to promote an idea rather than a product or service.


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