Advertising

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Research

Advertising agencies employ research for both strategic and evaluative purposes. Strategic research enables the agency to better understand how consumers use a product or service and how they regard the product or service. Strategic research also determines the types of people most likely to buy the product. That group of people is called the target market. Advertisers have limited budgets so knowing who is most likely to buy a particular product helps them spend their advertising budget more efficiently. Evaluative research is used after the advertising has run and seeks to determine how well consumers remember the advertising message and how persuasive it was. Evaluative research is expensive, and as a result, many advertisers do not employ it. Instead, they try to measure the advertising's effectiveness by analyzing sales results.

Agencies use both qualitative and quantitative research methods. Agencies employ qualitative research to gain an initial understanding of the marketing situation (see Marketing). This research method uses open-ended questions that allow consumers to explain their values, beliefs, and behaviors at length. One of the most common qualitative research techniques is the focus group in which a moderator leads a small group of consumers in a candid discussion of a particular product category, service, or marketing situation.

Agencies use quantitative research to determine a final course of action. This type of research uses close-ended questions in which answers are selected from a set list. This enables the researcher to determine the exact percentage of people who answered yes or no to a question or the exact percentage choosing answer a, b, or c. One of the most common quantitative research techniques is the survey in which researchers use a questionnaire to gain information from a large group of people, called a sample. Statistical studies show that if the sample is large enough, about 1,000 people, and is representative of a particular group (for example, working mothers who buy disposable diapers), then the findings from the sample are considered true, or statistically valid, and can be extended to the entire group of consumers in that category. The findings provided by quantitative research are therefore conclusive in a way that qualitative research cannot be.

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Media Buying

Once the target audience has been identified, an agency's media department determines the most effective way of delivering the message to that target. The media planner is the person who decides which media will be used. The media planner must consider three factors: (1) the number of people to be exposed to the message, known as the reach, (2) the number of times each person needs to be exposed to the message in order to remember it, known as the frequency, and (3) the costs.

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The media planner wants to reach the largest possible percentage of the target audience. To accomplish that goal, the media planner must employ the media that have audiences closely resembling the target audience. If the target is very broad, such as the national market for medium-priced automobiles, the media planner will probably select network television, which has a broad reach. If the target is more narrow and specialized, then the media that reach a more specialized audience, such as magazines, would be selected. Moreover, since not all members of the narrow target audience read the same magazines, the media planner might employ a range of magazines to reach a larger percentage of the intended consumer.

The media planner must also determine how frequently the advertising should run in each medium. Frequency is important because repetition helps the consumer remember both the product and the advertising message.

Finally, because no advertiser has an unlimited amount of money to spend, cost is also a factor. The media planner must choose those media that will enable the advertiser to reach the largest percentage of the target with enough frequency for the message to be remembered without exceeding the advertiser’s budget. Once this media plan has been put together, the agency's media buyer contacts the media on behalf of the client in order to purchase advertising space or time at the best possible rate.

Often an advertising campaign will employ many types of media. For example, to help advertise a medium-priced automobile, the ad campaign may consist initially of national television advertising to raise brand awareness, followed by local newspaper and radio advertising to reinforce the message and to direct consumers to a special sale at a local dealer.

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Creative Work

Once the types of media have been determined, the agency's creative department develops the presentation of the ads. The principal figures in the creative department are the copywriter and the art director. The copywriter is the person who writes the advertising message. The art director is the person who oversees the design of the ad. The copywriter and the art director work together to find creative ways to deliver the message that research found would have the greatest appeal to the target audience.

The creative team begins by familiarizing itself with the product and the research. Often the creative team will 'kick around ideas' or “brainstorm,” a process in which one idea is allowed to stimulate another without reaching a decision about whether any of the ideas are valid. Such free association often leads to unexpected approaches that might never have resulted from more logical thinking.

Once the brainstorming has produced a wide range of ideas, the team then evaluates the various proposals and selects the best to present to the client. For example, if the team selects an idea for a television commercial, they present the idea to the client as a storyboard. The storyboard consists of a sequence of drawings indicating how the TV commercial's story or action will unfold. Or the team may design print ads for the client as layouts in which the various elements—the headline, photograph or illustration, and body copy—will appear as intended for publication in a magazine or newspaper.

Print ads and television commercials use a variety of techniques to deliver their messages. Testimonials and endorsements can lend both prestige and credibility to a product. Seeing an athletic superstar, for example, endorse a particular brand of athletic shoe makes the brand seem more prestigious and suggests that it must be good because a professional uses it. Superiority is also often demonstrated through product comparisons–for example, by showing that one brand of paper towels absorbs more spilled liquid than another or that in consumer taste tests one beverage is preferred over another. But because more and more competing products are virtually identical to one another, advertisers frequently use image advertising to distinguish their products. Image advertising surrounds the product with a 'halo of positive associations' by using the same character or theme year after year.

Most advertising appeals to people’s emotions, particularly the emotional needs for love and belonging, prestige and self-esteem. Manufacturers of luxury and fashion products, for example, frequently appeal to the desire for esteem and prestige. Advertising for a line of clothing, such as Ralph Lauren’s Polo clothes, may associate the product with the lifestyle of wealthy landowners. Those who buy the clothing purchase it, in part, because they want to be identified with that prestigious lifestyle. Makers of personal care products, on the other hand, often suggest that buying their products will enable consumers to experience love and acceptance. Advertising for perfume or cologne conveys the message that the product makes users more sexually attractive. Personal care products such as breath mints and dandruff shampoos, on the other hand, usually play upon consumers’ fears and dramatize the rejection that results from failing to use the product. The implication is that product usage brings love and acceptance.

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Production

Art directors and copywriters create the concepts behind the ads, but they do not literally make the advertising. Making the ads is the job of the production department. In print advertising, the art director works with the print production manager to hire a photographer or illustrator and then supervises the work. Once the photograph has been taken or the illustration completed, the image is scanned into a computer and placed in the proper position. The art director also selects typefaces for the headline and body copy and then, using the computer, correctly positions the headline and body copy. Once all the elements are in place, the computer file is sent to the newspaper or magazine in which the ad will run. The publication then prints the ad directly from the computer file.

After a client approves a television storyboard, the creative team works with the broadcast producer to hire a director for the commercial. In consultation with the agency and the client, the director selects the actors who will appear in the commercial. The director also hires the crew, including the camera and sound people who will film and record the commercial. After the commercial has been filmed, the creative team works with an editor to put the commercial's various scenes together. When that task is completed, the copywriter and art director supervise the addition of music and sound effects. Once the ad is completed, numerous videotape copies called dubs are made. A dub is then sent to each television station that will air the commercial.

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Methods of Advertising

To reach the consumer, advertisers employ a wide variety of media. In the United States, the most popular media, as measured by the amount of ad spending, are television, newspapers, direct mail, radio, Yellow Pages, magazines, the Internet, outdoor advertising, and a variety of other media, including transit ads, novelties, and point-of-purchase displays. (These rankings are measured each year by Advertising Age, an advertising trade magazine, and seldom vary, although Internet advertising continues to grow significantly. In the first half of 2005, ad spending on the Internet increased 26 percent, far greater than the 4.5 percent growth for the entire advertising market.)

In Canada, newspapers are the most popular advertising medium, followed by television, magazines, radio, and outdoor advertising. Canada is the ninth largest advertising market in the world.

Television attracts about 23 percent of the advertising dollars spent in the United States. Television is available to advertisers in two forms: broadcast and cable. Broadcast TV—television signals that are sent over the air rather than through cable wires—generates all of its revenue from advertising. Advertising accounts for about 60 percent of cable television revenues with the rest coming from subscriber fees.

To run commercials on television, advertisers buy units of time known as spots. The standard units of time are 15, 30, or 60 seconds in length. These spots are purchased either locally or from a national network. Because of the high cost of national network spots, ranging from hundreds of thousands of dollars to millions of dollars, only large national advertisers can afford to run network television spots. Advertisers wishing to reach a local audience can buy time from an individual station. But even these spots cost so much to produce and run that small and even many mid-sized companies cannot afford them.

Because television commercials combine sight, sound, and motion, they are more dramatic than any other form of advertising and lend excitement and appeal to ordinary products. Advertisers consider television an excellent medium to build a product's brand image or to create excitement around a particular event such as a year-end auto sale. But TV spots are too brief to provide much product information. As a result, television works best for products such as automobiles, fashion, food, beverages, and credit cards that viewers are familiar with and easily understand.

In the United States, newspapers are the second most popular advertising medium after television, receiving about 22 percent of all advertising dollars. Newspapers enable advertisers to reach readers of all age groups, ethnic backgrounds, and income levels. Two types of advertising appear in newspapers: classified advertising, such as the want ads, and display advertising. Display ads range in size from as large as a full page to as small as one column in width and less than one centimeter (less than one inch) in length. Display ads often contain illustrations or photographs and usually provide information about where the product or service being advertised can be purchased. Typically, advertising makes up about 65 percent of a newspaper's content and generates about 65 percent of a newspaper's revenue. About 88 percent of this revenue comes from local businesses.

Most advertisers believe that newspaper ads fail to convey the kind of emotional images that build brand image. As a result, most newspaper advertising is done by retailers who use newspaper ads to provide timely information that can lead to immediate sales. Newspapers are particularly well suited to this role because most are published daily. Readers can clip coupons from the newspaper and cash them in quickly at local stores. People also turn to newspapers for immediately useful information about product discounts, bank interest rates, restaurant specials, and entertainment.

Direct mail is the third largest advertising medium, attracting about 20 percent of all U.S. advertising dollars. Direct mail advertising, as the name implies, is advertising that is sent directly to people by mail, usually through the postal system. Increasingly, however, electronic mail (e-mail) is being used as a direct mail device. Direct mail can be as simple as a single letter or as involved as a catalog or an elaborate e-mail known as HTML mail that offers graphics and links to more information.

From the advertiser's point of view, the key to a successful direct mail program is the mailing list. The mailing list contains the names and addresses of people who share certain common characteristics that suggest they will be likely to buy a particular product or service. Because advertisers are speaking directly to those who are most likely to buy their product or service, many advertisers consider direct mail the most effective of all advertising media for generating immediate results. Direct mail through the U.S. postal system, however, is the most expensive form of advertising, costing about 14 times as much per exposure as most magazine and newspaper ads. But because of the results it produces, many advertisers believe the expense is justified.

Radio attracts about 8 percent of all U.S. advertising dollars, making it the fourth largest advertising medium. Although national advertisers can buy national network radio time, 90 percent of all radio advertising is local. Unlike television which reaches a broad audience, the specialized programming of radio stations enables advertisers to reach a narrow, highly specific audience such as people who like sports or urban teenagers who listen to the latest styles of popular music. Because many people listen to radio while in their cars, radio also enables advertisers to reach prospects just before they go shopping. But because people listen to the radio while doing something else such as driving or working, radio commercials can be easily misunderstood. As a result, radio ads work best when the messages are relatively simple ones for familiar, easily understood products.

Yellow Pages, the thick directories of telephone listings and display advertisements, represent the fifth most popular advertising medium, attracting about 6 percent of total advertising spending. Almost all advertising in the Yellow Pages is local advertising.

Magazines rank sixth in total U.S. ad spending, representing about 5 percent. Although newspapers reach all different kinds of readers, a magazine’s specialized editorial content generally reaches readers who have similar interests. The relatively specialized, narrow audience of a magazine enables an advertiser to speak to those most likely to buy a particular product. For example, a manufacturer of mascara who advertises to teenage girls could use a magazine with editorial content aimed especially at teenage girls to reach that audience exclusively.

A magazine's editorial environment can also lend a product credibility and prestige, and the magazine’s ability to reproduce beautiful color photographs can enhance a product's appearance. As a result, magazine advertising is an effective way to build a product's brand image. Because such advertising is expensive and because most magazines are distributed regionally or nationally, they generally feature national advertising rather than local advertising. Magazines generate 63 percent of their revenue from advertising.

In 2004 the Internet accounted for $9.6 billion in advertising spending in the United States, or 3.7 percent of total ad spending, an increase from 3 percent in 2003, according to data gathered by the accounting firm of PricewaterhouseCoopers LLP for the Interactive Advertising Bureau. About 96 percent of ad spending on the Internet goes to 50 Web companies, mostly to four sites maintained by Yahoo, Google, America Online, and the Microsoft Network.

Advertisements on the Internet often take the form of banners, buttons, pop-ups, and sponsorships. But the most important aspect of Internet marketing is that the World Wide Web allows advertisers to personalize their messages for individual customers. For example, when a customer visits a commercial Web site that person is often welcomed by name and is offered information about new products based on the type of products the person has purchased in the past. Moreover, the customer can then order the product immediately without venturing out to a store. By allowing advertisers to customize their advertising, the Internet enables them to build customer loyalty and generate stronger sales results. Google pioneered the technique of providing customized ads when someone enters a search term. Advertisers take part in an auction to have their ads placed next to relevant search results and pay only when someone clicks on the ad.

Outdoor advertising amounts to less than 1 percent of total ad spending in the United States. Outdoor advertising is an effective way to reach a highly mobile audience that spends a lot of time on the road—for example, in commuting to and from work or as part of their job. It offers the lowest cost per exposure of any major advertising medium, and it produces a major impact, because it is big, colorful, and hard to ignore. The messages on outdoor boards have to be very brief. So outdoor advertising primarily serves as a reminder medium and one that can trigger an impulse buy.

A wide variety of other advertising media make up the remainder of total ad spending. Transit advertising is mainly an urban advertising form that uses buses and taxi tops as well as posters placed in bus shelters, airports, and subway stations. Like outdoor boards, transit is a form of reminder advertising that helps advertisers place their name before a local audience. Finally, point-of-purchase advertising places attention-getting displays, streamers, banners, and price cards in the store near where the product is sold to explain product benefits and promote impulse buys.

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