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| The advertising business comprises four main groups: advertisers (clients), agencies, suppliers, and media. It employs a wide range of artists and businesspeople, sales reps and engineers, top executives, and clerical personnel. There are four main categories of advertisers based on their geographic activities: local, regional, national, and transnational. Local advertising is placed by businesses in a particular city or county and aimed at customers in the same geographic area. It is important because most sales are made or lost in the local arena. There are three types of local advertising: product, institutional, and classified. Product advertising can be further divided into regular price-line advertising, sale advertising, and clearance advertising. Institutional advertising creates a long-term perception of the business as a whole by positioning it within the competitive framework. Classified advertising is used to recruit new employees, offer services, and sell or lease new or used merchandise. Local advertisers are the consummate integrators of marketing communications. Successful local advertisers wear many hats every day, and many of their daily activities help advertise the business. Building relationships is a key element. Local advertisers can get creative assistance from local ad agencies, media, freelancers and consultants, creative boutiques, syndicated art services, and desktop publishers. Wholesalers, manufacturers, and trade groups often help with cooperative advertising. Regional advertisers operate in one or several states and market exclusively within that region. National advertisers operate in several regions or throughout the country and comprise the largest advertisers. Local and national advertisers differ in focus, time orientation, and resources. National advertisers focus on brand building, share of market, grand strategies, and market groups. Local advertisers focus on daily traffic, gross sales or volume, tactical solutions, and the individual customers they see every day. National advertisers have a long-term perspective, local advertisers a short-term one. National advertisers also have more money and more employees. A large company's advertising department may be centralized or decentralized. Each structure has advantages and disadvantages. The centralized organization is the most typical and may be structured by product, subfunction of advertising, end user, or geography. Decentralized departments are typical of large, far-flung organizations with numerous divisions, subsidiaries, products, countries, regions, and/or brands. Transnational advertisers face unique challenges. Their markets have a different value system, environment, and language with customers of different purchasing abilities, habits, and motivations. Media customary in the United States may be unavailable or ineffective. Companies therefore often need different advertising strategies. To manage their advertising, transnational advertisers use an international, multinational, or global marketing structure. Ad agencies are independent organizations of creative people and businesspeople who specialize in developing and preparing advertising plans, ads, and other promotional tools on behalf of their clients. Like their clients, ad agencies may be local, regional, national, or international in scope. Agencies can be classified by the range of services they offer and the types of business they handle. The two basic types are full-service agencies and specialized service agencies, such as creative boutiques, media-buying services, and interactive agencies. Agencies may specialize in either consumer or business-to-business accounts. The people who work in agencies may be involved in account management, research, account planning, creative services, production, traffic, media, new business, administration, or a host of other activities. Agencies may be organized into departments of functional specialties or into groups that work as teams on various accounts. Agencies charge fees or retainers, receive commissions from the media, or mark up outside purchases made for their clients. Some advertisers develop in-house agencies to save money by keeping agency commissions for themselves. However, they risk losing objectivity and creativity. Most agencies get clients through referrals, publicity on successful campaigns, advertising, personal solicitation, or networking. The client/agency relationship goes through four stages: prerelationship, development, maintenance, and termination. Numerous factors affect the relationship, including chemistry, communication, conduct, and changes. The suppliers in advertising are all the people and organizations that assist in the business. Examples are art studios and Web designers, printers, photoengravers, film and video houses, talent agencies, research firms, and consultants. The media of advertising include the traditional mass media of print, electronic, and out-of-home as well as more specialized channels such as direct mail, digital interactive media, and specialty advertising. Print media include magazines and newspapers as well as directories, Yellow Pages, school yearbooks, and special event programs. Electronic media include radio, TV, and cable TV. Out-of-home refers to billboard and transit advertising. Direct mail advertising is the most expensive medium on a cost-per-exposure basis but also typically is the most effective at generating inquiries or responses. Interactive media let customers participate, turning advertising from a monologue to a dialogue. In foreign markets, advertisers are faced with different media mixes, different legal constraints, and different economies of advertising. |