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Part 1
Principle: Back to Basics
This is one of the most exciting times to take an advertising course because of all of the
changes in the industry – new technology, new media, new types of consumers and media
users, new ways of looking at brand communication, and new economic challenges. It is
also a great time to study the basics of advertising and brand communication because this
is the era of “back to basics.”
Unchanging Truths in Times of Change
Rather than redefine the field to accommodate changing times, Bill Weintraub, one of the
book’s advisory board members and a marketing export who led teams at several CPG
organizations, insists that the basic truths in marketing communication are immutable.
He continues, “Regardless of the economy, new media, changes in culture, etc., I don’t
accept that these superficial changes in the marketing environment are relevant in terms
of how intelligent business practices should be conducted.”
The Basic Truth: Understand Your Brand
Advisory board member Regina Lewis, a leader in the area of consumer insights says,
“There is a need for brand authenticity. With social media’s power, brands are tasked
with – among other things – achieving perfect transparency.”
Lewis also believes that the basics of successful branding lie with connecting with
consumer values. She sees that ‘uniquely positioning your brand is essential.” But that’s
just the foundation of successful branding; the structure of a successful brand is built on
effective communication.
The Enduring Principles
As you will see in this book, effective advertising and marketing communication are
founded on basic, enduring principles. These principles are central themes in this
textbook:
1. Brand. Build and maintain distinctive brands that your customers love.
2. Position. Identify your competitive advantage in the minds of consumers.
3. Consumer. Focus on consumers and match your brand’s strengths to consumer
needs and wants.
4. Message. Identify your best prospects and engage them in a brand conversation.
5. Media. Know how to best reach and connect with your target audience.
6. Integrate. Know how to connect the dots and make everything in the marketing
communication toolkit work together.
7. Evaluate. Track everything you do so you know what works.
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That does not mean that brand communication is unchanging. In fact, the practices are
dynamic and continually adapting to changing marketplace conditions. But the basic
principles are unchanging even in times of change.
Chapter 1
Advertising
CHAPTER CONTENT
CHAPTER KEY POINTS
1. What is advertising, how has it evolved, and what does it do in modern times?
2. How have the key concepts of marketing communication developed over time?
3. How the industry is organized – key players, types of agencies, and jobs within
agencies?
4. Why and how is the practice of advertising changing?
CHAPTER OVERVIEW
This chapter defines advertising, explains its basic functions and key components, defines
the role it plays in our society, and identifies eight different ways in which it is practiced
today. The industry’s evolution is explored, along with the role of the advertising
agency, how they are organized and how they function. The chapter concludes with a
discussion of how the practice of advertising is changing.
CHAPTER OUTLINE
WHAT IS ADVERTISING?
The purpose of advertising has always been to sell a product, which can be goods,
services or ideas. Although there have been major changes in recent years, the basics
of advertising remained unchanged even in the face of economic downturns and
media convulsions.
We can summarize a modern view of advertising with the following definition:
Advertising is a paid form of persuasive communication that uses mass and
interactive media to reach broad audiences in order to connect an identified
sponsor with buyers (a target audience), provide information about products
(goods, services, and ideas), and interpret the product features in terms of the
customer’s needs and wants.
This definition has a number of elements and the definition is changing because of
new technology, media shifts, and cultural changes.
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Advertising is usually paid for by the advertiser who has a product to sell,
although some forms of advertising, such as public service announcements
(PSAs), use donated space and time.
Not only is the message paid for, but the sponsor is identified.
Although advertising began as one-way communication, digital media has
introduced new forms of two-way and multiple-waybrand-related communication.
Advertising generally reaches a broad audienceof potential consumers, either as a
mass audience or smaller targeted groups. However, direct response advertising,
especially those practices that involve digital communication, has the ability to
address individual members of the audience. So some advertising can deliver
one-to-one communication to a large group of people.
In traditional advertising, the message is conveyed through many different kinds
of mass media, which are largely non-personal messages. This non-personal
characteristic, however, is changing with the introduction of more interactive
types of media.
A great deal of emphasis is now placed on word-of-mouth, which is now defined
as personal communication through new media forms rather than “scripted
messages in a paid format,” according to agency CEO Richard Edelman.
Most advertising has a defined strategy and seeks to inform consumers and make
them aware of a brand, company, or organization. In many cases, it also tries to
persuade or influence consumers to do something. Persuasion may also involve
emotional messages.
A product can be a good, service, or an idea. Nonprofits, for example, use ads to sell
memberships, inform about a cause, or advocate on behalf of its position or
point-of-view.
Advertising is not the only tool in a brand’s promotional toolkit, although it may be
the biggest. It is a more than $500 billion industry worldwide and a $174 billion
industry in the United States. It is often seen as the driving force in marketing
communications because it commands the largest budget as well as the largest
number of agencies and professionals.
What Are Advertising’s Basic Functions?
Identification. Advertising identifies a product and/or the store where it’s sold. This
goes back as far as ancient times. Some of the earliest ads were simply signs with the
name or graphic image of the type of store – cobbler, grocer, or blacksmith.
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Information. Advertising provides information about a product. Advances in printing
technology at the beginning of the Renaissance spurred literacy and brought an
explosion of printed materials in the form of posters, handbills, and newspapers. The
word advertisement first appeared around 1655 and by 1660, publishers were using
the word as a heading in newspapers for commercial information.
Persuasion.Advertising persuades people to buy things. The Industrial Revolution
accelerated social change, as well as mass production. It brought the efficiency of
machinery not only to the production of goods, but also to their distribution. For
widespread marketing of products, it became important to have a recognizable brand
name. Also, large groups of people needed to know about these goods. P.T. Barnum
and patent medicine makers were among the advertising pioneers who moved
promotion from identification and information to a flamboyant version of persuasion
called “hype” - graphics and language characterized by exaggeration or hyperbole.
What Are the Key Components of Advertising?
Strategy: This is the logic behind the advertisement. It is stated through objectives
that may focus on areas such as sales, news, psychological appeals, emotion,
branding and brand reputation, as well as the position and differentiation of the
product from competition, and segmentation and targeting of the best prospects.
Message: This is the concept behind a message and how that message is expressed
based on research and consumer insights, with an emphasis on creativity and artistry.
Media:Various media have been used by advertisers over the centuries including
print, broadcast, outdoor, and now digital media. Targeting ads to prospective buyers
is done by matching their profiles to media audiences. Advertising agency
compensation was originally based on the cost of buying time or space in the media.
Evaluation: Effectiveness means meeting objectives, and in order to determine if that
has happened, there must be testing. Standards are set by professional organizations
and companies that rate the size and makeup of media audiences, as well as
advertising’s social responsibility.
Common Types of Advertising
Different types of advertising play different roles. We can identify eight different
types of advertising:
1. Brand advertising, the most visible type of advertising, is also referred to as
national or consumer advertising, focuses on the development of a long-term
brand identity and image.
2. Retail advertising or Local Advertising: This type of advertising focuses on
retailers, distributors, or dealers who sell their merchandise in a certain
geographical area. Retail advertising has information about products that are
available in local stores. The objectives focus on stimulating store traffic and
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creating a distinctive image for the retailer. Local advertising can refer to a
retailer, such as T.J. Maxx, or a manufacturer or distributor who offers products in
a fairly restricted geographic area.
3. Direct-Response Advertising tries to stimulate an immediate response by the
customer to the seller. It can use any advertising medium, particularly direct mail
or the Internet. The consumer can respond by telephone or mail, and the product
is delivered directly to the consumer by mail or some other carrier.
4. Business-to-Business Advertising: Business-to-business (B2B) advertising, also
called trade advertising, is sent from one business to another. It includes messages
directed at companies distributing products as well as industrial purchasers and
professionals, such as lawyers and physicians. Advertisers place most business
advertising in professional publications or journals.
5. Institutional Advertising, also called corporate advertising, focuses on
establishing a corporate identity or winning the public over to the organization’s
point of view. Tobacco companies, for example, run ads that focus on the positive
things they are doing. Ads for a pharmaceutical company showcasing its leukemia
treatment are another example of this type of advertising.
6. Nonprofit Advertising: Not-for-profit organizations, such as charities,
foundations, associations, hospitals, orchestras, museums, and religious
institutions use nonprofit advertising to reach customers, members, and
volunteers. It is also used to solicit donations and other forms of program
participation.
7. Public ServiceAdvertisingprovides messages on behalf of some good causes, such
as stopping drunk driving (as in messages from Mothers Against Drunk Driving)
or preventing child abuse. Advertising professionals usually create these
advertisements, also called public-service announcements (PSAs), pro bono
(free of charge) and the media often donate the necessary space and time.
8. Specific advertising areas, such as health care, green marketing, agribusiness, and
international address specific situations or issues and have developed specialized
advertising techniques and agencies.
Despite their differences, there are many commonalities among these seven
categories. All types of advertising demand creative, original messages that are
strategically sound and well executed, and all are delivered through some type of
media.
Advertisements can be developed as single ads largely unrelated to other ads by the
same advertiser. Or they can be developed as a campaign, a term that refers to a set
of related ads that are variations on the same theme.
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Is Advertising the Only Tool in the Promotional Toolkit?
Advertising’s original purpose was to sell something, but over the years, other
promotional tools with different sets of strengths have developed to help meet that
objective. They include publicity or public relations, direct-response advertising, and
sales promotion.
In other words, a variety of tools can be used to identify, inform, and persuade.The
proper name for this bundle of tools is marketing communication (marcom), an
umbrella term that refers to various types of promotional tools and communication
efforts about a brand that appear in a variety of media.
What Roles Does Advertising Perform?
In addition to marketing communication, advertising also has a role in the functioning
of the economy and society. This is illustrated in the ‘1984” commercial that launched
the Apple Macintosh. As you read about this commercial in the Matter of Practice
feature in this chapter, note how it demonstrated all four functions – marketing,
communication, social and economic.
Marketing and Communication Roles
In its marketing and communication roles, advertising transforms a product into a
distinctive brand by creating an image and personality that goes beyond
straightforward product features. As advertising showcases brands, it also creates
consumer demand and makes statements that reflect social issues and trends.
Economic and Societal Roles
Advertising flourishes in societies that enjoy economic abundance, in which supply
exceeds demand. In such societies, advertising extends beyond a primarily
informational role to create a demand for a particular brand. Creating buzz - getting
people to talk about the brand – has become an important goal of marketing
communication in this era of social media.
Most economists presume that because it reaches large groups of potential consumers,
advertising brings cost efficiencies to marketing, and thus, lowers prices to
consumers. As demand grows, as well as competition, prices begin to drop.
Two contrasting points of view explain how advertising creates economic impact. In
the first, the rational view, advertising is seen as a vehicle for helping consumers
assess value through price cues and other information, such as quality, location, and
reputation. Advocates of the first viewpoint see the role of advertising as a means to
objectively provide price/value information, thereby creating more rational economic
decisions. The second approach appeals to consumers making a decision on
non-price, emotional appeals. This type of advertising is believed to be so persuasive
that that it decreases the likelihood a consumer will switch to an alternative, product,
regardless of the price charged.
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Advertising mirrors fashion and design trends, thereby adding to our aesthetic sense.
It also has an educational role in that it teaches us about new products. It may also
expose social issues and help us shape an image of ourselves by setting up role
models with which we can identify. It also presents images that capture the diversity
of the world in which we live. These social roles have both negative and positive
dimensions.
How Did Current Practices And Concepts Develop?
Figure 1.2 in the textbook provides a timeline reflecting how the principles and practices
of this multibillion dollar industry have evolved. The timeline divides the evolution of
advertising into five stages, which reflect historical eras and the changes that lead to
different philosophies and styles of advertising.
The Early Age of Print:
Industrialization and mechanized printing spurred literacy, which encouraged
businesses to advertise beyond just their local places of business. Ads from these
early years look like what we call classified advertising today. Their objective was to
identify products and deliver information about them, including where they were
being sold. The primary medium of this age was print, particularly newspapers,
although handbills, posters, and hand painted signs were also important.
The Early Age of Agencies
The 19th century introduced the beginning of what we now recognize as the
advertising industry. During this era, the first ad agency was opened in 1848 in
Philadelphia and P.T. Barnum embarked one of the first campaigns. The commission
system for placing ads was begun and the account executive position was created.
As advertisers and marketers became more concerned about ads that worked,
professionalism in advertising began to take shape. This is also when it became
important to have a definition or a theory of advertising.
On the retail side, department store owner John Wanamaker hired a full-time
copywriter. Also, the newly founded McCann agency developed a philosophy that
emphasized the agency’s role in crafting the ad message, and the industry’s first trade
publication appeared in 1888.
By the end of the 19th century advertisers began to give their goods brand names.
The purpose of advertising during this period was to create demand, as well as a
visual identity for these new brands. Inexpensive brand name products, known as
packed goods, began to fill the shelves of grocers and drug stores. The questionable
ethics of hype and puffery came to a head in 1892.
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In Europe, the visual quality of advertising improved dramatically as artists who also
were illustrators brought their craftsmanship to posters and print ads, as well as
magazine illustrations. Because of the artistry, this period is known as The Golden
Age. The artist role moved beyond illustration to become the art director in 20th
century advertising.
The Scientific Era
In the early 1900s, professionalism in advertising was reflected by the beginnings of a
professional organization, which was officially named the American Association of
Advertising Agencies in 1917.
In the early 20th century, modern professional advertising adopted scientific research
techniques. Advertisers believed they could improve advertising by blending science
and art. During the 1930s and 1940s, Daniel Starch, A.C. Nielsen, and George Gallup
founded research organizations that are still a part of today’s advertising industry.
Targeting, the idea that messages should be directed at particular groups of
prospective buyers, evolved as media become more complex. In 1914, the Audit
Bureau of Circulation (ABC) was formed to standardize the definition of paid
circulation for magazines and newspapers. Media changes saw print being challenged
by radio advertising in 1922. Radio surpassed print in ad revenue in 1938.
The world of advertising agencies developed rapidly after World War II, led by the J.
Walter Thompson agency. The agency’s success was due largely to its creative copy
and the management style of the husband and wife team of Stanley and Helen Resor,
who introduced quite a few of the advertising concepts and practices still with us
today.
Television commercials came on the scene in the early 1950s and brought a huge new
revenue stream to the advertising industry. In 1952 the Nielsen rating system for TV
advertising became the primary way to measure the reach of TV commercials. This
period also saw marketing practices, such as product differentiationand
marketsegmentation incorporated into advertising. The idea of positioning was
developed in 1969.
The Creative Revolution
The creative power of agencies exploded in the 1960s and 1970s, a period marked by
the resurgence of art, inspiration, and intuition. Largely in response to the previous
emphasis on research and science, this revolution was inspired by three creative
geniuses: Leo Burnett, David Ogilvy, and William Bernbach.
The Era of Accountability and Integration
Starting in the 1970s, the industry-wide focus was on effectiveness. Clients wanted
ads that produced sales, so the emphasis was on research, testing, and measurement.
To be accountable, agencies and other marketing communication agencies recognized
that their work had to prove its value. The economic downtown and dotcom crash
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toward the end of the 20th century reinforced this imperative. Advertisers now
demanded proof that their advertisements accomplished its objectives as stated in the
strategy.
Social responsibility is also another aspect of accountability. In 1971 the National
Advertising Review Board was created to monitor questions of taste and social
responsibility. As the digital era brought nearly instantaneous means of
communication spreading word-of-mouth among a social network of consumers,
companies became even more concerned about their practices and brand or corporate
reputation. At the same time,consumers became even more concerned about business
ethics.
This is also the era when integrated marketing communication became
important.Integrated marketing communication (IMC) is another technique that
managers began to adopt in the 1980s as a way to better coordinate their brand
communication. Integration and consistency makes marketing communication more
efficient and thus more financially accountable.
The Social Media Era
Advertising and marketing communication practices have been turned upside down in
the years since 2008. Digital and online communication became important earlier in
the new century with brands and companies setting up websites and experimenting
with online advertising worldwide. With the launch of Facebook, Twitter, YouTube
and other vehicles for sharing thoughts, photos, and videos, the structure of consumer
communication has been radically altered.
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