Marketing Chapter 13 Paid Media Paid Media Content Key Objectives Describe How

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Chapter 13: Paid Media

Chapter 13

Paid Media

CHAPTER CONTENT

KEY OBJECTIVES

1. Describe how marketers make effective decisions about advertising in published media, such

as newspapers and magazines.

2. Explain the factors media planners consider when making place-based (out-of-home) media

advertising decisions.

3. Explain how online advertising works.

CHAPTER OVERVIEW

This chapter will review the paid media category. It will discuss the traditional

advertising media industries, sometimes called legacy media, which dominate

the paid media category. The chapter provides an overview of traditional media,

their characteristics, and their strengths and weaknesses. It also discusses how

traditional media is changing. Not only are these traditional media formats

changing, so are the ads that appear in them. The chapter details how all media

CHAPTER OUTLINE

TRADITIONAL PAID MEDIA

 Traditional advertising media include print, broadcast, out-of-home, and online

media, as well as other nontraditional or alternative forms. Those are the major

groups of the paid media category used in brand communication, and they usually

demand a big share of the brand communication budget. They also play a huge role

in creating brand visibility.

 There are also specific media tools from the marketing communication areas of public

relations, promotions, sales, and merchandising that are traditional in the sense that

they’ve been around for a long time and are widely used.

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 Paid media are used primarily in advertising. Advertisers pay a fee to media in order

to present brand messages in their various vehicles—usually space and time in print,

broadcast, out of home, or online. Paid media can provide wide reach, as in television

audiences, or they can be tightly targeted, as in outdoor boards or magazines directed

to small niche audiences.

 The advertiser controls the size and timing of the message placement, but has no

control over whether readers or viewers will notice the ad. There tends to be lots of

clutter in traditional media. This can lead to avoidance by the media user—turning the

page, leaving the room when television ads come on, changing channels, or zipping

through television ads.

Published Print Media

 Print media vehicles include newspapers, magazines, brochures, and other printed

surfaces, such as posters and outdoor boards. Magazines and newspapers have

expanded their message delivery online, but billions of dollars are still spent on

traditional print media.

 Principle: Print media generally provide more information, rich imagery, and a

longer message life than other media forms.

 Consumers also find that reading a print publication is more flexible than watching

or listening to broadcast because they can stop and reread, read sections out of order,

or move through the publication at their own speed and on their own time. Because

Published Media: Newspapers

 Newspapers’ primary function is to carry news. Marketers with news to announce,

such as a special sale or new product, may find newspapers to be a comfortable

environment. Studies have found that people consider many ads—that is, commercial

information—to be news too.

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 With more than 6,400 national and local papers in the United States, newspapers

remain an important but primarily local medium. However, big dailies in the 500

largest markets account for only 1,300 of those papers, which means that most

newspapers are small, and many of them are rural and suburban weeklies.

 Consumers still consider newspapers to be a trusted and reliable source of

information. Nielsen Scarborough also found that more than 169 million adults in the

 As audiences have moved online for their news, major newspapers have responded to

the challenge of retaining and engaging readers by providing well-designed news

websites. Major newspapers’ web traffic now far surpasses their circulation, and the

number of website visitors and average minutes per visit have been rising for half of

the top 50 papers. In response, newspapers have beefed up their digital ad offerings,

 The primary characteristic of circulation is geography—whether the publication is

national, regional, or local. The Wall Street Journal and USA Today are national

newspapers and have the two highest circulations. Both have gone through major

redesign programs to update their looks and appeal more to younger audiences. The

online USA Today page also has been redesigned to be more readable on phones and

tablets.

 Decreasing subscriptions, however, have been a problem as readers have migrated to

online versions and dropped their print subscription. We can’t ignore the impact of

the digital revolution on newspapers with devoted readers wondering if their cup-of-

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Industry Structure

 Newspapers can be categorized according to their publication frequency, such as

dailies, weeklies, and Sunday editions. Retailers like to place ads and press releases in

daily newspapers because their lead time (the advance time needed to produce a

publication) is short. Food stores, for example, can change offers and pricing quickly

depending on product availability.

 Although newspapers go to a mass audience, they offer some market selectivity,

which allows them to target specific consumer groups. Examples of market selectivity

are special-interest newspapers (e.g., for coin collectors); ethnic editions, such as

Spanish-language papers; special-interest sections (business, sports, and lifestyle);

Newspaper Advertising

 Newspaper formats come in two typical sizes: broadsheet and tabloid. The broadsheet

format—think any large metropolitan or national paper, such as the New York Times

or USA Today—is typically 11 to 12 inches wide and 20 or more inches long.

Tabloids are smaller and typically measure around 11 by 17 inches. Tabloids are

popular in urban areas where readers may read them on buses or subways.

 Most advertising sales are handled locally by the sales staff of the newspaper;

however newspaper representatives (called “reps”) sell space for many different

newspapers. This saves an advertiser or its agency from the need to make a multitude

of buys to run a national or regional campaign in newspapers. The system is known as

one-order, one-bill. The Newspaper National Network (www.nnnlp.com) is a

partnership of newspaper companies that place ads in newspapers across the country.

Google has also gotten into this business, allowing advertisers to buy ads in daily

newspapers through its website.

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 Another alternative that allows national advertisers to pay the local rate is cooperative

(co-op) advertising with a local retailer. Co-op advertising is an arrangement

between the advertiser and the retailer whereby the retailer buys the ad and then the

Types of Newspaper Advertising

Three types of advertising are found within the local newspaper: retail/display, classified,

and two types of inserts (magazine supplements and preprints). Most of these are found

online as well as in the print form of the newspaper:

 Display The dominant form of newspaper advertising is display advertising. Display

ads can be any size and can be placed anywhere in the newspaper except the editorial

page. Display ads can even be found in the classified section. Display advertising is

 Classified Two types of classified advertising include advertising by individuals to

sell their personal goods and advertising by local businesses. These ads are arranged

according to their interest to readers, such as “Help Wanted” and “Real Estate for

 Supplements Newspaper supplements are magazine-style publications inserted into a

newspaper, especially in the Sunday edition, that are either syndicated nationally or

prepared locally. Syndicated supplements, such as Parade and USA Weekend, are

provided by an independent publisher that sells its publications to newspapers. These

supplements also carry national advertising.

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 Self-promotion, or house ads, is the type of advertising used by newspapers—and

other media—to promote themselves. House ads in newspapers are usually set up in

advance to help fill the layout where there is space left after the news stories and

other ads have been placed. But newspapers may also use other media forms to

promote themselves.

Published Media: Magazines

Most American adults read at least one magazine per month, and they spend more time

with magazines than with other print media. Similar to other mass media, magazines

were hurt by the recession but seem to be slowly bouncing back.

 Quality of reproduction is one of the biggest strengths of magazines. It allows the

advertiser’s products and brand image to be presented in a format superior to the

quality of newspapers.

The Magazine Industry

 The magazine industry hasn’t suffered as much from the recession and changing

media environment as newspapers, although, like most print media, it has been

threatened by the digital revolution. A number of well-respected magazines have

disappeared, but one of the most surprising was the announcement in 2012 that

Newsweek would no longer appear in print, only online.

 Magazine revenues come from advertising, subscriptions, and single-copy sales.

According to the Magazine Publishers Association, advertising contributes 55 percent

of magazine revenue and circulation is 45 percent (subscriptions 32 percent; single-

copy sales 13 percent). Some publications, such as People, are more dependent on

single-copy sales, which tend to be impulse buys.

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 Traditional delivery, called controlled circulation, is through newsstand purchases

or home delivery via mail. These are measured media, and their circulation or sales

can be determined.

 Nontraditional delivery, referred to as uncontrolled circulation, means that the

magazine is distributed free to specific audiences. In addition to mail, other

nontraditional delivery methods include hanging bagged copies on doorknobs,

inserting magazines in newspapers (such as Parade magazine), delivering through

professionals’ offices (doctors and dentists), direct delivery (company magazines or

those found on airplanes), and electronic delivery, which is being used by

organizational and membership publications, such as university alumni magazines.

 Sophisticated database management lets publishers combine the information available

from subscriber lists with other public and private lists to create complete consumer

profiles for advertisers. These databases, combined with new technologies, have

made personalized publishing a reality. For example:

 Satellite transmission, along with computerized editing technology, allows

magazines to print regional editions with regional advertising. This technology also

permits publishers to close pages (stop accepting new material) just hours before

press time (instead of days or weeks, as in the past) so that advertisers can drop up-to-

the-minute information in their ads.

Types of Magazines

The focus of the audience interest is the number one factor in classifying magazines. The

two main types of audiences that magazines target are consumer and business audiences.

 Business magazines target business readers; they include the following types of

publications:

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 Professional magazines aimed at physicians, lawyers, and other professionals

 Farm magazines are aimed at those working in agriculture

 Business magazines are also classified as vertical or horizontal publications.

 Vertical publications present stories and information about an entire industry.

Women’s Wear Daily, for example, discusses the production, marketing, and

distribution of women’s fashions.

 In terms of vehicle selection, the following factors influence how media planners fit

magazines into their media.

 Geography. Geographic editions help encourage local retail support by listing the

names of local distributors in the advertisements. Most national magazines also

offer a zoned edition that will carry different ads, and perhaps different stories,

depending on the region of the country.

 Demographics. Demographic editions group subscribers according to age,

income, occupation, and other classifications.

 Media planners look for readership patterns that match their target audience and

positioning strategy. For both female and male targeted magazines, their positions

are different relative to their readership. The patterns in both the male and female

magazine category are equally competitive and complex.

Magazine Advertising

Advertising in magazines is generally highly targeted because most magazines are

designed to reach consumers through their special interests. Magazine advertising

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 The emphasis on graphics encourages creativity, good design, and interesting

production technique.

 Normally, the largest unit of ad space that magazines sell is the double-page spread,

in which two ad pages face each other.

 A double-page ad design must bridge or jump the gutter, the white space running

between the inside edges of the pages, meaning that no headline words can run

through the gutter and that all body text is on one side of the spread or the other.

 Another popular format is a special advertising page or section that looks like regular

editorial pages but is identified by the word “advertisement” at the top. Called

advertorials, the content is usually an article about a company, product, or brand that

Published Media: Directories

 Directories are books like the Yellow Pages that list the names of people or

companies, their phone numbers, and their addresses. In addition to this information,

many directories publish advertising from marketers who want to reach the people

who use the directory.

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 Print business phone directories are a $3 billion industry, and 40 percent of

Americans consult one at least once a year. Although many view them as obsolete,

usage is stronger among older consumers and in rural areas.

Broadcast Media: Radio

The reason advertisers like radio is that it is as close as we can come to a universal

medium. Mostly all Americans listen to radio in some form – either over the air or

streaming from internet-based services, such as Pandora or Spotify. Virtually every

household in the United States (99 percent) has at least one radio, and most have multiple

sets. And almost everybody listens to radio at some time during the day.

 Radio is a talk, news, or music-driven medium where advertisements can also engage

the imagination to create stories in the mind. In terms of our Facets of Effects Model,

broadcast media are often more entertaining, using drama and emotion with audio to

attract attention and engage the feelings of the audience.

 If done right, radio can engage the imagination more than other media because it

relies on the listener’s mind to fill in the visual element.

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The Radio Industry

There are more than 10,000 commercial radio stations, and most of them, except for the

new internet stations, serve a local market. In recent years the industry’s growth has been

slow. Radio is tightly targeted based on special interests (religion, Spanish language, and

talk shows) and musical tastes. About 85 percent of the radio stations are focused on

music. Program formats offered in a typical market are based on music styles and special

interests, including hard rock, gospel, country and western, top-40 hits, soft rock, golden

oldies, and non-music programs, such as talk radio and advice, from car repair to finances

to dating.

In addition to digital forms, radio stations in the United States broadcast signals in several

formats:

 Cable Radio Launched in 1990, cable radio technology uses cable television

receivers to deliver static-free music via wires plugged into cable subscribers’ stereos.

 Satellite Radio can deliver your favorite radio stations, regardless of where you are in

the continental United States. For a monthly fee, the system allows you to access

more than 100 channels.

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 Public Radio Stations are usually affiliates of National Public Radio (NPR) and carry

much of the same programming, although they have to buy or subscribe to the NPR

services. For that reason, some local public radio stations might carry a full range of

NPR programming, while others that are less well funded may carry only a partial list

of NPR programs.

o Public radio stations are considered noncommercial in that they rely on listener

support for most of their funding. In recent years, however, they have slowly

expanded their corporate sponsorship messages or underwriting, which has

increased along with the audience size. Public radio is one of the few media that

can deliver an audience of well-educated, affluent consumers.

Radio Advertising

Media planners use radio to deliver a high level of frequency because radio commercials,

particularly jingles, which are commercials set to music, lend themselves to repetition.

Let’s review the categories of national radio buys:

 Network Radio Advertising can be bought from national networks that distribute

programming and advertising to their affiliates. A radio network is a group of local

affiliates connected to one or more national networks through telephone wires and

 Spot Radio Advertising—Both Local and National Spot advertising lets an

advertiser place an advertisement with an individual station rather than through a

network. Spot radio advertising makes up nearly 80 percent of all radio advertising.

In large cities, 40 or more radio stations may be available. Local stations also offer

flexibility through their willingness to run unusual ads, allow last-minute changes,

 Syndicated Radio Advertising is the original type of radio providing programming

that plays on a large number of affiliated stations, such as the TED Radio Hour, Fox

Sports Radio, America Now, and This American Life, which has a weekly audience

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 Television advertising is embedded in programming, so most of the attention in

media buying, as well as in the measurement of television advertising’s effectiveness,

is focused on the performance of various shows and how they engage their audiences.

Structure of the Industry

Considering TV’s structure and programming options helps to better understand how

television works. The main types of television delivery systems include network,

subscription (cable and satellite), pay programming, local and public television, and

syndication.

Broadcast network is a distribution system that provides television content to its

affiliated stations. Currently, there are four national, over-the-air television networks

in the United States: the American Broadcasting Company (ABC), the Columbia

Network Television dominates the television landscape with its $9.15 billion in

advertising revenue, and 150 affiliates. The networks sell commercial time to national

advertisers for placement on programs that play throughout the network.

 Some time is left open for affiliates to fill with local advertising. Affiliates pay their

respective networks 30 percent of the fees they charge local advertisers. In turn,

affiliates receive a percentage of the advertising revenue (12 to 25 percent) paid to the

national network. Advertising is the primary source of affiliate revenues.

 National advertisers sometimes buy local advertising on a city-by-city or station-by–

station basis, using spot buys. They do this to align the buy with their product

distribution, to “heavy-up” a national schedule to meet competitive activities, or to

launch a new product in selected cities.

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 A second decision is time availability, television programs are slotted into time

categories. The price of a commercial is based on the rating of the surrounding

program (note the rating is for the program, not the commercial). The price is also

based on the daypart during which the commercial is shown. The following table

shows the Television Standard Dayparts. The most expensive time block is prime

time.

Standard Television Dayparts

Early morning M–F 7–9 a.m.

Daytime M–F 9 a.m.–4:30 p.m.

Early fringe M–F 4:30–7:30 p.m.

 Although these time slots are important to media planners, they are vulnerable to

 Avoidance of television advertising is easy to do with your remote control.

 Time-shifting using a DVR such as TiVo, allows users to record favorite

television shows and watch them whenever they like. The technology makes it

possible to record the programming, letting users pause, do instant replays, and

 With DVR-recorded programs, consumers can zip past (fast-forward through)

commercials completely or zap them by changing to another channel. These

practices are forcing advertisers to rethink the design of their ads, recognizing that

they only have a few moments to win the attention of viewers.

 TiVo has also announced that it is considering a service that will provide second-by-

second data about which programs the company’s subscribers are watching and

which commercials they are skipping.

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 Satellite television networks and networks are battling over the ad-skipping. The

Auto-Hop feature available on Dish and other DVR systems is seen as copyright

infringement by the networks.

 Participations (network) Most commercials are sold as participations, where network

advertisers pay for commercial time during one or more programs. The advertiser can

buy any time that is available. This approach, which is the most common one used in

network advertising today, provides a great deal more flexibility in market coverage,

target audiences, scheduling, and budgeting.

 One problem that media buyers must negotiate is the fact that the “time avails” for the

most popular programs are often bought up by the largest advertisers or media-buying

agencies, leaving fewer good time slots for small advertisers.

Sponsorships can have a powerful effect on the viewing public, especially because the

advertiser can control the content and quality of the program as well as the placement and

length of commercials. However, the costs of producing and sponsoring a 30 or 60-

minute program make this option too expensive for most advertisers.

Several advertisers can produce a program jointly as an alternative to single sponsorship.

This plan is quite common with sporting events, where each sponsor receives a 15-minute

segment.

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Target Audiences and Viewers

 Targeting occurs by matching the programs with information about their viewership.

Some programs are media stars and reach huge audiences—the Super Bowl is a good

example. Other programs reach small but select audiences, such as The News Hour on

PBS.

 An overlooked television audience is the 50-plus boomer crowd. As younger viewers

move to online venues, these older folks stay loyal to their televisions, remote

controls, and shows like 60 Minutes, NCIS, and Blue Bloods.

New Television Technology

New technology is having an impact on programming options, as well as on distribution

patterns and systems. Innovations such as high-definition TV and interactive TV expand

advertising opportunities.

 High-definition TV (HDTV) is a type of TV standard that delivers movie-quality,

high-resolution images. As stations upgraded their equipment and moved to HDTV

by 2009, the increased availability of HDTV programming made it necessary for

consumers to upgrade to HDTV sets.

 Addressable television allows companies to design and deliver ads to individual

households based on consumers’ interests, behavior, demographics, and readiness to

buy. These ads arrive through Internet Protocol television (e.g., via a computer,

phone, or Roku) and through set-top boxes (cable, satellite). For example, Viacom

has partnered with Roku to use Roku’s data to send tailored messages to custom

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 3-D Television is coming to living rooms largely because of the popularity and

innovations developed for 3-D movies. 3-D sets, as well as set-top boxes, are being

tested by Japanese and Korean electronics rivals; Sony and ESPN are particularly

focused on this new market.

 Streaming video is a process by which video programs—television, movies,

YouTube creations, even video games—are sent to computers and other electronic

devices, such as smart phones and tablets. This practice has created a nightmare for

OUT-OF-HOME MEDIA

While many media have seen cutbacks and reductions in spending, out-of-home media

has experienced resurgence. This is because it complements other media well (e.g., radio)

and is well-suited to reach an ever-busy and on-the-go consumer marketplace.

Movie Advertising

Movie theaters sell time at the beginning of their film showings for commercials, called

trailers. Most of these trailers are previews advertising upcoming films, but some are

national commercials for brands, ads for local businesses, PSAs, or other forms of