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CHAPTER 14 MEDIA STRATEGY AND PLANNING FOR ADVERTISING AND IBP 485 over time, TV advertising has become relatively more and more expensive Over the past 37 years, advertising has gotten about ten times more expensive even though the audience has increased only two fold and ratings have stayed the same. 485-90 important changes agency compensation- o the 15% ad agency media commission system is gone, replaced by fee-for-service basis o new system resembles a law firm’s billing system than anything else in the business world more media- o new media options have been springing up with a blurring of the line between PR and advertising; lots of “news” stories are being written by marketers. These stories cost the companies nothing other than the salaries of the staff writers and placement specialists, so in a pure sense, no ads are actually purchased. o New species of media include internet, cross promotions, product placements, buzz marketing, movies that are long commercials, etc consolidation of power by larger media companies, clients, and agencies o Since so many agencies are merging and becoming larger, there are fewer and fewer places for disgruntled clients to go. Ad agencies can better absorb the loss of clients because they are so large these days. Advertisers have serious clout with their clients. Agency clients are asking for more accountability o direct mail response system says it can determine the effect of each promotional effort in real dollar terms advances in mathematical modeling helps clients determine the return on investment from advertisers so there is a lot of pressure to be successful agencies employ fewer people and they work harder – agencies have become much leaner operations due to the demise of the 15% commission system. If agencies are publicly traded companies there are lots of pressure from stockholders for short term profits. Ad agencies make short term profits by firing people and buying expensive media space. globalization is becoming more and more the wave of the present
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the internet- people don’t have to pay for ads in magazines if they can read the same content online. E-commerce/e-media has made two big changes in advertising- the rise of deal-proneness and price/cost transparency. 489 Ex. 14.5 the trend of consumer use of media (up or down) for each of the 6 media categories 1) radio- up 2)broadcast tv- down 3) cable and satellite- up 4) Internet- up 5) newspapers- down 6)consumer magazines- down √ 489 two of biggest changes the internet has wrought deal proneness- incredibly easy to know and get a good deal
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