ADVERTISING

The history of advertising is one that has to be psychologically understood.  Sophisticated advertising elements introduced over the years have changed motivational research to define consumer behavior, media analysis to reach targeted consumers, and creative strategy to enhance selling messages.  Advertising is a communications tool that functions most efficiently in combination with centralized exchange: when goods and services are no longer sold directly between buyers and sellers, but are handled by merchants as intermediaries.  Advertising was needed to make potential consumer aware of the availability of goods.  In an economy in which supply > demand, advertising created demand by introducing new products or suggesting how consumers can solve some problem with existing products.

The beginning of the fulfillment of democratic ideas created a more literate society. This created more of a need and support for newspaper and magazines.  The Industrial revolution swept across America allowing for more efficient manufacturing of goods and mass production of newspapers and magazines. This created a bigger worker class who urbanized and needed more information.  Railroads and telegraphic communication would begin to pave the way for brands to better communicate.  National brands began to emerge and changed the structure of advertisement. Products are now differentiated and consumers were gaining loyalty to one brand.  The availability of branded goods, ability to provide national distribution, and a growing middle class with income to spend provided a market for more products. This supported the growth of advertisement industry.

Advertising’s modern era would arise in research and responsibility.  In early advertising, they was a lack of an ethical framework for creating promotional message and a reliable research to measure advertising effects.  Used to be that people are responsible for discerning truth from falsehood themselves so little need for regulation of information.  The public called for greater consumer protection by late 19th century (mainly in medicines).  Research at this time often provided unreliable information and sometimes spread false fear of the power of subliminal advertising and motivational research.

The earliest known evidence of Advertising can be found on Babylonian clay tablets from 3000 B.B.  Inns in England were the first to use hoarding-first printed outdoor signs, the forerunner of modern outdoor advertising.  The foundations of modern advertising can be divided into 4 parts:

  1. The premarketing era: from start of product exchange to the 18th century.  During this time, buyers and sellers communicated very primitively.  They used clay tablets, town criers, tavern signs, or primitive printing.
  2. Mass communication era: from the 1700s to the early 20th century, advertisers were increasingly able to reach large segments of the population through mass media. Used mass newspapers and national magazines, radios, and brands began to differentiate.
  3. Research era: in recent years, from 1920s to now, advertisers increasingly have been able to identify narrowly defined audience segments through sophisticated research methods. Early research emphasizes info on broad demographics such as age, sex, and geography. Now it takes lifestyles and motivation into account.
  4. Interactive era: communication will increasingly become controlled by consumers who will determine when and where they can be reached with promotional messages.

People no longer have to watch commercials. Advertisers have to become more sensitive to feedback.  Advertisers have to be more focused on keeping people’s trust to have successful advertising.  In today’s world, there is now the move to creativity in advertising.  Originally, ad companies were media space brokers (buy bulk space from newspapers and reselling small space allotments to advertisers).  By the end of 20th century,  persuasive advertising became important because serious brand competition began to take place. The shift in commodity goods to branded goods pushed strong promotional offers accompanying product advertising (this introduces the emotional appeal).

John Wanamaker of Wanamaker Department Stores began to sell products based of style and luxury rather than by utility. He hired the “first” true copy-writer, John Powers, and this began the move towards full-service advertising.  John Watson from Johns Hopkins, the father of behavioral research, was hired to perform market research that attempts to determine underlying reasons of purchase behavior. Advertisers began to understand the needs and wants of consumers.  Then, Alfred Sloan Jr. issued in his teachings of planned obsolescence where products are discarded not because of lost utility but lost of status.  By the 1950s, almost all national companies had accepted that it was the position of a brand in consumers’ mind that sells the product rather than the superiority of utility.  Brand could last forever whereas products have a life cycle and will die.

The development of print media would create a symbiotic relationship with advertising.  The newspaper as an advertising medium.  It would become the forerunner of modern want ads were siquis, handwritten posters in 16th and 17th century England, that sought people to fill positions.  With the introduction of the rotary press, the era of the penny press began in the US, forerunner of the mass newspaper in the US.  Newspapers established a model for financial support from advertising that continues for the majority of media today.

At first, magazines weren’t as successful as newspapers but when they did become successful, they could reach more people beyond the borders of a particular city.  Modern consumer magazine didn’t begin until the later part of the 19th century.  Many magazines were about health, fashion, and good, but later about problems in social reforms and medicine advertisement.  At the time, advertising support for magazines came from already successful brands that had a national following.  Magazines would become the preeminent medium for national advertisers because they offered national circulation, both editorial and advertising credibility, color availability, and an extremely low cost means of reaching millions of readers.  Magazines got money from advertisers to make up for the cost of production.

Mass production, a manufacturing technique using specialization and interchangeable parts to achieve production efficiencies- began to take over America, beginning in textiles and furniture, and reached a peak with automobiles.  Henry Ford adopted a successful formula where mass production was based on high volume, affordability, and mass selling through advertising.  Mass production made products readily available; this improved the lifestyles and standards of living for almost all Americans.  Consumption had to keep these mass producing factories fueling; to encourage such consumption, the advertising industry grew to create demand. Hence, cue advertising agencies.

Volney Palmer is generally credited with starting the first advertising agency in 1841, buying bulk newspaper space at a discount and selling it to individual advertisers for profit).  In 1869, George Rowell published newspaper’s circulation estimates and started the movement toward published rate cards and verified circulation.  This made it harder for space brokers to make a profit.  By the end of the 19th century major companies were providing creative services, media placement, and basic research as well as developing the functions of the full-service ad agencies of the future.  In 1917, the American Association of Advertising Agencies (AAAA) founded 111 charter members. Today, they have more than 5,000 members that make approximately 75 % of all advertising dollars.

By the 1930s, some companies had begun to expand overseas and began the movement of global advertising.  During the rise of America, especially during the presidency of Ulysses S. Grant, the excesses of big businesses and the advertising that contributed to the environment of immorality (think Mad Men) forced the public and Congress to demand stricter regulation of advertising and other business practices.  The pure food and drug act of 1906 was issued to protect consumers from fraudulent food producers and advertisers.  did not address the problems of faulty food labels. This was not strictly enforced by the FDA either.

The federal trade commission act of 1914 came to act.  The agency of the federal government empowered to prevent unfair competition and to prevent fraudulent, misleading, or deceptive advertising in interstate commerce.  Today, the FTC primarily ensures that advertising claims and sales practices meet reasonable standards of honestly and truthfulness.

Advertising comes of age.  Some advertising executives were trying to gain back the public trusts and stop the faulty ads so they created the American advertising federation. They launched a campaign to promote truth within the industry.  This committee is now the Council of Better Business Bureaus: national organization that coordinates a number of local and national initiatives to protect consumers.

The Printers’ Ink Model Statue was intitiated.  This act was directed at fraudulent advertising, prepared and sponsored by Printers’ Ink, which was the pioneer advertising magazine- was adopted and still exists today.  Audit Bureau of Circulations (ABC) the organization sponsored by publishers, agencies, and advertisers for securing accurate circulation statements- which conducts its own audits and issues own circulation reports

During WWI, advertising agencies promoted patriotism, US government bonds, conservation, and other war-related activates rather than products.  The iconic Uncle Sam ad to recruit soldiers was created.

During the 1920’s, radio advertisements grew as more and more people owned radios.  The great depression of the 1930 turned the advertising industry into one that was deeply devastated.  Basically the advertising industry had an intensified version of their involvement in WWI.  Created the war advertising council in 1942 to promote WWII mobilization and evolved into the Advertising Council.  This would ultimatley lead to the creation of the famous Rosie the Riveter –women in workforce ad.

Buy us bonds, Promoted rationing, etc.  Advertising council: a nonprofit network of agencies, media, and advertisers dedicated to promoting social programs through advertising. Today, they produce campaigns about environmental issues to educational concern.  Created Smokey the Bear and McGruff the Crime Dog.

Advertising after WWII to 1975 was a time of growth.  After the war, the pent-up demand led to an unprecedented growth rate in consumer spending.  Once everyone got what they needed, advertisers were called on the persuade consumers to replace the items they already have.  Televisions became a household must and thus creating another portal to advertise.  Almost everything increased in the US: population, disposable income, automobile registration, homes with air conditioning, etc., as well as growth in advertising.  During this time, many developments would arise in advertising.  Ad agencies began to negotiate commission with clients. This encouraged growth of specialized companies.  Creativity (especially humor) became hallmarks during this period.  Legislation limited outdoor ads along interstate highways and banned cigarette ads from TV.  FTC deemed that ads can compare each other but are accountable for honest claims

Radio took a dive when TV came along.  Advertising in the fragmented 1980s became a volatile business that was constantly changing and adapting to economic conditions, technology, social, and cultural environment.  During this period: New technology: cable, home video recorders, specialized magazines, direct mail, home shopping, sales promotion all changed the fundamentals of advertising. Today, ad agents are more likely to know how to evaluate research and understand the psychology of consumers as well as being able to execute ads.

  1. Audience fragmentation: the segmentation of mass-media audiences into smaller groups because of diversity of media outlets. This time period marked the beginning of the end of the traditional mass-market strategies. Advertisers began to see consumers are individuals; this changed the way market research was carried out.
  2. Consolidation: as media and audiences proliferated, ownership of brand, ad agencies, and media were consolidated by a few giant firms. This created a unique dynamic as some agencies, media, and companies were acquired and combined into a giant, global conglomerate when they used to be rivals
  3. Credit: “buy now, pay later” mentality that plagued everyone also hit the ad. Industry. Media saw ad revenues fall, ads were harder to sell, merchants dealt with consumers looking for discounts, not fancy ads.
  4. America becomes a service economy

The 2000s have been marked by 2 significant developments in marketing and advertising.  Defining and using new technology to reach prospects, technology allows consumers to determine when, where, and if they will invite advertisers to deliver their message.  This era of permission marketing, asking consumers for permission or to opt in before sending them ads and other forms of marketing communications, requires companies to rewrite the old rules of marketing and fundamentally redefine exactly what constitutes advertising.  For example, cell phones.  Measuring the value of investing in various communication channels as it relates to the changes in how we reach prospects.  With media fragmentation and consumers increased control over hoe, when, where they receive ad messages, marketers have to come up with new strategies such as product integration, viral marketing, and contextual internet advertising.

The change from mass media to class media has increased cost of advertising, individualized the audience, and forced advertisers to change their mind-set concerning audience measurement.  Content delivery is harder to deliver when companies who used to be competitors are now all owned by the same conglomerate.  Branding  in the 21st century includes a return to strong branding with companies searching for new means to differentiate their products and move away from price competitors and generic brands.  Finally, the globalization and diversity of the world makes it necessary to understand language, culture, economy, and political environment of countries around the world necessary for market research of the international market.

Three key points:

  1. Today’s advertising industry is sophisticated and is worth billions of dollars, the idea of using persuasive communication to sell is as old as trade and commerce.
  2. Advertising cannot be studied in the abstract.  All developments in advertising of technology, research, and society as a whole must be understood.
  3. Today’s advertising and promotion are no longer confined to the rules of traditional media that dominated the 20th century.

Advertising and the Changing Communication Environment

Finding a cost-efficient plan for reaching increasingly in-control and demanding consumers is the major challenge of contemporary advertising  Convergence: coming together or intersecting different components of some related system.

1. Technological Convergence: radio programs on computer
2. Business Convergence: (consolidation) merging companies
3. Content Convergence: primary expense, using commercial content

Dual problem: advertisers must choose a media plan from an ever-expanding number of options and they must develop advertising messages that consumers will invite to share with their time.  Citizen media is referred to as the new relationship between advertisers and consumers. User-generated media (blogs) have become important in marketing plans. (free information).  New technology and interactive media is a central component.

Advertising as a Communicating Tool.  The fundamental principle of good advertising is that it must be built around the overall marketing plan and execute the communication elements of a more far-reaching marketing program. (ex: increasing brand awareness 25% increases growth).  The Marketing Plan: Overall goal(s) of plan, marketing objective, marketing strategy, situational analysis, problems/opportunities, financial plan, research.  The Advertising Plan: Prospect Identification, Consumer Motivation, Advertising Execution, The Advertising Budget and Allocation

Advertising makes proftiability based on it’s Return-on-investment (ROI): measures the efficiency of a company. How many dollars are produced for every dollar spent.  Involvement based ROI measures may give advertising less than its full worth in the marketing process.  Clients demand media and ad agencies to measure advertising success on the basis of effective communication rather than audience exposure.  The emphasis on short-term audience involvement runs the risk of devaluing the long-term value of advertising.

Integrated Marketing is broken down into the Marketing Mix the combination of 4 marketing functions (product, price, distribution, and communication) plus advertising, used to sell a product.  Communication is broken down into 4 parts:

1. Personal Selling: The most effective means of persuading but also the most expensive which makes it impractical in initial selling stages. It is used in business to business marketing as a follow-up, to close a sale, or develop a long-term relationship resulting in a sale.
2. Sales Promotion: Activities that supplement both personal selling and marketing, coordinate the two, and help to make the effective (ex: displays, coupons, giveaways). They are used to persuade distributors to carry a brand/product. They are short-term so no to lose money.
3. Public Relations: Communication with various internal and external publics to create an image for a product or corporation. One of the fastest growing sectors. It is perceived as having higher audience credibility than advertising but is viewed as a compliment not a competitor. Media controls where, when, and if product will be carried.
4. Advertising: A message paid for by an identified sponsor and usually delivered through some medium of mass communication. It is persuasive communication.

The reliance on the marketing mix strategy allows evaluations that view promotion as a coordinated mix of elements.  Companies are demanding programs to speak with one voice, meaning demonstrate a consistent overall theme.  Integrated Marketing Communication (IMC): The joint planning, execution, and coordination of all areas of marketing communication. More concerned with total effectiveness

Advertising: An Institutional Approach

For Consumers: Its economic role is disseminate product information that allows consumers to know that products exits, to give consumers info about competing brands, and to permit consumers to make intelligent choices among product options.  Its social and cultural (inadvertent) role in communicating not only product information but also social values. Advertising can create that Need driven behavior usually to solve a problem.  It can be utilitarian (buy new car for transportation) and hedonistic (buy new car to impress neighbor).  Advertising’s role is to provide info as efficiently and economically as possible to potential buyers.  Introducing new products/services

What Advertising Does For Business

Primary role of advertising include contributing to new-product launching, increasing consumer brand loyalty for existing brands, and maintaining the sales of mature brands.  Exchange theory suggests that market transactions will take place only to the extent that both buyers and sellers see value in the process. Built on positive mutual relationships.

What Advertising Does For Society

Advertisers convey subtle messages about society by the manner in which their advertising portrays products and services.  Challenges for contemporary marketing are monitoring changes so that a company is aware of what is happening in a society, creating products and services compatible with changing values, and designing marketing messages that reflect and build on the values target markets and individual customers hold.  Advertising benefits society by providing revenues to support a diverse and independent press system protected from government and special interest control.

Advertising to Diverse Publics

Regardless of its intended recipients, advertising communicates messages to various groups and individuals who in turn interpret these messages in the context of their own interests.  A single advertisement might be directed to a number of publics:

1. Distribution Channel: The various intermediaries, like retailers, that control the flow of goods from manufactures to consumers.
2. Employees: most important assets of any company. Advertising messages may mention quality workmanship that goes into a product and feature employees in it.
3. Current and Potential Customers: building brand awareness to attract new customers and enhancing brand loyalty to current customers.
4. Stockholders: high brand awareness and company’s good reputation contribute to maintaining higher stock prices.
5. The Community at Large: local companies use advertising to be viewed as a “good neighbor”  It’s important to keep ALL publics in mind during advertising

 

Advertising and the Marketing Channel

The marketing channel illustration is an important aspect of marketing.  Industrial good manufacturers are a manufacturer of finished product and wholesalers, retailers, and consumers.  A well-organized channel creates efficiencies through specialization in the movement of the channel.  Effective communication, including advertising, is crucial of for market channel efficiency.  The technology of the Internet has changed the longtime relationships among various elements of the marketing channel.  For example, travel agents have phased out and digital cameras are now taking over the film industry.  Mainly marketing and communication channels have changed.  It has not changed the fundamental decision-making process, but the way we communicate.  Regardless of its audience, effective advertising must be successful on 2 levels: (1) communicating (2) carrying out marketing goals.

There are different forms of directness and duration in relation to advertising.  How much of the total selling job should be accomplished by advertising and over what time frame must be planned.  Advertising is designed to produce an immediate response by a product purchase that is called direct action, short-term advertising.  Advertising used as a direct-sales tool, but designed to operate over a longer time frame is called direct action, long-term advertising.  Indirect advertising affects the sales of a product over the long term by promoting general attributes of the manufacturer, not specific product characteristics.  Long-term advertising is hard to measure.

Advertising to the Consumer

National Advertising: refers to advertising by the owner of a trademark product brand or service sold through different distributors or stores.  It tends to be general in terms of product information.  National advertisers have begun to identify and reach more narrowly defined market segments and in some cases individual consumers.  The Internet has allowed specifically tailored messages to consumers based on individual lifestyle and product usage.

RetailAdvertising: advertising by a merchant who sells directly to the consumer.  Includes price information, service and return policies, store locations, and hours of operation.  Most important change in retail advertising is consolidation.  Customers are now doing more and more “one-stop shopping” rather than patronizing several independent retailers.  There are significant ramifications for newspaper and local radio stations.  Dramatic advertising spending shifts as retailers move to national promotional plans with decline in ad pages.  Manufacturers find themselves competing with in-store brands.

End-Product Advertising: branded ingredient advertising building consumer demand by promoting ingredients in a product.  End-Product Advertising began in 1940’s with DuPont and Teflon nonstick coatings.  Successful end-product advertising builds consumer demand for an ingredient that will help in the sale of a product encourages companies to use these ingredients in their consumer products.  Consumers must be convinced that it offers and added value to the final product.  Extensive advertising is required to make consumers aware.   Successful advertisements are those that create meaningful differentiation for consumer purchase decisions.

Direct-Response Advertising: is any form of advertising done in direct marketing. Uses all types of media: direct mail, TV, magazines, newspapers, and radio (replaces “mailorder advertising”).  Benjamin Franklin was credited with the 1st direct-sales catalog published in 1744.  Largest sector is direct mail, which accounts for 1/3 of the total.  Fastest growing area is Internet advertising that is providing a catalyst for future growth.

Advertising to Business and Professions

Business-to-business (B2B) is one of the fastest-growing categories of advertising and it requires a much different strategy.  Personal selling, telemarketing, and other forms of direct response, and the Internet are the methods most often used.  Messages tend to be more fact oriented with little emotional appeal and are addressed to specific industries and job classifications within those industries.  Profit oriented appeals are very common.  B2B purchase decisions tend to have distinct differences compared to typical consumer purchases.  Purchase decisions made by companies frequently involve many people.  Organizational and industrial products are often bought according to precise technical specifications that require significant knowledge.  Impulse buying is rare and the dollar volume of purchases is often substantial.

Categories of Business Advertising

Trade Advertising: directed to the wholesale or retail merchants or sales agencies through whom the product is sold.  It emphasizes product profitability and the consumer advertising support retailers will receive from manufacturers.  Promotes products/services that retailers need to operate their businesses.  The objectives are to gain additional distribution, increase trade support, and announce consumer promotions.

Industrial Advertising: addressed to manufactures who buy machinery, equipment, raw materials, and the components needed to produce the goods they sell.  Directed at a very small, specialized audience.  Rarely seeks to sell a product directly.  The purchase of industrial equipment is usually a complex process that includes a number of decision makers.  Often introducing product or gaining brand awareness.

Professional Advertising: directed at those in professions such as medicine, law, or architecture who are in a position to recommend the use of a particular product or service to their clients.  Primary difference is the degree of control exercised.

Institutional Advertising: advertising done by an organization speaking of its work views, and problems as a whole, to gain public goodwill and support rather then to sell a specific product.  Sometimes called public relations advertising.  Objectives are establishing a public identity, explaining a company’s diverse missions, boosting corporate identity and image, gaining awareness with target audiences for sales across a number of brands, and associating a company’s brands with some distinctive corporate character.

Non-product Advertising

Idea Advertising: used to promote an idea or cause rather than to sell a product or service.  Idea advertising is often controversial.  The increasing ability of media to narrowly target audiences, by ideology as well as product preference, will make this type of advertising prevalent in the future.

Service Advertising: advertising that promotes a service.  Feature tangibles personalized in some way with testimonials of good service.  Feature employees as an important aspect of the company and how they develop trust with customers in a service message featuring real employees.  Stress quality. Advertisements should emphasize consistency and high levels of competency by using words like caring, professional, and convenient in ads.

Government Advertising: In the past 20 years, the growth of government services and programs has resulted in a greater use of traditional advertising by government agencies.  Millions of dollars are spent each year.

Brands

Brands are a company’s most valuable assets.  The product is not the brand, the product is manufactured and a brand is created.  Orlando is a brand and has to compete with other cities for convention revenues.  Product may change overtime, but the brand remains.

“A brand represents the most powerful link between the offer and consumer.”– Antonio Marazza Landor

Every product, service, and PR Company with a recognized brand name stands for something slightly different from anything else in the same product category.

“A brand for every intent and purpose, is a promise that it will help the user make money, look better or feel great.-Allen Adamson

For example, Dove promises women they will feel gorgeous and Volvo vows to deliver your family safely.  Manufacturers have to offer the best deal to wholesalers to get their products distributed creating a squeeze of profits.  The result is that some manufactures decided to differentiate their products form the competition giving their products names then obtained patents to protect their exclusivity and used advertising to take the news about them to consumers over the heads of the wholesalers and retailers.

In the mid 1880’s during the rise of great brands such as Maxwell house coffee in 1873 and Budweiser in 1876, advertising was going through its first true paradigm shift from making a connection in the mid 19th century to the disconnection caused by technology.

“Branding is about the idea that should be the organization principle and it should inform everything you do to help consumers grasp your brand promise in whatever channel you’re using to reach them.”-Michael Mendenhall 

In the digital age, it is absolutely critical to understand the value of each branding channel and its relevance to a particular audience.  In today’s digital world, your brand and brand organizations must perform, behave, and satisfy the consumer’s needs as they expected.  Integrated marketing communications is the integration of all communications culminates from a single strategic platform and will generate a significantly greater return on the communication investment than would be the case with traditional independent media executions.  IMC refers to all the messages directed to the consumer on behalf of the brand.

Brand equity: the values of how people such as consumers distributors, and salespeople think and feel about a brand relative to its competition.  The most important factor in the determining the actual value of a brand is its equity in the market.

Young & Rubicam: brand asset valuator [BAV] is a diagnostic tool for determining how a brand is performing relative to all other brands.  BAV demonstrates that brands are built in a very specific progression of four primary consumer perceptions of differentiation, relevance, esteem and knowledge.

  • Differentiation is the basis for choice as the essence of the brand and source of margin.
  • Relevance relates to usage and subsumes the five P’s of marketing related to sales.
  • Esteem deals with consumer respect, regard and reputation and relates to the fulfillment of perceived consumer promise.
  • Knowledge is the culmination of brand-building efforts and relates to consumer experiences.  A brands vitality lies in a combination of differentiate and relevance [lack of relevance reason fads come and go].  The components of brand stature are esteem and familiarity.  BAV is based on the fact that almost every successful brand began by being very simple according to Steve Owens.  A market is a group of people who can be identified by some common characteristic, interest or problem (use a certain product to advantage, can afford to buy it, and be reached through some medium).

Steps for creating advertisements for a brand

  1. Brand Equity Audit Analysis
  2. Market context of what is our market and with whom do we compete; what are other brands and product categories; are products highly differentiated.  This question helps us understand the statue and role of brands in a give market
  3. Brandy equity weaknesses and strengths: brand awareness, brand sensitivity, and brand loyalty
  4. Brand equity descriptions of the personal relationship between the consumer and the brand provide the most meaningful description of brand equity.

First, review all the available research to get as close a feeling as possible on how consumers view the brand and how they feel about it.  You must analyze in depth our brands and its competitor’s communications over a period of time.  Provide a clear summary of the current communication strategies and tactics of our brand and of key competitors.  Include an analysis of all integrated communication in relation to brand equity [assessment of problems and opportunities]

Strategic options drawn on the conclusions form the analysis of communication objectives [primary goal of message], Audience [who speaking to], Source of business [where customers going to come from], Brand position and benefits [benefits of brand to build equity], Marketing mix [mix of advertising], Rationale [how plan effects brand equity].

Do brand equity research for proprietary, qualitative research.  Determine which elements or elements of brand equity must be created, altered, or reinforced to achieve our recommended strategy and how far we can stretch each of these components without risking the brands credibility.

Make a Creative Brief as a short statement that clearly defines our audience, how consumer think or feel and behave; what the communication is intended to achieve, and the promise that will create a bond with the consumer.  Synthesize all the information and understanding into an action plan for the development of all communication or the brand.

  • Key observations-most important market factory that dictates the strategy.
  • Communications objective-primary goal the advertising aims to achieve.
  • Consumer insight-consumer hot button our communication will trigger.
  • Promise-what the brad should represent t in the consumers mind.
  • Support-reason the promise is true].
  • Audience-who we are speaking and how they feel about the brand.
  • Mandatory-items used as compulsory constraints].  There isn’t only one approach to developing an integrated strategic plan for a brand.

Avrett, Free and Ginsbergs planning cycle:

  1. Brand market status
  2. Brand mission
  3. Strategic development
  4. Strategy
  5. Creative exploration
  6. Brand valuation
  7. Brand vision-some other typical steps agencies and clients take in the planning process:
  • Current brand status [evaluate brands over all appeal]
  • Brand insight [agency use a series of tools designed to help it develop insights to better understand the customers view] 3. Brand vision [strategic planners look or the consumers hot button to identify the most powerful connection between brand and consumer]
  • Big idea [creative expression of the brand vision – foundation of all communication briefs]
  • Evolution [essential aspect of communications planning is accountability] the consumer has to be an important part of the strategic planning process.  How the advertiser engages consumers is critical to the process.

“Just do it” -Scott Bedbury, brand builder for Nike

A great brand is in it for the long haul.  By using a long-term approach a great brand can create economies of scale by which you can earn solid margins over the long term.  A great brand can be anything [almost any product offers an opportunity to create a frame of mind that is unique].  A great brand knows itself [keep the brand vital by doing something new and unexpected related to the brands core position].  A great brand invents or reinvents an entire category [brand aims to dominate their entire category ex: Disney, Apple, Nike].  Great brand taps into emotions [it is an emotional connection that transcends the product].  A great brand is a story that’s never completely told [stories create the emotional contest people need to locate themselves in a larger experience].  A great brand is relevant with ideas that need to satisfy peoples wants and perform the way they want. Advertisers need to have a clear understanding of the product and consumer wants and needs when making strategic advertising strategies’.  The developmental stage of a product determines the advertising message.  As products pass though the stages, the manner in which advertising presents the product to consumers depends largely on the degree of acceptance the product has earned with its life cycle.  It is the degree of acceptance that determines the advertising stage of the product.

Pioneering Stage: the advertising stage of a product in which the need for such a product is not recognized and must be established or in which the need has been established but the success of the commodity in filling that need has to be established.  Advertising in the pioneering stage must show that methods once accepted as the only ones possible have been improved and that the limitations long tolerated as normal have now been overcome.

Purposes of the Pioneering stage of a products life cycle:

  • Educate consumers about the new product or service
  • To show that people have a need they did not appreciate before and that the advertised product fulfills that need
  • To show that a product now exist that is actually capable of meeting a need that already had been recognized but previously could not have been fulfilled
  • Many new products are simply advertisers trying to get a piece of the pie in an established product category [ during the past 25 yrs almost 60% of companies on fortune 500 list have been replaced]
  • Companies’ success is based on the fact that they created new markets or reinvented existing ones [ex: Procter and gable introduced tide, the first disposable diaper and the first shampoo conditioner combo].  New ideas travel through cultures at much slower rates, especially if the ideas require throwing something away and replacing it with something else, relearning skills, or coordination by large independent organizations.

Pioneering expense: in the early introduction of a new product, heave advertising and promotional expenses are required to create awareness and acquaint the target with the product benefits.  Usually the main advantage of being a pioneer is that you become the leader with a substantial head start over others [Aleve emerging as original pain reliever before aspirin, Tylenol. Advil].

COMPETITIVE STAGE [the advertising stage a product reaches when its general usefulness is recognized but its superiority over similarly brands has to be established in order to gain preference].  In the short term, the pioneer usually has an advantage of leadership that can give dominance in the market.  Generally in the early competitive stage, the combined impact of many competitions, each spending to gain a substation market position, creates significant growth for the whole product category [if the pioneers grown, it can more than make up for the earlier expense associated with its pioneering efforts].  The purpose of competitive stage advertising is to communicate the products position or differentiate it to the consumer; the advertising features the differences of the product.

RETENTIVE STAGE [the third advertising stage of a product, reached when its general usefulness is widely known, its individual qualities are thoroughly appreciated and it is satisfied to retain its patronage merely on the strength of its past reputation].  The chief goal of advertising may be to retain those customers by making a brand name for themselves.  Ad goal is to maintain market share and ward off consumer trial for the products.  Generally products in the retentive stages are at their most profitable level because developmental costs have been amortized, distribution channels established and sales contacts made

REMINDER ADVERTISING: it simply reminds consumers that the brand exists [usually highly visual and is the basically name advertising giving little reason to buy the product].  If your product is alone in the retentive stage, this is cause for alarm because it ma mean the product category is in decline and competition sees little future in challenging you for consumers.  Advertisers goal in the retentive stage is to maintain market share and ward off consumer trial for the products.  Products in the retentive stage do not successfully cut back on their advertising expenditures but they adopt different marketing and promotional strategies than those used in the pioneering and competitive stages.  Generally products in the retentive stage are at their most profitable levels because developmental costs have been amortized, distribution channels established and sales contracts made.

The Advertising spiral is an expanded version of the advertising stages of products providing a point of reference for determining which stage or stages a product has reached at a given time in a given market and what the thrust of the advertising message it should be.  Advertising spiral parallels the life cycle of the product.  The development of the new types of products or categories does not take place frequently.  In using the advertising spiral we deal with one group of consumers at a time.  Advertising depends on the attitude of that group toward the product.  Pioneering and competitive advertising could be going on simultaneously.  Products in the retentive stage usually get the least amount of advertising.  As long as the operation of a competitive product does not change, the product continues to be in the competitive stage despite any pioneering improvements [once the principle of this operation changes the product itself enters the pioneering stage].  Whenever a brand in the competitive stage is revitalized with a new feature aimed at differentiating it, pioneering advertising may be needed to make consumer appreciate the new feature.  A product can coast for only a short time before declining.  No business can rely only on its old customers over period of time and survive.  The retentive stage is the most profitable one for a product and can go 2 ways after:

  1. The manufacturer determines that the product has outlived its effective market life and should be allowed to die [manufacturer quits advertising it and withered other types of support].  The product will gradually lose market share but remain profitable to cuts in spending
  2. The advertising spiral does not accept the fact that product must decline and product seeks to expand the market into a newer pioneering stage

The newer pioneering stage attempts to get more people to use the product.  Ways to enter the stage: making a product change or complete overhaul of a product, such as a radical model change for an automobile.  Smart advertisers will initiate a change in direction of their advertising when their product is enjoying great success [show new ways of use].  A product entering the new pioneering stage is actually in different stages in different markets.  Longtime consumers will perceive the product to be in the competitive or retentive stage.  New consumers will perceive it as being a pioneer

The newest pioneering stage focuses on getting more people to use this type of product.  Products in this stage are faced with new problems and opportunities.  The advertising focus on the newer pioneering stage must be on getting consumers to understand what the product is about advertising in the newer competitive stage to get more people to buy the brand.  A product may try to retain its consumers in one competitive area while at the same time seeking new markets with pioneering advertising aimed at other groups.  The life cycle of a product or brand may be affected by many conditions.

Immersive media is one that is involved and fun.  Environments (real or virtual) create involvement and exploration.  Social tie-in should be used with real place ads.  For example, Lays potato chips put chips on ceilings on subways. Some of the best games have been the Monopoly online street games that used Google maps.  Facial Profiling where they pickup your body movements.  Remote tests are ones that you can actually use a remote car control.  Events are the best hands down though.  For example, Sony Viao Pc.  Other Virtual Places too.  Games that have smart phone capabilities.  IPhone baby that gets prevented.  Pranks: Ex. “Dexter” treatment KEY POINTS: Not information delivery, but involvement.  Should be user directed where you explore to do things.  This will help connects brand/ product to everyday life and personal experience. 

Integrated Marketing Communications

Planning and Context: Single ads not seen in isolation and create a bunch of ads.  Campaigns.  Other ads for product/ service.  Ads for your product in other media.  Ads for competitor product/service.  Integrated Marketing Communications (IMC).  All the above + non-advertising media and mentions of product.  New coverage, lawsuits, etc.  Campaigns.  Many separate ads but need continuity/ relationship.  Similarities in Ads.  Visual Similarity.  Similar appearance: Layout, typeface, and style of image.  Verbal Similarity:  Content: key points and same “voice.”  Aural Similarity: Music/song, Announcer’s voice, and sound design.  Attitudinal Similarity: Perspective: stance towards.  Brand personality

Integrated Marketing Communications: A strategic plan to connect all communication activities, Built around existing, compelling story/ situation.  Campaign criteria extended throughout all marketing communications.  They include public relations, events, packaging, direct response, digital, promotions, and sponsorships.

Gatorade Replay: KEY POINTS, Campaign continuity need to have 4 similarities.  IMC.  Media presence.

ROLE OF ADVERTISING

What is effectiveness?  Cause you to buy, persuade, pressure, and cause.  They need to be POWERFUL.  Behaviorism.  Needs, urges, and instincts we cannot control.  Food, water, shelter.  Romance, fear, aggression.  Conditioning: Can be controlled by others, Classical: modification of involuntary reflex behavior.  Behaviorist view on Advertising: Create stimuli (ad) to condition responses that benefit the product, Overt (very sexual), and subliminal

Theory of Representation.  Symbolism.  Isolated textual characteristics= specific meaning.  Persuade You to Buy: NOT Powerful and Rationalism: Needs and wants are individual, known, and controllable “enlightenment” individual.

Rationalist View on Advertising delivers dependable information.  Theory of Representation is Denotation: clear reason why and Pressures You to Buy.  It can be POTENTIALLY Powerful and create Culturalism.  Born into and taught general ways of understanding the world.  Commonsense “natural.” “Pressure” can be Negative.  For Example, if you don’t want to be alone buy this produce. Positive one would be one to have more friends.  Culturalist View on Advertising: uses existing pressures in the benefit of campaign.  Theory of Representation.  Signification: Meaning not in the message, made through associations, Textual and social, Learn and internalize the meaning of particular association, Ads use and remake meanings.

LEGAL ISSUES

Legal Environment includes what laws and regulations that determine what advertisers can and cannot do.  It opens up communications (rationalism) to broaden the range of ideas and debates.  It can also expand market economy and democratic society.  However it limits Communications (behaviorist).  One needs to enforce standards of truthfulness and morality and to protect the economy and society.

Sources of the legal environment are the Supreme Court, regulations created by elected officials, first amendment issues.

Kinds of speech are commercial speech that promotes a commercial transaction (ads).  There can be political speech that advocates a cause or point of view.  A corporate speech is one that has paid publications of points of views and same protections as political speech.  Commercial speech less protected (more regulations) than political speech because:  Hardier: getting word out is necessity.  Falsehood verifiable.

New York Times vs. Sullivan: Paid advertising that advocated a point of view, the New York Time was not liable, and Lead to corporate speech.

Central Hudson Four-Part Test: s the message eligible for the first amendment protection?  Is the government interest asserted in regulating the expression substantial?  Does the proposed regulation advance the regulatory interest?  Is the proposed regulation narrow enough?  If the answer is YES, to all 4, the regulation is constitutional.  Elected/ Appointed Government Officials:

Local councils, state/national legislatures, federal trade commission.  Early 20thCentury Towards Regulations was a time when Agencies concerned with truthfulness, Industry sought regulations to enhance its value, and the Pure food and drug act of 1906.  Correct false messages, not product.

Federal Trade Commission was established in 1916 to Protect consumers from deceptive and unsubstantiated ads.  Remedies include to Stop/ change ads, Pay fines, Public correction ads, and Deceptive Advertising likely to mislead.  Representation, omission, or practice must be “material.”

ETHICAL ISSUES

Legal vs. Ethical.  Legal Realm: DECEPTION while the Ethical Realm is MANIPULATION.  Pressures of where Ads can be legal, but still unethical.  Defining Ethics and Moral Conduct “What is the right thing to do?”

Ethical Dilemmas: Advertising in Schools, Pressures: budget, money, and revenues.  Forms: signs, product contracts, lesson books.  Channel One: Lend satellite dish, VCRs, and TV sets, In exchange for 12-minute newscasts and 2-minute ads.  Fast Food.  Ethics in the Workplace.  Ethically Impaired and “Moral Myopia”: Nearsighted and rationalize their ideas

“Moral Muteness” is where one can see ethical dilemmas, but don’t say anything.  Compartmentalization is workplace ethics vs. person life.  The client is always right.  Ethics is bad for business

Ethically Active: Agencies that openly encourage ethical actions, Recognize moral issues.  The Steps to take are Recognition, Communications, Saying No, and Moral imagination, KEY POINTS.  Don’t forget the Legal Realm of Behaviorism: protect people and Rationalism: dependable information.  The Ethical Realm is only addressed fully by culturalism and Recognition of pressures.

CHALLENGING THE AGENCY

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.

PRINCIPLES IN THE REAL WORLD

Major Principles of Advertising in the real world.  Strategy: all good effective advertising has a strong strategic basis.  Media: best media choices are creative choices.  Creative: the best campaigns have fresh, original, imaginative executions.  Advertising in Society: study not only ads, but industry and society, then go back and study emergence of all 3 over time.  Normative vs. Historical.  Normative: Guidelines or ideals, How things “should” operate, Systematic, and consistent.

Historical: The “real world”, How things are actually done, Irrational, unpredictable.  Normative is what we learn in class, historical is more real world, learning on the job.  What Goods are Principles?  Justification for practice, Tools to generate options, Ammo for arguing your case, and explaining your choices to people.

Digital and Direct-Response Advertising *Virtually every advertiser is using the techniques of direct response as a key ingredient of marketing strategies.

Digital Pros:

A relatively inexpensive, quick, targeted, measurable, and easily available interactive medium.  A combination if interactive audio with video capabilities that can engage a customer.  Among the most flexible media with an ability to change messages immediately in reaction to market and competitive conditions

Digital Cons:

Early failures made some advertisers cautious about exploring the unique possibilities offered by this medium.  Some consumers are still reluctant to use the Internet as a means of buying products and services; they are timid to give their credit card numbers over the Internet even though secure sites are available.  There are so many websites that it makes it difficult for consumers to know what is available or have much time to spend with any single site.

Direct Contact with Consumers

Marketers have moved towards a more personal relationship with their consumers. They have progressed steadily from mass marketing wherein prospects were reached relatively indiscriminately at the lowers possible CPM to: Category marketing (broad demographic targeting. Ex: women aged 18-34), Niche marketing (more narrow categories. Ex: women aged 18-34 with children), Group or community marketing (groups with common interests. Ex: tennis players).  While this was happening, the competitive market was reducing the distinction among its brands resulting in: Price competition with shrinking profit margins for sellers and A reliance on trusted brands to provide customers with a perception if consistent quality.

Customer relationship marketing (CRM): a management concept that organizes a business according to the needs of the consumer. From the standpoint of customers, it is clear that the audience feels empowered by interactive media, and they use this empowerment in a proactive manner. Customers are also embracing online couponing, entering sweepstakes online, and participating in other targeted sales promotion activities. Customers respond to promotions tailored to their interests and businesses are happy to avoid the expense of waste circulation. Although CRM sacrifices some control to customers, there are 5 advantages:

More effective cross selling and upselling from current customers.  Higher customer retention and loyalty.  Higher customer profitability.  High response to marketing campaigns.  More effective investment of resources.  The use of interactive technology allows businesses to deal with the unique purchasing, lifestyle, and behavioral histories of each customer – businesses now have the capability of one-to-one marketing. The end results are that the consumer gains better value and the company engenders continued customer loyalty.

 

The Complete Campaign

Today’s advertisers usually create campaigns that fit into their integrated marketing communication program. They don’t create only an ad by itself. The four components (creative brief, brand equity probe, strategic options and recommended plan, and brand equity audit) are synthesized into an action plan for developing all communications for a brand – it must maintain a consistent identity. Advertisers’ main concern is reaching every consumer’s “touch point.”

A campaign versus an ad: there is no magic time frame for a campaign, but generally, campaigns are designed to run over a longer period of time than an individual ad. The average length of a regional or national campaign is about 17 months, although it is not uncommon for a campaign to last 3 or 4 years – a few have lasted much longer.

Changing campaign risk: there is never a guarantee that the next campaign will be as strong, let alone stronger, than the original. Although, some believe that most successful campaigns need refreshing over time – people change, products change, and markets change. Adding online advertising to a television campaign boosts brand awareness, but the inclusion does little to impact sales. Broadcast ads upped the linking of brand to a message or value proposition by nearly 13 points, the web added 7 points. Television spots increased the ability to influence purchase decisions by nearly 6 points, whereas the web only contributed a mere 0.4 point incremental boost. The web was stronger at raising awareness and association than influencing purchasing decisions.

Campaign Diversity: many campaigns have purposely highlighted models with racially indeterminate features – “Generation E.A.: Ethnically Ambiguous.” Good advertising starts with a clear understanding of both short and long-term marketing goals

Situation Analysis: establishes a current benchmark or starting point. It has two orientations: the past and the present. The situation analysis is the first step in developing a campaign.  The Product: successful advertising and marketing begin with a good product or service. At this point, we need to analyze our product’s strengths and weaknesses objectively. Among the questions usually asked are the following:

  1. What are the unique consumer benefits?
  2. What is the value of the product relative to the proposed price?
  3. Are adequate distribution channels available?
  4. Can quality control be maintained?

Prime prospect identification: the next step is to identify our prime prospects and determine if there are enough of them to market the product profitably. We also must identify the prime prospects problem: What are their needs and wants in the product or product type?

Competitive atmosphere and marketing climate: we carefully review every aspect of the competition, including direct and indirect competitors. Recognizing the market climate during the recession in 2009, Subway promoted their $5 sandwiches and the promotion was so successful it became a campaign.

Creative objective and Strategy: we begin to select those advertising themes and selling appeals rhar are most likely to move our prime prospects to action. Advertising motivates people by appealing to their problems, desires, and goals – it is not creative if it does not sell. Once we establish an objective, er are ready to implement the copy strategy by outlining how the creative plan will contribute to accomplishing our predetermined goals:

  1. Determine the specific claim that will be used in the advertising copy (if more than one, list in order of priority)
  2. Consider various advertising executions
  3. In the final stage of the creative process, develop the advertising copy and production

Continuity: term used to describe the relationship of one ad to another ad throughout a campaign. This similarity or continuity can be visual, verbal, aural, or attitudinal.  Visual similarity:  all print ads in a campaign should use the same type face or virtually the same layout format; stress continuity not sameness. Another device is for all ads in a campaign to use the same spokesperson or continuing character – strong continuity strengths communication.  Verbal similarity:  Great words and great strategies make great campaigns. “What can Brown do for you” UPS “Mmm mm Good” Campbell’s  Aural similarity: the same sound effect can make a campaign very distinctive “This is Tom Bodett for Motel 6”.  Attitudinal Similarity: some ads express a consistent attitude toward a brand and the people using it. Nike is a strong brand name and its signifies status, glamour, competitive edge – its presence and identity is so strong that many people want to connect with the brand.

Media Objectives: creative planning and media planning have the same foundations – marketing strategy and prospect identification – and they cannot be isolated from each other. Media attempts to be “media neutral.” The media plan involves three primary areas: strategy, tactics, and scheduling.

Media strategy: at the initial stages of media planning, the general approach and role of media in the finished campaign are determined:

i.     Prospect identification.

ii.    Timing. The media planner must consider many aspects of timing, including media closing dates, production time required for ads and commercials, campaign length, number of exposures desired

iii.     Creative considerations. Media and creative teams must accommodate each other. Media has to be creative in finding a way to reach and engage consumers

Media tactics: media planner decides on media vehicles and the advertising weight each is to receive.

Media scheduling: actual media schedule and justification are develope

The promotion plan: discussed very early, and its relationship to the advertising plan is determined. Promotion activities may involve dealer displays, in-store promotions, premiums, cooperative advertising, and coupon offers

Other Integrated Elements: don’t forget the importance of every aspect of your IMC functioning as one voice. You need to maintain focus on the brand or positioning throughout the marketing mix.

Getting the Campaign approved: for approval, it is wise to present a statement of the company’s marketing goals. Next, the philosophy and strategy of the advertising are described, together with the reasons for believing that the proposed plan will help attain those objectives. Not until then are the ads or commercials presented.

Research – Posttests: the final part of a campaign entails testing its success. First, the expected results are defined in specific and measurable terms. Then, the actual research is conducted to see if these goals were met. The pretest is intended not only to provide a benchmark for the campaign but also to determine reasonable goals for future advertising.

onomic, Social, and Legal effects of Advertising

The History of Advertising Criticism

I.    The Era of exaggerated Claims (1865 – 1900)

II.   The Era of Public Awareness (1900 – 1965)

III.  The Era of Social Responsibility (1965 – present)

A number of studies indicate that buyers support those companies and brands that have gained a reputation for being good citizens and actively promote their good works.   

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.

Advertising’s Legal and Regulatory Environment

The public and the advertising industry itself agree that companies that use illegal or unethical advertising tactics should be dealt with severely. Not only is deceptive advertising wrong, but it also creates a lack of trust in all advertising, making it difficult for honest businesses to effectively promote their products and services. Constraints no advertising include laws and regulations of legally constituted bodies such as Congress and the FCC, control by the media through advertising acceptable guidelines, and self-regulation by advertisers and agencies using various trade practice recommendations and codes of conduct.

Caveat emptor is Latin for “Let the buyer bewares”; represents the notion that there should be no government interference in the marketplace. Many of the principles of caveat emptor have been rejected. Rather, both businesses and the public realize that buyers have far less information than sellers, and they must be protected by legal guarantees of the authenticity of advertising campaigns.

In 1922, in Federal Trade Commission (FTC) vs. Winsted Hosiery Company, the Supreme Court held that false advertising was an unfair trade practice. In 1938, the Wheeler-Lea Amendments broadened the scope of the FTC to include consumer advertising.  One of the primary concerns of the FTC is to ensure that consumers are protected from deceptive advertising. The key to FTC enforcement is that advertisers must be able to prove the claims made in their advertising – be able to substantiate what they say. There is a 3-part test to figure out if a claim is untruthful:

  1. There must be a representation, omission, or practice that is likely to mislead a consumer
  2. The act or practice must be considered from the perspective of a consumer who is acting reasonably
  3. The representation, omission, or practice must be material (in other words, the claim, even if not true, must be judged to have had some influence over a consumer’s decision)

A FTC intervention in alleged deception starts with a claim of deception practices to the FTC.  Then the FTC begins to investigate with a request for substantiation from the advertiser.  If the FTC finds the practice to be unsubstantiated and therefore deceptive, a complaint is issued. The advertiser is asked to sign a consent decree where they stop the practice that is under investigation, but admit no guilt.  If the advertiser refuses to sign a consent decree, the FTC issues a cease-and-desist order. This order can carry a $10,000-per-day fine.

Even if an advertiser agrees to abide by a cease-and-desist order, the FTC may find that simply stopping the practice does not repair past damages to consumers. They may be required to run corrective advertising to counteract the past residual effect of previous deceptive advertising (this began around the 1960s).

If a company cannot reach agreement with the FTC, its next recourse is the federal courts.  It is extremely rare that cases go beyond the cease-and-desist stage.

FTC Rules and Guidelines: the FTC is responsible for enforcement and education in:

  • Federal Laws passed by congress
  • Formal FTC industry rules: the telemarketing sales rule means that callers are authorized to provide caller information, the used car rule is intended to prevent oral misrepresentations and unfair omissions of material facts by used car dealers, and the contact lens rule made it mandatory that patients receive copies of their prescriptions.

Among the most common areas of FTC inquiry for which guidelines have been issued are the following:

  • Environmental claims, the term “free” in advertising, “Made in the USA” label, Advertising as a Contract, facts versus puffery (meaning the advertiser’s opinion of a product that is considered a legitimate expression of biased opinion), testimonials, and warranties and guarantees.

Robinson- Pitman Act: a three-part “package” that evolved over a period of almost 50 years:

  1. 1890 Federal Sherman Antitrust Act: designed to prevent alliances of firms conceived to restrict competition
  2. 1914 Clayton Antitrust Act: amended the Sherman Act; it eliminated preferential price treatment when manufacturers sold merchandise to retailers
  3. 1939 Robinson-Pitman Act: in turn, the Pitman Act amended the Clayton act. It requires a manufacturer to give proportionate discounts and advertising allowances to all competing dealers in a market. It protects smaller merchants from unfair competition of larger buyers.  For example, a manufacturer may not limit co-op dollars to television, knowing that many retailers ion smaller markets might not have practical access to television advertising. Such an offer is known as an improperly structured program.

Slotting fees are payments to retailers by manufacturers to gain shelf space; the FTC has a continuing review of the role of slotting fees because it fears that they have the potential to prevent marketplace entry of new brands or prevent small retailers from gaining access to establish brands because of disproportionately high slotting fees.

The Federal food, drug, and cosmetic Act was passed by Congress in 1938 and established the Food and Drug Administration (FDA); it superseded the original legislation (the original prohibited interstate commerce in misbranded and adulterated foods, drinks, and drugs) and gave the FDA increased responsibility. One of the most active and controversial areas of FDA regulation is consumer prescription drug advertising. Until 1997, pharmaceutical companies could only advertise prescription drugs to doctors, and then, consumer advertising was permitted. By 2005, $5 billion was being spent on direct-to-customer drug advertising. The FDA has begun an aggressive campaign of enforcing promotional regulations, often sending formal letters of warning to drug companies. The jurisdiction of the FDA to control and regulate labeling was enhanced when Congress passed the Nutritional Labeling and Education Act of 1990. Beginning on January 1, 2006, the agency was given greater enforcement authority over labeling, and labeling information was enhanced to include data about trans-fat allergen groups, and whole grain ingredients.

Despite a more open environment for commercial messages, judicial opinions supporting commercial speech still deny full first amendment protection to advertising.

In 1980, the court articulated a set of guidelines concerning the constitutional protection that would be afforded commercial speech. These guidelines were set forth in the case of Central Hudson Gas and Electric v. Public Service Commission of NY. The court established a four-part test to determine when commercial speech is constitutionally protected and when regulation is permissible – known as the Hudson Four-Part Test:

  1. Is the commercial expression eligible for first amendment protection? Is it neither deceptive nor promoting of illegal activity?
  2. Is the government interest asserted in regulating the expression substantial? The stated reason for regulating must be of primary interest to the state rather than of a trivial, arbitrary nature
  3. If the first two tests are met, the court then considers if the regulation of advertising imposed advances the cause of the government interest asserted.  If we assume that an activity is of legitimate government concern, will the prohibition of commercial speech further the government’s goals?
  4. If the first three tests are met, the court must finally decide if the regulation is more extensive than necessary to serve the government’s interest. Is there a less severe restriction that could accomplish the same goals?

Because of the unique nature of communication, it may be that the Supreme Court will never be able to issue a totally definitive decision that will cover every instance of commercial speech.

CAN-SPAM Act of 2003: the controlling the assault of non-solicited pornography and marketing act is enforced by the FTC, and established requirements for those who sent commercial email. Provisions to the act include false or misleading information is banned, deceptive subject lines are prohibited, the e-mail must give recipients an opt-out method, commercial email must be identified as an advertisement and include the senders valid physical postal address.

Advertising of professional services: one of the most controversial areas of commercial speech involves advertising by professionals; especially attorneys and health care providers.

Comparison Advertising has primary concerns.  Comparative advertising runs the risk of inadvertently promoting competitive brands and/or appearing to offer credibility to them by including their names.  Some comparison advertising may appear unfair to consumers and damage the reputation of the brand as well as advertising in general.  Firms fear that comparative advertising claims will precipitate lawsuits by companies that think their brand is unfairly disparaged.  Comparison advertising can also invite counterattacks form competitive brands.

The Advertising Clearance Process: the internal process of clearing ads for publication and broadcast, conducted primarily by ad agencies and clients.  The toy is presented logically and realistically.  Animation is limited to about 10 second spot.  Copy must clearly disclose if parts are sold separately and if batteries are not included

Self-Regulation by Industry-wide groups serves two important purposes beyond ensuring more informative and truthful advertising by seeking to overcome the relatively poor public perception of advertising by showing that there is a concerted attempt within the industry to foster responsible advertising and strong self-regulation may ward off even stricter government control.

Better Business Bureaus areone of the best-known, aggressive, and successful organizations in the fight for honest and truthful advertising.  Their primary responsibility is for truthful and non-deceptive advertising rests with the advertiser.  Advertisements that are untrue, misleading, deceptive, fraudulent, falsely disparaging of competitors, or insincere offers shall not be used.  An advertisement as a whole may be misleading although every sentence separately considered is literally true.  Although the BBB’s have no legal authority, they are a major influence on truth and accuracy in advertising.

The National Advertising Review Council (NARC)’s primary purpose was to develop a structure which would effectively apply the persuasive capacities of peers to seek the voluntary elimination of national advertising which professionals would consider deceptive. Its objective was to sustain high standards of truth and accuracy in national advertising through voluntary self-regulation.

National Advertising Division (NAD) isthe primary investigating unit of the NARC self-regulation program. The NAD is staffed by full-time lawyers who respond to complaints from competitors and consumers and from referrals from local BBBs. They also monitor national advertising. Primary areas of challenges are product testing, consumer perception studies, taste/sensory claims, pricing, testimonial/anecdotal evidences, and demonstrations.  The NAD/NARB process cannot order an advertiser to stop an ad, impose a fine, bar anyone from advertising, or boycott an advertiser or product.

The National Advertising Review Board (NARB) provides an advertiser with a jury of peers if it chooses to appeal a NAD decision.

The Children’s Advertising Review Unit (CARU) was established in 1974 to review the special advertising concerns of advertising directed to children.  The CARU primarily deals with product presentations and claims, sales pressure, disclosures and disclaimers, comparative claims, endorsements and promotions by program or editorial characters, safety, and interactive electronic media.

Obesity concerns: an area of concern is food advertising and its alleged contribution to childhood obesity, demonstrates many similarities with the battle over tobacco advertising in the 1990s.

The Children’s Food and Beverage Advertising Initiative (CFBAI): launched by CBBB in 2006 to provide transparent and accountable self-regulatory guidelines for companies that advertise foods and beverages to children. The initiative’s goal is to ensure that food and beverage advertising messages directed to children younger than 12 encourage healthy dietary choices and lifestyles.

Related articles

Books to read:

http://www.amazon.com/Ogilvy-Advertising-David/dp/039472903X/

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