Advertising and Marketing

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Background

From the street cries of merchants selling their wares to today’s sophisticated electronic means of reaching customers, advertising has experienced a dramatic evolution. In its earliest days, advertising allowed merchants to go from street to shop, adopting symbols and later written signs to show the goods and services they offered. With the invention of paper and advances in education that enabled more and more people to read, tack-up signs became common. It wasn’t until printing was introduced in the 15th century, however, that advertising was truly revolutionized. Merchants began printing and distributing handbills by the hundreds. Advertisements in newspapers became a familiar sight by the 17th century. By the end of the 1800s, magazines were carrying ads of all kinds.

The advertising industry formally emerged in the 1840s, when newspaper-advertising solicitors began representing groups of newspapers. In 1865, a new system was introduced: buying newspaper space and dividing and selling it to advertisers at higher prices. Other forms of advertising also came onto the scene. By the early 1900s, for example, outdoor posters developed into the billboard form, and the merchants who used them were the principal advertisers. In 1922, radio station WEAF in New York City offered program time to advertisers. The use of television advertising began just before the end of World War II. Today, the Internet is catapulting the world of advertising into a whole new realm, allowing vendors not only to target and reach customers but to interact with them as well.

Modern advertising is defined as mass communication paid for by an advertiser to persuade a particular segment of the public to adopt ideas or take actions of benefit to the advertiser. Today, most national advertising, and much local advertising, is prepared by advertising agencies.

Marketing is anticipating customer needs and directing a flow of need-satisfying goods and services from producer to customer. A combination of events led to the creation of the marketing industry as it exists today. After the Roaring Twenties, which produced an abundance of products, it was no longer true that a good product would sell itself. Competition for customers increased, and producers sought ways to boost awareness of their products in order to remain viable in the market. When radio broadcasting flourished in the United States during the 1920s, advertisers quickly capitalized on the new medium.

A second major influence on the development of the marketing industry was the Great Depression of the 1930s. As money became scarce, an increased number of producers competed for dollars in an ever-shrinking marketplace. Up until then, producers had been willing to market anything with the assumption that someone out there somewhere would buy it. But businesses soon discovered otherwise. Sales began to drop. If there was no interest in or need for a product, an advertising campaign might carry the company through the first wave of purchases. After that, however, there would be little chance of improving sales.

The business discipline of marketing began to take shape as sellers realized that if a group of potential buyers could be found for a product, the product could be better designed to suit the needs of those buyers. Sellers also discovered the importance of identifying a group of buyers before starting an advertising campaign. By doing so, the producer could style the campaign to reach that specific group and would have a better chance of launching a successful product. Marketing, therefore, provided a service for both sides of the business world, the seller and the buyer.

This market-driven thinking is now a major part of business decisions and begins long before product development, manufacturing, and sales. In fact, the market is the central focus of both today’s advertising and marketing trends and those that will take industries into the next millennium. Database marketing, for example, allows companies to identify their current and potential markets and provide customer service - before, during, and after the sale. Relationship marketing - developing long-lasting relationships with customers - requires companies to examine customers’ needs, offer products and services that satisfy those needs, supply products and services quickly, and offer customers choices with respect to the products as well as ways to purchase and pay for them.

In order to reach and keep their customers, advertisers and marketers are capitalizing on the newest technologies. The number of Internet users worldwide was estimated at 1.04 billion in 2006, and companies are responding by placing advertising on the Web and creating Web sites that allow customers the ease and convenience of online shopping. From flowers to antiques, clothing to furniture, virtually everything can be purchased online. Other technology-related trends include fax-on-demand services, phone shopping via voice mail, and 24-hour interactive communication.

Words to Know

Advertising: Mass communication paid for by an advertiser to persuade a particular segment of the public to adopt ideas or take actions of benefit to the advertiser.

Advertising agency: A group of researchers, writers, artists, buyers of space and time, other specialists, and account executives who design and execute advertising programs for clients.

Copywriter: Idea generator who writes the text and creates the basic framework of advertisements. Database marketing: The use of databases to identify current and potential customers according to demographics and preferences.

Electronic banners: The Internet’s equivalent of billboard advertising, which accounts for 80 percent of online ads.

Five-second flash: The term used to describe the estimated amount of exposure time of an outdoor poster to the average motorist.

Integrated services: Advertising, marketing, sales, and promotion services all in one package.

Interactive marketing specialist: A person who specializes in online advertising and marketing.

Marketing: Activities that identify customer needs and accordingly direct the flow of goods and services from producer to customer.

Media: The avenues through which advertisers can place ads, including the Internet, television, radio, magazines, newspapers, and outdoor signs.

Niche market: A specialized group of customers to whom advertisers often target campaigns.

Nielsen ratings: National audience percentages based on the television viewing habits of a select number of families chosen to reflect as closely as possible families from across the country.

Package research: Research that studies customer response to how a package looks on the shelf.

Relationship marketing: Marketing that aims to develop long-lasting relationships with customers.

Sample: A group that reflects the entire population from which it is selected.

Structure

In 1975, $27.5 billion was spent on advertising in newspapers, magazines, business publications, medical journals, and telephone directories; on billboards and buses, the radio, network television, and cable. In 1998, with the addition of online advertising, that figure had risen to more than $180 billion. Ad spending in 2003 dropped to $128.3 billion, according to TNS Media Intelligence/ CMR (Competitive Media Reporting), a provider of marketing communication and advertising expenditure information. Advertising expenditures have increased since then, however, and TNS Media predicted that total U.S. advertising spending would reach $150.3 billion in 2006.

Today, most national advertising and much of local advertising is prepared by advertising agencies. A modern advertising agency is composed of researchers, copywriters, artists, telemarketers, buyers of space and time, other specialists, and account executives who represent the agency to its clients. The size of an agency is determined by the amount of advertising it bills to its clients. Many agencies are small, billing less than $10 million a year. Part of an agency’s income results from commissions that are equivalent to 15 percent of the advertiser’s cost of placing the ads. While some agencies bill clients on a fee basis, others use a fee/commission combination.

Large advertising agencies usually handle a variety of accounts, while some of the smaller agencies specialize in a single field. They may handle only financial accounts, for example, or hotels, book publishers, or industrial clients. Some agencies are known for their expertise in selling package goods. Others excel in retail and department store promotion or selling on the Internet. Almost every agency develops some distinctive quality to help sell its services.

Along with targeting a well-produced message to its intended audience, the placement of ads in the most effective media is extremely important to the success of an advertising campaign.

The newest mass medium to hit the scene, the Internet, is a worldwide, computer-based network consisting of online services, Web sites, newsgroups, and more. The Internet allows advertisers and marketers to precisely target customers, accurately measure response, and clearly identify consumer needs. Through the Internet’s Web sites, consumers themselves provide companies with information about their interests, demographics, preferences, and needs, either through registration surveys or indirectly by the choice of Web sites they visit. With more than 600 million users, the Internet is drawing advertisers in droves. In the first quarter of 2006, companies spent about $2.3 billion on Internet advertising, and increase of 19.4 percent compared to the first quarter of 2005.

Internet advertising’s mainstay is the banner, a narrow rectangle across the top of the screen that can blink, flash, or be static. An offshoot of the banner is the skyscraper, which is the vertical equivalent and runs in a narrow margin on either side of a Web page. Since surfers have become used to banners and skyscrapers, they get less attention, so some advertisers place their messages in large boxes that are hard to ignore. Another trend in Internet advertising is the pop-up window, a separate window that opens while a Web page is loading.

Many other media also allow advertisers to showcase their offerings. Television, for example, provides opportunities to show products in actual use. Through a TV ad, an advertiser can design a message that appeals to both the eye and the ear at the same time. Advertisers usually include their messages during the course of various television shows to achieve the desired reach and frequency. Rating services like A. C. Nielsen and Arbitron measure the sizes of audiences through the use of home meters and diaries. According to the Television Bureau of Advertising, 98.2 percent of U.S. households had a TV set in 2006 and the average time per household spent viewing TV was eight hours a day in 2006. The reach and frequency of a TV commercial are determined from this raw data. The newest trend in advertising and marketing is the placement of products or mention of services in actual television shows and films. For example, advertisers interested in promoting a specific soft drink might arrange to have it placed in the background of a scene or have a main character drink it.

In addition to network television, advertisers are increasingly turning to cable TV. Developed in the late 1940s simply as a means of improving reception, cable television today reaches more than 67 percent of all American households, with almost 74 million current subscribers. Appealing to specific audiences, such cable channels as MTV, HBO, The History Channel, Cable News Network, and ESPN, allows advertisers to target specific audiences with ease.

There are more than 575 million radios in the United States, according to the CIA: The World Fact book. Radio commercials are designed to deliver messages on behalf of local and national advertisers. While radio production techniques are relatively inexpensive and a radio commercial reaches large audiences, listeners conjure up different pictures in response to radio ads than they do with visual ads.

Magazine advertising offers special values not found in other media. Magazines are kept longer than daily newspapers, for example, and may be picked up and read several times or passed on from one reader to another. Thus, the actual number of readers may be considerably higher than circulation figures indicate.

Many advertisers send direct mail to prospects from carefully maintained lists. Such lists can be bought from firms that compile information about buyers with specific interests and income levels. As a rule, the more specialized the list, the higher the price. Nearly all direct mail seeks to encourage some kind of buying action, often with return cards or coupons, and is frequently used in conjunction with other types of advertising.

Outdoor advertising, such as billboards, posters, and electric signs, is favored by national advertisers, as well as local businesses that want to attract passersby. Those who create outdoor posters design them with the five-second flash in mind, since that amount of time is the estimated exposure of the message to the average motorist. This means that the message must be very short and instantly understood.

Transit advertising is displayed in or on such public vehicles as subway cars, buses, and commuter trains. The messages in transit ads can be longer than those on outdoor signs, because passengers have more time to look at these ads.

Some companies have in-house advertising departments, while others work with agencies. Similarly, many large companies have their own marketing departments, with smaller organizations often using outside marketing services. How a product is marketed can determine its success or failure. Advertising plays a key role in this process.

Marketers work with advertising professionals to determine how ads should look, where they should be placed, and when the advertising should begin. The look and message of an ad are researched by employees in advertising and marketing to make sure that the ad effectively interests the targeted audience. Timing of advertising is extremely important to the success of a marketing strategy as well; launching an advertising campaign too early may create interest well before the product is available. In such cases, by the time the product is released, the public may no longer be interested.

Research usually starts long before a product is developed. Since competition is often intense, marketing department personnel go to work compiling data about similar products in the marketplace. If there is some chance that a product will sell well enough to cover initial expenses, the cost to manufacture and launch the new product is determined. The price of the product to consumers will then equal the overall cost of production plus the desired profit.

The marketing department is also responsible for developing a distribution plan for products. If a product is expected to sell well to a certain group, for example, then marketing professionals must decide how to deliver to members of that group based on when and where they shop. Large companies often handle sales and distribution from inside the company, while smaller companies may sell through wholesalers, who supply retail stores with products from many different manufacturers.

Once markets are evaluated and merchandise is designed, the actual production begins. The marketing department’s work, however, is not yet done. Along with the public relations department, marketing professionals contact members of the press with the aim of getting product information out to the public.

The failure rate for new products is very high. Once a product is released, marketers evaluate sales and look for ways to make improvements in features and designs. Package research studies show how a product looks on the shelf. Designers explore new color combinations, more appealing shapes, interesting patterns, and new materials. If problems can be easily corrected, a company may decide to launch an improved version of the product. If, however, the target audience is not being reached or is not interested, the company might redesign the product or the advertising or discontinue production altogether.

Although it is not an exact science, marketing uses a scientific and statistical approach in answering a client company’s questions about selling a product to the public. The advertising aspect of a marketing campaign must get attention, arouse interest, secure belief, create desire, and stir action. Beauty, comfort, convenience, and quality are the promises that sell all kinds of products, from consumables to cars.

Outlook

Advertising and marketing grow in direct proportion to the national economy. As a result of the favorable economic climate in the United States during the late 1990s, both industries enjoyed considerable growth. In the early 2000s, employment growth in these industries slowed as a result of a weaker economy. Economic conditions are expected to improve, and the U.S. Department of Labor predicts that the advertising and marketing industries will grow faster than the average through 2014. Such growth will be accelerated through the development of new products and services and the resulting increase in competition among producers of both industrial and consumer goods.

Greater competition among producers will, in turn, spur more intense advertising and marketing efforts for their products, and competition for these advertising and marketing jobs will be fierce. Creative college graduates who communicate well will have the best job prospects. Those who have knowledge of and experience with cutting- edge technology will have an enormous edge. People who know how to create Web sites, for example, are hotly pursued in the advertising and marketing arenas, as are Web professionals, graphic designers, and interactive marketing specialists. As the global economy continues to expand and opportunities to market foreign products increase, those who speak a foreign language also will be in demand.

More than half of all advertising firms employ fewer than 20 people. These small shops will offer strong employment opportunities for people with experience, talent, and flexibility, but competition is especially intense and jobs - which depend on attracting and keeping clients - are often not guaranteed.

In addition to smaller agencies, self-employment and home-based businesses are on the rise. Marketing and advertising professionals with an entrepreneurial spirit are starting their own marketing and advertising firms or offering consulting services to a growing number of small businesses and services that have opened in recent years in response to cutbacks and salary reductions.

On the other side of the coin, the mega-agencies-multinational agencies created from mergers and acquisitions - still dominate the advertising industry. Of the approximately 47,000 advertising agencies and public relations firms in the United States, most of the large firms are located in New York, Chicago, and Los Angeles and offer higher pay scales than smaller agencies. About one in five firms and more than one in four jobs are in New York or California. One way these advertising giants attract and keep clients is by offering integrated services: advertising, marketing, sales, and promotion services all in one package. As a result, many agencies seek employees with not only advertising experience but public relations, packaging, and/or sales promotion experience as well.

Another important trend that continues to affect employment opportunities in the advertising industry is specialization. Many agencies are increasing their focus on niche markets, and they will continue to specialize. Expected high-growth areas include foreign-language programming, advertising aimed at specific ethnic groups, advertising targeted at the over-50 market, special events advertising and marketing, and direct marketing campaigns for retailers and technological companies.

Many nonindustrial companies will create advertising jobs as a result of the growth of the managed health care, nutrition, and fitness industries. And banks and local governments will use both marketing and advertising techniques in order to deliver services more cost effectively. Banks, for example, will require researchers to guide them in creating more competitive consumer investment tools. In addition, local governments will use marketing research techniques to locate the best sites for schools and hospitals and advertising techniques to promote special events and new services.

Part of the satisfaction of advertising work is in the sense of creative accomplishment, such as seeing and hearing your own ideas as they appear before millions of people. But there is less glamour than is commonly supposed and much more of the day-to-day routine that requires painstaking attention to detail. In addition, advertising employees need to have people and communication skills, common sense, and the ability to solve problems. Most entry-level positions require a bachelor’s degree, preferably with a concentration in the liberal arts.

Employment in the marketing industry is projected to grow faster than the average through 2014. There will be more emphasis on selling quality products, increased marketing segmentation, shorter life cycles for products, and increased demand for new and better-quality products. In addition, many chief executive officer positions in businesses of all kinds will be filled by those with marketing experience, because marketing will play an increasingly important role in differentiating and creating need for products. This is good news for manager-level marketers. As for those just starting out, the ability to anticipate trends will become more valuable than the traditional skills in technical marketing.

On the downside, many marketing jobs will be temporary. In addition, the hours of the marketing worker can often be quite long, with overtime a frequent requirement in every level of the marketing profession. Stress is a continual element of the job, since inaccurate product estimates can mean the difference between survival and failure for a small company.

Employees who fare the best in marketing are detail-oriented people who work well under pressure and enjoy the challenge of developing a new product for sale. Human resource professionals recommend refresher courses at local colleges and universities to stay abreast of new trends and processes.

For More Information

For profiles of advertising workers and career information, contact

Advertising Educational Foundation

220 East 42nd Street, Suite 3300

New York, NY 10017-5806

http://www.aded.org

For information on college chapters, competitions, and internships, contact

American Advertising Federation

1101 Vermont Avenue, NW, Suite 500

Washington, DC 20005-6306

Tel: 202-898-0089

Email: [email protected]

http://www.aaf.org

The AAAA is the management-oriented national trade organization representing the advertising agency business.

American Association of Advertising Agencies (AAAA)

405 Lexington, 18th Floor

New York, NY 10174-1801

Tel: 212-682-2500

http://www.aaaa.org

For career resources and a job bank, contact

American Marketing Association

311 South Wacker Drive, Suite 5800

Chicago, IL 60606-6627

Tel: 800-262-1150

Email: [email protected]

http://www.marketingpower.com

Visit the following Web sites for advertising and marketing glossaries:

Glossary of Terms Used in Advertising and Marketing Communications

http://www.garyeverhart.com/glossary_of_advertising_terms.htm

The University of Texas at Austin: Department of Advertising

http://advertising.utexas.edu/research/terms

See Also

Public Relation; Advertising Account Executive; Advertising and Marketing Manager; Advertising Worker; Art Director; Business Manager; Demographer; Graphic Designer; Marketing Research Analyst; Media Planner and Buyer; Public; Opinion Researcher; Statistician; Telemarketer; Writer

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