Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Five major decisions involve the mission, money, message, media and measurement
Advertising—the use of paid media by a seller to communicate persuasive information about its products, services, or organization—is a potent promotional tool. Advertising takes on many forms (national, regional, local, consumer, industrial, retail, product, brand, institutional, etc.) designed to achieve a variety of objectives (awareness, interest, preference, brand recognition, brand insistence).
Advertising decision-making consists of objectives setting, budget decision, message decision, media decision, and ad effectiveness evaluation. Advertisers should establish clear goals as to whether the advertising is supposed to inform, persuade, or remind buyers. The factors to consider when setting the advertising budget are: stage in the product life cycle, market share, competition and clutter, needed frequency, and product substitutability. The advertising budget can be established based on what is affordable, as a percentage budget of sales, based on competitors’ expenditures, or based on objectives and tasks, and based on more advanced decision models that are available.
The message decision calls for generating messages, evaluating and selecting between them, and executing them effectively and responsibly. The media decision calls for defining the reach, frequency, and impact goals; choosing among major media types; selecting specific media vehicles; deciding on media timing; geographical allocation of media. Finally, campaign evaluation calls for evaluating the communication and sales effects of advertising, before, during, and after the advertising.
Developing and managing an advertising program (An overview)
- Setting the advertising objectives—according to whether the aim is to inform, remind, or persuade
- Deciding on the advertising budget—five factors to consider include stage in the product life cycle, market share and consumer base, competition and clutter, advertising frequency, and product substitutability
- Choosing the advertising message—creative stage
- Message generation—utilizing an inductive versus deductive framework
- Message evaluation and selection—focus on one core selling proposition and aim for desirability, exclusiveness and believability.
- Message execution—impact depends not only on what is said but how it is said (positioning). Creative people must also find a style, tone, and format for executing the message
- Social responsibility review—make sure the creative advertising does not overstep social and legal norms
- Deciding on media and measuring effectiveness
- Deciding on reach (number of people exposed at least once), frequency (total number of times they are reached) and impact (qualitative value)
- The relationship between reach, frequency and impact, specific media, media timing, geographical allocation
a) Media selection: target audience, media habits, product, message, and cost
- Determining the most cost-effective media to deliver the desired number and type of exposures to the target audience
- Choosing among major media types
b) Target audience media habits
c) Product characteristics
d) Message characteristics
e) Cost (based on cost-per-thousand exposures criterion)
- New media—rethinking the options
f) Commercial clutter, advertorials, infomercials
g) Result is coming death of traditional mass media, as we know it—more direct and consumer control coming
- Allocating the budget—increasingly spent attracting attention than on the product itself
- Selecting specific vehicles—measures include:
h) Circulation, audience, effective audience, effective ad-exposed audience
i) CPM adjustments based on audience quality, audience-attention probability, editorial quality and ad placement policies
- Deciding on the media timing
j) Macro-scheduling (according to seasonal or business trends)
k) Micro-scheduling (allocating advertising expenditures within a short period to obtain the maximum impact)
l) Models for media timing: Kuehn (if no carryover and habitual behavior then percent of sales justified)
- Deciding on the geographical allocation
a) National versus international
b) Spot buying (ADIs and DMAs)
- Evaluating advertising effectiveness
a) Communication-effect research—copy testing, consumer feedback, portfolio tests, laboratory tests
b) Sales-effect research—share of voice and share of market, historical approach, experimental design
c) Advertising effectiveness: a summary of current research
Benefits of Advertising
Enormous human and material resources are devoted to advertising. Advertising is everywhere in today’s world .People are exposed to various forms of advertising through various advertising messages, media, billboards and techniques of every sort.
The General benefits of advertising are as follows.
a) Economic Benefits of Advertising
Advertising can play an important role in the process by which an economic system that is guided by ethical. It is a necessary part of the functioning of modern market economies, which today either exist or are emerging in many parts of the world. Advertising can be a useful tool for sustaining ethical competition that contributes to economic growth. It can help people by informing them about the availability of desirable new products and services and improvements in existing ones, helping them to stay informed, prudent consumer decisions, contributing to efficiency and the lowering of prices, and stimulating economic progress through the expansion of business and trade.
b) Benefits of Political Advertising
Political advertising can make a contribution economic situation in a market system. As free and responsible media in a democratic system help to counteract tendencies toward the monopolies, so political advertising can make its contribution by informing people about the ideas and policy proposals of parties and candidates, including new candidates not previously known to the public.
c) Cultural Benefits of Advertising
Because of the impact advertising has on media that depend on it for revenue, advertisers have an opportunity to exert a positive influence on decisions about media content. This they do by supporting material of excellent aesthetics and moral quality, and particularly by encouraging and making possible media presentations which are oriented to minorities whose needs might otherwise go unserved. Moreover, advertising can itself contribute to the betterment of society by uplifting and inspiring people and motivating them to act in ways that benefit themselves and others. Advertising can brighten lives simply by being witty and entertaining.
d) Moral Benefits of Advertising
In many cases social institutions use advertising to communicate their messages – messages of moral values ,ethics ,patriotism, responsibilities toward the needy, messages concerning health and education, constructive and helpful messages that educate and motivate people in a variety of beneficial ways.
Benefits of advertising from company’s view point:
1. Provides information
Consumer needs information about various products. The lack of information may make a consumer buy an inferior product, pay high price etc.
2. Improves brand image:
Advertisement helps improve brand image. Images are mental pictures of brands. The images projected are geared to match the needs and expectations of target audience. Favorable image help in generating brand loyalty and disposition to buy that brand.
3. Helps in Innovation:
Advertising is seen to perform this task effectively for new products. It reduces the risk of innovation. The cost of innovation can be more than recovered by the sales which advertising may generate and this encourages manufacturers to undertake research and development.
4. New Product Launch
Various strategies including advertising is used to make potential buyers of new products. Advertising can be used to promote new products and to inform changes in old products.
5. Growth of Media:
Advertising enhances the potential for raising advertising revenues. This helps in launching new publications and expanding the media.
Role of advertising
1. Communication with Consumers:
Advertising is a major way of establishing communication between manufacturers and other organizations providing services or trying to put across ideas and concepts, on the one hand, and customers, buyers and potential acceptors, on the other.
Advertising attempts to persuade prospective buyers to buy a product/service. In modern markets, the producer who is content with the advertising that merely identifies or informs may soon find himself in a vulnerable position.
3. Contribution to Economic Growth:
Advertising contributes to economic growth by helping to expand the market, particularly for new products, and by helping to develop new market segments.
4. Catalyst for change:
Creativity inherent in advertising leads to the discovery of new relationships that can change the perception of a prospect.
Functions of Advertising
1. Primary Functions
- Helps to increase sales
- Helps to reduce overall cost of sales
- Provides information about the product
- Persuasion of customers or dealers
- Receptiveness of new product
- Stimulates distribution of products
- Insurance for manufacturing business
- Confidence in quality
- To eliminate seasonal fluctuation
- To generate awareness and revenue
- Builds value, brand loyalty and preference
2. Secondary Functions
· To encourage salesmen and lend them moral support
· To furnish information
· To impress executives
· To impress factory workers
· To secure better employees
· To capture market
· To have an extra edge over the market
* Feeling of security
Advertising is a social waste
* Because it’s time consuming
* It does focus on specific group only.
* Waste of resources.
* Consumers are deceived by advertising.
* Misleading information to the public.
* It affects the health by having alcohols and cigarettes advertising.
* Consumers are paying for those advertisements because fess will be added into the price of the product.
* People are lured to buy products which is not needed and not within their reach. (propensity to consume)
Some critics view advertising as a waste of time, talent and money —In their view, not only does advertising have no value of its own, but its influence is entirely harmful and corrupting for individuals and society. Sometimes advertisements depict false assertions which create a false impact in individuals and society.
a) Economic Harms of Advertising
Advertising can betray its role as a source of information by misrepresentation and by withholding relevant facts. Sometimes the information function of media can be subverted by advertisers’ pressure More often, advertising is used not simply to inform but to persuade and motivate to convince people to act in certain ways, buy certain products or services This is where particular abuses can occur. Brand advertising can raise serious problems. Often there are only negligible differences among similar products of different brands, and advertising may attempt to move people to act on the basis of irrational motives like brand loyalty, status, fashion, instead of presenting differences in product quality and price as bases for rational choice.
b) Harms of Political Advertising
Political advertising can support and assist the working of the democratic system, but it also can obstruct it. This happens when the costs of advertising limit political competition to wealthy candidates or groups Political advertising seeks to distort the views and records of opponents and unjustly attacks their reputations. It happens when advertising appeals more to people’s emotions and base instincts — to selfishness, bias and hostility toward others, to racial and ethnic prejudice and the like — rather than to a reasoned sense of justice and the good of all.
c) Cultural Harms of Advertising
Advertising also can have a corrupting influence upon culture and cultural values.. In the competition to attract ever larger audiences and deliver them to advertisers, communicators can find themselves tempted — in fact pressured, subtly or not so subtly — to set aside high artistic and moral standards and lapse into superficiality Communicators also can find themselves tempted to ignore the educational and social needs of certain segments of the audience — the very young, the very old, the poor — who do not match the demographic patterns (age, education, income, habits of buying and consuming, etc.) of the kinds of audiences advertisers want to reach.
d) Moral and Religious Harms of Advertising
Advertising sometimes is used to promote products and inculcate attitudes and forms of behavior contrary to moral norms.
Characteristics of advertising
1. Advertising is paid form of communication.
2. Advertising is non personal communication.
3. Advertising has an identified sponsor.
4. Advertising can be controlled.
An advertising agency or ad agency is a service business dedicated to creating, planning and handling advertising (and sometimes other forms of promotion) for their clients. An ad agency is independent from the client and provides an outside point of view to the effort of selling the client’s products or services. An agency can also handle overall marketing and branding strategies and sales promotions for its clients.
An advertising agency acts in the fist place as a consultant to its client, the advertiser in formulating the advertising plans and translating them into advertising campians. The other role of ad agency, namely placing the advertisment, articles from its traditional association with the media.
Typical ad agency clients include businesses and corporations, non-profit organizations and government agencies. Agencies may be hired to produce single ads or, more commonly, ongoing series of related ads, called an advertising campaign.
Ad agencies come in all sizes, from small one- or two-person shops to large multi-national, multi-agency conglomerates such as Omnicom Group or WPP Group.
Some agencies specialize in particular types of advertising, such as print ads or television commercials. Other agencies, especially larger ones, produce work for many types of media (creating integrated marketing communications, or through-the-line (TTL) advertising). The “line”, in this case, is the traditional marker between media that pay a (traditionally 15%) commission to the agency (mainly broadcast media) and the media that do not.
Role / Functions of an advertising agency
1. Planning the advertisement campaign
2. Creation of the advertisement
3. Execution or placing the advertisement in various media vehicles.
4. Marketing and advertising Research
5. Sales promotion
6. Public relations
STRUCTURE OF ADVERTISING AGENCIES
An agency, depending on its size, will likely have different departments which work on the separate aspects of an account. An account manager or the account planning department will coordinate the work of these departments to insure that all the client’s needs are met. The departments within a full-service agency will typically include:
RESEARCH The research department will be able to provide clients with some details about the prospective audience of the final advertising campaign, as well as information about the market for the product being advertised. This should include specific market research which leads to a very focused ad campaign, with advertising directed to the ideal target audience.
CREATIVE SERVICES Advertising agencies employ experts in many creative fields that provide quality, professional services that conform to the standards of the industry. Copywriters provide the text for print ads, and the scripts for television or radio advertising. Graphic designers are responsible for the presentation of print ads, and the art department is responsible for providing the necessary images for whatever format advertisement is decided upon. Some agencies have in-house photographers and printers, while others regularly employ the services of contractors.
The individuals involved in creative services are responsible for developing the advertising platform, which sets the theme and tone of the ad campaign. The advertising platform should draw upon specific, positive features of the product advertised and extrapolate the benefits the consumer could expect to receive as a result of using the product. The campaign, through the development of this platform, should prove to be eye-catching, memorable, and in some way unique. The advertising that is remembered by consumers is that which stands out from the rest; it is the advertising agency’s (and specifically the creative services department’s) responsibility to provide this quality for their clients.
The final advertising provided by an agency should be fully developed and polished. Television commercials should be produced with professionalism; print ads should be attractive, informational, and attention-getting; radio spots should be focused and of high audio quality.
MEDIA BUYING One of the services provided by advertising agencies is the careful placement of finished advertisements in various media, with an eye toward maximizing the potential audience. The research search conducted by the agency will inform any media-buying decisions.
An agency will be able to negotiate the terms of any contracts made for placing ads in any of various media. A full-service agency will deal confidently with television, radio, newspapers, and magazines. Some agencies are also branching into direct mail marketing and point of purchase incentives; some agencies have expanded into Internet advertising; and some agencies will also place an ad in the local yellow pages, or utilize outdoor advertising or one of the more creative avenues of incidental advertising, such as commercial signs on public buses or subways or on billboards.
The media-buying staff of an advertising agency will draw on specific research done for the client, as well as on past experience with different media. Through this research and careful consideration, the agency will develop a media plan: this should be a fully realized plan of attack for getting out the client’s message. Some factors to be considered in the development of the media plan include:
Cost Per Thousand: This refers to the cost of an advertisement per one thousand potential customers it reaches. Media-buyers use this method to compare the various media avenues they must choose between. For example, television ads are considerably more expensive than newspaper ads, but they also reach many more people. Cost per thousand is a straightforward way to evaluate how to best spend advertising dollars: if a newspaper ad costs $100 and potentially reaches 2,000 customers, the cost per thousand is $50. If a television ad costs $1000 to produce and place in suitable television spots, and reaches a potential of 40,000 viewers, the cost per thousand is only $25.
Reach: This term is used when discussing the scope of an advertisement. The reach of an ad is the number of households which can safely be assumed will be affected by the client’s message. This is usually expressed as a percentage of total households. For example, if there are 1,000 households in a town, and 200 of those households receive the daily paper, the reach of a well-placed newspaper ad could be expressed as 20 percent: one-fifth of the households in the community can be expected to see the advertisement.
Frequency: The frequency of a message refers to how often a household can be expected to be exposed to the client’s message. Frequency differs widely between media, and even within the same medium. Newspapers, for example, are read less often on Saturdays, and by many more households (and more thoroughly) on Sundays. Fluctuation like this occurs in all media.
Continuity: The media-buyer will also need to consider the timing of advertisements. Depending on the client’s product, the ads can be evenly spread out over the course of a day (for radio or television advertisements), a week (for radio, television, or print advertisements), or a month (radio, television, print, or other media). Of course, seasonal realities influence the placement of advertisements as well. Clothing retailers may need to run more advertisements as a new school year approaches, or when new summer merchandise appears. Hardware stores may want to emphasize their wares in the weeks preceding the Christmas holiday. Grocery stores or pharmacies, however, might benefit from more evenly distributed advertising, such as weekly advertisements that emphasize the year-round needs of consumers.
DAGMAR APPROACH & HIERARCHY OF EFFECTS MODEL
Russell H Colley (1961) prepared a report for the association of national advertisers titled defining Advertising Goals for Measured Advertising Results (DAGMAR). He developed a model for setting advertising objectives and measuring the results of an ad campaign. According to this model, communications effect is the logical basis for setting advertising objective and goals against which results should be measured.
In Colley’s words
“Advertising job purely and simply is to communicate to a defined audience information and a frame of mind that stimulate action. Advertising succeed or fails depending on how well it communi-cate the desired information and attitude to the right time and at the right cost.”
There are no significant differences between Colley’s proposed model and other important hierarchy of effects models. One important contribution of DAGMAR was its ability to clarify what continuous a good objective. According to Colley, the objective should have the following features:
- Stated in term of concrete and measurable communication tasks.
- Specify a target audience.
- Indicate a benchmark or standard starting point.
- Specify a time period for accomplishing the objective or objectives.
Concrete measurable tasks
The DAGMAR approach requires that the measurement procedure should also be specified. There must be a way to determine whether the intended ad message has been communicated properly to the target audience. If the ad message communicates that brand X is the best on Q attribute, then a questionnaire may include the request, “rank the following brands on best Q attribute.” The responses could be quantified to mean percentage of audience who rated brand X as the best on Q attribute.
Another important feature of good objectives is the specification of a well-defined target audience. Though the primary target audience for a company’s product or service is describe in situation analysis, yet it may need some refining.
For example, user of a product may be further categorized as heavy, medium or light users.
Benchmark and degree of change sought
It is important to know the target audience’s present status with respect to responses variable and then determine the degree of change desired by the advertising campaign.
Assessment and criticism of DAGMAR approach
The DAGMAR approach has had an enormous influence on the advertising planning process and objective setting. It has focused the advertiser’s attention on the important and value of using communication-based objectives as against sales based objectives to measure the impact and success of an ad campaign.
The approach has not been totally accepted by everyone in the advertising field. A number of questions have been raised concerning its value as an advertising planning tool.
- Problems with responses hierarchy
- Sales as the advertising goal
- Practicality and costs
- Inhibits creativity
Among advertising theories, the hierarchy-of-effects model is predominant. It shows clear steps of how advertising works, even though it has been criticized on some points, such as that people do not exactly follow these sequences. There are various versions of hierarchy-of-effects model. AIDA model is initiatory and simplest.
Awareness à Interest à Desire à Action
AIDA model was presented by Elmo Lewis to explain how personal selling works. It shows a set of stair-step stages which describe the process leading a potential customer to purchase. The stages, Attention, Interest, Desire, and Action, form a linear hierarchy. It demonstrates that consumers must be aware of a product’s existence, be interested enough to pay attention to the product’s features/benefits, and have a desire to benefit from the product’s offerings. Action, the fourth stage, would come as a natural result of movement through the first three stages. Although this idea was rudimentary, it led to the later emerging field of consumer behavior research.
Hierarchy-of-effects models have many variant models. DAGMAR (Defining Advertising Goals for Measured Advertising Results) model suggests similar but different steps.
Awareness à Comprehension à Conviction à Action
DAGMAR model suggests that the ultimate objective of advertising must carry a consumer through four levels of understanding: from unawareness to Awareness—the consumer must first be aware of a brand or company; Comprehension—he or she must have a comprehension of what the product is and its benefits; Conviction—he or she must arrive at the mental disposition or conviction to buys the brand; Action—finally, he or she actually buy that product.
Determining the Advertising Budget
An important goal in determining the size of an advertising budget is to maximize profits. To achieve this goal, even approximately, is a very complex problem. Many procedures or rules have been adopted to provide what appears to be a reasonable answer from one point of view or another, but which, most people in the business would agree, are very crude at best. Hence, such approaches as “percentage-of-sales,” “all-you-can-afford,” “objective-and-task” and “competitive-parity,” are used because “scientific” approached either don’t exist, or have not been able to prove their superiority.
The difficulties of devising a scientific approach are fairly well know. The multitude of factors involved and the scarcity of relevant and accurate data are only two of many which could be listed.
The theoretical underpinning of an advertising-budget decision is based on marginal analysis and is easily expressed. A firm would continue to add to the advertising budget as long as the incremental expenditures are exceeded by the marginal revenue they generate.
Budgeting Decision Rules
There are several decision rules on which many firms dray in making budget decisions. Four such rules will be described. The rules are basically justified by arguing that budgets based on them are unlikely to be far from the actual optimal budget if a marginal analysis could be performed. In some cases, the rules are used in combination, the net budget being a compromise among several.
* Percentage of Sales
One rule of thumb used in setting advertising budgets is the percentage of sales. Past sales or a forecast of future sales can be used as the base. A brand may have devoted 5% of its budget to advertising in the past. Thus, if the plan calls for doing $40 million worth of business next year, a $2 million advertising budget might be proposed. A similar decision could be based upon market share. For example, a brand could allocate $1 million for every share point it holds.
The percentage-of-sales guide is the most common approach to setting advertising budgets. If a firm or brand has been successfully over several years using the percentage-of-sales approach, it might be assumed that the decision rule yielded budgets reasonably close to the optimal, so there is little incentive to change to another approach in setting budgets. The rule does tend to make explicit the marketing-mix decision, the allocation of the budget to the various elements of the marketing program. Furthermore, it provides comfort to a prudent financial executive who likes to know that her or his firm can afford the advertising. Finally, if competitors also use such a rule, it leads to a certain stability of advertising within the industry, which may be useful. If there is a ceiling on the size of the market, it is wise to avoid precipitating a war over advertising expenditure.
* All You Can Afford
Firms with limited resources may decide to spend all that they can reasonably allocate to advertising after other unavoidable expenditures have been allocated. This rule usually ensures that they are not advertising too heavily, that advertising moneys are not being wasted. It thus does have some logic. Of course, if the value of more advertising could be demonstrated, extra money could usually be raised, so the limitation may be somewhat artificial.
* Competitive Parity
Another guide is to adjust the advertising budge so that it is comparable to those of competitors. The logic is that the collective minds of the firms in the industry will probably generate advertising budgets that are somewhat close to the optimal. Everyone could not be too far from the optimal. Furthermore, any departure from the industry norms could precipitate a spending war.
* Objective and Task
Objective and task, more an approach to budgeting than a simple decision rule, is used by two-thirds of the largest advertisers. An advertising objective is first established in specific terms. For example, a firm may decide to attempt to increase the awareness of its brand in a certain population segment to 50 percent. The tasks that are requited to accomplish this objective are then detailed. They might involve the development of a particular advertising campaign exposing the relevant audience an average of the five times. The cost of obtaining these exposures then becomes the advertising budget. This approach assumes that there is a causal flow from advertising to sales. In effect, it represents an effort to introduce intervening variables such as awareness or attitude, which will presumable be indicators of future sales as well as immediate sales.
1. Task Definition: The objective of the advertising programme, are to be defined. The objectives may be to
– Close an immediate sale
– Increase sales
– Create awareness
– Building company goodwill and corporate image.
2. Determining the type of strategy, media, and amount of exposu