Canadian Advertising in Action, 10E Keith J Tuckwell Solution Manuals

INSTRUCTOR’S MANUAL FOR

Canadian Advertising in Action Tenth Edition

Keith J. Tuckwell St Lawrence College

CONTENTS

Page

Part One Chapter 1 Chapter 2

Advertising and Marketing Communications Today Advertising in a Marketing Communications Environment Advertising Industry

Part Two Chapter 3 Chapter 4

Marketing Communications Planning Consumer Behaviour Concepts and Target Marketing Strategic Planning Concepts for Marketing Communications

34 50

Part Three Chapter 5 Chapter 6

Creating the Message Creative Planning Essentials Design, Layout and Production

66 83

Part Four Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12

Communicating the Message: Planning Message Placement Media Planning Essentials Print Media: Newspapers and Magazines Broadcast Media: Television and Radio Out-of-Home Media Direct-Response Media Interactive Media

96 114 128 148 160 173

Part Five Chapter 13 Chapter 14

Communicating the Message: Integrated Media Choices Sales Promotion Public Relations and Experiential Marketing

191 205

ADVERTISING CASE STUDIES Case Studies – Some thoughts on How to Use Cases Case Study Model Advertising and Marketing Communications Plan Model Case Study 1: PepsiCo Beverages Canada Case Study 2: Beiersdorf Inc: Nivea for Men

1 15

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Video Correlation Grid Number Video Title 1 Radian6 2 Crispin Porter + Bokusky 3 Strawberry Frog 4 Jones Soda 5 6 7 8 9 10 11 12 13 14

Nielsen Intel E*Trade Mullen NineMSN HSN: Direct and Online Marketing NutriSystem Bzz Agent Nudie Nike

Source Time 2014 Marketing Videos DVD 11:13 2014 Marketing Videos DVD 8:30

Chapter 1 1, 2

2014 Marketing Videos DVD 11:28 7:39 2014 Introduction to Business Videos DVD 2014 Marketing Videos DVD 3:45 2014 Marketing Videos DVD 15:30 2014 Marketing Videos DVD 5:07 2014 Marketing Videos DVD 9:35 2014 Marketing Videos DVD 9:45 2014 Marketing Videos DVD 6:30

2 3

2014 Marketing Videos DVD 3:33 2014 Marketing Videos DVD 4:52 2014 Marketing Videos DVD 10:49 2014 Marketing Videos DVD 9:21

4 4 5, 6 5 7 7, 9, 11.

12 11 12 13 14

PREFACE This instructor's manual is intended to save the instructor time and energy in the preparation of class lectures and activities. Each chapter in the manual contains a summary of important information from the textbook chapters and supplemental information that will complement lectures and student assignments. The organization of the material in Chapter 1 of the manual is representative of the organization of material in all chapters.

This manual also contains additional illustrations of key concepts presented in each chapter and answers to end of chapter questions. There is also a summary of videos that accompany the textbook. Each chapter in the manual is presented in a consistent format and is divided into the following sections:

CONTENTS OF EACH CHAPTER Learning Objectives The student learning objectives that precede each chapter are repeated in the manual.

These objectives indicate what the student is expected to learn from the chapter.

Chapter Highlights The purpose of this section is to summarize the key concepts included in each chapter.

This section will facilitate your design of lectures. Where applicable specific chapter references are indicated and teaching suggestions are made.

Additional Illustrations of Key Concepts Additional illustrations of important concepts are included in each chapter. These illustrations are presented in a variety of formats (lists, stories, new examples, statistics, etc.) and provide valuable information to supplement lectures.

Answers to End‐of‐Chapter Questions Sample answers that appear at the end of each chapter are provided. Instructors should note that each chapter contains review questions to confirm the students' understanding of concepts, and discussion and application questions on specific issues where student creativity can be exploited.

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RESOURCE INFORMATION INCLUDED IN MANUAL Advertising Case Studies This section includes two case studies presented in the form of a communications brief.

Each case is ideal for preparing a marketing communications plan of some kind. After reviewing each case the instructor can decide how the student should handle the case.

You may only want a creative solution, advertising solution (creative and media) or complete integrated marketing communications solution. You can set your own specifications when you distribute the case to your students. The cases are ideal for team projects.

This section also includes some planning models very similar to those contained in various chapters of the textbook. You can provide these to your students as a working guideline for preparing their plans or you may amend them as you see fit prior to giving them to students. They are intended as a “guideline” only. If you are anything like me, you are constantly modifying planning models to suit different occasions.

OTHER RESOURCE MATERIAL Other resources available for Canadian Advertising in Action, 10th edition, include: 1. A complete set of PowerPoint slides available online and in CD format.

2. A Test Item File and computerized test bank containing a large selection of multiple choice and true and false questions. The test item file is available in disk format. Make sure you have a copy!

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CHAPTER 1 ____________________________________________________ ADVERTISING IN A MARKETING COMMUNICATIONS ENVIRONMENT Chapter 1 examines the role of advertising and describes its relationship to other elements of marketing communications.

LEARNING OBJECTIVES Students will be able to: 1. Assess the role of advertising and its relationship to marketing and other elements of marketing communications 2. Identify distinctions among the various forms of advertising 3. Identify and define the various components of integrated marketing communications 4. Explain the conditions necessary for advertising to be effective 5. Identify critical trends and issues that have an impact on advertising and marketing communications planning 6. Describe the role that laws and regulations play in guiding marketing communications programs in Canada CHAPTER HIGHLIGHTS A.

Advertising Today Advertising today is a $14.4 billion industry in Canada with dollar growth averaging +5% annually over the past five years. Much of the growth is being fuelled by the significant gains in digital media. Canadians generally, are spending more time with digital media than with traditional media, particularly the print media. Consequently, advertisers are allocating more one to digital media and less to traditional media. Tech‐savvy consumers in the 18‐ to 24‐year‐old age range will carry their strong digital media habits forward as they age and will have much more impact on media consumption trends.

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B.

The Role of Advertising Advertising is defined as: "A paid form of marketing communication through the media designed to influence the thought patterns and purchase behaviour of a target audience."

Based on that definition, the basic role of advertising is to: “Influence the behaviour of a target market in such a way that they view the product, service, or idea favourably.” Once consumers hold a favourable attitude about a product or service advertising attempts to motivate them to purchase it.

Advertising plays a key role in achieving an organization’s business objectives (e.g., it helps increase revenues, market share, brand loyalty, and so on). The challenge for advertisers is to deliver the right message and select the right media combinations to effectively reach and have an impact on their target audience.

C.

Advertising and Integrated Marketing Communications Companies today approach marketing communications from a “total solutions” perspective. Advertising is but one aspect of marketing communications. IMC involves the coordination of all forms of marketing communications into a unified program that maximizes the impact on consumers and other types of customers.

Different situations require different marketing communications mixes to get the job done. Further, companies are always looking for the most cost‐effective options to deliver their message. Now, word‐of‐mouth via social media plays a key role. Communications is evolving from an “interrupt me” model to an “engage me” model. It seems that people will actively engage with brands, if properly tempted. Over the long‐term, such tendencies results in a stronger relationship between brand and customer.

Communications play a key role in inducing engagement.

D.

The Integrated Marketing Communications Mix Advertising – Advertising is divided into two categories: consumer advertising and business advertising. Consumer advertising solicits a response from consumers while business advertising is directed at business and industry customers. Trade advertising encourages distributors to carry a manufacturer’s product. Corporate advertising falls into either category depending on the nature of the communication. Corporate ads typically encourage good will, build reputation, or re‐establish an organization’s

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credibility in a time of need (e.g., when it faces a crisis situation). Advocacy advertising is a sponsored message expressing a point of view on a publicly recognized issue.

Interactive Communications – Internet delivery of commercial messages (banner advertising, e‐mail, and video ads, and advertising in video games). Mobile communications through cell phones is another form of interactive communications.

Smart phones are growing in numbers and will become a primary medium moving forward. Investment in social media will continue to rise as advertisers learn the benefits of engagement and word‐of‐mouth that this medium offers.

Direct Response Communications – delivering messages directly to potential customers on an individual basis (mail, e‐mail, direct‐response television, and 1‐800 phone numbers) Public Relations – activities influencing the attitudes and opinions of various interest groups to an organization.

Sales Promotion – activities that encourage immediate response from customers (incentives included with advertising) Personal Selling – personalized forms of communications whereby the seller presents the benefits of a product to a buyer.

Experiential Marketing – A type of communications that engage people with a brand in a more personal manner; often the communications is face‐to‐face or through a communications that reaches them directly. For example, participating in an event where a branded item can play a role with the audience. Event marketing and sponsorships are core components of experiential marketing campaigns.

E.

Conditions Necessary for Using Advertising Effectively It is important for students to understand what advertising can accomplish. For advertising to be effective, certain conditions should be positive. Prior to embarking on an advertising campaign, the manager/planner should review these conditions. If they are favourable, the decision to proceed with advertising is an easy one. If less than favourable, the decision is more difficult. A discussion of these conditions is considered essential: 1.

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Market (Product Category) and Product Demand ‐ How positive is the demand for an entire product category (.e.g., demand for soft drinks (one category) versus demand for bottled water (another category in the cold beverage industry). If

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demand is not positive it makes little sense to invest in advertising. That said, in some categories investment in advertising is essential to protect market share.

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Product Life Cycle ‐ What stage is the product in and how does the stage influence advertising strategy? The introduction and growth stages are critical stages to invest in advertising (e.g., to create awareness, trial purchases and brand preference). Products that are mature or in decline will be better served by less expensive marketing and marketing communications alternatives. Rejuvenation programs in the mature stage are usually supported with an increase in spending on a short‐term basis. Maturity is a stage where brands attempt to reposition themselves; repositioning strategies require an investment in advertising to make consumers aware of the change. No advertising is needed in the decline stage; it’s simply too late for such an investment.

3.

Competitive Advantage ‐ Is the product distinguishable from the competition (USP/benefits)? Every brand needs something unique to say to consumers.

Uniqueness can be expressed in terms of superiority, product innovation, hidden qualities, and lifestyle associations. Brands must clearly differentiate themselves from the competition in the mind of consumers.

4.

Competitive Advertising Environment ‐ Who is spending and how are they spending? Are any other promotion alternatives attractive? If a company does not have the financial resources to compete on the basis of advertising (investment required to compete) it should concentrate on other aspects of the marketing communications mix and marketing mix that are less costly to implement.

5.

Product Quality ‐ Does the product live up to the promise (as communicated by advertising)? Securing trial purchase is costly whereas subsequent purchases are much less costly if the customer is sold on the product benefits (based on experience). The product must live up to the promises made through advertising otherwise considerable sums of money are wasted.

6.

Management Commitment ‐ Is advertising viewed by management as a short‐term expense or a long‐term investment? How committed is management to the advertising plan? Lack of commitment means budget cuts in mid‐stream of a plan.

Cuts can magnify problems situations further.

7.

Marketing and Marketing Communications Mix ‐ What role will advertising play in the marketing mix? Are all mix elements congruent with each other? A coordinated effort is essential. All pieces of the marketing and marketing communications puzzle should be on the same page—one sight, one sound, one sell!

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F.

Issues and Trends Influencing Contemporary Advertising Planning The advertising agencies are always grappling with change in order to find ways of reaching consumers effectively and to meet the expectations of clients. Some of the key issues and trends that advertisers face today include:  The transition to integrated marketing communications  The Internet is becoming the distributor for all media content  Privacy concerns expressed by consumers on how their data is being used  Social media and its influence on consumers  The delivery of inappropriate or controversial messages Advertisers and advertising agencies must stay abreast of changing conditions and adapt their advertising appropriately if they are to succeed. As illustrated by the list above advertisers must be careful how they use information they collect on consumers, they must deliver messages that do not mislead or alienate consumers and they must select media that effectively reach a constantly moving target.

G.

Advertising Laws and Regulations A certain amount of in‐class discussion time should be allocated to discussing laws and regulations that affect the Canadian advertising industry. Two organizations are largely responsible for administering advertising laws and regulations: the Canadian Radio‐ television and Telecommunications Commission (CRTC) is responsible for all broadcasting laws including advertising, and are governed by the Broadcasting Act and the Telecommunications Act. The second organization is Advertising Standards Canada, a self‐regulating body that develops voluntary codes of practice which member advertisers adhere to. Their primary code is the Canadian Code of Advertising Practice. The ASC monitors issues such as the accuracy and clarity of messages, price claims, bait and switch practices, the use of testimonials, scientific claims, and advertising directed at children, among many other issues. Advertising Standards Canada conducts ongoing research with consumers to gain insights into their perspectives on advertising and advertising standards.

ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

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Television is not dead. At Least Not Yet

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Doomsayers lament the death of television and the demise of the 30‐second spot. It is a debatable issue especially when you consider the viewing habits of young people. As much as 30 percent of Generation Y doesn’t watch regular television. If they do watch they are streaming content online or watching on‐demand version of their favourite programs. Other age groups are starting to follow suit.

It is important to keep things in perspective however. Advertising campaigns have different objectives and require different media solutions. For example, live sports programming on television is a staple advertising requirement for many a beer brand or automobile company. Their objective is “top‐of‐mind” awareness in large numbers.

Therefore, placing ads on NHL, NFL and MLB television broadcasts makes perfect sense.

The Super Bowl, North America’s biggest sports broadcast counters all the arguments against television advertising. At a cost of $3.8 million (CBS 2013 game) a commercial will reach over 100 million viewers. That’s a mouth‐watering figure for any advertiser.

The problem with regular television is the fragmented audiences due to so many channel choices and technology, more specifically, the way people are consuming television today. Yes, the Internet is catching up but measuring the true value of online advertising investment has proven to be tricky. With uncertain value, it leaves advertising decision‐ makers more perplexed than ever.

Adapted from Susan Krashinsky, “100 Million Viewers $3.8 million for 30‐second Spot,” The Globe and Mail, February 1, 2013, p. A8. “

2.

Television and Internet a Deadly Combination Right now (2013) the combination of television and Internet account for 50% of all advertising revenues in Canada. All other media you can name account for the remaining 50%. The latest figures published by the Canadian Media Directors’ Council show television investment for 2012 to be $3.46‐billion (27.3% share) and the Internet at $2.93 billion (23.0% share).

The growth of online advertising revenue is starting to level off but within two years it is expected to surpass television. Search advertising is the most popular form of online advertising. It accounts for $1.3 billion in advertising revenues. Display ads such as banners and rich media banners follow at $916 million.

Source: Canadian Media Directors’ Council Media Digest, 2013‐14, p. 11.

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Strategy Perspectives Essential in Marketing Communications Mix

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There is little doubt that social media are becoming an important component of the marketing communications mix. There is plenty of proof that social media campaigns can draw audiences but the debate regarding return on investment is far from settled. Clients want to know what they are getting. They don’t understand the medium but are investing in it simply because their competitors are. That’s not sound strategy.

Many analysts argue that social media is great at spreading word‐of‐mouth. That can be positive or negative for a brand and admittedly word‐of‐mouth can spread fast in social media. But, “only 7 percent of word‐of‐mouth happens online,” says marketing professor Jonah Berger, of the Wharton School of Business at the University of Pennsylvania. The professor cautions marketers: “Marketers are always chasing the shiniest new toys and jumping on the bandwagon, but it’s important to take a step back and think about strategy.”

Research done by the professor indicates that the nature of communications should be different online than offline. Online marketers should emphasize different aspects of the product when presenting their brands. The message must offer some social currency.

Offline is about making a brand top of mind and a time to talk about attributes and price.

Regarding word‐of‐mouth other researchers have discovered that empowered consumers either pay no attention to other people’s opinions or dismiss them entirely when evaluating a product. That behavior undercuts the value of social influence. Therefore, marketers may conclude that social media offers great promise but they must remember it is just another weapon in the marketing communications arsenal.

Adapted from Susan Krashinsky, “Social Issues,” The Globe and Mail, August 16, 2013, p. B5.

3.

IMC on the Rise Key trends are influencing the nature of media and integrated marketing communications activities. Here are a few key trends to consider when planning campaign strategies: Search Advertising – In the online environment vertical search advertising is the future as more publishers offer a means of reaching segmented audiences through vertical search engines.

Online Video Ads – As the quality of online video improves consumers will be more accepting of advertising messages. Video ads have great potential considering the trend away from television advertising.

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Media Fragmentation – As more channels become available, marketers must make tough choices about how to reach an increasingly fragmented audience with their messages and their marketing dollars.

Direct Marketing – Direct marketing will continue to grow because it is measurable.

Getting approval for media campaigns now involves showing a return on investment.

While difficult in other media, this has always been an advantage of direct marketing.

Sports Marketing – Sponsoring events in sports that reach diverse audiences is now seen as a more effective means of spending marketing dollars. If sponsorship programs are implemented properly (by implementing good sales promotion and public relations programs to engage consumers with the sponsorship), the benefits are maximized.

Adapted from Kate Maddox, “New media, ROI, deliverability key to success,” BtoB, December 9, 2005, www.btobonline.com.

4.

Insensitive Mountain Dew Ad Draws Public Ire PepsiCo was forced to pull an outrageous Mountain Dew commercial that offended online viewers. A combination of blatant racism and violence toward women got the brand in lots of hot water! Shown on YouTube channels the ad depicts a badly battered women held up with crutches, being pressed by a cop to pick out a suspect from a lineup of five African‐American males and a goat. A male voiceover says “Snitches get stitches, fool” and “keep your mouth shut.”

Yes, you can do things differently online but is this how you sell soda pop? Social commentator Dr. Boyce Watkins called the ad “the most racist commercial in history.

PepsiCo did apologize for the ad and said the content could be perceived by some people as being offensive. Really! To their credit PepsiCo removed the ad from all Mountain Dew channels.

Adapted from, Christopher Heine, “Mountain Dew Pulls ‘Most Racist Commercial’ in History,” Adweek, May 1, 2013, www.adweek.com.

5.

ING Direct TV Spot Hits Wrong Buttons Due to social media backlash and perhaps not really thinking things through in the first place, IBG Direct pulled a controversial spot that promoted RRSP accounts in 2013. The spot included images of a man sitting forlornly on a chair outside and lying motionless on a couch. The man is cured when his wife notices his condition and directs him to ING Direct website.

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Peter Coleridge, CEO of the Canadian Mental Health Association called the ads “insensitive and disrespectful” to people suffering from mental illness. Given the negative feedback, Mark Nicholson of ING Direct acknowledged that their message was misinterpreted, and felt it was their responsibility to stop airing it.

This example dramatizes the difference between advertiser intent and how the public may react to how the message is delivered. ING listened to the public and made the right decision.

Adapted from Chris Powell, “ING Direct Pulls RSP ‘Suffering’ Ad over Complaints,” Marketing, January 22, 2013, www.marketingmag.ca.

6.

Cineplex and Scotiabank Strategy Paying Dividends – The Scene Card In the information age, having the ability to target your audience directly with messages makes much more sense that any form of mass advertising where you just hope for the best. In 2007 Scotiabank and Cineplex got together and created a customer relationship management program featuring the now well known Scene card. Both organizations had similar cultures and similar goals—it would be a good marriage.

Cineplex wanted a customer rewards program and the bank wanted to reach the 18‐ to 45‐dempographic in a very compelling way. Scotiabank was also looking for naming rights and their name now appears on many theatres in the Cineplex chain.

By the end of 2009 there were 2 million members. Each year there are about 60 million visitors to the theatre and the program gets lots of promotional exposure in the theatres.

The results have been good. According to Cineplex “It has exceeded our expectations in terms of members and attendance is by far outpacing the North American industry average. We now have data on the people entering the building. From that we can design targeted promotional offers to build frequency of visits.”

The bank says “Some 40 percent of current Scene members are bank customers. It is proving to be a good way to attract and maintain younger customers. Customers are usually loyal to their bank so getting them early is crucial.” The key for both companies is to keep evolving the concept so it remains interesting to the customers.

Adapted from Alexandra Lopez‐Pacheco, “Can a Bank be Youth‐Friendly?” National Post, August 11, 2009, p. FP11.

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7.

Do Not Call: A Sham Critics say the national do not call list should be scrapped. There is little enforcement despite the fact that more than 300,000 complaints have been raised against unwanted telemarketers. The government has only imposed $73,000 in fines and over a two‐year period has only collected $250.

According to Liberal MP Dan McTeague, the legislation “is a colossal disappointment. The expectations of the legislation have never been met. He calls the list “A hollow and very empty promise to provide consumers with a modicum of assurance the list would be respected. It’s clearly not worth the paper it’s written on.”

The law needs significant retooling if it is to be a genuine, effective system against unwanted calls.

Adapted from “Critics Trash National Do Not Call List, Marketing, July 8, 2010, www.marketingmag.ca.

ANSWERS TO END‐OF‐CHAPTER QUESTIONS Review Questions 1. The basic role of advertising is to influence target‐market behaviour favourably towards a product, service or idea. Favourable attitudes that develop over a period of time should create purchase motivation. Specific tasks of advertising include the creation of product awareness, preference, and trial purchase. It should be clear in the student's mind that a direct link with sales is practically impossible to measure due to the influence of other marketing variables. The marketing concept involves satisfying consumer needs better than the competition. Advertising is a primary vehicle for making potential customers recognize a need and demonstrate how a specified product or service can satisfy it.

2. Integrated marketing communications involves the development and coordination of various communications elements in order to achieve business objectives. A collective effort from a variety of different communications sources cerates synergy and impact on customers. Companies have the ability to communicate with customers through a variety of media. IMC plays an important role since companies are looking for maximum value from their communications—in short, one sight, one sound, one sell!

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3. The components of the IMC mix are advertising, sales promotion, public relations, experiential marketing, direct response communications, interactive communications, and personal selling.

4. Consumer advertising is directed at consumers to provide them with information about products and services. Advertising for nationally branded products and retail organizations comprise the bulk of consumer advertising.

5. Business advertising is advertising by business fro business. It typically involves one company promoting its goods and services to another company. Corporate advertising which involves advertising the broader services of a company to create or improve image is often classified as business advertising. Trade advertising encourages distributors to carry and resell a manufacturer’s products.

6. The primary role of corporate advertising is to build a company’s image. It can do so by communicating to the public the god things it is doing. For example, social responsibility programs that help society, sponsorships of cause related issues important to the public, helping with community activities and events are good reasons to implement corporate advertising programs.

7. Market demand and the product life cycle play a significant role in determining the extent and nature of advertising. Markets where demand is positive are more conducive to spending funds on advertising. In mature markets emphasis should be placed on protecting and conserving funds as the business goals usually shift to making a profit.

The degree of competition and other business objectives (gaining market share) could influence the amount spent on advertising in mature markets. In terms of the product life cycle it is important to advertise in the introduction and growth stages in order to create awareness, achieve trial purchase and brand preference. Expenditures in the growth stage could exceed that of introduction depending on the amount invested in advertising by competitors.

8. In terms of brand advertising it is important that each brand have something unique to advertise—to have competitive advantage. The objective is to make a brand stand out— to differentiate itself from competing brands. Typically, brand uniqueness is communicated through superiority claims, hidden qualities and lifestyle associations.

9. Product quality is essential. It makes no sense at all to spend heavily on advertising to get someone to try a product once. If they are not satisfied with the product (e.g., it did not meet the expectations that the ads created) they won’t buy it again. A good product with good advertising is the best possible combination.

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10. The Canadian Radio‐television Telecommunications Commission (CRTC) administers all broadcasting laws in Canada. The CRTC pre‐clears commercials in certain product categories, specifically, food, drugs, cosmetics, and alcohol categories. In addition, all advertisements directed at children must be approved by the CRTC. Advertising Standards Canada represents the advertising industry (advertisers, agencies, and the media). Its primary role is to develop a better understanding of advertising and how it works among other groups, and to maintain industry standards (ensure that the industry practices what it preaches). ASC enforces industry standards of practice. In this capacity it advises advertisers and agencies on laws, regulations, and codes affecting advertising.

DISCUSSION QUESTIONS 1. This question deals with student’s opinions regarding changes in the media landscape.

They will probably relate directly to interactive communications since they are an Internet‐based generation. Encourage perspective however. Students must look beyond the media they use and see the bigger picture. Older generations still rely on traditional media and television retains its lead over the Internet in terms of advertising investment, at least for now. All media still play a role in achieving an advertiser’s objectives.

2. The purpose of the question is to have students critically appraise ads and brands that compete with each other. Brand differentiation is important and the purpose of advertising is to differentiate Brand A from Brand B. The students should recognize what each brand is trying to communicate to the consumer. If it isn’t obvious then the advertisement isn’t effective.

3. The students will have varying opinions on lifestyle advertising. What they will discover through secondary research is that lifestyle ads say little about the product but often leave consumers with good feelings about a product. Lifestyle ads appeal to consumers’ emotions and often that is good enough to make them buy the product.

4. The demise of television as an advertising medium is hotly debated. More and more people are watching television on their computers, tablets, and smart phones.

Television advertising won’t disappear but the format of television will change as will the advertising models associated with the medium.

5. Students will have varying opinions on “stretching the truth” in advertising. For messages directed at adults some exaggeration of a brand’s benefits does little damage.

Generally, people see advertising for what it is—a way of encouraging people to buy something. Think of all the ads that dramatize the strength and durability of a truck.

Nobody objects to these ads yet nobody would do what is shown in the ads. If messages .

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are directed at children stretch the truth is unacceptable—laws are in place to protect innocent minds and advertisers must respect them.

6. For certain society today is much more tolerant of sex on television so why should it not be acceptable in advertising? It’s all a matter of taste and good judgement on the part of the advertiser. If an ad offends the audience, the advertiser must deal with the consequences. Overly offensive sex or anything perceived to be in bad taste should be evaluated prior to reaching the public. Negative publicity that could happen is detrimental to brand and company image. The entire issue is a hotly debated one among students and critics of advertising.

VIDEO CASE 1 Radian 6 Time: 11:13 Key Issues Changing Marketing Environment Technology Social Media Word‐of‐Mouth Conversational Marketing This video highlights an important change in the marketing and marketing communications environment that will impact how communications strategies are developed and implemented.

Marketing communications has moved from a “one‐way interruptive format” to a “two‐way conversational format.” Marketers are no longer in control of their destiny like they were in the past. In the current era marketers are participants in the equation. Marketers have some influence but so do consumers who interact with brands and post material about brands in social media. This video demonstrates the importance of brand marketers “listening’ to consumers and utilizing communications systems that encourage consumer input and feedback. The role of the Internet as a content distributor and the influence of social media are dramatized in the video.

Discussion Questions 1. What is the fundamental difference between interruptive marketing and conversational marketing?

2. How much emphasis should marketers place on social media communications? What is the role of social media in the communications mix?

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VIDEO CASE 2 Crispin Porter + Bokusky Time: 8:30 Key Issues Advertising Agencies Traditional Media versus Digital Media Application of IMC Components Media (IMC) Integration This video examines the fundamental operations of a very successful advertising agency. The roles of various departments and specific occupations are introduced. A key theme in the video is the “importance of message” as the key ingredient to influencing consumers to look favourably on a brand. The video also points out that there aren’t any right and wrong solutions. Rather, experimentation is necessary if the desired results are to be achieved. The video also introduces the various marketing communications components (advertising, public relations, events, promotions and social media) and suggests that only the proper components be used when solving a client’s problems.

Discussion Questions 1. What is the fundamental role of an advertising agency?

2. What is your opinion of the expression” It’s ideas, not media channels that create relevancy for a brand.”

3. Is experimentation (with an idea or a media channel) wise given the scarcity of advertising dollars available?

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CHAPTER 2 ____________________________________________________

The Advertising Industry LEARNING OBJECTIVES Students will be able to:

1. Identify the organizations that comprise the industry 2. Identify and describe the various advertising management systems used by clients 3. Identify the roles and responsibilities of clients in the advertising development process 4. Describe the roles and responsibilities of the agency in the advertising development process 5. Discuss the nature of relationships between clients and agencies 6. Distinguish among the various types of advertising agencies 7. Outline the organizational structure of agencies and the functions of agency personnel 8. Identify the key concepts associated with managing a client’s business 9. Identify the methods of compensating advertising agencies.

CHAPTER HIGHLIGHTS A.

Composition of the Advertising Industry There are five primary groups: advertisers, agencies, media, advertising support companies and audience measurement companies.

Advertisers (The Client) This group includes manufacturers, retailers, service firms, governments, and non-profit organizations. Among the largest advertisers are Procter & Gamble, Rogers

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Communications, Bell, General Motors, BCE, the Government of Canada, and Ford Motor Company.

Canadian advertisers' views are represented by the Association of Canadian Advertisers.

The ACA's mandate is to exercise leadership in advancing the advertising interests and responsibilities of Canadian advertisers.

Advertising Agencies Agencies are service organizations that create, plan, produce, and place advertising messages for their clients. Essentially, four multi-national communications conglomerates control the ad agency business worldwide—Omnicom (American), WPP (British), Interpublic (American), and Publicis (French). Most of the large agencies in Canada are owned by American organizations and are part of an International network of agencies. The largest Canadian-owned agency is Cossette Communication Group.

Students should be familiar with the different types of agencies available to advertisers (e.g., full-service versus specialty-boutique operations). Smaller, regional agencies tend to serve the needs of local and regional clients.

The Institute of Canadian Advertising represents the views of full-service agencies. Its mandate is to act as spokesperson, negotiator, and defender of advertising practices and procedures and to undertake tasks to promote the growth of member agencies.

The Media There are three broad categories: broadcast (television and radio), print (newspaper, magazine, outdoor, transit, and direct-response), and digital (Internet and various forms of mobile communications). Revenue generated from all media sources is approximately $14.4 billion. Television is the largest single medium with advertising revenues followed closely by the Internet. Within a few years the Internet is forecast to surpass television.

Advertising Support Companies Students should be aware of the major support (resource) groups that work with a variety of interested parties in the advertising industry. Included in this group are commercial production companies, music and sound specialists, and media representatives who sell time and space. Production companies that specialize in interactive communications are growing and their role is such that they are taking business away from traditional agencies.

Media Support Services .

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Support organizations help promote the medium they represent in order to increase that mediums share of revenue. In this group are organizations such as the Television Bureau of Canada (TVB), Newspapers Canada, Magazines Canada, the Out-of-Home Marketing Association, and the Interactive Advertising Bureau.

Research and Measurement Companies These organizations provide information that assists media planners. Included in this group of companies are BBM Bureau of Measurement, Nielsen Media Research, Audit Bureau of Circulations, Nielsen/Net Ratings, and Print Measurement Bureau.

B.

Client-Side Management Advertising can be managed several different ways in a client organization. Among the more common alternatives are brand management and category management, regional management and global management.

C.

1.

Brand or Category Management - Advertising and other marketing planning activities are the responsibility of a brand manager (product manager). In some cases a category manager overseas the activities of a team of brand managers.

2.

Regional Management - Advertising management based on geography to ensure that advertising plans are developed considering the varying needs in different regions. Regional manages can respond quicker to changes in the marketplace.

3.

International Management - Clients interested in worldwide opportunities are looking for agencies with international affiliations. "Think globally and act locally" is now a common battle cry among multinational advertisers. Their goal is to implement campaigns that will work in as many markets as possible (e.g., all of North America instead of separate campaigns in Canada and the United States).

Good ideas, regardless of their source should be used as it saves money in terms of production (the cost of producing advertising materials).

Client Responsibilities in Advertising Planning Process Responsibility for advertising management varies according to the management structure of an organization. While job titles vary from one organization to another, the advertising manager's responsibility is divided into six main areas:

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D.

.

1.

Briefing Agency on Assignments – The advertising manager compiles and presents all relevant information for an advertising assignment. Communications briefs typically include market data, competitor information, brand information, market share data, a positioning strategy statement, a list of key objectives to achieve, and the budget for the assignment. The nature and scope of a brief varies from client to client.

2.

Coordinate Advertising with Other Marketing Communications Strategies Ensuring that advertising works congruently with other elements of the marketing mix and marketing communications mix. Cohesion is vital in order to maximize impact of the message. Blending traditional media with digital media (online, phone, social media and video games) and video games is a major challenge for the advertising manager and the agency.

3.

Liaison With Advertising Agency - Day-to-day contact with agency personnel.

Major areas of concern centre on getting agency assignments completed on time and securing senior management approval for advertising recommendations.

4.

Monitoring the Advertising Program - Ensuring that activities are implemented according to plan (e.g., media expenditures or adapting to changes when necessary throughout the year).

5.

Evaluating the Advertising Program - Being accountable for the success or failure of the campaign (e.g., did the campaign achieve the objectives established in the advertising plan?). The manager may conduct appropriate research to evaluate advertising activity.

Agency Roles and Responsibilities 1.

To Provide Experience/Expertise in Communications - In accordance with the marketing plan, the agency develops the communications component of the plan (advertising, sales promotion, experiential marketing, and other activities may be part of the plan). Clients may utilize specialized agencies for various components of a plan or they may employ a full-service agency that plans and implements all elements of the plan.

2.

To Provide Planning Assistance - Agency account groups are external planners who can provide client assistance in areas other than advertising. They can look at the bigger picture and provide clients with new points of view.

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E.

3.

To Provide Objectivity in Planning - The agency can present recommendations that will have an impact on the target market. Such recommendations should not have to conform to the internal working expectations of the client. They must strive to get the client to accept ideas that they believe will work. They must encourage a client to take certain risks and move in completely new directions if the situation so dictates. Advancing communications technologies are forcing organizations to adapt to new ways of doing business.

4.

Active Liaison with Clients – It is important that agencies and clients communicate regularly. Account managers should be in constant touch with the client regarding assignment progress. Managers at comparable levels of both organizations should also keep in touch with each other to foster better understanding and relations.

Client-Agency Relationships The relationship between a client and agency is a business partnership. This relationship is often very delicate and the relationship can turn sour for many reasons. Unsatisfactory relationships lead to a significant amount of account shifting (movement of an account from one agency to another) each year. Some common reasons for account shifting include: client dissatisfaction with quality of advertising, new communications demands not being adequately served, philosophical differences in style/approach, perceived chemistry problems among people on both sides (people change over time so relationships are in a state of flux), clients' decisions to consolidate their business with fewer agencies, and account conflicts due to mergers. Several good examples of why accounts are shifted are included in the chapter.

To encourage the best possible working relationship, both parties are urged to evaluate the performance of each other on an ongoing basis. The review and evaluation process can flag potential problem areas and allow for corrective action where applicable. A good relationship depends upon honest and open communications. A reality of the business however is that agencies frequently take the fall when sales and market share goals are not met.

In recent years there has been a migration toward short-term relationships. Clients are assigning work to agencies on a project basis. With this approach agencies find that they must continuously prove their worth in order to be assigned new work. Results are essential! As well, many clients now farm out work to specialists, especially digital specialists, feeling that their expertise is what’s needed when shifting dollars into interactive media.

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Clients have a choice of working with communications generalists or communications specialists. There are arguments in favour of both alternatives.

.

1.

Full Service Agencies (Generalist) - A full-service agency provides clients with a complete range of services (advertising, public relations, sales promotion, marketing research, direct response, etc.). Clients are now searching for agencies that can provide integrated marketing communications. Full-service agencies are typically divided into three main areas: account management, creative, and media.

Many have expanded their operations to include other services to the point where they refer to themselves as marketing communications agencies. Many full-service agencies have acquired “specialist” expertise (e.g., digital media expertise) to meet client demands and expectations.

2.

Creative Boutiques (Specialist) – An agency specializing in the development and execution of creative (message) ideas. Such a boutique is typically staffed with personnel who gained experience at a full service agency. It is common for account personnel and creative to join forces when opening a creative boutique. Such was the case when Rethink started up in Vancouver. These experts enjoy working in smaller shops where they can be closer to the clients (to do what they do best).

3.

Media Buying Service (Specialist) – An agency responsible for planning and buying cost-efficient media for a client. This specialist is not concerned about the message, but how to spend scarce media resources wisely. A majority of media placements in Canada are planned and bought by a media buying company. Several large media buying companies dominate the industry in Canada, Group M being one of the largest.

4.

Direct-Response, Digital and Experiential Specialists - Other communications specialists are available for services such as direct response advertising, online advertising and experiential marketing campaigns. Digital agencies, for example, differentiate themselves by offering web-based services such as web design and development, search engine marketing and online communications strategies (banner, and video display ads. See the discussion about Twist Image in the chapter for more details. Agencies such as Mosaic and Capital C are experts in developing experiential marketing campaigns for clients seeking face-to-face interchanges with customers. Other specialists focus on product categories and industries (e.g., healthcare agencies) and specific target markets (e.g., agencies that specialize in campaigns for baby boomers or youth targets). Such agencies are serving the unique needs of demanding clients.

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The type of agency a client chooses to work with depends on a host of factors such as size, the need for certain types of services, the extent of geographic coverage required and existing affiliations with agencies. Generally speaking, there is a trend toward using specialist agencies.

G.

Roles and Responsibilities of Agency Personnel A typical full-service agency is divided into three functional areas: account management, creative, and media.

H.

1.

Account Management - This group manages the affairs of the agency's clients. As consultants and coordinators, the primary task is to advise clients on strategic planning and motivate agency resources to build a client's business. Typical position titles include: account executive or account planner (junior management), account supervisor (mid-management), and account director (senior management).

The account executive defines the task, provides information to creative and media personnel and presents recommendations to the client.

2.

Creative Department - This group is responsible for the generation of communication ideas and concepts. Headed by a creative director who is ultimately responsible for the quality of creative output, the department consists of copywriters (message) and art directors (visual). The copywriter and art director work together as a team creating ads for a select group of clients. Copywriters develop the main idea while art directors are responsible for the visual image.

Production managers provide technical advice and work closely copywriters, art directors and external suppliers. Traffic managers are responsible for ensuring materials reach their media destination on time.

3.

Media Department - This group is responsible for the planning and placement of media time and space. Functional responsibilities include: media planning, media buying, and media research. Position titles include: media buyers (make effective/efficient buys), media planner (assess strengths, weaknesses, and cost efficiencies of alternatives), media supervisor (mid-level position managing buyers and planners), and media director (senior-level administrative position accountable for planning and placement of all media).

Managing the Client's Business Agency Teams Advertising agencies usually designate an account group or team to handle a client's business. This group consists of a cross-section of personnel from the agency including an

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account executive, copywriter, art director, account supervisor, media planner, and media buyer. For the client, an account group (team concept) provides two main benefits: even if changes do occur in the structure of the group, the group is familiar with the client's business, and a certain consistency in approach will prevail.

The team concept has recently expanded now that the digital media is part of the picture. It is important for specialists in traditional media and digital media to meet during the planning stages of a campaign in order to develop and assess potential ideas that will work in all media. Such teams are referred to as hybrid teams (bringing the two areas together). In many cases the digital team is often the lead in such meetings. Based on consumer behavior, all media are now being funneled through the \internet. This has important ramifications for both creative teams and traditional media teams.

Competing Accounts Agencies avoid conflict situations. Since the client-agency relationship is a confidential partnership, agencies do not accept assignments from advertisers that compete with their current clients.

Agency of Record Many advertisers divide their advertising assignments between several agencies. In such cases, the client usually designates one agency to be the Agency of Record (AOR). The AOR is the central agency responsible for media negotiation and placement for an advertiser using more than one agency. The AOR is responsible for corporate contracts under which other agencies issue placement orders. The AOR may be a full-service agency or a media buying company depending upon how a client organizes its advertising activities. The AOR usually receives higher compensation than other agencies working for the client.

I.

Agency Compensation Advertising agencies receive compensation on the basis of commissions, a fee structure, or by performance. In the commission system, the agency receives a 15% rebate from the media based on the dollar volume of time and space purchased on behalf of the client. Example illustrations are contained in the textbook. Advertisers are now seeking better deals with agencies and they are negotiating lower rates of commission.

In a fee system the client and agency agree on an hourly, annual, or overall fee. Common practices include minimum guarantees, hourly rates, and cost plus profit margin schemes. Fee systems tend to be cumbersome and require lots of administration to work

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effectively. As well, the system does not consider the quality of work produce by the agency.

In a payment by results (PBR) system actual performance determines the level of compensation. Such a system eliminates traditional media biases and allows for more objective media recommendations by agencies. If the desired results are achieved, an agency could make even more than what a traditional commission rate would have generated. For this system to work the key is to have both client and agency agree to results that are achievable. This compensation system is growing in popularity and for certain is forcing agencies to look at all forms of marketing communications as a means of generating the desired results. Refer to Figure 2.7 for more details about PBR. ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

Seeking a Creative Agency: Who’s at the Top of the Canadian Advertising List Strategy magazine acknowledges Canada’s best creative agencies each year. Among the agencies that have a good track record each year are the following: • Leo Burnett • DDB • BBDO • Rethink • Cossette • Taxi • John Street • Sid Lee • Grey • Red Urban Are any of your students looking for a work placement or internship? They may as well learn from the best.

2.

Biggest Merger Ever in Adland As separate companies they were among the world’s top four agency conglomerates.

Merged together they are one of the biggest! In July 2013, Publicis Groupe SA and Omnicom Group Inc. agreed to merge in an all stock transaction to create the world’s largest advertising company with $23 billion in revenue. Former leader WPP Plc drops to second place in the size rankings.

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No doubt, management conflicts and account conflicts will follow the merger but in defending the merger both companies stated “we share a culture based on our clients. A lot of the world’s biggest accounts are now under one roof. Among the clients affected by the merger are PepsiCo, Nissan, Philips Electronics, McDonald’s and Procter & Gamble.

According to the CEOs of each company “merger talks started out as a joke, but the more we looked at the idea the less we thought it was stupid.”

Adapted from “Publicis to combine with Omnicom to create top advertiser,” Bloomberg, July 29, 2013, www.bloomberg/com.

3.

Canadian Tire Offers Sound Rationale for Changing Agencies Client-agency relationships are often on tender hooks and change is always in the wind.

Canadian tire made a big decision when it hired a new agency. The account had been handled well by MediaCom, a division of WPP Worldwide, but Canadian Tire was looking for “new direction” in a marketplace that was changing fast.

Omnicom Media Group is the new agency. “Our decision to consolidate with one media agency was driven by the need to get more strategic and more efficient in how we do things across all of our divisions,” said Duncan Fulton, senior vice-president corporate affairs at Canadian tire. “We saw a benefit in working with one integrated media services team who can have line of sight and drive media strategy across all of our businesses.

Beyond the Canadian Tire brand, the company also owns FGL Sports (Sport Chek and other retail sporting goods banners) and Mark’s.

Adapted from “Canadian tire moves media to Omnicom Media group,” Marketing, June 12, 2013, www.marketingmag.ca.

4.

Thanks but No Thanks: Frito Lay Dumps Juniper Park Juniper Park a very successful Toronto-based agency originally opened with Frito Lay as its inaugural account. The agency handled the global account for the brand and has done some exciting work for it. Several successful Super Bowl campaigns and contests were among the work.

But, in the age of globalization Frito Lay (a division of PepsiCo) was looking to globalize the brand and its marketing strategies. Parent company PepsiCo is doing the same thing.

When this strategy is in place a client seeks an agency network that can effectively coordinate marketing communications activities anywhere. Frito lay decided to go with Omnicom’s BBDO network of agencies.

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As a consolation Juniper Park retains the Quaker portfolio (another division of PepsiCo).

It’s a big loss for Juniper Park. Globally the chip brands control 31% of the market. Media spending for Sun Chips and Lay’s chips combined was in the $50 million range annually.

Whether working of fee or commission that is a financial setback for Juniper Park.

This example demonstrates that agencies have little control over their destiny with a client. Their work may be good and the relationship sound but bigger such as global efficiency take precedence over any human factors in the partnership. As usual, it’s always about the money!

Adapted from “Juniper Park Loses Big hunks of Frito Lay, Marketing, August 2, 2011, www.marketingmag.ca.

5.

Agencies Don’t Burn Bridges Molson Coors decided to put their account into review meaning the current agency would have to pitch the account again in order to retain it. Crispin Porter + Bogusky Canada, the current agency decided not to pitch the account.

Molson acknowledges that the partnership with CP+B has been successful. It was a 7 year relationship that saw core brand Molson Canadian successfully repositioned in Canada with effective advertising produced by the agency. The agency literally reversed the fortunes of Molson Canadian.

CP+B took the high road after being dismissed. Jeff Steinhour, president, stated: “We are privileged to have partnered with Molson Canadian for the past seven years, during which time we were able to reverse the decline in sales and significantly grow the brand for the first time in a decade. We are extremely proud of the work and success we’ve had together, however we do not pitch existing accounts. We remain close friends with Molson Canadian and wish them much success going forward.”

We will never know the real story but the agency’s explanation doesn’t burn any bridges, it actually sets up their sales pitch for another beverage account. They have proven they can reverse the fortunes of a brand in a highly competitive market. Someone will knock on their door.

Adapted from “Molson starts agency review,” Marketing, September 20, 2011, www.marketingmag.ca.

5.

New Agency Models Full-service agency, digital agency, social media agency: what kind of agency do I need?

Different clients have different needs and it makes for interesting decisions on the type

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of agency to hire. Some clients want big, global agencies while others want small boutique agencies, and there’s also everything in between.

Digital shops haven’t knocked out full-service agencies and social media agencies are still just circling their predecessor digital agencies. Most discussion today about new agency models suggest smaller is better. Clients are seeking agencies that produce fast, cheaper creative solutions. The result is an influx of small shops employed with few full-time staff and an army of freelancers hired on a client-by-client-basis. New agencies such as Zulu Alpha Kilo (Toronto) and slingshot (Vancouver) operate on this basis.

Another new development is the crowdsourcing agency, the opposite of the smaller, cheaper concept. This type of agency operates with freelance-led, modular creative teams—a loose network of creative people working on projects on an as-needed basis.

These agencies bill themselves as huge and nimble. Cloud (a Toronto-based agency) operates with this model.

Adapted from Jeromy Lloyd, “New Agencies vs. Old Agencies,” Marketing, February 28, 2011, p. 23.

6.

Thanks but No Thanks: You’re fired!

No matter how you tell it (e.g., it was a mutual parting of the ways after a successful partnership) sometimes the honey-coated explanations passed to the public don’t pass the smell test.

To demonstrate, consider the parting of the ways between Coca-Cola Zero and agency CP+B. The explanation went this way: “After an extremely successful seven-year relationship, Coke Zero and CP+B have decided to part ways. We are all very proud of the results we have achieved together and will continue to partner on the Vitamin Water account (a consolation prize!) as well as other potential projects going forward.”

Many analysts saw it as a surprising split given the length of the relationship and the success of the brand. CP+B did excellent creative work on the brand and their message “all of the taste of Coke without the calories” is responsible for positioning the brand in the customer’s mind. In the United States Coke Zero spent about $35 million in measured media. Whether CP+B worked on commission or a fee system, they stand to lose considerable revenue as a result of the dissolved partnership. Make you wonder!

Adapted from “CP+B loses North American duties for Coke Zero,” Marketing, July 3, 2012, www.marketingmag.ca.

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7.

Canada’s Leading Advertisers Packaged goods, telecommunications, and automobile lead the charge in advertising spending in Canada. Here is the latest list available for Canada’s top 10 advertisers for 2008. Please be advised that Nielsen Media Research no longer publishes publically the dollar value spent by advertisers.

1. Rogers Communications 2. Procter & Gamble 3. BCE Corporation 4. E1 Entertainment 5. Government of Canada 6. General Motors Corporation 7. Ford Motor Company 8. McDonald’s 9. Provincial Government :Lotteries 10.Chrysler Dodge Jeep Ram Dealers Association Source: Top 10 and Trends, The Nielsen Company, 2012 data. ed from, " U.S. dollars in millions for

the year 2005. charge in advertisng spending in Canada. s on staff and will be full 8.

WPP Group Creates Team Mazda to Meet All Marketing Needs A new agency model for managing a client’s business has been implemented by WPP. Team Mazda will operate as a separate unit of WPP an offer its expertise and services in any and all aspects of marketing and marketing communications.

WPP embraces the practice of building dedicated teams for client pitches which appeals to the “integrated” needs of most clients and the efficiencies that come with it. Other agencies look at this model and wonder, “Can they deliver what they promise?”

Team Mazda will have about 100 employees, a single profit and loss statement and its own leadership. All disciplines will be represented, from traditional advertising and media planning and buying and digitals media, direct marketing, public relations and analytics.

Mazda is looking forward to the partnership and sees open and direct dialogue as a key benefit to the management model. He sees good communications leading to a firm understanding of objectives among both parties. Mazda spends about $150 million in measured media in North America each year.

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Adapted from Andrew McMains, “WPP Looks to Repeat Success of Team Detroit and Learn from its Enfatico Stumble with Dell,” Adweek, July 26, 2010, www.adweek.com.

9.

Tips for Making Agency Evaluations Work To effectively evaluate an agencies work clients must start evaluating all aspects of marketing communications the agency is accountable for. There is a tendency for clients to focus on creative when conducting evaluations. Agency evaluations must be a productive experience. Here are five tips for accomplishing that goal: • All marketers, even those with small budgets, should conduct formal agency reviews regularly.

• Use a consistent format for all agency types, though specific questions can vary.

• Present results in person and discuss them openly with the right agency people.

• Have clear corrective action plans with due dates assigned to “owners.”

• Try to eliminate game playing and politics. Be open and honest with the feedback so that agency personnel can consider corrective actions. The repercussions should be positive rather than negative.

Adapted from Jack Neff, “ANA Survey: Agency Performance Reviews are Now Business as Usual,” Advertising Age, September 14, 2009, p. 3.

ANSWERS TO END-OF-CHAPTER QUESTIONS Review Questions 1. The three primary groups comprising the advertising industry: advertisers, advertising agencies, and the media. Creative and media support companies and audience measurement can also be included as industry participants.

2. Common systems for managing the advertising function include: brand and category management, regional management, and global management. Brand and category management involves the development of advertising for national brands regardless of location in Canada. Regional management considers geographic and cultural differences and develops advertising that is best suited to unique regional needs. Global management involves using successful ad campaigns from one country in other countries. .

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3. The client (usually represented by the advertising manager of marketing manager has five primary roles: planning and budgeting, coordinating advertising strategies with other communications strategies, monitoring the implementation of plans, evaluating plans for effectiveness (e.g., their ability to achieve desired results), and liaising with agencies on a day-to-day basis.

4. Agencies have three primary roles: to provide experience and expertise in the areas of creative planning and media planning, or any other aspect of communications that the client demands; to provide planning assistance where necessary (e.g., this assistance may go beyond communications planning); and to provide objective ideas and concepts that will help sell the client’s products (e.g., provide customer-focused campaigns rather than client-focused campaigns).

5. Client-agency relations refer to the nature and quality of the relationship between the two partners. Both parties must take the necessary steps and actions to ensure there is a good working relationship. For example, establishing reasonable objectives that both can agree to is a good first step. Having a system in place that ensures good two-way communications is another step. Taking the time to evaluate each other’s performance is another step in the relationship-building process. Other factors work against the relationship. For example, not providing a sufficient level and quality of service, philosophical differences in creative direction, and lack of effective communications all contribute to a poor working relationship.

6. Account shifting is a situation where clients move from one agency to another during the course of a year (e.g., a client fires one agency and hires another). The sum total of such actions by all clients and agencies is called account shifting. Account shifting is a sure sign of poor working relationships between the two parties.

7. A full service agency can be equated to a one-stop shopping concept. Clients that use full service agencies expect service in a variety of communications areas: advertising, public relations, direct response, Internet, sales promotion and so on. In contrast, specialists such as creative boutiques and media buying services focus on one particular area, usually claiming that such a focus will produce better campaigns for their clients.

Trends indicate that specialists are becoming more prominent with clients.

8. The account management group is made up of consultants who manage client business/advertising affairs. They provide advice on strategic planning matters and are responsible for motivating agency staffers to build the client's business. The creative department is responsible for the generation and development of communication ideas

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and concepts. The media department is responsible for the planning and placement of media time and space on behalf of the client.

9. Agency teams (account groups) are formed by the agency as a means of managing a client's business. The team consists of a cross-section of agency personnel (creative, media, and account management). Such a concept is important to the clients as they want agency personnel to be totally familiar with their competitive situation and advertising requirements at all times. Also, clients usually look for consistency in how an agency handles their business. What the clients want is a management approach from the agency that will complement their long-term marketing planning.

10. The Agency of Record is a term describing the central agency responsible for media negotiation and placement for a multi-product advertiser using more than one agency.

Such a designation provides the client with more efficient media buying (e.g., greater corporate discounts when purchasing time and space through a central service).

11. The three methods for compensating an agency are commissions, fees, and payment by results. In the commission system, the agency receives a 15% rebate from the media based on the total value of media time and space it purchases for a client. Several options are available in the fee system (e.g., an agreed upon hourly rate for various agency personnel, minimum guarantees, and costs plus profit margin). In the payment by results system, agencies agree to work for a lower commission but will receive bonuses if they meet and exceed desired results. Details regarding objectives to be achieved have to be mutually agreed to well in advance.

12. The commission earned by the agency would be: For time and space: $3 000 000 + $450 000 + $250 000 x .15 For production: $400 000 + 60 000 x .1765 Total Commission: Media Receives: $3 700 000 - $555 000 Client Pays: $3 700 000 + $460 000

= $555 000 = $81 190 = $636 190 = $3 145 000 = $4 160 000

Discussion Questions 1.

The purpose of this question is to have students evaluate the pros and cons of using full service agencies or a team of specialist agencies. There are good arguments in favour of either direction. Firms with global objectives seem to be teaming up with networks of full service agencies while firms with primarily domestic objectives can use either a full service agency or teams of specialists. Specialists are attracting a lot more interest as

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creative boutiques now focus on specific forms of communications (e.g., direct response and digital) or communications for specific industries (e.g., pharmaceutical advertising).

2.

This is an opinion question. Generally speaking the client should not be too involved in the development of creative strategies. Clients provide information and advertising experts develop the ads. That’s why the agency was hired in the first place. Clients who interfere or who have too much say often results in a poor working relationship with the agency. The result is client-driven advertising rather than customer-driven advertising. It is the client’s money however so their input cannot be neglected.

3.

Students should analyze the meaning of the word partnership and provide their own insight into how a client-agency partnership should operate. The characteristics of a good partnership are much like that of a good marriage (I often draw this analogy in class).

Factors such as trust, understanding, respect, open communications, and common goals are the ingredients of a successful relationship. When any of these factors starts to sour, the relationship will hit some rocky patches and eventually disintegrate.

4.

Global campaigns are very hard to implement due to language and cultural differences.

Generally, they are only used by the biggest and most resourceful companies as is the case with the McDonald’s ‘I’m Lovin’ It” campaign. Nike’s “Just Do It” campaign would be another example. If successful such campaigns provide cost savings on the production side of the equation.

5.

With clients tightening their belts at every turn, they want to use the payment-by-results system more than before. If clients and agencies believe in the “partnership” model than both parties should commit to the task at hand, and in the case of an advertising agency, stand behind the quality of work it produces. If that work it doesn’t sell the client’s product, their compensation should be less. Oppositely, an agency should reap the rewards if a campaign is successful.

VIDEO CASE 1 Crispin Porter + Bokusky Time: 8:30 Key Issues Advertising Agencies Traditional Media versus Digital Media Application of IMC Components Media (IMC) Integration

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This video examines the fundamental operations of a very successful advertising agency. The roles of various departments and specific occupations are introduced. A key theme in the video is the “importance of message” as the key ingredient to influencing consumers to look favourably on a brand. The video also points out that there aren’t any right and wrong solutions. Rather, experimentation is necessary if the desired results are to be achieved. The video also introduces the various marketing communications components (advertising, public relations, events, promotions and social media) and suggests that only the proper components be used when solving a client’s problems.

Discussion Questions 1. What is the fundamental role of an advertising agency?

2. What is your opinion of the expression” It’s ideas, not media channels that create relevancy for a brand.”

3. Is experimentation (with an idea or a media channel) wise given the scarcity of advertising dollars available?

VIDEO CASE 2

Strawberry Frog Time: 11:28 Key Issues Advertising Industry Agency Structure and Roles Client-Agency Relations Project Management Time: 11:28

This video dramatizes a new style of advertising agency that is in touch with changing market conditions and client expectations. Strawberry Frog is smaller and more nimble than traditional agencies that have bureaucratic structure and onerous global networks. In the video the students will see first-hand how an agency is structured to manage client projects. The various roles of key positions and departments are examined including account management, account planning and research, creative development, media planning and buying, and internal services. Students will get a feel for what it’s like to work in a fast-paced agency environment.

Discussion Questions .

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1. Briefly explain the role and responsibilities of an account manager?

2. How does the creative development process work?

3. What is the basic function of media planners and buyers?

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CHAPTER 3 ____________________________________________________ CONSUMER BEHAVIOUR CONCEPTS AND TARGET MARKETNG LEARNING OBJECTIVES Students will be able to: 1. Explain how consumer behaviour concepts influence the development of marketing communications strategies 2. Assess the information needed to identify and select target markets 3. Distinguish between demographic, psychographic, geographic, and behavior-response segmentation variables 4. Explain the influence of relationship marketing concepts on marketing communications strategy 5. Explain the concept of positioning and its role in developing marketing communications strategies CHAPTER HIGHLIGHTS A.

Consumer Behaviour Consumer behaviour deals with how consumers search for, select, purchase, use and dispose of goods and services. Access to information of this nature allows for more effective communications programs. Therefore, organizations invest considerable sums of money on consumer research. Most research is designed to determine who makes the buying decision, which influences the buying decision, and what motivates the buyers and influencers to take action.

Several factors influence consumer behaviour: Needs and Motives

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Needs -a state of deprivation; the absence of something useful Motives - conditions that prompt action to satisfy a need.

Maslow's theory of needs and motivation has had an impact on marketing and advertising strategy. This theory is based on two assumptions: • •

When lower level needs are satisfied, an individual moves to higher level needs Satisfied needs do not motivate

Maslow describes five levels of needs: psychological, safety, social, esteem, and selfactualization needs.

Personality and Self-Concept Personality refers to a person's distinguishing psychological characteristics. Self-concept theory states that the self has four components: real self (you as you really are); selfimage (how you see yourself); looking-glass self (how you think others see you); and ideal self (how you would like to be). Advertisers focus on those components that make people feel better about them selves. Knowledge of this theory explains why so many products are advertised using emotional appeals. In many situations, people purchase goods to look and feel better.

Attitudes and Perception Attitudes are feelings towards an idea or object. Generally, advertising should be presented in accordance with prevailing attitudes held by a target group.

The brand Mountain Dew, for example, uses advertising effectively to reach the mindset of males in their late teens and early twenties. The active, adventurous, edgy, image that the ads project hit the hot buttons of young males who want to partake in the lifestyle the ads portray In the section on attitudes, the question of targeting the gay community is posed. What are the benefits and risks if a mainstream brand goes in that direction? The key benefit is the sheer size of the market and the spending power of this market segment. Many advertisers are more willing to deal with risk these days as it offer a means of differentiating from the pack and building a brand or business.

Perception refers to how individuals receive and interpret messages. Consumers are selective about the messages they receive—they accept messages that are in line with .

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their needs, self-concept and attitudes; and reject messages that are not. There are three levels of selectivity: selective exposure, selective perception, and selective retention.

Knowledge of perception explains why people do not respond to advertising. Quite simply, they do not notice it. The challenge for advertisers is to break through the perceptual barriers in the customer's mind Reference Groups With a reference group or peer group, the role and status one has within the group influences behaviour. There is a desire to "fit in" with a group (to conform to the group standards and norms) that influences purchase decisions. Brands like Red Bull, Mountain Dew, and Gatorade G2 are popular with the youth market based on the impact of their respective advertising campaigns.

Family The family also influences buying when purchase decisions are shared among household members. Shared roles by male and female heads of households have resulted in double targeting (e.g., appealing to both sexes but in different ways or appealing to both sexes in a unisex manner). Financial services companies now target males and females equally. This is a departure from past practices. Clearly, women play a more active role in all kinds of purchase decisions, and that role has been recognized by progressive-minded organizations. Canadian Tire and Home Depot are among these companies. At the parent level decisions are shared by partners so advertisers must approach both with the message.

Children also play a role in purchase decisions. Teens for example, do their own shopping for all kinds of goods that parents were once responsible for. Many advertisers now target parent and their children with advertising messages.

B.

Identifying and Selecting Target Markets Market segmentation is defined as the division of a large market into smaller homogeneous markets based on common needs and/or similar lifestyles. Organizations target groups of customers they want to pursue. Demographic profiles of customers consider variables such as age, gender, education, occupation, income, and marital status.

C.

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Demographic Segmentation

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Target markets are pursued on the basis of age, gender, income, occupation, education, marital status, household formation, and cultural mix. Among these factors, certain trends are worthy of note, specifically age trends, gender trends and ethnic diversity.

Age Trends – Canada’s population is ageing and various age groups are categorized based on common characteristics: Generation X and Y, baby boomers and greys (seniors).

In terms of segmentation, marketers target specific groups. Mercedes-Benz for example targets 35- to 54-year-old professionals. The challenge for marketers is to change their communications strategies as their target market ages while trying to attract new customers entering a particular age segment.

Gender Trends – With more women in the work force prudent marketers are targeting women with specific campaigns or are double targeting to cover both bases. Financial institutions place greater emphasis on female targets now. Nike is an advertiser often cited as doing it right with women—their message emphasizes confidence and selfesteem. Advertisers must understand the differences in what motivates buying decisions when targeting both males and females with the same product. For example, when buying a car women are very rational while men tend to buy on emotion.

Ethnic Diversity – The ethnic population is growing and is a major force in key urban markets like Toronto, Vancouver and Montreal. Such concentration in urban markets makes it easier for marketers to reach ethnic consumers with advertising messages.

Paying attention to ethnic buying power will determine the fate of everyday brands in the future. Walmart is a good example of a retailer that devotes significant resources to attract ethnic customers.

D.

Psychographic Segmentation Psychographic segmentation is the examination of lifestyle based on activities, interests, and opinions (AIOs). Its consideration shows how individuals who look similar demographically, behave differently when other factors are known. Such knowledge allows an advertiser to position a product more effectively. It presents opportunities for better messages (product is communicated in accordance to lifestyles) and more efficient media planning (media habits and media consumption patterns are known and used to advantage when developing plans).

Marketing research companies such as Millward Brown and Environics Analytics conduct studies that ultimately classify Canada’s population into clusters. The characteristics of these clusters offer input for developing better advertising and marketing strategies. See Figure 3.11 for a description of some of these clusters. Axe deodorant and body sprays were launched on the basis of psychographic profiling. See the chapter for details.

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The combination of demographic and psychographic targeting allows a company to position its products much better. Brands in the beer and fashion industries effectively use psychographic information to develop ad campaigns that will have impact on their targets. Fashion brands like Calvin Klein and Diesel often show young couples in provocative poses, for example.

E.

Geographic Segmentation Geographic segmentation divides a large market (Canada) into distinct geographic regions. Language and cultural differences across Canada present challenges and opportunities for advertisers. Given the nature of the Canadian market, it is appropriate to consider different strategies in the various regions, or to alter strategies where necessary. Geography also distinguishes between urban, suburban and rural differences (e.g., the attitudes, opinions and activities of people may vary due to location and related factors).

The importance of geography is demonstrated by the fact that 81 percent of people live in an urban area, with just over 50 percent of the population living in five urban areas; Ontario’s Golden Horseshoe, Montreal and region, the lower mainland of British Columbia, southern Vancouver Island, and the Calgary-Edmonton corridor.

Many organizations are moving away from broad stroke national campaigns and toward unique, regional campaigns. Such a strategy is often referred to as micro-marketing.

Other organizations look for common ground across all areas and use national or international strategies. Quebec and its French language and culture represent an obvious opportunity for regional advertising strategies.

Geodemographic segmentation combines demographic characteristics with location characteristics. For example, like people tend to reside in certain areas of a city—they want to be with their lifestyle peers. To demonstrate, middle-class families tend to reside in the suburbs while single professionals live in the downtown area of a city.

F.

Behaviour-Response Segmentation Behaviour-based targeting refers a database-driven system that tracks one’s behavior to determine interests and then serve ads that should be relevant to the receiver. A wellmaintained and managed CRM program is the backbone of behavior targeting. Shoppers Drug Mart is a good example of a company implementing behavior-response targeting.

The Shoppers Optimum card program has some 10 million members in Canada.

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Now and in the future, communications techniques such as direct response advertising, Internet communications and mobile communications will play a stronger role in the marketing communications mix., all because of the growth of behavior-based targeting and the ability to reach consumers as individuals effectively and efficiently.

G.

Market Positioning Concepts Positioning involves designing and marketing a product to meet the needs of a target market, and creating appropriate appeals (usually through advertising) to make the product stand out from the competition. A positioning strategy statement provides guidance to all marketing and marketing communications strategies. The positioning statement should be clear, concise, and uncomplicated. Several examples were cited in the text.

Advertising can communicate the positioning strategy many different ways. Here are some common techniques: 1.

Head-On - A strategy in which one brand is presented as an alternative equal to or better than another brand. It usually the strategy used by a challenger (e.g., Pepsi challenges Coke).

2.

Brand Leadership - A strategy that states a product is successful, a market leader, and highly acceptable to a majority of users (e.g., Coca-Cola and Shoppers Drug Mart).

3.

Product Differentiation - A strategy that focuses on the unique attributes or key benefits of a product; benefits important to the customer (Red Bull, Coke Zero or Pepsi One).

4.

Innovation - A strategy that dwells on technical leadership in product development (Gillette Fusion razors and Apple iPad, etc.).

5.

Lifestyle - Communications based on the lifestyle of a target market. The product "fits" the lifestyle of the user (party scenes in beer ads, adventurous automobile ads, and exotic travel ads).

For more insight into positioning and advertising strategy see the action vignette Hyundai Adopts New Positioning Strategy.

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H.

Repositioning Products are repositioned according to the prevailing environment in the market.

Repositioning involves changing the place a product occupies in the consumer's mind in relation to competitive products. Repositioning occurs for two primary reasons: it is a reaction to competitive activity and positioning, and it is a reaction to changing consumer preferences.

Repositioning should only be undertaken when absolutely necessary. Some times, a company tires of its positioning strategy before the customers do, and when they make a change the face the wrath of existing customers. Never change for the sake of change. As the old saying goes, “If it ain’t broke, don’t fix it.”

ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

Changing Roles and Responsibilities Influence Buying Behaviour Males, females, and kids often work together to make family buying decisions. Changing roles and responsibilities also influence decisions and these factors combined have forced organizations to rethink how they present themselves to customers. A relatively new strategy involves double targeting—devising strategies that appeal to both genders effectively.

Financial companies, automobile companies and big retailers recognize the changing roles and have designed new campaigns to reflect the change. Retailers like Mark’s, Canadian Tire, Home Depot, and Best buy have redesigned their store layout, created a better shopping environment, and implemented new advertising campaigns aimed directly at women. Mark’s even changed its name from Mark’s Work Wearhouse in an effort to soften its image as a store for men.

2.

What Your Beer Says About You The beer you drink says a lot about you, in fact it can be as telling about your personality as the clothes you wear or the car you drive. A research survey conducted by Mindset among 2600 people found specific personalities and mind-sets popped up for a variety of beer brands. As well, people who drink a broad portfolio of beers are very different from one-brand drinkers. Here are some examples: Budweiser – Bud drinkers are sensible, grounded and practical. They don’t like authority—can anyone say union! Bud drinkers are also spontaneous and do a lot of advance planning. Not surprisingly, 42% of Bud drinkers drive a truck.

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Bud Light – Bud Light drinkers are grounded like their Bud brethren, but respect authority. They tend to have frat-boy personalities, particularly when it comes to risk taking. They are generally accepting of others and easy to get along with.

Corona – They are busy and energetic people who are also extroverted. They are people others seek out in a social situation. They see more people in one day than most people see in a week. While they are the life of the party they also see themselves as very caring of other people and are giving and warm in nature. They are 91% more likely to buy recycled products.

Heineken – A slang term describes Heineken drinkers—posers. They are self-assured and believe they are exceptional, get low scores n modesty and high scores on self-esteem.

They like to be the centre of attention and in the middle of the action. They are 58% more likely to own an American Express card and 30% are more likely to drive sports cars.

Adapted from Beth Snyder Bulik, “What Your Taste in Brew Says About You,” Advertising Age, November 2, 2009, p. 12.

3.

Ethnic Diversity Brings New Targeting Strategies The ethnic market is actually a big market in Canada. Statistics Canada reports that a vast majority of Canadians belonging to a visible minority group live in major cities. In Toronto they represent 63 percent of the population, in Vancouver 59 percent and Montreal 31 percent. Those numbers are significant! The largest visible minority group are people of South Asian descent, followed by Chinese, black, Filipino and Latin Americans.

According to Emma Fox, senior vice-president of marketing at Walmart Canada it is absolutely vital that her company pursue the ethnic market. “It’s really important that we win our share of that market. It’s a necessity because all the future market growth in terms of spending is coming from new population growth.”

Walmart Canada has been a leader in ethnic marketing and marketing communications and the company is moving forward with a “store of the community” concept which caters to local needs and tastes. The location of various ethnic groups in a city will be a determining factor on what merchandise a store carries.

Scotiabank holds similar views and is pursuing niche markets that competitors may be neglecting. Scotiabank recently focused on the Hispanic market in Toronto and Montreal.

According to Fabiola Sicard, director of Latin markets at Scotiabank, “They are a smaller market than other immigrant communities, they are fragmented geographically, and no

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significant research has been done on their needs.” Despite this the bank sees great opportunity as they number 600 000+ population in Canada.

In Canada the Hispanic community is highly educated—50 percent have at least a bachelor’s degree and another 12 percent have a college diploma. Scotiabank sees Hispanic Canadians as a growth market for its StartRight bank accounts, which are tailored to the needs of newcomers.

In terms of marketing communications Scotiabank stays away from mainstream media, preferring a more grassroots approach. The bank targets professional associations, street festivals, and blogs aimed at people living in Latin American countries who are mulling a move north. Scotiabank does not neglect the larger Chinese and South Asian communities, but the other banks are aggressively targeting them as well. Scotiabank is going into areas nobody else is targeting.

Adapted from Marina Strauss, “Walmart aims to cater to a more diverse palate,” The Globe and Mail, April 17, 2012, p. B7 and Simon Houpt, “Unknown, ignored and invisible,” The Globe and Mail, November 18, 2011, p. B7.

4.

Boomer Market: Neglect Them and Suffer the Consequences Why are marketers obsessed with attracting Generation X an Y leaving the bulging boomer market unattended? Companies that lose their connection to people over the age of 50 do so at their own peril.

There is practically no segment or product category where Boomers aren’t a significant factor—even across technology. They may not be the first to buy when a new product comes out but they are purchasing at rates similar to other segments, and because they are often buying for their kids, many are double-dipping.

While Boomers account for about 38% of spending, Nielsen Media Research estimates only 5% of advertising dollars are targeted at adults 45 – 64 years old. That’s a big disconnect!

Marketers have this tendency to think of Boomers quietly moving forward in their retirement years, but that perception is false. Aging people are active consumers for much longer—they have better health and many are affluent. They will be an important segment for a long time.

Adapted from Sarah Mahoney, “Nielsen: Time to Recommit to Boomers,” Marketing Daily, July 21, 2010, www.mwediapost.com.

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5.

Its All about the Attitude Boys: The Self-Concept at Work The male attitude toward grooming is changing dramatically, even among the youngest of males. A survey of 2000 teenagers discovered they are just as self-conscious about their bodies as girls. More than half of the boys in the survey felt they were unattractive to females. They indicated that getting into shape would improve the quality of their life and make them happier.

Apparently boys look in the mirror an average of ten times a day. They spend 65 minutes getting ready for a date and 34 minutes getting ready for school. Why so? They are influenced by the images of perfect looking men seen in men’s magazines. It’s hard for young men to measure up to those images.

The boom in cosmetic surgery and the media coverage it receives has made it seem acceptable to men of all ages even though many of their role models haven’t had any surgery. Following in the footsteps of metrosexuals, 95% of teenage boys think that good grooming improves their prospects with girls. They spend an average of $60 a month on grooming products. That’s great news for brands such as Gillette, Nivea and Biotherme Homme.

Adapted from Sarah Womack, “Boys anguish over their looks,” National Post, May 24, 2005, p. A2.

6.

Some Ethnic Numbers for Thought Ethnic diversity will dramatically change the way organizations approach customers in the future. If an organization is not on board now, they better get on board, quickly! The composition of Canada’s big three cities will show continued and escalated ethnic diversity. By 2031, Toronto is projected to be 63% ethnic. Vancouver is projected to be 59% ethnic and Montreal 31%.

Statistics Canada estimates that 96% of all Canadians from a visible minority will live in cities by 2031. “We’re looking at and urban phenomenon,” said Richard Day, a sociology professor at Queen’s University.

Based on these trends, some new language is in order. If 63% of Toronto’s population is a visible minority by 2031 and Vancouver is 59% we are going to have to stop using the term visible minority. The visible minority is actually a majority.

National campaigns will no longer work. Companies will have to become more regional in nature, more neighbourhood oriented and even adopt a more individualized approach to

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its advertising and marketing communications. Ethnic media choices will play a more primary role in the media mix.

Adapted from Bryn Weese, “Canada to get more diverse,” Kingston Whig-Standard, March 10, 2010, p. 9.

7.

Organizational Attitude toward Gay Market Will be Changing Many companies have successfully marketed to the gay market. Along the way they identified the potential risk in doing so but saw the benefits outweighing the risk. There is sound support for pursuing the gay market: • Between 6 and 9% of the population is estimated to be gay (up to 3.7 million people) • 33% of the gay community earns more than $100K annually • The before tax income of gays amounts to 7.2% of the GDP Banks and other financial institutions have aggressively pursued this market. TB Bank has a fully integrated campaign that has been very successful. TD Bank offers two good tips for other companies wanting to venture in. first, be authentic to your brand and have a good understanding of what the consumer is looking for. Second, it’s important to be committed to the market and not just see it as pink washing.

Adapted from Evra Taylor, “The Pink dollar is at Par,” Marketing, July 9, 2012, pp. 23, 24.

8.

How Do You Explain the Behaviour of Fast Food Restaurant Customers?

We are living in a health-conscious era, a period where most people are counting calories and exercising in order to look and feel good about themselves. So how do you explain what’s going on in the fast food business. KFC markets the Double Down: Bacon, cheese and a secret sauce sandwiched between pieces of deep-fried chicken. Don’t ask for the calorie count! Burger King launched a hamburger topped with French fries to cut down on the time it takes to down your fat and sodium fix—now that’s convenience! Not to be outdone Boston Pizza is experimenting with a pizza burger concoction—a bacon burger wrapped in pepperoni pizza.

All of these products have created an odd dichotomy. On one side of the menu these chains offer healthy items featuring low-fat, low sodium options; on the other side it’s a gluttony of calories and sodium. Why are these opposing occurrences happening? Some psychologists have weighed in and cited the fact that eating has become a spectator sport (think gross food eating contests) r that the skinniest of people eat the grossest foods—it just doesn’t affect them like it does others.

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The fast food companies are only interested in store traffic. Marketing healthy foods is nice; increasing sales and profits is nicer. As they say, “we’re just giving the customer what they want,” and you can’t argue with that!

Adapted from Susan Krashinksy, “The power of ‘gross’ foods,” The Globe and Mail, August 30, 2013, p. B4.

9.

Lessons in Consumer Behaviour: You and Your Automobile According to research, who you are or who you think you are, has a big influence on the automobile you drive. Here’s what marketing research says about Canadian SUV and minivan owners. SUV owners tend to be confident, adaptable and not at all afraid of the future. They believe in personal responsibility and are working hard to achieve goals.

They feel financially secure and love to go shopping.

The minivan owner is family-focused, risk averse, time-stressed, and anxious about violence and technology. They are practical, pragmatic shoppers looking for a good e\deal over novelty and style, and are more concerned about the environment.

The colour of your car also says something about the owner: • Black – confident, aggressive freedom fighters • Red – hedonistic, aggressive risk-takers • Blue – romantic, spiritual, stability-seeking • Gold – status-conscious, striving to get ahead • Silver – adaptable, independent and flashy • Green – flexible, tranquil, understated • White – spiritual and reflective • Brown - anxious to keep up Finally, Canadians prefer smaller, more affordable and practical cars in part because we are more comfortable with what they say, or more precisely, what they don’t say about us. It was for this reason that BMW chose to subtly change its slogan “The Ultimate Driving Machine” to “The Ultimate Driving Experience” for Canada.

Adapted from David MacDonald and Michael Adams, “We are what we drive,” Marketing, March 15, 2004, p. 42.

ANSWERS TO END-OF-CHAPTER QUESTIONS Review Questions .

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1.

The various levels of needs are: physiological (food, shelter and sex); safety (security and protection), social (acceptance by peers); esteem (recognition and status); and selfactualization (realization and a sense of self-satisfaction) The two basic principles upon which needs theory is based are: People move up to the next level of needs when current level needs are satisfied, and satisfied needs do not provide motivation to act.

2.

The components of the self-concept theory are: real self (you as you really are), Selfimage (how you see yourself); looking-glass self (how you think others see you) and ideal self (the way you would like to be). Examples provided to demonstrate the use of this theory will vary.

3.

It is important to know and understand the attitudes and perceptions held by a target market. People are more accepting of commercial messages that agree with their attitudes. Mountain Dew, for example, understands males in their late teens and early twenties. They present situations and images that this target readily identifies with. They buy the product. What people think about a product is just as important. Any negative perception will have to be overcome before someone will buy.

4.

Double targeting is a strategy whereby one brand targets two unique audiences with the same or different message. Double targeting is now more common since it is difficult to determine who makes buying decisions and who influences buying decisions. Advertisers who make decisions based on old ways (e.g., stereotypical responsibilities) could be in for a surprise when their message doesn’t have any impact.

5.

Demographic segmentation identifies targets by factors such as age, gender, and ethnic diversity. Other factors include income, occupation, and education. Psychographic segmentation looks at lifestyles. It examines targets based on activities, interests, and opinions. Geographic segmentation identifies targets by geographic location. All three forms of segmentation provide information to develop a complete consumer profile. The acquisition of information about people complements the development of marketing and advertising strategy.

6.

The basic trends affecting demographic segmentation in Canada are: the population is aging, the role of women continues to change, the population is more ethnically diverse, household formations are changing (new types and smaller size), and the middle class (the largest segment) generally has less to spend now compared to the past.

7.

Data mining involves a close examination of pieces of information in a database in search of relationships. Uncovering relationships can lead to more effective marketing communications strategies. The goal of data mining and database marketing is to get

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current customers to buy more product or related products. The cost of achieving these goals is less than trying to constantly attract new customers 8.

Positioning deals with the desired image that a brand would like to have in the minds of consumers. The effectiveness of the marketing communications helps determine if the desired positioning is achieved. A brand establishes its positioning strategy statement (typically a statement f what the brand stands for and how consumers may benefit from it). Then, the marketing strategies and marketing strategies are designed and implemented in order to achieve what the positioning statement says. Positioning is the focal point of the entire marketing plan.

9.

Head-on positioning is when a brand presents itself to the target audience as an equal or better alternative than another brand. Typically, it is a challenger type of brand that tries to build its own credibility by comparing itself to the leading brand and making claims that they are better. Brand leadership positioning is when a leading brand presents itself as a leader, a preferred brand by a majority of people. The brand sells itself on its own merits but in a leadership type of way.

10.

If a product differentiation strategy is in play the advertised brand will focus squarely on the most important benefit. Michelin tires focus on safety, Maxwell House coffee focuses on taste and Harvey’s focuses on hamburgers using catchy slogans to attract males (e.g., “Harvey’s makes a hamburger a beautiful thing”).

11.

Repositioning involves changing the place a brand occupies in the customer’s mind. For example, a brand has a certain image and the advertiser wants to change it. Advertisers pursue repositioning if they notice a change in consumer preferences or if competitive activity so dictates. For example, healthier lifestyles of today are forcing many food brands to alter their products (eliminating fat, salt and other harmful ingredients) and repositioning the brands with a different message and style of advertising.

Discussion Questions 1.

The purpose of this question is to get students to apply basic theory in a communications environment. Recommend that they scan some popular magazines so that they can bring some samples of adverting to class.

2.

Answers to this question will vary as the intent is to seek student opinion. Viewpoints expressed should revolve around regional differences based on demographics and psychographics. The student must resolve the question of whether or not one creative strategy can be successful in all regions of Canada.

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3.

For this question, students must understand the relevance of monitoring demographic changes in the marketplace. Products aimed at younger markets will have to mature with the target market if they are to be successful in the future.

4.

Generally speaking, organizations are doing their best to present contemporary households in advertising. It is important to keep pace with change and on the basis of demographics, a lot of change has occurred. Companies are still wrestling with issues such as ethnic targeting and gay targeting. Will advertising strategies directed at these targets cause confusion about what the brand stands for? These kinds of changes present risks and challenges for organizations.

5.

Many observers firmly believe mobile communications is the key component of future advertising campaigns. If correct, behavior response targeting will become more prevalent and individualized messages and offers will be distributed effectively by cell phones, tablets and other electronic devices. Budgets allocated to traditional mass media will shrink and budgets for digital media will increase. Advertisers will have to strike the right balance based on their knowledge of the target they are trying to reach.

VIDEO CASE 1 Jones Soda Time: 7:39 Key Issues Consumer Behaviour Targeting Market Segmentation Niche Marketing This video dramatizes the rise, fall, and potential rise again of Jones soda. Initially, the brand was targeted at a youthful counter-culture demographic and it was a huge hit. Various experiential marketing activities were used to drive the brand instead of traditional forms of advertising. The result was a strong connection between the brand and target customer. To grow the brand further it was decided to enter traditional retail outlets thus making the brand available to different consumer targets. That endevour proved unsuccessful and almost pushed the company into bankruptcy. Mainstream shoppers did not identify with the brand. It was also a time when health concerns were turning people away from sodas and an economic downturn had settled in. A few CEOs came and went but the company finally decided to retool and get .

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back to its roots. The focus would be on the youthful target and their original niche in the soft drink market. Perhaps there is a moral to this story. Being profitable in a niche of a market may be a better strategy than pursuing growth in bigger market segments where competition is much greater and the cost of doing business much higher.

Potential Discussion Questions 1. Can you think of any other marketing or advertising strategies that Jones should have considered when it wanted to initially expand its business?

2. Does the desire to grow outweigh (at great risk) outweigh a decision to simply stay in a niche market where a brand is successful? What is your opinion on this issue?

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CHAPTER 4 ____________________________________________________ STRATEGIC PLANNING CCONCEPTS FOR MARKETING COMMUNICATIONS LEARNING OBJECTIVES Students will be able to: 1.

Identify the distinctions and relationships between the various types of business planning

2.

Describe the key variables that comprise a corporate plan

3.

Outline the organization and content of a marketing plan and marketing communications plan

4.

Show how integrated marketing communications plans provide solutions to marketing problems

CHAPTER HIGHLIGHTS A.

Business Planning Process It is important to distinguish between three planning variables:

B.

1.

Objectives - Outline "what" is to be accomplished

2.

Strategies - Outline "how" objectives will be achieved

3.

Execution - Specific action plans or tactics based on strategy

Strategic Planning Strategic planning is the process of determining objectives and identifying strategies to help achieve the objectives. The corporate plan originates at the top of an organization and acts as a guideline for the development of operational plans (marketing and

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advertising). Marketing plans consider matters related to the marketing mix, target market characteristics, and control and evaluation mechanisms. Marketing communications plans consider the relationship between advertising, public relations, sales promotion, personal selling, experiential marketing, direct response communications and digital communications.

C.

Corporate Planning The key areas of a corporate plan include: Mission Statement - A mission statement is a statement of an organization’s purpose or its operating philosophy. It recognizes customers' needs, considers the competition and the need to build long-term relationships with customers. See Figure 4.2 for details about Coca-Cola’s mission statement.

Corporate Objectives - Usually sales, market share, return on investment, and social responsibility Corporate Strategies - Factors of concern are marketing strength, competition, financial resources, and R&D capabilities Corporate strategies can go in numerous directions: penetrating of current markets more aggressively, acquiring a competitor, developing new products, forming strategic alliances, and divesting in products that no longer fit with a company’s future plans.

D.

Marketing Planning The key areas of marketing planning and responsibility include: identifying and selecting target markets; establishing marketing objectives, strategies, and tactics; and evaluating and controlling marketing activities.

E.

The Marketing Plan A marketing plan is short-term in nature (1 year) and specific in scope. Developing a marketing plan typically involves the following steps: 1. Conduct a situation analysis in which information is collected about the market, product, competitors, and any external influences that could potentially affect the direction of the plan.

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2. SWOT Analysis (assessment of strengths, weaknesses, opportunities and threats). A SWOT analysis is an appraisal of the information that has been collected.

3. A positioning strategy statement (desired image that a company would like to place in the minds of customers. A good positioning strategy sets the stage for the development of marketing strategies. It is the focal point from which relevant marketing and marketing communications strategies are developed.

4. A target market profile is described in term of demographic, psychographic, geographic, and behavior response characteristics. In the age of CRM programs marketers also identify and target consumers directly with unique communications.

5. Develop specific marketing objectives, strategies and tactics. A marketing plan typically includes sales, market share, and profit objectives. Others could also be included (e.g., launching a new product or line extension, etc.).

6.

Establish a budget and other financial information.

7.

A control and evaluation process must be implemented. A periodic evaluation of the results of strategies in the plan is necessary to determine if changes are needed. Either the objectives change or the strategies to achieve the objectives change.

For insight into how customers use target market profile information and positioning strategy statements to develop an advertising campaign see the Advertising in Action vignette Carlsberg Goes Upscale and Attracts Younger, Savvier Audience.

In terms of organization, a marketing plan has two sections: a background section and a plan section. The background section includes discussion on areas such as external influences, market analysis, product analysis, and competitive analysis. The collection and analysis of this information leads into a SWOT analysis. The end result of a SWOT analysis should be the matching of potential opportunities with resource capabilities.

The marketing plan section includes a positioning statement, a list of marketing objectives, identification of appropriate marketing strategies including a detailed description of the primary target market, marketing tactics (specific action plans), a financial summary that includes all budget allocations, and plans for controlling and evaluating the marketing effort. The performance (results achieved) by implementing a plan should be periodically measured against the objectives set out in the plan.

Similar to corporate planning, marketing planning involves objectives, strategies, and execution.

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1.

Marketing Objectives - Focus on sales volume, market share, and profits for individual products and services.

2.

Marketing Strategies - Identify potential targets to pursue and how the elements of the marketing mix are used to achieve objectives within budget constraints. The amount of the budget is clearly identified.

3.

Execution (Tactics) - Outline the specific actions (e.g., activities, costs, timing and responsibility).

Teachers should attempt to stress the relationships between the background analysis and the marketing plan. Specifically, it is imperative that all organizations keep abreast of changing conditions in the marketplace; hence, the need for constantly updating background information. The analysis and interpretation of background information is the input for the identification and development of marketing strategies that will be employed over a specified period.

Once the detail of a marketing plan is established senior executives should be provided a financial summary that outlines the past, present and forecasted status of the brand. As the planning cycle progresses, there must also be a plan of action for measuring and evaluating the effectiveness of the plan (periodic reviews during the year). If financial objectives are not being achieved changes to marketing strategy may be necessary.

F.

Marketing Communications Planning Marketing communications planning involves the identification of appropriate objectives, strategies and tactics to help resolve marketing problems. If the plan is an integrated marketing communications plan it will include the elements of advertising, sales promotion, personal selling, public relations, experiential marketing, direct response communications and interactive communications. The marketing communications plan or any sub-plans (e.g., an advertising plan) are usually prepared by specialist organizations that work as partners with client organizations.

The first task in marketing communications planning is to establish a list of objectives that embrace behavioural issues. Separate strategies are developed for each of the components of the marketing communications mix that are to be part of the plan.

Behavioural objectives tend to focus on creating awareness, altering consumer perceptions, attracting new targets, trial and repeat purchase incentives, and brand preference.

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Marketing communications strategies provide a broad outline of how the various elements will be integrated into the plan. This section of the plan should include a positioning statement, and a budget should be identified and allocated to each of the communications components (e.g., how much for advertising, sales promotion, etc.).

The final section of the communications plan details the role and activities for each of the components that are to be utilized. Conceivably there could be plans for advertising (creative plans and media plans), direct response communications, Internet communications, sales promotion, personal selling, public relations, and events and sponsorships.

See the vignette Youth Market Presents Communications Challenge for an illustration of how Virgin Mobility and Red Bull reach the youth market. Also refer to the vignette McDonald’s Builds Coffee Market Share for details on how that brand altered consumer perceptions about its coffee.

G.

Advertising Plan The advertising plan begins with a clearly worded list of objectives and is then subdivided into a creative plan and media plan.

The creative plan documents the nature of the message and the strategies that will be used to communicate the message. The message usually revolves around a key selling point.

The media plan involves decisions on which media are best suited for reaching the target market. The goal of a media plan is to efficiently reach the target.

H.

Other Marketing Communications Components Separate plans are devised for each component of the marketing communications mix that will be employed in the overall plan. Actions recommended in any area must complement the brand and the overall objectives and strategies that are outlined in the marketing plan.

The illustrative case for Schick Quattro that appears in Appendix I also demonstrates how many of these planning principles are applied and integrated.

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ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

Strategic Planning: Smart is In at Hyundai. Ads Focus on “Smart” The recession of 2009 had an impact on many industries. The impact on the automobile industry was particularly harsh. Dealer lots were loaded with inventory, and cash incentives and discount financing were the name of the game. Despite the incentives, car and truck sales were dropping at the rate of 30 percent per month.

Automakers that had a stable of fuel efficient cars took advantage of the situation, and nobody did it better than Hyundai. Hyundai enjoyed unit sales increases in the area of +24 percent a month and market share rose from 4.9 percent to 7.3 percent. How did Hyundai do it? Good information obtained from a marketing research study determined that consumer spending was going to slowdown long before the recession actually occurred.

In anticipation of the doom, Hyundai changed its marketing and marketing communications strategy. “We put together a plan to succeed in a down industry,” says John Vernile, vice-president marketing. Hyundai introduced a “Smart is in” marketing communications campaign that was different from anything done previously. Hyundai recognized that people were falling behind financially and were concerned with keeping their heads above water.

Hyundai focused on the rational side of human behaviour and used the word “smart” to its advantage. “Smart” would be the new cool, and would appeal to the thriftiness of consumers. One television commercial delivered the message by showing a young teen proud to be seen in mom’s car when being dropped off at school (not the typical situation). Taglines such as “Smart on gas” and “Smart style” summarized the message in commercials and print ads.

The new communications strategy had an impact on middle-class Canadians. The sales and market share gains are directly attributed to the “smart” message that Hyundai delivered.

Adapted from Jeromy Lloyd, “Hyundai’s smart moves,” Marketing, September, 14, 2009, p. 25.

2.

Example of Corporate Mission, Vision and Values You may want to use this Sun Life Financial illustration in class as an alternative example of an organizations planning process at the executive level.

Our Mission To provide lifetime financial security

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Our Vision To be an international leader in wealth management and protection Our Values • Integrity – We aspire to the highest standards of business ethics and good governance • Excellence – We pursue operational excellence through the people we employ, constant innovation, superior service and value-based risk management • Customer Focus – We always work with the customers’ interest in mind, and partner with them directly or through their employers to provide sound financial solutions over their lifetimes • Building Value – Everything we do, from the products and services we offer, to the way in which we deliver them, add value for our customers and builds value for our stakeholders.

Sun Life is a leading international financial services organization.

Adapted from, “Building Excellence,” Sun Life Financial Annual Report, 2008.

3.

Marketing Planning – Consumer Confidence Should Be Considered Is Canada out of a recession? Economists are telling us we are but the average consumer has another point of view (2010). A survey conducted by Bensimon Byrne (an ad agency) and The Gandolf Group (a research company) reveals consumer confidence does not match the views of economists.

Approximately 1500 Canadians participated in the survey. One-third of respondents said they still felt like they were living in a recession. That means a large percentage of the population is not experiencing an economic recovery. A recent conference Board report shows similar results. The Board says consumer confidence is stalling. Consumers have long-term optimism and short-term skepticism.

Bensimon Byrne has advised its clients to bolster their value propositions to customers in order to meet the frugal spending patterns of average consumers. Such insight lead to the Scotiabank ad campaign “Let the Savings Begin, Canada” which focus on the bank’s personal savings services instead of its investing services. Apparently, consumers are “Richer than they think.”

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Adapted from Jeromy Lloyd, “Financial Recovery Not Felt in Canadian Homes,” Marketing, July 22, 2010, www.marketingmag.ca.

4.

Communications Planning: Reaching Youth on a Personal and Emotional Level Let’s start with a few facts about the youth market in Canada. There are 10 million youth in Canada under the age of 24 and collectively they earn about $50-billion. Some of their favourite brands are American Eagle, Bench, H&M and Forever 21. On the music scene they love Taylor Swift, Rihanna and Cold Play.

The youth market has something to say about marketing. They don’t like prices that are too high, poor quality, poor customer service, brands that have a negative impact on the environment, and being talked down to. Marketers beware! This target has a lot of power.

Youth today are distrustful of brands and companies; they aren’t that loyal and they are resistant to traditional marketing techniques. These characteristics call for a different form of marketing and marketing communications if a brand wants their loyalty. And the youth market is loyal if things are done right!

The key is to create emotional ties with youth while treating them as individuals rather than a mass market. Virgin Mobile and Red Bull are two brands that understand youth and are communicating effectively with them. “Virgin Mobile created a reward program focused on four key points—travel, fashion, entertainment and music. Virgin members get benefits such as early access to concert or movie tickets, and discounts at retailers such as H&M and The Body Shop.” Virgin listened to what subscribers wanted and took advantage of it. Redemption rates for these perks exceed expectations and members pass on their positive experiences with Virgin to their friends—a means of boosting Virgin membership further.

Red Bull anchors its communications strategy in events and experiences to reach youth and youth subcultures. Its priorities lie with experiential-based activities. Yes, Red Bull does advertise, “Red bull gives you wings” but the brand focuses on music, arts, and sports events. Red Bill Crashed Ice Festival in Quebec City draws millions of people while smaller events such as a movie festival for skiing enthusiasts may only draw a few hundred. Red Bull pursues subcultures that other brands neglect.

Youth will express their uniqueness through brands so it is up to the brand to connect with them in an appropriate manner. Brands that reach and engage them on a more personal and emotional level will secure their loyalty.

Adapted from “Building Loyalty with Youth,” Strategy, April 2012, pp. 26, 27.

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5.

Positioning: Centre of the Planning Universe at Hyundai When you’re an automobile company operating on a global scale you look for certain efficiencies when devising a marketing strategy. As you have learned the foundation for a good marketing strategy is a solid positioning strategy—a strategy that fits with the marketplace you are operating in.

Hyundai recently moved to a “Modern Premium” global positioning strategy. Before defining what that means let’s first examine the situation in Canada to determine the need for the new position. Hyundai has been very successful in Canada. Market share doubled from 4 percent to 8 percent between 2004 and 2010. Since Hyundai markets smaller, economical cars the brand was a good fit for middle-class buyers. So the question is: why change things? A lot of other car makers are losing market share.

According to John Vernile, vice-president marketing “there’s one area where people don’t think positively about Hyundai, and that’s around well-built and durable products.”

Hyundai wanted to change that impression. A new advertising campaign with a much larger budget featuring featured television commercials (in prime time and on Hockey Night in Canada broadcasts), print ads and out-of-home media was launched in 2012. The objective of the campaign was to alter consumers’ perceptions of Hyundai. Therefore, the message focused on the quality of important components of the automobiles.

To Hyundai “Modern Premium” is an attempt to move the image more upscale but not to the luxury level. Hyundai realized that luxury is about exclusivity rather than quality, and that’s not what Hyundai is about. According to Vernile, the new definition of premium is “good quality and performance that might be unexpected, but at an accessible price.”

Hyundai believes that this shift in positioning is a good fit for the target audience of 19to 54-year-olds they are trying to reach.

Ironically, Hyundai dropped its online advertising when the new campaign was launched.

Hyundai wasn’t happy with the results of their past online advertising activities and decided to spend some time rethinking how to approach consumers with online communications.

Adapted from “Hyundai Canada Adopts ‘Modern Premium’ Global Positioning,” Marketing, January 18, 2012, www.marketingmag.ca.

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Keep Pace with Change: Reposition for Success

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ING Direct is a successful online banking company and much of its initial success is attributed to a well known advertising campaign featuring a straight-talking Dutch actor by the name of Frederik de Groot. In television commercials he encouraged consumers to “save your money” by banking online with ING Direct.

ING Direct determined the “Save your money” campaign had run its course. ING wanted to move from being known as a bank with a high interest savings account to a bank offering a full range of products and services including RRSPs, GICs, mortgages and a home equity line of credit. ING’s new positioning strategy is “Forward banking” a strategy that reflects the evolution of its product offerings.

According to Andrew Zimakas, chief marketing officer, “We’ve been known as the bank that helps Canadians save their money since we launched (1997). It’s an identity that served us well…but our offering has evolved significantly over the years.” The new campaign will let consumers see ING in a fresh way.

To communicate the new positioning to consumers ING takes a poke at traditional banks.

One television commercial shows some hallmarks of bricks and mortar banks—pens attached to counters, velvet ropes and next window please signs—being blown up in slow motion. The message: “It’s time to stop banking in the past.”

Since banking in Canada is dominated by traditional banks, ING’s objective was to be a game-changer, to be known as a brand that empowered its customers through a combination of technology and a human touch. ING also adopted a café concept for its bricks and mortar locations. The CEO communicates with consumers about simple banking via Facebook and Twitter.

The repositioning was launched with a multimedia campaign featuring television, print, digital media and out-of-home media. Social media communications compliment the mainstream media strategy. ING presently has 1.8 million customers in Canada.

Adapted from Chris Powell, “ING adopts new position,” Marketing, April 24, 2012, www.marketingmag.ca.

7.

Keeping Plans Simple is the Best Approach Some people subscribe to the “communications by the pound” theory of planning, preparing huge tomes that look and seem authoritative and take up considerable shelf space. Such plans seem ominous and one wonders if they are actually read by senior executives. Students should be advised that plans vary from one organization to the next—some are short and relatively simple while others are long and complex. For those who like to keep it simple here is a recommendation on the 10 essential sections that should be in a plan.

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• Situation Analysis • Marketing Objectives • Marketing Strategies • Target Audiences • Communications Objectives • Communications Strategies • Budget Recap • Timetables • Media Flowchart • Exhibits ANSWERS TO END-OF-CHAPTER QUESTIONS Review Questions 1. Objectives state what is to be accomplished; strategies state how objectives will be accomplished; and tactics outline the detailed activities or action plans based on the strategy.

2. A good mission statement considers the needs of the customer, the position of the competitor, and the philosophy by which the company will operate. As such, it provides sound direction for the development of marketing strategies.

3. The planning process in an organization usually starts at the top. For example, senior executives establish corporate objectives and strategies. This framework provides guidance for the development of marketing plans (e.g., the marketing department prepares plans which will contribute to achieving corporate objectives). Advertising plans are based on strategies outlined in the marketing plan. Strategically, the various types of plans should be heading in the same direction.

4. A situation analysis refers to the collection of vital information that will have an impact on the direction a marketing strategy will take. Relevant information is collected and analyzed for the market, key competitors, consumers and business customers, and the product.

5. A positioning strategy statement acts as a guideline for developing a marketing and marketing communications strategy. All executions are initially measured for acceptance or rejection based on how well the “fit” the positioning strategy. In terms of communications all creative messages regardless of medium utilized must send out the same message in order to maximize impact against the target audience. .

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6. A target market profile is described based on relevant demographic, psychographic, geographic and behaviour response characteristics. They are presented in such a way that a profile of the primary consumer is identified.

7. The four main elements of a marketing strategy are: a clear identification of the target market, the role that each element of the marketing mix will play in the plan, the budget, and details regarding key aspects of marketing execution.

8. The availability of a thorough target profile that includes demographic, psychographic and geographic variables is essential for developing creative and media plans. Creative planners consider the behaviour and lifestyle aspects of the target. Such information helps determine the best appeal technique to employ. Media planners must know the media alternatives that the target refers to most frequently and under what circumstances they refer to it. This information provides guidance and helps determine what media to recommend and at what weight levels (e.g., some media will be more important than others).

9. Marketing control is the process of measuring and evaluating the results of marketing strategies and plans, and taking corrective action to ensure that marketing objectives are attained. There are three basic elements: establishing standards of performance, periodically measuring actual performance, and taking corrective action in areas where performance does not meet expectations.

10. Marketing communications objectives define the role that advertising and other forms of communications will play in marketing a product or service. Clearly worded objective-oriented statements provide guidance to the development of communications strategies and tactics, and make it possible to quantify the success or failure of a plan after it has been implemented.

11. The key decision areas of an advertising plan involve creative decisions and media decisions. In terms of creative or message, decisions are made on various appeal techniques, visual illustrations, and themes. The media plan involves decisions on which media to use, when to advertise, how much to spend, and what length of time should the campaign run?

12. The various components of the marketing communications mix are advertising, sales promotion, public relations, direct-response communications, interactive communications, personal selling, and experiential marketing.

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Discussion Questions 1. In marketing and advertising, the strategy is the essential element. The statement, "good strategy, poor execution versus poor strategy, good execution," should yield a cross-section of opinion from students. It is imperative to make students understand that it is sound strategy that provides for long-term success. Good strategy and poor execution may yield less than desirable results, but good execution of a strategy that is off-base will not yield any positive results.

2. The purpose of this question is to have students appreciate the links between the various levels of strategic planning in an organization. Some online research for a few companies of their choosing will reveal what companies are doing in this area. You might suggest that companies that are leaders in their industry tend to have good information available.

3. The purpose of this question is simply to get students familiar with collecting relevant data online and then to analyze it to make some observations and conclusions. By looking at different companies in different industries students should note that the role and importance of the various components of integrated marketing communications varies. In package goods, advertising may play a key role, in aerospace and high technology industries, the emphasis shifts to personal selling and public relations.

4. Opinions will vary among students regarding the direction and techniques a brand should use to reach the youth market. There could be a natural bias towards digital communications considering the media consumption behavior of youth. Other media and other forms of communication such as sales promotions and experiential marketing techniques also have an impact on youth. Students must recognize that some balance is needed in the communications mix and that it is easy to avoid messages received via interactive communications devices.

VIDEO CASE 1 Nielsen: Observing and Predicting Consumer Behaviour Time: 3:45 Key Issues Marketing Research Consumer Behaviour Input for Strategic Planning

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This video offers some top-line insight into the various research activities of Nielsen. Nielsen is one of the largest research companies in the world. Well known for producing television ratings, the scope of Nielsen’s research is extensive. Essentially, they do what is necessary to provide clients with useful information to make better marketing decisions. Nielsen electronically tracks consumer purchases in retail stores, a process that produces terabytes of data that is analyzed. Other forms of research embrace household panels that collect a variety of purchase and behavioural information, the monitoring of conversations in social media, and mobile usage studies. Nielsen’s role is to collect the information and then cut through all the data to identify useful insights for marketing and advertising purposes. Essentially, they offer organizations a 360 degree view of the customers they are targeting—very useful information for making marketing decisions and mapping out strategies.

Discussion Questions 1. It seems that consumer activity is being constantly monitored by business organizations. Is this invasion of our privacy an issue or should we be accepting of it.

2. Numerous forms of research data and information were identified I the video. How can this information be directly applied for marketing and advertising purposes. Cite some specific situations.

VIDEO SUMMARY 2 Intel Time: 15:30 Key Issues Strategic Planning Advertising Research Campaign Planning Establishing Advertising Objectives This video describes the now famous “Intel Inside” marketing strategy and advertising campaign in detail. Originally, an offbeat idea that nobody in the company thought would work turned out to be the foundation of the company’s entire marketing strategy. The video traces how the marketing strategy (product development over time) combined with effective and impactful messaging to create a brand. The irony of the strategy is that Intel was marketing an ingredient of a finished product. Would people actually care about the type of chip or quality of chip inside their computer? The success of this campaign strategy and the dominance of .

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Intel in this market clearly indicate that consumers can be swayed by such a communications strategy. The slogan “Intel Inside” and the music that accompanies it in the commercials are memorable. The video also shows how insights gained from marketing research lead to better marketing and advertising decisions. An Intel logo and slogan may appear on your laptop computer. Now you know why?

Discussion Questions 1. Intel describes its product as an “ingredient” brand (part of another finished product). Is it possible for brands in other product categories to duplicate the success enjoyed by Intel or is this simply an exceptional case? What is your opinion?

2. What role does marketing research play in the campaign development process? Cite some specific applications where it is useful.

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CHAPTER 5 ____________________________________________________ CREATIVE PLANNING LEARNING OBJECTIVES Students will be able to: 1. Identify the basic elements of the communications process 2. Distinguish between client responsibility and agency responsibility in the creative development process 3. Explain the stages in the creative development process 4. Explain the creative briefing process and describe the content normally included in a creative brief 5. Clearly distinguish between creative objectives, creative strategies and creative execution 6. Describe the various appeal techniques commonly used in advertising 7. Identify the various execution techniques for presenting advertising messages 8. Explain the measurement techniques used for evaluating creative CHAPTER HIGHLIGHT B.

Creative Development Process and Client – Agency Responsibilities The creative development planning process involves seven distinct stages. In a nutshell, the client presents relevant background information to its agency via a creative brief. The agency then uses the information to devise creative strategies and executions.

Client Responsibility - The client provides market and other background information so that the agency understands the situation. The transfer of information from client to agency is usually in the form of a creative brief. In providing direction, the client usually

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determines the creative objectives (e.g., what is to be said about the product). Once the agency completes its assignment (strategy and execution), the client applies qualitative and quantitative research assessments.

Agency Responsibility - The agency develops the creative strategy (e.g., how the message will be communicated). Agencies must consider the new digital media as part of the mix so it is important that creative people from both sides of the business (traditional and digital) meet to look for common ground to build on. Typically, the agency develops a short list of possibilities that look promising. When the assignment is complete, in the form of storyboards, scripts, rough layouts, etc., the agency creative team presents the ideas to the client for approval.

C.

The Creative Brief Creative planning and development can be divided into five steps. In developing ad campaigns the copywriter and art director immerse them selves in information bout the product, competition and market. Information is provided in the form of a creative brief, a discussion document that is usually prepared by the client. Refer to the sample creative brief for Harley-Davidson that appears in the chapter. The content of the brief contains some or all of the following information: 1. Marketing Information - The brief contains information on the market, product (unique selling points), competition, target market, and a proposed budget.

2. Problem Identification or Challenge Statement – Typically, a campaign is designed to resolve one specific issue (e.g., create awareness, to position or reposition a brand, to present a new image or to attract a new target market).

3. Advertising Objectives – The central focus will revolve around influencing behaviour. (e.g., increase awareness and preference, encourage trial purchase, communicate promotion incentives, increase frequency or variety of use, attract new targets, communicate improvements or incentives, to alter a perception or image, and build a positive corporate image). Advertising objectives may also be referred to as communications objectives.

4. Positioning Strategy Statement – A clearly worded positioning statement provides basic guidance for the development of ads. Ads are often evaluated against the positioning strategy. Is the ad on strategy? Agency people refer to the positioning statement when trying to discover the “big idea” to build the campaign around. As well, the slogan or tagline they develop usually

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summarizes the positioning statement. For example, McDonald’s “I’m Lovin’ it” or Subway: “Think fresh, Eat fresh.”

5. Creative Objectives – Statements outlining "what" message is to be communicated. Their may be several important points to communicate. They may appear in a list format or as a key benefit statement (promise or reason for buying) and a support claim statement (proof of promise).

6. Creative Strategy – Statements outlining "how" the message is to be communicated. It is a statement of character, personality, and desired image for the product. From this the creative team decides on the central theme, the tone and style to be applied and the appropriate appeal technique (e.g., positive, negative humourous, etc.) to capture the attention of the audience.

7. Creative Execution – Here there are two main areas of concern: •

Tactical Considerations – Precisely defined strategies to generate the desired action (e.g., using testimonials, endorsements, comparisons, demonstrations, and so on). See Section G below for more details.

•

Production Considerations – Usually mandatory requirements such as length of commercial, size of advertisement, and placement of brand name and logo are indicated here.

The Molson Canadian 67 vignette in the chapter illustrates how the brand was positioned to appeal to younger beer drinkers.

D. Creative Evaluation Creative Evaluation involves the various stages of client approval of agency's creative recommendations. Clients will use the "managerial approach" for evaluating creative (qualitative assessment by client management) and may decide to conduct quantitative research with the target audience, if necessary. When evaluating an ad, the client uses the following criteria or something similar: • • • • •

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Does the ad communicate the objectives and reflect the positioning strategy?

Does the ad mislead or misrepresent the brand?

Is the ad memorable? Does it breakthrough the clutter?

Is the brand recognition effective?

Should the ad be researched?

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D.

Creative Objectives Creative objective and strategy statements serve three purposes. They provide: 1.

2.

3.

Continuity in advertising Guidance and direction to the agency A framework for evaluation

In terms of message content, there is an endless list of possibilities for any product or service. Some of the more common creative objectives are as follows: 1.

2.

3.

4.

5.

7.

8.

To communicate unique attributes and benefits To increase frequency of use or variety of use To attract new targets To encourage trial purchases To communicate promotion incentives To communicate a favourable corporate image To alter a perception or image

The chapter contains numerous examples of each objective.

E.

Creative Strategy Creative strategy deals with "how" an advertised product appeals to its target market.

How a product appeals to the target is a critical decision. The creative team must come up with the central theme or that one big idea that will bond all commercials and ads together into a cohesive campaign. They must also consider tone and style. Will the ads be informative, persuasive, or entertaining in nature? For example, the “Forever young” theme used by Diet Pepsi was presented in an entertaining way. Viewers (the intended target audience) could quickly identify with the situation and the humor. See the illustration in the textbook.

The creative team must use an appropriate appeal technique. Some of the more common appeal techniques used in advertising include: positive or negative appeals, factual appeals, comparative appeals, and the use of humour, emotion, sexual, and lifestyle appeals. The chapter contains numerous examples and visual illustrations of each technique.

For more insight into creative objectives and creative strategies and how they can evolve to build a brand, refer to the Advertising in Action vignette Scotiabank Gives New Meaning to Richer.

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F.

Creative Execution With the creative strategy determined, the next step is to decide how to best present the message so that maximum impact is generated. Some of the more commonly used presentation tactics include: testimonials, endorsements, demonstrations, product-ashero situations, character presenters, and product comparisons. Examples of each technique are included in the chapter.

For an applied illustration of creative objectives, strategies, and execution see the communications plan included in Appendix I.

G.

Creative Evaluation When clients review creative ideas submitted by an agency, many use a technique called the managerial approach for evaluating creative. This technique is purely subjective and open to interpretation by many whop are involved in the evaluation process. Creative is the property of the client so they have every right to critically appraise what the agency is recommending. Such an approach varies from one organization to another but it usually covers similar criteria.

Often the evaluation is based on the following questions: • Does the advertisement communicate the creative objectives?

• Is the advertisement on strategy (does it agree with the positioning strategy)?

• Is the advertisement memorable?

• Is the brand recognition effective?

• Is there a need for the advertisement to be researched?

H.

Creative Research Techniques Creative research is conducted in either a pre-test or post-test situation. Pre-testing is done before decisions are made about final production or media placement. Post-testing is the evaluation of an ad during or after it has run.

Among the more common techniques for measuring effectiveness are: • Recognition Tests – Respondents are tested for awareness • Recall Tests – Respondents are tested for comprehension (what do they remember about the ad?)

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Starch readership tests are used to evaluate recognition and recall in print advertising. A Starch test measures the following: • • •

Noted – percentage of readers who remember seeing the ad Associated – percentage of readers who saw any part of the ad can identify the brand Read Most – percentage of readers who read half or more of the written material

In the broadcast media a day-after-recall test is common. In this test, respondents are contacted by telephone the day after the appearance of an ad and asked basic questions to determine what they remember about it. The test measures for related recall which is the percentage of audience claiming to remember the ad and can provide some description of it.

Some additional forms of testing include: Opinion Measure Testing – Exposure to a test commercial in a TV viewing situation. The test measures recall, the extent to which the main idea was communicated, and the effect the commercial might have on purchase behaviour.

Psychological Testing – Among these tests are an eye-movement camera test (a hidden camera tracks eye movement when exposed to an ad), pupilometer test (measures pupil dilation in order to determine level of interest in an ad), and voice-pitch analysis test (measures how voice responds to emotional messages being received).

ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

An Ad within an Ad: Old Spice Crashes the Party A commercial for Bounce paper towels starts by showing a blond woman praising the product while gentle guitar music plays in the background. Then the commercial takes a sharp left turn when former NFL player Terry Crews crashes through the wall on a Jet ski (which apparently was driven from a landlocked neighbourhood) and begins to rant about Old Spice body spray—quite a juxtaposition! “It’s so powerful it sells itself in other people’s commercials,” he hollers.

In an era of cross-promotion marketing, this advertising concept is relatively new. One brand interrupting another is not very common, yet. Procter & Gamble spends a fortune on television commercials so it is in position to do this kind of thing. When you own so many brands a little experimentation to grab the viewer’s attention can be a good thing.

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In another commercial for Charmin moist wraps Mr. Crews head pops out of a toilet tank and through the Charmin packaging. Three fists then demolish some drywall to spray some Old Spice in the direction of the camera.

P&G has always advertised its brands as separate entities but is now experimenting with some ideas to cross-sell brands together. It’s a concept that could save some money in the long term.

Adapted from Susan Krashinsky, “We interrupt this ad to bring you… another ad,” The Globe and Mail, March 9, 2012, p. B7.

2.

For Dempster’s Bread Celebrity is Good Sidney Crosby and Canadian wheat farmers have something in common—hard work and determination. Dempster’s is using Sidney Crosby in its advertising to show they put everything into what they do each day.

A one-minute television spot compares Crosby’s game day preparation with the work of farmers growing wheat and grains used in Dempster’s bread. The spots are narrated by both a farmer and Crosby.

Beyond television the campaign includes point-of-sale displays in some 3500 grocery stores and an online contest and game. The brand has used Crosby successfully in the past. It seems to be a good relationship between the brand, the celebrity and the customer—a good fit all around!

Adapted from Kristin laird, “Dempster’s puts Crosby Back on the Ice,” Marketing, November 18, 2011, www.marketingmag.ca.

3.

The Perils of Celebrity: Nike and Woods / Nike and Armstrong Nike is a company that uses global athletes to help market its products. Two of the most famous of them are Tiger Woods and Lance Armstrong. Both athletes found themselves in all kinds of trouble for different types of behavior. Behaviour clauses are typically part of any endorsement contract.

Tiger Woods was exposed publicly for extramarital affairs spanning many years and many women while playing on the professional gold tour. He is the name behind Nike golf and perhaps the only reason why Nike is so successful in the golf equipment business. Many sponsors dropped Tiger once his affairs became public but Nike stood by his side. Nike did

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so because the scandal exposed flaws in his character and Nike wasn’t selling his character.

Lance Armstrong faced insurmountable evidence that he participated in doping while winning 7 Tour de France titles and many other events. He was exposed as a “cheat” in a sport known for cheating. It’s a rather flimsy defense but doping was the only way for Armstrong to compete on a level playing field. Nike felt obligated to drop Armstrong as a spokesperson.

You may want to pose a question or questions to students. Aren’t the reputations of both athletes tarnished to the point where they should be dropped? Is one type of cheating any worse than the other? Why drop one athlete and not the other? Perhaps it’s just a matter of money. Tiger produced tangible business results for Nike. Does anything else really matter?

Adapted from Susan Krashinsky, “On Armstrong and Doping, Nike draws the finish line,” The Globe and Mail, October 18, 2012, p. B10.

4.

Brand Characters Play an Important Role in Advertising Famous characters play a key role in building a brand’s image and reputation. They are often front and center in commercials. Simply put, a character gives a brand some personality. Think of characters like the Michelin Man, Mr. Clean, and the Maytag Repair man.

Procter & Gamble uses characters on many of its leading brands and in honour of the company’s 175th anniversary, readers of Advertising Age were asked to cast a ballot for their all-time favourite P&G brand ambassador. The overwhelming winner was Mr. Clean.

In the first round of voting Mr. Clean garnered 27% of the votes followed by Mr. Whipple (Charmin) at 23%. The Man Your Man Could Smell Like (a relatively new character promoting Old Spice) ranked third with 21% of the vote. Others on the list included Rosie the Waitress (Bounty Towels), and Josephine the plumber (Comet cleanser).

Mr. Clean and Mr. Whipple entered the final round of voting. Mr. Clean earned a commanding victory getting 69% of the votes to 31% for Mr. Whipple.

Some comments the voters had for Mr. Clean: • “Mr. Clean is still gleaming today, while Mr. Whipple is retired.”

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• “Mr. Clean, hands down. Longevity, memorability, brand and consumer benefit integration.”

Adapted from “Who is the No. 1 P&G brand icon of all time?” Advertising Age, October 29, 2012, p. 33.

5.

Good Creative Keeps Coming Back “How do they put the caramel in a Caramilk bar?” That question has been the theme of Cadbury Caramilk bars for a long time. It’s a theme the brand brings back to ignite short term interest for a mature brand in a cluttered and competitive market.

More recently the brand has used another idea called the “Caramilk Key to the Secret” program—in which 10 golden keys are hidden in specially marked packages and one leads to a prize of $250,000.

Ads for the creative and contest feature Terri Grant, former star of the OLN series Mantracker. He and other predictors, provide insight based on their particular skill, as to where and when the keys will be discovered.

The contest is very popular—it has run three times so far. The campaign has helped make Caramilk a uniquely Canadian brand and a top-selling chocolate bar. The campaign is credited with generating incremental sales of $3.1 million, surpassing the campaign objective of $1.5 million.

Adapted from Chris Powell, “Caramilk brings back popular ‘secret’ campaign,” Marketing, July 11, 2012, www.marketingmag.ca.

6.

At Scotiabank “Richer” Has a New Meaning You have probably seen television ads for Scotiabank telling people “You’re richer than you think.” These ads have been on the air since 2006. The primary objective of the campaign was to spread a sense of optimism across the country in troubled economic times. The ads encouraged people to visit Scotiabank for a second opinion on their financial situation. When they visited the bank they learned their situation wasn’t as bad as they thought.

The campaign was based on insights gained from consumer research which revealed that people were concerned about their financial struggles—struggles that didn’t necessarily depend on income level. That insight was the impetus for a marketing communications campaign to make people feel more comfortable and confident about their finances. The bank’s new message was communicated using the slogan: “You’re richer than you think.”

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This campaign was successful. It raised the bank’s advertising awareness level significantly and attracted new customers to the bank. So why change things? In 2012 Scotiabank recognized it was time to redefine the campaign; it was time to give new meaning to the term “richer.”

Scotiabank’s decided it was best to let Canadians to define their own wealth. Again, this strategy was based on insights from consumer research that revealed “richness” meant different things to different people. It had a lot to do with a person’s stage in life. For example, having a baby, retiring, striking out on your own or paying off a mortgage— events that involve money!

The new campaign reflects these events. One commercial titled “Conversation,” shows young parents discussing how they want to do what’s best for their baby. The copy reads: “Richness is: a 7 pound 4 ounce fresh perspective.” An online digital ad showing a new mother and baby proclaims “Richness is: The moment everything changes.” The campaign includes television, print, digital and in-bank posters.

With a sound strategy in place the challenge for Scotiabank and its advertising agency is to bring new and fresh executions of that strategy to the consumer. The “You’re richer than you think” strategy clearly demonstrates that a sound strategy considers new input (in this case new consumer insights) and evolves over time. If there’s a moral to the story it is this: if a strategy is working resist the temptation to change it. Find new executions to keep it fresh.

Adapted from Kristin Laird, “Scotiabank Redefines Richer Campaign,” Marketing, January 23, 2012, www.marketingmag.ca.

7.

Real People versus Celebrities in Ads Harry Rosen spends a considerable sum of money advertising to upscale male customers.

Just recently the company shifted its focus from celebrities to regular customers in its ads.

Harry Rosen typically relied on well-known people from the entertainment, sports and business fields for its ads. But, in a time of economic uncertainty, a successful but less famous person serves as a more reliable model. According to Harry Rosen, “We really feel like this was a time to feature confident, successful businessmen; real hard-working men who are out there in the trenches leading.” All of the men featured in the campaign are loyal Rosen customers.

Adapted from Matt Semansky, “Harry Rosen Keeps It Real,” Marketing, February 11, 2009, www.marketingmag.ca.

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8.

Characters and Slogans Help Build Brands The right character in an ad campaign or an effective and impactful slogan goes a long way in building a brand’s image. In the U.S. the industry honors characters and slogans in its “Walk of Fame.” The list below includes a cross-section of characters and slogans in the Walk of Fame. Examine the list. All are associated with firmly established and successful brands.

Characters • Pillsbury Doughboy • Tony the Tiger • Juan Valdez • Colonel Sanders • Geico Caveman • Serta Sheep • The Burger King • Fruit of the Loom Guys • Jolly Green Giant Slogans • Melts in your mouth, not in your hands (M&M’s) • Imagination at work,” (GE) • What can brown do for you? (UPS) • When it absolutely, positively has to be there overnight (FedEx) Source: “Advertising Week Walk of Fame,” Advertising Age, September 7, 2009, p. 10.

9.

A Little Sex Breaks Through the Clutter – Dentyne Fire Dentyne Fire—what a name, what a promise! Apparently those hardworking research folks at Dentyne have developed a gum that makes you horny. The TV commercial has more tongue wrestling than a MTV awards show.

The commercial shows a teenage couple chatting with the girls’ middle-aged parents in their living room. The gum chewing young girl suddenly lunges at her boyfriend. They embrace lustily, remove their shirts and continue to tussle sexually with each other. The parents are taken by surprise initially but suddenly the mother chews a piece of gum and suddenly lunges at her surprised husband to do the same. The ad got attention!

Perhaps it got too much attention. A revised version of the commercial excluded the parents from the sexual escapade. I guess it was just too much for middle-aged Canadians

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to watch. In the new version they simply look surprised by what’s’ going on. The father actually continues the conversation as the teens embrace on the coffee table.

The lesson: risky ads are usually good ads. This ad caught everyone off guard and probably made people laugh. No doubt the creative people behind the ad were proud of their efforts only to see an intimidated client request that it be toned down. No wonder Canadian ads lag behind those of other countries! This story may spark some controversy in class discussion abut the use of sex in advertising.

10.

Some Tips from the Creative Director In the “show and tell” business of advertising the options of how you reach the consumer are challenging. There are no rules, but if the idea becomes secondary to the execution the ad is doomed. Consider these pros and cons: • Humour has the ability to break through but can backfire if the joke wears thin • If you ask a question you may not get the answer you want • Testimonial ads must have credibility to be relevant to the consumer need or promise • Jingles have the power to support the main selling message, but they’re not the solution • Negative advertising is a no-no since people are skeptical of the comparative-selling approach • Celebrity spokespeople lack credibility because people believe they are only doing it for the money These thoughts are from Allen Sneath, a former creative director with Goodis, Goldberg, Sorin; Maclaren Advertising; and Caledon Advertising.

Adapted from Allen Sneath, “If you owned the firm, would you run the ad?” Financial Post, June 1, 2004, p.

FP4.

ANSWERS TO END-OF-CHAPTER QUESTIONS Review Questions 1. The key responsibilities of the client in the creative development process are to provide relevant information to the agency and to appraise the recommendations that the agency returns with. The agency’s responsibility is to assess all information and devise a

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creative strategy that will meet the objectives of the campaign. Both parties openly discuss the situation in a creative briefing session.

2. A creative brief is a document that outlines all of the necessary information an agency will need in order to prepare an ad campaign. Usually prepared by the client, a brief contains background information about the market, the customer, the product and the competition. It also identifies the positioning strategy for the brand and what the communications objectives and creative objectives are? These statements provide guidance for the creative development process. The ads prepared by the agency are usually evaluated against these statements.

3. The stages of the creative development process are: market background, problem identification, communications objectives, creative objectives, creative strategy, creative execution and creative evaluation.

4. A positioning statement is a vital statement for all aspects of marketing communications planning including creative planning. The statement outlines the desired image a brand would like to have in the minds of customers. Therefore, it acts as the focal point for strategic planning. All activities including the nature of the message must reflect the positioning statement.

5. Advertising objectives are usually behavioural in nature (the objective is to influence behavior in some way. Creative objectives focus on the content of the message to be communicated.

6. Creative objective statements include a list of essential benefits that are to be communicated. Typically one benefit takes precedence and it is included in a key benefit statement that makes a promise (here’s what the product will do) and a support claims statement that provides the proof (here’s why this product will do what we say it will).

7. Creative strategy outlines how a message will be communicated. Strategy considers appeal techniques, tone and style of message and the theme of the ad or campaign.

Creative execution is a more precise form of strategy and deals directly with specific techniques that an ad will employ. For example, a campaign for Buick automobiles includes a celebrity endorsement (strategy) and the celebrity is Tiger Woods (execution).

8. Several factors influence the direction of creative objectives and strategies. The process involves analyzing past occurrences in the market, competition, among customers and product activity in order to determine the direction a brand should take in the future.

Does the brand retain direction or change direction. If change is warranted, then new .

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creative objectives (what to communicate) and new creative strategies (how to communicate) are formulated.

9. Commonly used appeal techniques include: positive, negative, factual, comparative, humourous, emotional, sexual, and lifestyle appeals. These or other appeal techniques are selected based on their perceived impact on the target audience. Lifestyle appeals are popular for product categories such as beer, alcohol and automobiles. Factual appeal techniques are suitable for health care products and so on.

10. In a demonstration the product is shown in action fulfilling the promise that is made in the ad (e.g., the Energizer bunny keeps going and going). In an exaggerated demonstration the presentation of the benefit is more dramatic (e.g., the Energizer E2 battery shows a person base jumping), and in a product-as-hero situation, a problem is presented and then the product comes to the rescue (e.g., Glad garbage bags take a beating but the garbage never spills out).

11. The managerial approach for evaluating creative is the client’s qualitative assessment of agency creative recommendations. Their assessment is usually based on questions like these: • • • • • •

Does the ad communicate the creative objectives?

Is the ad a reflection of the positioning strategy?

Does the ad mislead or misrepresent the intended message?

Is the ad memorable? Does it breakthrough the clutter?

Is their sufficient brand recognition?

Is there a need for consumer research?

12. Pre-testing occurs before an ad is run. It usually involves consumer input while an ad is in the development stage and is used to ensure the creative team is heading in the right direction. Post-testing occurs while an ad is running or has run. Feedback from a posttest is used at a later date (e.g., to alter direction somewhat or to determine if creative direction needs to be changed completely).

13. A recall test is a test for basic awareness of an ad (e.g., seeing an ad and being able to identify the brand that was advertised). A recognition test determines comprehension (e.g., identifying the brand and the main idea that was communicated).

14. A Starch readership evaluates print ads on the following criteria: Noted – percentage of readers who saw the ad Associated – percentage of readers who saw the ad and can identify the brand .

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Read Most – percentage of readers who read more than half of the written material Discussion Questions 1. For this question, the viewpoints should vary. The intent is to look at the pros and cons of humorous appeal techniques and have the students form their own conclusions.

Numerous examples of long-term campaigns suggest that they can be successful. The students should be able to provide their own examples to substantiate their opinions, be they favourable or unfavourable.

2. The intent of this question is to examine the pros and cons of comparative advertising.

Many brands have succeeded on the basis of presenting meaningful comparisons. It is a way for a challenger to establish credibility (e.g., Pepsi has invested heavily in taste test comparisons and made the results known through advertising). Many believe that a product should simply stand on its own merit. Opinion will vary on this question.

3. In each case students will probably see similarities in the creative approaches used by the competing brands (Coca-cola and Pepsi-Cola, Guess sand Levi’s jeans, and Canadian Tire and Home Depot). Encourage them to look beyond the obvious and examine the impact of the ads on the intended target audience.

4. As an opinion question, responses from students should vary considerably. The managerial approach involves a qualitative assessment of an ad on the basis of some preset criteria. The key issue is whether or not the ad is on strategy (e.g., does it reflect the positioning of the brand and does it communicate the key benefit. A client may have other criteria as well. When all is said and done, an ad should be customer-focused not client-focused. The problem is that the client has t approve it before the consumer will ever see it. Creative people have to swallow their pride some time and accept the input from clients who know little about the creative process.

VIDEO CASE 1 E*Trade Time: 5:07 Key Issues Creative Planning Creative Strategy Creative Execution AIDA or ACCA .

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This video presents E*Trade’s venture into Super Bowl advertising in the midst of the dot.com boom. A glut of Internet companies paid $2.2 million for a 30-second commercial on super Bowl XXXIV. E*Trade remains one of the few survivors of the Dot.com bust. E*Trades success is partly attributed to the nature of its advertising, specifically its message and media strategy. E*Trade believes that the right message, a message that is compelling, engaging and memorable, combined with the right medium, is the formula for good results. That’s easier said than done, but their message strategy combined with effective placement on the Super Bowl generated a lot of buzz for the brand. Consumers typically pay as much attention to the ads on the Super Bowl as the game itself. And of course, there are viral opportunities post-game that E*Trade took advantage of. The effort successfully positioned E*Trade in the minds of consumers as a simple way to make stock trades. Consumers no longer needed big investment dealers to do the work for them.

Discussion Questions 1. Message or medium: which component of the communications mix is more important?

What is your opinion?

2. Is placing a television commercial on the Super Bowl a wise investment or waste of money? What is your opinion?

VIDEO CASE 2 Mullen Time: 9:35 Key Issues Advertising Agency Roles (Creative) Creative Planning Creative Research Creative Strategy and Execution This video profiles an agency that develops multi-disciplined marketing communications campaigns but focuses more specifically on the development of creative campaigns. Their mission is to plan and implement memorable campaigns and they have delivered many noticeable, humorous and memorable campaigns for their clients. Prior to developing a campaign the agency spends time and dollars on account planning and research to determine the potential effectiveness of campaign ideas under consideration. Typically, an agency will .

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focus on post-campaign research which determines the effectiveness of something that has been done. From Mullen’s perspective it is wiser to have the basic communications strategy validated by consumers before the client invests too much money in the project. A sound strategy combined with a good creative idea will produce better results. One of the campaigns featured in the video involves the use of a celebrity endorsement in a campaign for Nextel. A campaign that produced good results for Monster.com is also presented.

Discussion Questions 1. Some advertising experts believe pre-campaign research is wise in order to identify creative ideas worth pursuing. Others believe that research can stifle creativity or eliminate riskier ideas that may ultimately work. What is your opinion on the matter?

2. Is the use of celebrities in advertising and effective technique for growing a brand? Can the use of celebrities backfire on a brand or company?

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CHAPTER 6 ____________________________________________________ DESIGN, LAYOUT AND PRODUCTION LEARNING OBJECTIVES Students will be able to: 1. Explain the role and functions of copywriters and art directors 2. Identify the design principles and creative considerations for developing print, broadcast, and interactive advertising 3. Explain the various types of print layout options 4. Explain the production stages for television and radio commercials CHAPTER HIGHLIGHTS A.

The Copywriting and Art Direction Functions In print advertising, the central theme is primarily conveyed through the headline and visual illustration. The copywriter is responsible for the headline and the purpose of the headline is to command attention. Several types of headlines are commonly used in advertising: promise, curiosity, question, news, and command headlines. Examples of each type are included in the chapter.

Subheadlines (subheads) are smaller headlines that amplify the main point of the headline. A subhead provides some amplification and is a transition statement between headline and body copy. Sometimes, the subhead is placed above the headline, but distinguished by the size of typeface. This location for a subhead is called a kicker.

The body copy is the informative or persuasive prose that explains the central idea. It is the payoff or the proof of the promise. There are several types of body copy: story; bullet point: and one line. With a story style there is a beginning, middle and ending with the advertising message flowing throughout. Bullets involve a list format that highlights the key benefits of the product (clear and to the point). The one line option may involve only a headline and a visual image—message delivered (no unnecessary words or clutter).

Short copy is appropriate for image advertising. Longer copy is needed when things have

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to be carefully explained. If even longer explanations are needed it is wise to refer the receiver of the message to a website or Facebook page.

The signature or tag line is the final copy element in an advertisement. Signatures usually include a logo and slogan. Their role is to summarize the theme (reinforce a key point) and help position the product in the customer's mind.

The art director designs the layout of the advertisement. Progression through three stages occurs: 1.

Thumbnail Sketch - A series of small, experimental drawings

2.

Rough Artwork - A drawing to actual size with the various elements of the ad included

3.

Final Design – Once the rough art is approved by the client, computer software can advance the design and layout to its final stage. The ad will represent the exact look of the ad that will be placed in the print media.

Despite technology, art directors still like to revert to pen and paper to develop creative concepts—that is the true purpose of doing thumbnails—it’s a creative thing!

Through design and layout, the creative team strives for distinctiveness in an effort to break through the clutter of competitive ads. To achieve this objective, the art director considers several design factors: balance, flow, unity, colour, contrast, white space, size, and whether to use photography or artwork. Clarity and simplicity are additional factors to consider.

Some of the more common layout options include posters, vertical and horizontal splits, multiple illustrations, long copy, and insert layouts. The chapter includes illustrations for several of these layouts. While all of these factors are considered, there is no magic formula for success. The objective is to get noticed. See the many visual illustrations of these concepts in the chapter figures.

Computers now allow for a lot of quick experimentation of advertising design. Various components of an ad can be shifted around to find the right balance, flow and unity. For the creative team, the main advantage of computer-assisted design is the capability to quickly examine "what if" experiments with raw ideas. For the client, the computer allows for shorter production times, lower costs, and more involvement in the creative design process. For more insight into the copy and design elements that produce better advertising, refer to the vignette “Words versus Images.”

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1.

Outdoor In designing outdoor advertising, bold identification of the name is essential. As well, it is important to capitalize on the amount of space available. Several factors should be considered in order to attract attention:  Use bold colour and high contrast  Use typefaces that are simple, clear, and easy to read  Be telegraphic by using no more than nine words  Size the copy and place it appropriately in relation to the product  Make good use of the product and package (and logo) instead of words

2.

Transit For interior transit, the advertiser can use time to advantage. Since the customer is literally trapped for a period of time, the copy and illustration can be detailed. Good use of contrast, and clear, easy to read copy are essential elements of good interior transit advertising.

Exterior transit is often seen from angles since the vehicle is moving. For this reason, bold type, punchy copy, and absolute simplicity are essential design elements.

3.

Point-of-Purchase Design elements of point-of-purchase advertising are quite similar to magazines and newspapers. Design elements consider what the point-of-purchase industry refers to as the 4 I's: impact, identification, information, and imagery.

4.

Direct-Response Print Advertising The more common types of direct-response advertising include magazines, newspapers and direct mail. Direct mail remains the most widely used form of direct-response print advertising. For direct mail, important layout and design elements include:  Attention-getting  Personalize the mailing  Include a complete presentation  Include multiple pieces in the mailing

C.

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Television Advertising

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The first challenge for the creative team is to develop the central theme. For example, Molson Canadian uses a Canadian heritage theme in its commercials and they include beauty shots of prominent Canadian landscapes. Television advertising is concerned with the how time is used. Therefore, the creative team is concerned with the flow of commercials. For the design of a commercial, the creative team uses a storyboard (a set of graphic renderings in television frame format) and a script (written description of the video and audio). Illustrations of both are included in the chapter.

To make a commercial stand out from the clutter of other commercials, the creative team considers factors such as: Unity – Logical flow to present and resolve a problem Integration of Audio and Video – Voice and action doing the same thing, plus sound effects and music where appropriate.

Integration of Music and Special Effects – Music helps grab one’s attention so select the right music. Special effects such as fades, zooms and rotations are good for holding the viewer’s attention.

Pace – Proper speed within time constraints. It’s difficult with 15-second commercials.

Live Action – The use of real life situations and people Animation – The use of cartoon style characters or other stylized figures (e.g., the Pillsbury Doughboy).

Keep it Simple – Stick with one good idea in a commercial. Too many selling points and too many scenes defeat the purpose. Focus on the primary benefit and do it right!

In terms of creative execution, there are several tried and true alternatives to use. Among these alternatives are: demonstrations (many of which are exaggerated to make a point), slice of life scenarios (here’s a problem and here’s how to fix it), testimonials (a 3rd party endorsement of the brand’s key benefit), and celebrity endorsements (using a famous person to deliver the message; the brand basks in the halo of the celebrity). The casting of characters is a big decision area. Characters must suit the product and situation and they must make immediate impact on the intended target audience.

D. Television Production Stages Once a client has approved the storyboard and script, the commercial goes into production. In production there are four stages:

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Cost Quotations – The collection and evaluation of estimates from various production companies (usually two or three capable suppliers) Preproduction – Production house, client, and agency personnel meet to review the script and storyboard, and make final decisions.

Production – Actual shooting of commercial in a studio or on location Postproduction – Putting the commercial together (e.g., editing film or videotape, mixing in sound, music and other special effects. Many commercials are now shot in a digital format and all editing is done using software such as Final Cut Pro. Once approved duplicates (dupes) are made for distribution to television stations.

E.

Direct Response Television Advertising DRTV advertising has two distinct formats: a 30, 60, or 120-second spot, or the 30 minute infomercial. Mainstream advertisers are now recognizing the value of direct response techniques and are investing in this area. As opposed to traditional advertising, advertisers can predict outcomes better (actual results) when using direct response television advertising. The following are some proven techniques associated with infomercials: • Continuously focus on the product (lots of praise and sell!)

• Include a strong offer (one that is clear, compelling and simple) • Demonstrate the product convincingly (testimonials and statistical evidence are convincing) • Clearly link needs with benefits (a problem solution scenario) • Use an appropriate tone and style (in keeping with the desired brand image) • Longer is better so consider 60-second spots if the budget is not a problem • More is better so develop a thorough and convincing presentation to encourage action

F.

Radio Advertising As in television, radio execution deals with timing. Radio ads must grab the listener’s attention fast; listeners will tune out if they are not interested. One of the key decisions is casting for the voice-over. That person brings all elements of a radio commercial together.

Some tips include: • Mentioning the brand name often • Being somewhat controversial • Focusing on one key idea • Including sound effects for visual imagery

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• Being positive and cheerful There are several types of radio commercials. The more common types include: musical commercials, slice-of-life commercials, straight announcements, and personality announcements.

Once a radio ad is approved the production stages are: a) Selecting the studio and casting director b) Finding appropriate actors and voices c) Determining the type of music (e.g., stock music versus original music) d) Deciding on special effects e) Rehearsal of commercial readings f) Adding music and sound that is recorded separately to form a master tape.

G.

The Internet The most common form of advertising online is banner advertising. Response to banner ads thus far, has been low.

Rich media are banner ads that include animation, sound, video and interactivity. Ads are designed giving consideration to factors such as engagement (get attention quickly in the first few seconds), interactivity (tell a story while encouraging viewer involvement) and exit (provide a means to get more information or to take action). Some of the options include expandable banners, video strips and floating ads.

When online people expect to be entertained, therefore, advertising should also entertain. A few basic guidelines below will help increase the impact of a banner ad: • Keep it simple • Ask for action • Use words that raise attention or emotion • Emphasize benefits • Be professional • Size matters (larger sizes get more attention)

H.

Video Advertising Advertisers see video ads as similar to television commercials. Many experts believe TV ads don’t work online and recommend advertisers devise unique ad for digital media.

Video ads should be short (10 to 15-seconds). Production quality is less important online.

Viewers don’t want slick ads; they want to be entertained. Finally, strive for an integrated message in all media but find a unique way to present it in digital media.

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I.

Web Sites Web sites can communicate significant amounts of information but boring sites are not revisited. A good site offers the browser good overall content, be enjoyable and easy to navigate, and be unique in design. Some tips to improve Web design include: • Use the F-Pattern scanning principle (value proposition at the top of the page) • Have an informal writing style • Have a consistent look • Limit the use of graphics • Avoid scrolling • Make graphics clear • Call out important words • Convert paragraphs to bullet points The Internet is a fluid medium so keeping information up to date is essential.

J.

Viral Marketing Viral marketing encourages a receiver of a message to pass it on to others to generate additional exposure. Viral marketing cannot be planned; at least you can’t plan for people to pass a message along. It’s up to them. Posting content on YouTube could trigger some consumer-generated content beneficial to a brand, and at no cost to the advertiser. Word of mouth remains an effective form of advertising.

ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

Tips for Creating Interesting Ads Why does one ad stand out in your mind while most others fade away into the background? If done properly, a good television commercial can make the most boring product memorable. Rick Kemp, creative director at JWT New York offers a few insights on the matter. He says that even if your product is a floor cleaner or toothpaste, it’s important to grab the consumer’s attention through entertaining advertising. “The more boring the product, the more interesting your advertising should be,” he says.

He offers a seven-step process for developing more interesting ads: •

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The Big Idea – Look for a fundamental truth about the product. Get to the heart of the matter and do something with it.

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• Be Obvious – Great ideas are easily identified by consumers. They must relate quickly to the message.

• Simplify – Avoid cluttered messages. It’s not what you say it’s how you say it that counts.

• Exaggerate the Truth – Exaggerate the truth with a little humor, metaphors, or hyperboles. Introduce a “surprise” element.

• Engage in a Story – Make the product integral to telling the story.

• Focus on a Narrow Target Audience – Tailor each ad for the specific target (20 yearolds and 50 year-olds have little in common).

• Think Visually – The image is what stays in the consumer’s mind. Avoid the usual visual context. For example, if you are selling a cereal get out of the kitchen. People remember the unusual.

Adapted from Karen Kelly, “Tapping advertising secrets from the beer world,” Profit, www.profitguide.com.

2.

Symbols Can Simplify the Message Since people tend to glance at advertising messages, the challenge for copywriters and art directors is to engage the consumer quickly and ensure that the visual impression communicates the intended message. They may not get around to reading all of the copy.

A recent United Way campaign that features a hand as a symbol does just that—it effectively communicates the message. The creation of a good symbol can simplify the message and make it easier for the reader to understand, even at a glance. In the United Way’s case the device of the hand, taken straight from the United Way logo, and used to illustrate the plight of the homeless in our society not only communicates the role that the United Way plays, but also reinforces the “brand” that is the United Way. Adapted from Michael Clancy, “United Way ads set the bar higher for public service,” Financial Post, October 6, 2006, p. FP4.

3.

What Makes the Old Spice Commercial So Effective?

“The Guy your man could smell like.” You have seen the commercial. Critics of advertising love this ad for the way in which the copy lines are presented. It is a job well done by the copywriter. According to advertising wizard Roy H. Williams (you may want to look up his credentials) the magic of the commercial is in the actor’s imperative voice and commanding tone aided by short sentences. He suggests others try it in their own ads. His advice:

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•

Short Sentences – Four words are okay. Three are better. Two rock!

•

Open with Verbs – Words such as walk, sing, wiggle, kick, jump, and lift.

•

Imperative Voice – Keep it tight and taught. Command the viewers.

Adapted from “Spicy Words Offer a Lesson,” Globe and Mail, April 12, 2010, p. B7.

4.

Color and Placement are Factors in Achieving Exposure in Magazines Color ads more than double the chance that ads will be read in a magazine, ensuring your media investment works harder for you. Indexed against black and white ads scores for color ads register and index of 210.

What about where the ad is located in a magazine. Not surprisingly, covers are the best positions, if the advertiser can afford the premium for the location. Magazine covers get noticed by readers. They are ideal for launching new products, responding to competitive activity, a seasonal heavy-up schedule to rapidly create awareness or when simply looking to make a statement. The inside front cover gets the highest impact score at 46%. The back cover gets 43% and the inside back cover gets 34%.

Source: Reed Research Group: A Research Study Conducted for Magazines Canada.

5.

Tips for Copywriting Here are some other creative-writing tips to help spark your marketing copy: Show, don’t’ tell – telling is detached; showing is intimate Spotlight the view, not the window – readers want to be moved by the message, not the writer’s ego.

Limit adjectives and adverbs – it’s better to be precise and graphic; don’t mince words.

Be concise – brevity is the name of the game Use visual sound – “At 60 miles an hour the loudest noise in a Rolls Royce is the clock.”

Be profound – the sequence of events must keep someone’s interest.

Create drama – Drama draws someone in; if you entertain them they will stay with you.

Adapted from Sam Harrison, “Pick up best sellers’ writing secrets,” Marketing News, February 15, 1999, p.

12.

ANSWERS TO END OF CHAPTER QUESTIONS Review Questions .

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1.

The basic elements of a print advertisement are: headline (to attract attention), subheadline (transition statement between headline and body copy), body copy (elaborative prose explaining the benefits), signature (a tagline that summarizes the essence of the message), and illustration (photograph or drawing).

2. The various types of headlines are: • Promise – makes an immediate promise to reader • Curiosity – reader becomes inquisitive and seeks out answer • Question – asks a question to encourage more reading • News – expresses a sense of urgency • Command – politely makes a request of reader 3.

The signature should summarize the key message of the advertisement and help solidify the positioning of the brand in the customer’s mind. A good signature is one that consumers remember.

4.

The types of body copy are story (beginning, middle and ending to a message), bullet points (list of key benefits), and one line (headline plus visual image).

5. A thumbnail sketch is a series of small renderings of potential ads. Rough art is a drawing of the preferred thumbnail to actual size to give an overall impression to the client of what the ad will look like.

6. The difference between various terms: a) Balance is the relationship to left and right sides of a page. Unity refers to the blending of all elements of an ad to create an overall impression. Flow refers to eye movement from top to bottom and left to right on a page. b) A vertical split divides an ad down the middle of a page (e.g., copy on one side and picture on the other). A horizontal split divides an ad across a page (e.g., picture on top and copy on bottom). c) A poster ad is picture dominant. A long copy ad is just what it implies. d) In television unity refers to the flow of an ad from opening to close and within time constraints (e.g., 30-seconds or 60-seconds). Pace refers to communicating the message evenly throughout the time allotted. e) A live action commercial includes real people and real situations. Animated commercials include cartoon-like characters or characters produced by software graphics (e.g., the Pillsbury Doughboy). .

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7. The design characteristics of a good outdoor ad include using bold colours and high contrast, using typefaces that are simple, clear and easy to read; and good balance between size of copy and the illustration. In outdoor advertising vivid illustrations can tell a good story in a short space time frame.

8. The four I’s of point-of-purchase advertising are: impact (immediate impact), identification (of brand name in bold form), information (a brief reason to buy), and imagery (overall impression on consumer).

9. Response to direct mail is relatively low but certain elements can improve response rates.

Things to consider include: getting the reader’s attention quickly, personalizing the mailing, including a complete presentation, including multiple pieces in the mailing.

10. The various sections of a television commercial are the opening (problem stated), middle (benefits explained) and closing (solution presented).

11. The television script and storyboard are the guidelines by which clients approve ads and agencies brief production companies on what is expected in the final commercial. They represent the creative team’s vision of what the final commercial will be like.

12. In television there are several tried and true styles of commercials. Some of the common execution techniques include demonstrations (which often stretch the truth a bit), narratives, testimonials and endorsements by celebrities.

13. The various stages of television production are: • • • •

Cost Quotations – securing cost estimates from a few reputable suppliers.

Pre-production – personnel from the client, agency and production meet to finalize details Production – shooting commercial in a studio or on location Post-production – editing film, adding sound and special effects to get finished commercial

14. Some of the proven techniques for producing effective infomercials include: keeping the focus squarely on the product; including a strong offer to tempt people to take immediate action; and providing a convincing demonstration of key attributes; and building an image for the brand.

15. The different types of radio advertising are musical commercials, slice-of-life commercials, straight announcements and personality announcements.

16. Tips for designing better banner ads are listed in the Section G of the Chapter Highlights section. .

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Discussion Questions 1. This is a good question for in class discussion. Have students bring the ads to class and let them present the strengths and weaknesses. Perhaps they could compare and contrast two different ads, one they perceive as good and one not so good. They can use the design and copy principles in the chapter as a basis for comparison.

2. “Tell more sell more” is not true in print advertising. The body copy is the least noticed and least read aspect of the typical ad. An art director will tell you that a “picture is worth a thousand words.” Therefore, the other elements of the ad (headline, picture and tagline) must do a lot of selling. On the Web it is the opposite. Here you have ample opportunity to communicate detailed information and images in a cost-effective manner. People visit websites for information (they are doing research before they buy) so make sure you give them all the information they need—in an entertaining sort of way!

3. This is an opinion question that requires some secondary research by students in order to offer a good answer. No doubt many students have created their own content but do they see the advertising value in it. Was it just something entertaining to do? In many cases a brand finds itself at the mercy of the wrong type of fans; fans who can harm a brand’s image. Make sure they look at things from the brand’s point of view.

4. Student response will vary based on the Web sites they visit. Have them evaluate the site based on the criteria in the chapter.

VIDEO CASE 1 E*Trade Time: 5:07 Key Issues Creative Planning Creative Strategy Creative Execution AIDA or ACCA This video presents E*Trade’s venture into Super Bowl advertising in the midst of the dot.com boom. A glut of Internet companies paid $2.2 million for a 30-second commercial on super Bowl XXXIV. E*Trade remains one of the few survivors of the Dot.com bust. E*Trades success is partly attributed to the nature of its advertising, specifically its message and media strategy. E*Trade believes that the right message, a message that is compelling, engaging and memorable, .

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combined with the right medium, is the formula for good results. That’s easier said than done, but their message strategy combined with effective placement on the Super Bowl generated a lot of buzz for the brand. Consumers typically pay as much attention to the ads on the Super Bowl as the game itself. And of course, there are viral opportunities post-game that E*Trade took advantage of. The effort successfully positioned E*Trade in the minds of consumers as a simple way to make stock trades. Consumers no longer needed big investment dealers to do the work for them.

Discussion Questions 1. Message or medium: which component of the communications mix is more important?

What is your opinion?

2. Is placing a television commercial on the Super Bowl a wise investment or waste of money? What is your opinion?

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CHAPTER 7 ____________________________________________________ MEDIA PLANNING ESSENTIALS LEARNING OBJECTIVES Students will be able to: 1. Assess the role and responsibility of both client and agency in media planning 2. Differentiate between media objectives, media strategies, and media execution 3. Use media planning terminology 4. Describe the steps involved in the media selection process 5. Identify the factors affecting the size of an advertising budget 6. Describe the methods of determining the size of an advertising budget CHAPTER HIGHLIGHTS A.

Media Planning Process Media planning is defined as the process of developing a plan of action for communicating messages to the right people (target), at the right time, and with the right frequency. The plan should flow logically from the marketing communications plan.

Media planners decide the best medium or combination of media for delivering the message within budget guidelines.

Several factors have complicated the media planning process: the growth of digital media alternatives are now a key factor to consider as are the changing consumption patters of the media. Blending the new media with the old media is a present day challenge for most media planners. With digital media the metrics are different. Consumers seem to be “engaged” when they are online or using their cell phones and music players. With engagement comes an opportunity to deliver an advertising message. At one time (with the mass media) the advertisers were in control of when and where the message would be received. In the digital era, consumers are in control of when and where they receive

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messages. Media multitasking by consumers is another factor influencing media selection decisions today.

Information provided to the agency is usually contained in some kind of media brief. The brief contains all relevant background information that could influence the direction of the agency’s media recommendations. Typical information embraces a market profile, product media profile, target market profile, competitor media usage profile, media objectives, and a media budget.

B.

The Media Plan The media plan is a document that recommends how the clients' advertising funds can best be spent to achieve their advertising objectives. A media plan includes a precise definition of media objectives, supporting strategic rationale, and tactical details.

C.

Media Objectives The components of media objective statements are as follows: 1.

2.

3.

4.

5.

Who is the target market?

What is the advertising message?

Where are the priority markets?

When is the best time to advertise?

How many, often, long, involved?

Several examples of media objectives are included in the chapter.

D.

Media Strategy Media strategy deals with how to best communicate a message within budget guidelines. The various factors that influence the development of media objectives and strategies include the following: Target Market A precise definition of the target (demographic, psychographic, and geographic) has a positive influence on the efficiency of the media plan. Compatible matches (e.g., the media that reaches the target best) can be recommended. In this regard three different strategies are considered: profile-matching, shotgun, and rifle.

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1. Shotgun - The advertising message is placed in a medium that reaches a broad spectrum of people (e.g., a popular sitcom in prime time reaches a wide variety of age groups, income groups and so on). This strategy is typical of a product with widespread appeal.

2. Profile-Matching - The advertising message is placed in media whose readers, Listeners or viewers have a profile that is reasonably close to the profile of the brand’s target market (e.g., to reach the female head of household who balances career with household responsibilities, an advertiser might select Chatelaine magazine). See Figure 7.4 for an illustration of the reader profile for Financial Post Business.

3. Rifle - The advertising message is placed in a medium in which the audience shares a common characteristic. Factors such as age, income, and gender are irrelevant. It is the common characteristic (e.g., a hobby, interest, or recreational activity) that makes the medium attractive for advertising purposes). A middleaged male golfer probably subscribes to Golf magazine, so it would be a logical choice for a rifle strategy.

Nature of Message If, for example, factual details form the message, print options are the only choice.

If a demonstration is important or an emotional response is desired, television and interactive media presentations are options. If the message is brief, transit and outdoor advertising are alternatives—different messages mean different media.

Refer to the vignette Right Message, Right Media = Greater Results for Koodo for more details.

Reach/Frequency/Continuity/Flexibility These factors are grouped together based on their interrelationships in media planning.

Reach is the total, unduplicated audience potentially exposed to a message at least once in a given period. Reach is expressed as a percentage of the population in a geographic area.

Frequency is the average number of times an audience is exposed to a message over a period of time, usually a week. Frequency may also be referred to as average frequency.

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Reach multiplied by frequency produces impressions as in the number of impressions made on the target. The weight or amount of advertising in a market is expressed in terms of gross rating points (GRPs). Reach (expressed as a percentage of people reached) multiplied by frequency equals GRPs. The chapter includes some examples of this concept.

Continuity is the length of time required to ensure impact on a target audience through a particular medium.

Media planners must juggle the reach, frequency, and continuity factors to obtain maximum benefit for the dollars invested in the media. Advertisers stretch dollars over a full year by purchasing media time and space in flights. Planners must be careful to balance these three factors since there is a saturation point at which additional placements of ads will be a waste of money. Also, people get tired seeing the same message too often.

Ads are typically scheduled in flights (a pre-determined number of weeks which are separated by periods where there is no advertising). Over the period of a year a flight pattern that is carefully justified by the media planners will be implemented.

There are times of the year when advertising will be heavy, light, and even nonexistent.

A more recent media timing theory is recency. With recency the key issue is the timing of the advertising whereas with traditional models the key issue is weight (reach and frequency). Reaching consumers with the message when they are ready to buy is crucial. Good creative can have an immediate impact on people.

Engagement Engagement refers to the degree of involvement the consumer has with the brand message. The combination of message (impact of the message) and the media determine the degree of involvement. People tend to be more engaged with certain media. For example, they spend considerable and planned time reading newspapers and magazines. While they watch television or surf the Internet they may be less engaged since there is an inclination to do other things at the same time (multitasking). Media planners must consider the degree of engagement desired in the context of the media objectives and the nature of the message to be delivered.

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Finding ways to move people from a medium like television to the Internet (e.g., encouraging them to enter a contest online) is a technique used to encourage engagement.

Market Coverage How many markets will the advertising cover over the duration of the media plan?

Coverage plans are categorized as national, regional, key market, or selective.

Obviously, the budget available has a large impact on this decision as does the level of distribution of the product being advertised.

Best Time to Reach Target Best time refers to the time of year, week, or day. Is prime time or day time better?

Are weekdays better than weekends? Is the product seasonal in nature?

Considering time and the availability of media dollars, several scheduling options are available to advertisers. These include: even schedule (uniform over a period of time), skip (alternate timing), pulse (flights of predetermined weight and length), and seasonal (heavy media in preseason), build-up (low weight initially progressing to intensive weight), and blitz (heavy weight in a short burst). The nature of the schedule depends on the objectives of the campaign (e.g., RRSPs are advertised seasonally while new products are launched with a build-up of blitz schedule).

For insight into how various strategic factors work together refer to the vignette Right Message, Right Medium = Great Results for Boston Pizza.

Competitive Media Strategies Competing media usage is assessed. Does an advertiser follow the competitors' practices or develop a strategy employing different media to reach the same target audience?

Media Alternatives What are the advantages and disadvantages of all options? Which media is most suitable considering creative strategy, reach, frequency, and continuity concerns?

Presently, television and newspapers get the lion’s share of advertising revenue.

The growth and influence of various interactive media alternatives has forced many advertisers to shift advertising dollars in that direction and away from the traditional media.

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Budget

E.

All other factors are affected by the budget. A budget restricts the use of media, the extent of coverage, and reach and frequency levels. The end result is usually a concentrated media strategy (one that uses a selective list of media) or an assortment media strategy (one that use several media—a multimedia campaign). .

Media Execution Media execution fine-tunes the strategy into specific action plans which are divided into the following areas: evaluating cost comparisons of media alternatives, media scheduling, budget summaries that outline spending details, and buying media time and space.

The media selection process involves a three-stage (funneling) decision system (refer to Figure 7.10): 1.

2.

3.

General Type of Media - (e.g., magazine) Class of Media within Type - (e.g., general interest or specific interest magazines) Particular Medium - (e.g., Canadian Living, Chatelaine)

To illustrate how media planners recommend a particular medium over another, a CPM calculation is analyzed. CPM is defined as the cost incurred in delivering a message to one thousand individuals. The CPM calculation allows for easy comparison of magazines with different circulations and rate structures. The formula for calculating CPM is as follows: CPM

=

Unit Cost of Message __________________ Circulation (000)

The final stage of the media plan is to formulate the schedule (a calendar showing the type and timing of all media activities) and related budget summaries (spending by medium, time of year, etc.).

Media plan details are illustrated in Appendix 1, the marketing communications plan for Schick Quattro. Some organizations are experimenting with media convergence strategies, a relatively new concept.

Once the media plan is approved by the client, the media buyer executes the plan. The media buyer negotiates the buy with media representatives to obtain the most effective

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and efficient buy within the guidelines of the plan. In television the buying pattern is referred to as upfront buying or simply upfront. Agencies compete against each other to obtain the key spots in network prime time. The demand for the spot ultimately determines how much it will cost. Buying later on in the year on a more random basis is called scatter buying.

Computers now play a major role in planning and buying media. User-friendly software developed by BBM Canada, Nielsen Media Research, and Telmar/Harris Media Systems lets media planners make reasoned, detailed decisions. In the context of media planning, software allows planners to maximize reach at the least amount of cost.

F.

The Media Budget In striking a budget, the advertising manager is concerned with how much to spend and how to allocate the funds (by medium, by region, by time, etc.).

The factors affecting the size of an advertising budget are as follows: 1.

Size of Customer Base - Consumer products with mass target markets rely heavily on advertising (larger budgets); whereas industrial/business products with more concentrated targets have smaller budgets.

2.

Competition - The degree of competition can force an advertiser to spend more than desired. All advertisers sacrifice profit to accomplish other objectives such as market share.

3.

Stage in Product Life Cycle - The critical stages are introduction and growth. To accomplish awareness objectives in the introduction stage and to counter competitive activity in the growth stage requires a heavy advertising expenditure.

In the mature stage, emphasis shifts to profits, therefore, investment in advertising should be reduced whenever possible.

4.

Product Characteristics - The degree of uniqueness and perceived value to potential customers influences the amount invested in advertising. High interest unique selling points need to be advertised heavily. Brands using the lifestyle approach tend to spend heavily on advertising also. If brand USPs are marginal, the brand’s objectives will determine the extent of advertising required. For example, brands classified as followers do not have the financial resources to advertise at a level similar to leaders or challengers.

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5.

Management Attitude - The size of the firm affects financial resources available for advertising. Expense-oriented managers are reluctant to invest in advertising while investment-minded managers will spend to encourage long-term development.

The chapter presents a variety of budgeting methods with appropriate illustrations.

These methods include: percentage of sales, fixed sum per unit sold, industry average, task (objective), and advertising share/market share. For planning purposes, the task method is most appropriate since it is not restricted by a sales figure. In effect, the task method is used to generate sales rather than the reverse.

For an applied illustration of how the budget and media objectives influence media strategy and media execution, refer to Appendix 1.

ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

Planning the Media Mix Beware if you plan on reducing your television budget. There is little doubt that the growth of the Internet has taken “time spent with a medium” away from other media.

But, a close look at the numbers show that television has held its own over the past seven years. In 2006 adults spent 1.16 hours a day with the Internet and in 2012 it rose to 1.68 hours. In 2006 adults spent 4.24 hours with television and in 2012 the figure rose to 4.33 hours. You might say “Let’s keep the TV for awareness and use the Internet for more targeted communications.” That would be a good mix.

Over the same period of time both print (newspapers and magazines) and radio suffered gradual declining figures each year. Food for thought!

2.

Behaviour Change in Television Viewing The CRTC says Canadians spent more time watching television or listening to radio in 2011 than in previous years despite the proliferation of non-traditional media. But they also say that people increased their internet television watching to 2.8 hours a week from 2.4 the previous year. On a weekly basis Canadians watched an average of 28.5 hours of television. Such a high figure is skewed by an aging population—the older one gets the more television you watch.

Source: http://marketingmag.ca/news/media-news/canadians-spent-more-time-watching-tv-listieng-toradio-in-2011.

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3.

Planners Must Adjust Thinking on Planning and Measurement Metrics Reach, frequency, continuity, and impressions were powerful considerations when planning a traditional media plan. With the surging importance of the Internet planners have to adjust to a new way of thinking and in the process convince their clients there is another way to measure things.

In the Internet world it’s not the number of people who visit a site that’s important.

Rather, the amount of time people spend at a site is what’s important. For example, in 2012 Facebook users spent an average of 8 hours each week on the site. Visiting Facebook and other social networks has almost become the default thing to do when a person is bored. In fact, relieving boredom is the primary reason people go on Facebook (according to one research study). Facebook also satisfies a person’s entertainment needs and offers an outlet for personal communications and self-expression.

From an advertising perspective the potential for “engaging” the consumer with a brand for an extended period (lets say minutes instead of seconds) becomes an attractive proposition for advertisers. Reaching the right audience for an extended period seems more attractive that reaching a mass audience on television for a few fleeting seconds (the audience’s attention span considered). All of this sounds good but social sites have yet to develop a good method of presenting advertising to visitors. Constant experimentation with different models is adding more confusion to the situation.

Adapted from Brittany Fitzgerald, “Facebook Study Explains Why We Still Spend So Many Hours Stalking Each Other,” The Huffington Post, May 7, 2012, www.huffingtonpost.com and Abbey Klaassen, “Why time spent on websites can be just as important as views,” Advertising Age, September 7, 2009, p. 17.

4.

Some Thoughts on Media Strategy and Budgets Cut! Cut! Cut! No it’s not a film we’re talking about, it’s the media budget. How does an organization achieve its objectives when the trend is to reduce media budgets? Here are a few tips to consider when devising a media plan:

.

•

Target Prospect Most Likely to Buy – Go beyond demographic profiles and look at the benefits of behavioral targeting. If you know purchase and usage behavior you can focus on television programs with audiences having the highest composition of the behavioral target (let's say medium to heavy users).

•

Focus on Geographical Markets that Matter the Most – many planners depend on low cost CPM efficiencies of national media. In a national plan there is a tendency to under-deliver in high priority markets. For example, consider the

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importance of key urban areas in terms of population instead of the entire country. Put the media weight where it should be.

•

Avoid Excessive Exposure – maintaining weekly reach at minimum effective exposure frequency levels helps avoid excessive frequency and over-spending.

•

Spend When Return Will be the Greatest – Consider recency (see textbook for explanation) instead of the more common “flight” pattern of typical media schedules. Knowing how to optimally schedule spending across time will save money.

•

Avoid Over-spending in Any One Medium – There is no optimal media mix since the optimal mix will vary by the overall spending level. Knowledge of media consumption patterns among the primary target must be considered. For example, rushing to the Internet is becoming common, but here must be a sound rationale to do so.

Source: Joseph Abruzzo, “How to Cut Media Spending without Hurting Sales,” Advertising Age, August 4, 2008, www.adage.com.

5.

Plan Creative and Media Together The media landscape is now more complex; consumers are now fully in control of anywhere, anytime media access. Consequently, strategic planning is now crucial as media planners provide insights and media innovation.

Creative people have to appreciate the changes. Traditionally, media planners have not worked alongside creative planners. They plan and buy media without ever seeing the creative. Creative people lack media knowledge; things like the phone as a medium, integrated cross-platform messaging or the increasing options within the digital television environment.

We should be developing big ideas that can be carried cross-channel and cross-platform, and which are offered in a way the consumer chooses (or not) to receive the message.

Coordination between creative planners and media planners is essential given the changes that are happening. This necessitates changes in culture in traditional adverting agencies.

Further to the point, if digital agencies are working on the same project as a traditional agency, they too must work together from the very beginning. Clients should brief all of their agencies at the same time and encourage cross-agency discussion. Delivering the

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same message in a digital environment is possible but the strategy and execution could be very different. Now, it is more common for the digital agency to play a leading role in briefing sessions.

6

The Media Shift: Traditional versus Digital Slowly but steadily media planners are recommending more balanced strategies between traditional media and all of the digital media platforms (laptops, tablets, mobile, video games and social media. As well, other forms of communication such as Public relations and experiential marketing are elbowing their way onto the front burner. In short, what is happening to budgets is hard to explain—so much is in a constant state of flux!

Some advertisers are jumping into social media and viral campaigns (if there is such a thing) simply because their competitors are doing it. Many executives just can’t get their mind around the difference between traditional media and digital media in terms of how to measure their investment. ‘A million people like our brand.’ So what, many say. Show me some sales results or a lift in market share. In terms of budget allocation some marketers are now in the 20% to 25% range for digital media.

Media expert Sunni Boot of ZenithOptimedia explains things: “Traditional media continues to get the lion’s share because it continues to generate the greatest results in terms of awareness, reach and traditional ROI. However, traditional media is not being used in traditional ways—more multi-platform executions are being seen than ever before, and traditional media are leading the innovative ways of using mobile, email, SMS, and sponsorships.” She adds that many media planners now consider online media part of “traditional media.” In other words, media planners see no difference. But clients do! For sure, this dilemma has to be resolved.

Source: Comments by Sunni Boot are from “The Media Shift,” Strategy, December 2008, p. 45.

7.

Don’t Forget About Radio Other media are placing a lot of pressure on radio but radio has great survival instincts.

Many radio planners and buyers still say radio is an effective tool in their kits. Since 2010 a total of $1.5 billion has been spent on radio advertising annually in Canada ($13 billion in local markets). Even as the Internet’s share has jumped from 3% in 2003 to 25% in 2012, radio has held its own in the market.

So why has radio survived and why must advertisers consider it? Radio dominates in-car listening, with close to 66% of Canadians tuning in on the road, according to ‘Radio Engagement in Canada,’ a survey by Vision Critical for the Canadian Association of

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Broadcasters. From an advertiser’s perspective you have a captive audience in a car— 58% say they listen closely when travelling in a car.

Other factors are also important. Radio is a local medium that is needed for community information, news, traffic and sports. Over the years, radio has proven to be a resilient medium, surviving everything that was supposed to kill it—video, CDs, satellite, and digital. Advertisers shouldn’t give up on radio.

Source: Matthew Chung, “The Hits Keep on Coming,” Strategy, November 3013, p. 17.

8.

The Future is Mobile Consumers are now using mobile devices for all the things they do on their desktops and laptops. Essentially, mobile is the conduit for any kind of content they want. For advertisers, new mobile formats and targeting technology, such as location-based marketing, are providing good opportunities to reach a fast-growing and moving audience. By the numbers: • 23 million Canadians are mobile phone subscribers • 72% of mobile phone subscribers have a smartphone • The mobile market is equally split between females and males • 43% use the Android • 35% use Apple iOS The smartphone audience by age covers all segments of the market: Age Range 13 – 17 18 – 24 25 – 34 35 – 44 45 – 54 55 – 64 65+

% of Audience 7% 16% 22% 19% 18% 12% 6%

Mobile advertising revenues are growing fast. Advertising revenue in 2012 was $160 million in Canada and is projected to reach $240 million in 2013.

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9.

TV Viewers Distracted: Does the Message Actually Get Delivered If the TV’s on and nobody is watching, does your ad make a sound? Interesting question!

A recent study by Canwest Global and Solutions Research Group among female viewers revealed some interesting information about viewing.

Viewer distraction is not new; people do leave the room, fall asleep or engage n conversation when commercials are on. But, there are some new distractions that advertisers must contend with. The study revealed that half of the women watching television also have a laptop in front of them, 70 percent are on Facebook, and 65 percent use some sort of wireless device at the same time. Under these circumstances will a television commercial actually reach the viewer?

There is some good news. Since the introduction of PPM measurement all kinds of viewing is measured; you might call it ambient viewing. For example, three people may be watching television (different programs) via the Internet in the same living room. The question remains though: is anyone paying attention?

The study also revealed some insights into how women view television. Some stations and cable channels are more attractive to them than others and they pay more attention when viewing channels of higher interest. Among these channels are the Food Network, HGTV, Mystery TV, National Geographic and OLN. Source: Jeff Beer, “Canwest charts out difference between TV viewing and paying attention,” Marketing, February 11, 2010. www.marketngmag.ca.

10.

Strategy for Reaching Net Generation The power and influence of the Internet cannot be denied, especially when it comes to reaching the 11 to 31 year age group—the Net Generation. This group spends considerable time online researching products they end up buying in stores. They always consult the Internet before making a purchase. This behaviour doesn’t show up in ecommerce data, but the practices strongly suggest that long held tenets for reaching this group must change.

This group has grown up immersed in the Internet. They don’t accept the one-way approach; they have been immersed in two-way communication since childhood. Raised in a world of advertising they quickly detect spin when it comes their way. They are not impervious to advertising but they are experts at filtering out unwanted messages and fast-forwarding to skip commercials.

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In short, the buying power of this group is such that they have the power to change the way goods and services are bought and sold. Marketers who adopt the Smart marketers ABCDE rules of marketing stand to benefit with this group—anyplace, brand, communication, discovery and experience.

Adapted from Don Tapscott, “Net Gen Transforms Marketing,” Business Week, November 17, 2008, www.businessweek.com.

ANSWERS TO END-OF-CHAPTER QUESTIONS Review Questions 1.

In the media planning process the client is responsible for providing the agency with relevant background information and a clear representation of their objectives. The client analyzes the information and develops appropriate strategies and executions to achieve the objectives.

2.

Media objectives outline what the media plan will accomplish (a guideline that considers who, what, where, when, and how to advertise). Media strategies consider how best to advertise to reach the target within budget. They delineate the best media alternatives.

Media execution refers to the specific media action plans (details on what media, timing, and costs).

3.

The components of media objective statements and their explanations are included in the chapter highlights section.

4.

In a profile-matching strategy, media whose target audience is similar to the product's target market (demographics, psychographics, and geographics) are chosen. In a shotgun strategy, more general media are used to reach a wide cross-section of the population (e.g., advertising on a sitcom in prime time). In a rifle strategy, a medium is selected that reaches a precisely defined target, usually on the basis of a common interest (e.g., reaching golfers through Golf magazine).

5.

Reach, frequency, and continuity are interacting variables that influence the mediaplanning process. Rarely is there an unlimited supply of funds, so the three variables must be juggled in a way that the objectives of the media plan are accomplished. For example, does the planner recommend low reach, high frequency over a long period, or high reach, lower frequency over a short period, or any other combination?

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6.

Gross rating points (GRPs) are an aggregate of total ratings in a schedule, usually in a weekly period, against a predetermined target audience. It is a description of audience delivery. Reach times frequency equals GRPS.

7.

Engagement refers to the involvement of the viewer of an ad with the message (in any medium). The more engage the viewer the more likely they are to see a message and pay more attention to it, at least spend more time with it. If that is the goal of advertising then the message and the media together will determine the degree of involvement.

Some media like newspapers and magazines get people more engaged since they plan the time for reading. People may pay less attention while watching television particularly during the commercial breaks. TV may create awareness but not engagement. The media objectives will help guide recommendations regarding what media to use.

8.

A key-market media plan purchases time and space in urban markets that are identified as priorities. A selective media plan uses media that reach a narrowly defined audience based on a common characteristic important to the advertiser (e.g., Photo Life magazine reaches the photography enthusiast).

9.

A pulse media schedule groups advertising into flights over a predetermined period of time. The weight of advertising in each flight may vary, hence the description pulsing.

The combination of reach, frequency, and continuity determines the overall weigh level for each period.

10.

A build-up media schedule has low media weight initially and gradually builds to an all out campaign. A blitz schedule involves ha heavy concentration of advertising initially and then it tapers off. Both strategies are commonly used during the launch of a new product.

11.

A concentrated media strategy recommends a selective list of media (usually due to budget constraints) whereas an assortment media strategy usually involves a multimedia campaign based on a larger budget being available.

12.

There are three stages in the media selection process: selecting the general type of media, selecting the class of media within type, and selecting the particular medium within class.

13.

CPM stands for cost per thousand. It is a calculation used to compare alternatives within a class of media (e.g., magazines). It is calculated by dividing the cost by the circulation (in thousands). The lower the CPM, the more efficient the alternative at reaching the intended target, at least on a purely quantitative comparison.

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14. The key factors influencing the size of a budget are: size of customer base, stage in the product life cycle, degree of competition, product characteristics, and management commitment to advertising.

15. In the percentage of sales method of budgeting, the amount of goods sold determines the budget. In the task method, the budget that is recommended produces the sales.

Which comes first: the chicken or the egg?

16.

There is a need for heavier advertising investment in the earlier stages of the product life cycle as the objectives are awareness and trial. In the mature stage advertising investment will be at a lower rate as the goal is to make money rather than spend it.

Investment in the mature stage will be adequate to protect the brand’s market share position.

Discussion Questions 1.

Students must recognize the experience and expertise that is needed to develop effective and efficient media plans. Clearly, the task should be left to specialists at the various types of advertising agencies. Consideration must also be given to the computer knowledge that is required in today's media environment.

2.

Clients expect meaningful recommendations from the agency media department for the commissions or fees they earn. It is doubtful that the client is at the mercy of these recommendations, however. If the agency-client relationship is built on trust, both parties will respect the opinions of the other. Media plans are usually discussed and examined in detail by the client prior to final approval.

3.

Which comes first: the budget or the media plan? Realistic clients always have a figure in mind when it comes to advertising. Being profit-motivated, the client will be very cautious about how much is invested in media advertising. On the other hand, clients also realize that an effective media plan is built on achieving realistic objectives to which costs can be applied. If they do not like the budget in this case, then the objectives should be toned down. Agencies are accustomed to working with a budget guideline as well as the need to tone down aggressive objectives that cannot be achieved if adequate media dollars are not available.

VIDEO CASE 1 NineMSN Time: 9:45

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Key Issues Strategies for Marketing a Website Web Design Concepts Digital Media Strategies Nine MSN is a strategic partnership between channel Nine TV and MSN in Australia. It is a website that communicates news content and a host of other content of interest to consumers (shopping, entertaining, dining, travel, etc.). The video initially focuses on some essential web design concepts that encourage greater consumer engagement. It then introduces the various media strategies that were employed to build awareness and interest in the site. The communications strategy embraces mainstream television ads on channel nine, the creation of a character called “butterfly man” that is featured in commercials and video content, a viral marketing campaign, email marketing and online advertising (banner ads). Measurement and evaluation concepts are also introduced. The effectiveness of the website is evaluated in terms of unique visitors, page impressions or views, and time spent on the site (engagement).

Discussion Questions 1. Viral marketing: can it be planned or does it just happen? What is your opinion?

2. Are the measurement techniques expressed in this video adequate for measuring the success of a campaign? Do impressions and time spent translate into product purchases?

3. Digital media communications seem to be the future of communications. What role will mobile communications play in the advertising mix? Do people pay attention to mobile ads? What is your opinion?

VIDEO CASE 2 HSN: Direct and Online Marketing Time: 6:30 Key Issues Media Planning Media Trends Media Integration Direct-Response Advertising

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Consumer Behaviour This video portrays the growth of HSN, a digital television network in the direct marketing business. The network is targeted at female shoppers who control or influence 80% of purchases. In the context of media planning the video shows how television is losing ground to digital media on many fronts. Not to suggest that television is dead—it continues to play a vital role in creating awareness and interest in a brand. But, to get people to make purchases there digital opportunities that make perfect sense, especially when used in combination with television advertising. One of the attractions of HSN is that customers willingly visit the network for specific content. They are loyal visitors who will purchase goods. That has to be of high interest to any branded good. Television advertising creates the awareness but consumers today want to engage with brands before they purchase. Building a stronger connection is important and that’s a role that HSN can play in the purchase decision process. HSN tells brand stories in different ways on multiple platforms: laptops, tablets and mobile devices. Essentially, HSN is an ideal medium for reaching the multi-tasking, multi-viewing female consumer.

Potential Discussion Questions 1. What are some of the advantages of using a network like HSN for selling branded goods?

2. What does the future of traditional television advertising? Will it be fully replaced by digital advertising?

3. What does the future hold for any form of mass market advertising?

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CHAPTER 8 ____________________________________________________ PRINT MEDIA—NEWSPAPERS AND MAGAZINES LEARNING OBJECTIVES Students will be able to: 1.

Identify the classifications of newspapers and magazines available to Canadian advertisers

2.

Explain the advantages and disadvantages of newspapers and magazines as advertising media

3.

Assess the considerations and procedures for buying newspaper and magazine space

4.

Understand the basic terminology used in newspaper and magazine advertising

5.

Assess the influence of technology on the print media

CHAPTER HIGHLIGHTS There are currently 121 daily newspapers operating in Canada. The Toronto Star is the largest single daily newspaper in Canada. Daily newspapers are the third largest medium in Canada behind television and the Internet.

A.

Newspaper Formats Canadian newspapers are published in two formats: 1.

2.

B.

Tabloids - Sold flat with only a vertical centerfold (e.g., Toronto Sun, Calgary Sun).

Broadsheets - Larger and folded horizontally once (e.g., The Globe and Mail, National Post).

Newspaper Readership NADbank data indicate that daily newspapers are declining in circulation and readership but they still reach some 15.9 million Canadian adults on a daily basis. Generally, readers

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are migrating to electronic editions of their favourite newspaper. The challenge for publishers is to move advertising revenue from hard copy editions to digital editions.

C.

Types of Newspaper Advertising There are two broad forms of advertising: display (ads appearing anywhere but in the classifieds), and classified advertising. Display advertising includes general, or national, advertising (ads for products and services sold nationally), and retail advertising (all forms of retail advertising sold locally). Newspapers also generate revenues through the distribution of preprinted inserts (supplements or free-standing inserts). Inserts are a fast-growing revenue stream for newspapers and an ideal medium for retailers.

D.

Advantages of Newspapers Newspapers offer geographic selectivity, coverage and reach in local markets, reader engagement, creative and merchandising opportunities, good editorial support, and suitability for small (local) advertisers. Newspapers also offer flexibility as space can be purchased on short notice if needed. Newspapers are an excellent medium for large advertisers using a key market media strategy.

E.

Disadvantages of Newspapers Some drawbacks include short life span, absence of a target-market orientation, clutter, poor reproduction quality, and higher costs for national advertisers (compared to local advertisers). Creatively speaking, newspapers are a black and white medium so the ability of any ad to really stand out from the clutter is a challenge.

Refer to the vignette Newspapers Effective for McDonald’s and Scotiabank-Cineplex for additional details about use newspaper advertising.

F.

Buying Newspaper Space The basic procedure for buying newspaper space is to determine the size of the ad in agate lines or modular advertising which involves buying ads of specific, predetermined sizes.

In the agate line model the cost of the ad is calculated by multiplying the number of agate lines by the appropriate line rate. Numerous examples of both situations are included in the chapter. To simplify matters regarding ad size and costs per line, some newspapers use the modular advertising model in which standard size ads (e.g., quarterpage, half-page, etc.) are offered at specific costs.

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Other factors that influence costs include the number of insertions or estimates of volume lineage over time (earns a better line rate), creative considerations such as the use of colour, and position charges. These factors increase the cost of advertising.

Several examples of newspaper buying are included in the chapter along with a Globe and Mail rate card (Figure 8.6). It is recommended that these examples be reviewed in class so that students become somewhat familiar with how to use a rate card. Additional examples appear in Figure 8.7.

Newspaper advertising rates are published in a rate schedule. The schedule publishes a maximum line rate and usually includes a discount line rate grid based on lineage purchased over time (usually one year). Costs for colour, preferred positions, and other special requests are quoted separately. Some key terms on a newspaper rate card include: 1.

Casual Rate or Transient Rate - A one-time, or base, rate that applies to casual advertisers.

2.

Space Contract - An agreement that considers volume discounts for large advertisers. If a contract is used, the advertiser estimates lineage requirements for one year and is billed according to the estimated rate. Adjustments are made at the end of the year when actual lines purchased are known. The difference between the estimated rate and the actual rate at the end of the year is referred to as the short rate.

3.

Position Charges - Higher line rates are charged when an advertiser requests a particular position (e.g., a certain section, above the fold). The cost is usually quoted as a percentage addition to the line rate.

4.

Colour Charges - There are additional costs for each additional colour.

5.

Multiple Page Charges - Double-page spreads or additional pages are quoted at discounted rates.

6.

Preprinted Inserts - Usually quoted on a cost-per-thousand basis with rates increasing with the size or weight of the insert.

The digital editions of newspapers offer banner ads of various sizes and with varyi9ng degrees of animation and video content. The cost of banner ads is calculated on a cost

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per thousand basis (CPM). Digital advertising costs are explained in more detail in Chapter 12.

Advertisers use an insertion order when purchasing newspaper space. An insertion order is a document that specifies the size of the ad, dates of insertion, use of colours, position requests, and the line rate to be charged. To verify that an ad has run as scheduled, a tear sheet (an actual ad extracted from the paper) is provided to the advertiser. Should there be any problems with the ad (e.g., poor reproduction quality), an advertiser might request a make good (a rerun of the ad at no cost to the advertiser).

G.

Comparing Newspapers for Efficiency In larger metropolitan markets where several newspapers compete for advertising revenue, advertisers must decide on which paper(s) to place advertising with. Since circulation and costs vary from one paper to another, the advertisers compare alternatives based on the cost of reaching one thousand readers. The expression is referred to as cost per thousand (CPM). The formula for the calculation is: CPM

=

Cost ______________ Circulation (000)

Other factors that influence the selection decision are the readership profile (demographic and psychographic profile of readers), and the editorial content of the publication. The Globe and Mail, for example, has a high CPM compared to other Toronto dailies but it reaches an upper income target (professionals, business managers, etc.).

That makes it an attractive vehicle for advertising purposes. Figure 8.8 includes some CPM examples.

H.

Magazine Classifications There are over 1300 magazines published in Canada. Magazines are classified several ways. The main classifications are consumer magazines and business magazines. Both publish general-interest magazines and special-interest magazines.

Among the most popular consumer magazines in Canada based on circulation, are Reader’s Digest, Maclean’s, Chatelaine, Canadian Living, and Canadian House and Home.

Business publications can be subdivided into horizontal and vertical publications. A horizontal publication appeals to business people at the same level of responsibility in an organization (e.g., Canadian Business and National Post Business). Vertical

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publications appeal to people employed in the same industry (e.g., Canadian Grocer or Hospitality magazine). Other ways to classify magazines are as follows:

I.

1.

Circulation Base (Distribution) - Paid circulation which includes subscriptions and newsstand sales or by controlled circulation (free distribution to selected targets).

2.

Frequency of Publication and Regional Editions - Weekly, monthly, bi-monthly, etc.

Maclean’s is a weekly while Chatelaine is a monthly. Both publish regional editions (e.g., if an advertiser only wants to reach Ontario customers they buy the Ontario edition).

3.

Size and Format - Digest, standard, or larger sizes (Reader’s Digest compared to Chatelaine).

Magazine Circulation and Readership Highlights Both circulation and readership data influence an advertiser’s decision to select certain magazines for advertising. Generally, circulation of Canadian magazines is declining marginally. Readership is gradually shifting to digital editions of magazines. The medium has been influenced negatively by the emergence of digital media alternatives.

Readership data is compiled by the Print Measurement Bureau and audited circulation data is verified by Audit Bureau of Circulations.

Managers and media planners typically review both circulation and readership data as it is possible that a lower circulation magazine has higher levels of readership. Circulation multiplied by readers per copy equals the total readership of a magazine. Refer to Figure 8.9 for an illustration of such data.

J.

Advantages of Magazines The advertising advantages of magazines include demographic selectivity, geographic flexibility, extended life span, high degree of engagement by readers, quality reproduction, creative considerations (bleeds, gatefolds, etc.), and passalong readership.

Magazines are perceived as a quality medium by advertisers and they reach readers with their message in a relaxed environment. Magazines tend to be a date rather than a random read.

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K.

Disadvantages of Magazines The drawbacks to advertising in magazines include long lead time for materials, clutter, high cost (particularly for four colour), and low frequency. Generally speaking, magazines are useful when a profile matching strategy or rifle strategy is in place.

L.

Additional Features of Magazines Some special features offered by magazines, which make them attractive to advertisers, include the following:

M.

1.

Bleeds - Running colour to the edge of the page (see Figure 8.11)

2.

Gatefolds - Multiple page foldouts to attract attention (see Figure 8.12)

3.

Preferred Positions - Although more costly, cover positions offer higher reach potential.

4.

Inserts and Reply Cards - A card or small multiple page insert can be bound into a magazine. Tipping (gluing) items such as coupons and small recipe booklets into magazines are now quite popular with advertisers.

Buying Magazine Space The basic procedure is to determine the size of the ad from the variety of page options available. Rates are quoted based on the size of the page requested. Other factors that influence the cost of magazine advertising include frequency, the use of colour, and guaranteed position charges. A variety of examples of cost calculations are provided in the textbook. Figure 8.14 includes a rate card that is used for a magazine cost examples.

Magazine rate schedules quote rates on the basis of ad size and colour combinations (black & white, black & one colour, 4-colour, etc.). Some of the more common discounts offered by magazines include: frequency (based on the number of times an ad runs), continuity (for advertising in consecutive issues), and corporate (considers all pages purchased by a multi-product advertiser). Media companies that publish more than one magazine offer advertisers additional discounts if they advertise in any combination of magazines.

Colour and position charges are quoted separately on the rate card. Both variables increase the cost of magazine advertising.

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Advertisers must decide on particular magazines to place advertising with among the competitive alternatives that are available. The magazine alternatives are compared based on cost per thousand (CPM). CPM refers to the cost of reaching one thousand readers and is based on the following formula: CPM

=

Cost per Page ______________ Circulation (000)

Other qualitative factors are considered along with the CPM calculation prior to making the final decision on which magazines to advertise in. Figure 8.15 includes some CPM comparisons for a few Canadian magazines that compete with each other for advertisers.

N.

Technology and the Print Media The information age and digital revolution has changed the nature of newspaper and magazine publishing. The print media are launching Web sites to get their message out.

Hard copy combined with a website gives advertisers an opportunity to reach the same target but in a different way. Most sites sell banner and video ads, and offer sponsorship deals to interested advertisers. The challenge is to convince advertisers of the value of online advertising.

Some newspapers are expanding into the broadcast media. A few examples include BNNTV, a Globe and Mail venture, and Canadian House and Home with Lynda Reeves, a Transcontinental Publishing venture. Cottage Life magazine has its own cable channel.

Cross-advertising opportunities are available to advertisers.

ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

Newspapers Aren’t Dead (Yet) Conventional wisdom suggests that newspapers are a dying breed, victims of declining circulation and readership numbers. Circulation and readership are declining but newspapers remain a relevant advertising medium. Newspapers deliver excellent reach in key markets, they are an integral aspect of major product news, and they are highly trusted source of information.

The latest data published by NADbank (2012) reveal that daily newspapers reach 49% of adult men and 51% of adult women each day. There is a slow but steady migration to digital editions and now that readers are becoming more comfortable with pay walls, this looks like a bright spot for regaining some lost advertising revenue.

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In many cities the daily newspaper still dominates the local news coverage. That fact alone bodes well for advertisers wising to concentrate their advertising dollars in local markets across the country or in the city or town in which they do business.

The Toronto Star retains its lead as the highest circulation and most read newspaper in Canada. The present circulation of the Toronto Star is 357, 600. Ranking second is The Globe and Mail (302, 200) and third is the Journal de Montreal (287,800).

Source: Numeric data from Canadian Media Directors’ Council Media Digest, 2013-2014, p. 65.

2.

The Readers Attract the Advertisers: The Globe and Mail Advantage Mercedes, BMW, Lexus, Rolex, Harry Rosen…why do they choose a newspaper like the Globe and Mail? They want to reach a very select target audience. The Globe and Mail has the numbers that keep these and other upscale product advertisers coming back for more. Here are the facts. Globe readers are educated, influential and discerning, with the highest average household income of any newspaper in Canada. The Globe is a natural fit for any advertiser wanting to reach an upscale audience.

3.

General Readership Trends in Newspapers Readership Read Yesterday (M-F) M-F Cume Read Last Weekend 7 Day Cume

Totals 42.0 66.0 40.0 75.0

Women 18+ 42.0 64.0 380 72.0

Men 18+ 46.0 68.0 42.0 78.0

The data show that newspapers remain a viable medium for reaching adult Canadians.

Source: Canadian Media Directors’ Council Media Digest, 2013-14, p. 65.

4.

Some Insights about magazines for Advertisers All media have a positive story for advertisers. With magazines the story often involves factors such as trust, level of reader interest and impact scores. Here are a few points that the industry will sell to potential advertisers: • Readers Prefer Print Editions – in spite of the digital revolution, hard copy remains most popular by far. Readers like the familiarity and ease of print.

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• Magazine Ads Demand High Reader Interest – Advertising in magazines is still one of the best ways to engage your target audience. Ads are not a nuisance, they are relevant and welcome.

• Magazine Readers Take Action – Advertisements motivate 62% of readers to take action indicating there is influence beyond recall.

• Ad Size Affects Impact Scores – Garnering attention and improving brand association scores is influenced by the size of an ad Source: “2012 Consumer Fact Book Now Available,” Magazines Canada, September 27, 2012.

5.

Why Advertise in Magazines - Engagement Beyond the traditional advantages of advertising in magazines there are a few other good reasons to use this medium. Today there is an emphasis on “engagement” and magazines are a medium that do engage. Research data indicate that 90% of magazine readers pay full attention when reading magazines. Magazine readers demonstrate the lowest level of multitasking when compared with the multitasking rates of other media.

As well, magazine ads last. Consumers refer to magazines multiple times—even saving them, giving advertisers the opportunity for added exposures. Many readers simply like to relax with their favorite magazine. This gives the advertiser a real chance to connect with their customer.

Adapted from “Ten Reasons to Advertise in Magazines,” Advertising Age, September 26, 2005, p. M22.

6.

Magazines: The Shift to Digital The magazine industry in Canada (and everywhere!) is feeling the squeeze. Industry revenue has declined from $732 million in 2007 to $608 million in 2011, according to ZenithOptimedia.

Publishers simply don’t accept that magazines are dying and are looking beyond the written page to keep people reading their content. Traditional print is moving into other platforms as most high circulation magazines now offer a digital edition, are involved in branded events and some have their own television shows. There are lots of crossplatform opportunities to advertise and in unique ways.

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Listed below are the highest paid circulation/readership magazines in Canada. Ask the students if they can identify the most widely read magazines are in Canada. They will be hard pressed to identify any in the Top 5.

Magazine Reader’s Digest (general interest) Chatelaine (women’s) Canadian Living (women’s) Maclean’s Canadian House & Home

Circulation 593,243 536,447 508,479 330,203 242,575

Readership 5,340,000 3,280,000 3,892,000 2,426,000 2,316,000

Note: Circulation x Readers per Copy = Readership Some of the most popular free distribution magazines include: CAA Magazine (circulation 1,573,000), Cineplex magazine (700,000) and Tribute (501,000) Source: Circulation from ABA and PBA Worldwide/CCAB Audited Statistics. Readership data from PMB. All figures as of September 30, 2011.

7.

Newspapers Ideal Medium to Reach Boomers The 50-plus age group spends about 58 minutes reading a newspaper each day. That compares to 39 minutes for younger adults. Boomer household income may be less than younger, double income households but there investment holdings are significantly greater.

Boomers will continue to be a major force as a consumer group. While they remain loyal to traditional media they are also open and adaptable to new technologies and media.

They are a lucrative segment for the travel industry and automobiles and are most likely to refer to daily newspapers for information on these products and services.

Adapted from “NADbank: Zero in on lucrative boomer market with dailies,” Media in Canada, August 3, 2008, www.mediaincanada.com.

8.

Can You Reach Men with Magazines?

The answer is yes but there aren’t that many options directly targeted at men. General interest magazines and business magazines reach Canadian males but can you reach males in certain age groups, lifestyle groups and so on?

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According to Canadian Advertising Rates and Data (CARD) the men’s category in Canada consists of Chill Magazine (a freebie at The Beer Store), Driven, Maxim, Ontario Out of Doors, UMM, the French-language title Summum and the regional title Winnipeg Men Magazine.

The U.S edition of Men’s Health has a circulation of 112,500 in Canada, followed by Sports Illustrated with 86,300 and Maxim with 55,300. These magazines attract many traditional male product advertisers including Calvin Klein, Gillette, Ford, Old Spice, and Honda.

Source: Circulation data from Canadian Media Directors’ Council Media Digest, 2013-14, p. 79 and Chris Powell, “Maximed Out,” Marketing, May 14, 2007, p. 31.

ANSWERS TO END-OF-CHAPTER QUESTIONS Review Questions 1.

A tabloid is a smaller size newspaper that is sold flat. A broadsheet is a larger size and has a fold in the middle.

2.

General, or national, advertising is the advertising of products and services sold on a national basis. The space is sold by a national sales group or a media rep house. Retail advertising is usually sold by local sales representatives employed by the newspaper.

Classifieds are ads that give readers the opportunity to buy, sell, lease, or rent a variety of products and services (often located in a separate section or on special pages).

3.

Refer to the chapter highlights section for a listing of advantages and disadvantages of newspapers as an advertising medium.

4.

On a quantitative basis, the newspaper alternatives could be compared on a cost per thousand basis. Qualitative variables that influence the decision include the editorial content and the demographic profile of readers (newspapers usually reach a general cross-section of the adult population).

5.

(a)

Hooker- Inclusion of the retailer's name in a national advertisement (usually at the bottom).

(b)

MAL - Modular agate line. A standardized unit of newspaper space equal to one column wide and 1/14" deep.

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6.

(c)

Transient Rate - A base rate charged to casual advertisers (the rate to which discounts will apply).

(d)

Make Good – An ad that runs free of charge should there be a malfunction of the original ad (e.g., ad ran with poor colour).

(e)

ROP Colour - Run of press colour (spot colour) printed by newspaper presses as part of a regular press run.

(f)

Tear Sheet - An ad extracted from a newspaper to verify that it actually ran.

(g)

Flexform – a non-conventional style of advertising in terms of layout. The ad is presented in an odd shape and may cross two pages.

(h)

Position Charge - The surcharge to ensure placement of an advertisement in a specific position in a publication.

The costs of the various campaigns are as follows: Campaign 1 Cost of campaign would be: 4 x 8 x 14 x 10 = 4480 lines 4480 lines x $14.99 = $60,439.68 The transient line rate was used in the above calculation. If the advertiser committed to a $50,000 contract the line rate would drop to $12.36 in this example. The advertiser could place a few more ads based on the discount earned.

Campaign 2 Cost of campaign would be: 6 x 6 x 14 x 8 = 4032 lines 4032 lines x $31.88 = $128,540.16 The transient line rate was use in the above calculation. If the advertiser committed to a $100,000 contract, the line rate would drop to $25.51.

Add: position charge of 40% $128, 540.16 x 1.40 = $179,956.22

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7.

The advantages and disadvantages of magazines as an advertising medium are listed in the chapter highlights section.

8.

(a)

Paid circulation refers to sales via subscription or through newsstand sales.

Controlled circulation refers to free distribution to selected individuals or households.

(b)

Horizontal publications appeal to people at the same level of responsibility in an organization or industry. Vertical publications appeal to all levels of people in the same industry.

(c) A primary reader is the reader of the magazine that subscribes to the magazine. A passalong reader is a potential reader who does not subscribe to or purchase the magazine.

9.

10.

(a)

Digest Ad - Ads designed for smaller publications (e.g., Reader's Digest).

(b)

Bleed Ad - A coloured background extends to the edge of the page.

(c)

Gatefolds - A fold-out advertisement (multiple pages).

(d)

Tipping (tip-in) - The gluing of items (e.g., recipe booklets or small catalogues) into a publication.

(e)

Reply Cards - Cards included with other advertising that provide readers with an opportunity to access more information on the product or service.

(f)

Insertion Order Date - The closing date for ordering space in a magazine.

(g)

Material Date - The closing date for production materials to be at the publisher.

(h)

Space Contract - A contract between the advertiser and publisher that guarantees the buying of space at a certain rate.

(i)

Preferred Position - A specific placement request within a magazine (e.g., cover or close to the front cover).

Campaign 1 – Magazine: $12,965 x 4 = $51,860 Campaign 2 – Magazine: $8,640 x 8 = $69,120

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11.

Magazines offer frequency discounts (a reduced page rate based on the number of times an ad runs), continuity discounts (reduced rates for advertising in consecutive issues), and corporate discounts (considers the total number of pages for all brands by one advertiser).

12.

A magazine short rate is a term that describes the difference between actual costs of advertising and the estimated costs of advertising over a one-year period. Advertisers entering into a space contract are charged during the year based on estimated usage.

Adjustments are made at the end of the year when actual purchases are known.

13.

CPM refers to the costs of reaching one thousand readers. It is a comparative calculation that allows advertisers to select which publications to place advertising in. Magazines with a lower CPM are attractive as they reach the target more efficiently.

Discussion Questions 1.

Opinions will vary for this question. Presumably such high rates are justified based on the way in which a newspaper is read. For example, some sections are more popular and more widely read than others. Therefore, a preferred location for an ad in that section will garner more attention from the readers. Conversely, avid newspaper readers usually read the entire paper according to their own preferred reading sequence (e.g., sports first followed by business followed by national news and so on. Eventually they will see an ad regardless of its location.

2.

The additional costs an advertiser must pay for a cover position (inside or outside) should result in higher exposure for the advertised brand. The advertiser must evaluate the extra exposure against the costs in comparison to exposure and page costs within the pages of the magazine. The use of covers will definitely influence the frequency of advertising in a negative manner.

3.

A good newspaper representative will tell you that it doesn't matter where an ad is placed in a newspaper. The differences in recognition and recall scores are marginal from one section to another. Nonetheless, an advertiser may want to be in a particular section, based on the assumption that certain sections have higher levels of readership.

For example, the business page (section) or the sports page (section) may have higher readership levels than the local news page (section). Additional costs can be incurred by making specific requests. Others argue that the closer an ad is to the front of the paper (the first four to five pages), the higher the readership potential. Students will likely arrive at opinions on this issue according to their own readership patterns.

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CHAPTER 9 ____________________________________________________ BROADCAST MEDIA: TELEVISION AND RADIO LEARNING OBJECTIVES Students will be able to: 1.

Identify the organizations involved in the Canadian broadcasting industry

2.

Assess the advantages and disadvantages of television and radio as advertising media

3.

Explain the factors considered in, and procedures used, for buying television and radio time

4.

Identify recent technologies affecting commercial television and radio in Canada

CHAPTER HIGHLIGHTS A.

Television in Canada Television reaches 99% of Canadian households and 90 percent of households are equipped with satellite or cable. On the average day, 82% of Canadians view television at least once. New technologies are influencing the way people consume television and radio. Their ability to download network shows to computers is changing the way consumers view television. Consumers have more control of what they watch and when they watch. In terms of revenue generate by advertising, television remains the leader in Canada ($3.5-billion in 2012).

There are four national networks: CBC, CTV, Radio-Canada and TVA. Networks can also be classified geographically as follows: 1.

.

National - CBC (16 owned and 25 affiliate stations), CTV (18 stations), and RadioCanada (13 stations).

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B.

2.

Regional - there are eleven regional networks operating in Canada (e.g., CBC Regional, CTV Regional in Ontario, Saskatchewan and Atlantic Canada, Global, and TVA.)

3.

Specialty - offered through cable television, these networks include MuchMusic, TSN (The Sports Network), YTV (Youth Channel), Outdoor Life, Showcase, Discovery and HGTV to mention a few. Recently added to the mix are some digital stations such as ESPN Classic Canada, Leafs TV and the NHL Network. Pay-per-view options such as HBO Canada and The Movie Network are also available to advertisers.

Trends Affecting Television Several factors are influencing the present state of television viewing and television advertising: 1. Viewing Trends – Generally people are viewing TV less than before. The 18 to 34year-old age segment in particular, is watching much less. Many are dissatisfied with the quality of TV shows and are moving to other entertainment alternatives such as video games including online games.

2. Audience Fragmentation – There are so many conventional channels, cable channels and digital channels to choose from. Consequently, the viewing audience is fragmented. With the size of audiences diminishing television may not be the ultimate mass medium it once was. How long will advertisers pay more (for advertising) to reach smaller audiences than in the past?

3. Alternative Viewing Behavior - Television is a casualty of the Internet. With 20 percent of adults watching prime time shows online and half of these people use a computer to view instead of a television. Mobile devices are now creeping into the picture. While streaming shows online is popular there is less advertising online resulting in less revenue for the networks. It’s a double-edge sword so to speak. Younger age groups are into alternate viewing. As they carry this habit forward advertisers will have to adjust their allocation of resources accordingly.

4. Mobile Media – The small screen is becoming more popular. While the viewing environment is less than desirable, the advertiser has an opportunity to reach people at a critical time—when they are ready to buy. Moving forward there is no doubting the impact of mobile technology. In fact, many analysts predict the phone will become the hub by which consumers access virtually everything they need. Scary thought!

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5. Commercial Avoidance – Personal video recorders (that record digitally) allow consumes to record shows free of commercials for viewing whenever they like—a phenomenon referred to as video-on-demand. Networks and advertisers must find ways to combat this practice. As the penetration of PVRs increase the issue of skipped ads will be a major concern for advertisers. Advertising revenue fuels the entire industry.

C.

Television Viewing Highlights BBM Canada measures viewing audiences using diaries and portable people meters. A people meter automatically records what people watch. Information is downloaded each day from the meters to a central database. The data is collected from five key markets: Toronto, Vancouver, Montreal, Edmonton and Calgary. BBM publishes the top 30 programs nationally and in selected key markets (based on the size of the viewing audience) on a weekly basis.

The data collected determines the rating of a program. Ratings are audience size estimates expressed as a percentage of a population in a defined area. For example, if a show has a 10 rating it reached 10 percent of a market’s population.

On average people watch about 21 hours of television each week. As we age we watch more each week. Prime time viewing only accounts for 20 percent of viewing hours but 41 percent of viewing time. On a seasonal basis viewing drops off in the summer.

D. Advantages of Television The primary advantages of using television as an advertising medium include impact and effectiveness (multi-sense medium), high reach (adults in prime time), frequency potential (message repetition for large advertisers), some demographic selectivity (sports programs on TSN reach 5.1 million males weekly while HGTV reaches 2.6 million females weekly), coverage flexibility (station-by-station or market-by-market selection based on need), and demonstration capability (creative promise and proof). Television is a multisense medium that offers lots of creative flexibility to advertisers. Some research studies suggest television is the “most influential” medium.

E.

Disadvantages of Television The major disadvantages include high cost (absolute dollar amount required), clutter (clustering of commercials), lack of target market selectivity (limited compared to alternatives), audience fragmentation (stations available reduces reach in any market), lack of planning flexibility (long lead time and commitment of dollars in media contracts),

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audience fragmentation (which reduces the potential reach of a show), commercial avoidance (through devices like PVRs), and creative limitations (short messages and movement toward 15-second commercials). Television is losing some ground to the Internet but it remains popular with advertisers wanting to reach a large audience quickly.

Canadians are spending more time online and less time (in prime time) with television.

For more details refer to the vignette, “Is the King of the Hill over the Hill?

F.

Television Advertising Alternatives There are four basic options available: 1.

Network - For advertisers with broad distribution and large budgets. One commercial is broadcast from a central source. Network advertising is cost-efficient (compared to buying individual stations) and offers high reach to a national audience.

2.

National Spot (Selective Spot) - Regional or local stations selling to advertisers who want a particular market. Selective spots provide incremental coverage for national advertisers, and for smaller advertisers there is flexibility to select markets on an as-required basis.

3.

Sponsorship Opportunities - Major networks market sponsorship opportunities that integrate television advertising with other marketing and promotional activity.

Advertisers can leverage the sponsorship into consumer and trade promotions, contests, and alternate media exposure. Good sponsorship opportunities exist on popular sports shows and reality shows (e.g., Kraft Hockeyville on CBC’s Hockey Night in Canada). See the vignette No Better Place to Bring Your Brand to Life for details of why Budweiser decided to sponsor Don Cherry’s Coach’s Corner on CBC Hockey Night in Canada)

4.

Product Placement and Branded Content – Placing branded merchandise in television shows (product placement) is one way to compensate for less exposure to real advertisements. In some cases the brand plays a role in the show.

Integrating the brand right into the script of the show (branded content) is another option. Many brands have benefitted from being mentioned or used in AMC’s popular drama Mad Men. Jaguar and Canadian Club are among those brands.

5.

Local Advertising - Purchase of time by local market advertisers.

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G.

Television Advertising Rates Television rates are affected by four primary factors: 1.

Supply and Demand - For network advertising the market demand establishes the price of the network spots.

2.

Nature of the Purchase - This factor considers demand and the difference between network and selective spot advertising. Networks accommodate advertising requests as best they can, but priority is given to faithful advertisers based on incumbency position and the length and volume of the contract. Time is purchased either upfront (when it initially goes on sale), or by scatter (buying from what is left once the initial buying phase is over)

3.

Types of Programs - The programs determine who watches (target market) and the size of the potential audience. The size (higher reach) moves rates upwards. Special programs such as sports and miniseries have separate rates.

4.

Dayparts - Television is divided into three categories: prime time (7 – 11 pm), fringe time (4 – 7 pm and 11 pm – 1 am), and day time (all other times). Rates increase with audience size by time of day.

5.

H.

Length of Commercial – Rates are based on the cost of 30-second commercials.

Split 30s (two 15-second spots usually cost about 30% more). 60-second spots are twice as much as a 30-second spot.

Buying Television Time Media buying in television is a complex process that requires top-level expertise on both sides of the negotiation process.

Both national networks negotiate airtime on the basis of supply and demand. Rates charged depend on: inventory of time available, projected audiences, continuity, and seasonality. The bidding process by competitive advertisers and the budgets (size of the purchase) are other factors affecting supply and demand. These factors also influence rates on local market stations, particularly in prime time.

In the case of spot sales, advertisers purchase time from any station that is part of the networks. Similar to networks, local market stations offer a variety of discounts. Some are experimenting with a reach plan whereby commercials are rotated vertically

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throughout the day and horizontally during the week. Such a plan maximizes reach against the entire viewing audience of an area.

With viewing patterns changing and more new shows starting at different times of the year, the nature of television media buying will be gradually changing. It is expected that there will be less upfront buying in the future as networks are experimenting with launching new shows at various times of the year. American networks are finding that late spring and summer launches of new shows are popular with viewers. This system is ideally suited for advertisers that have adopted a recency media strategy. With recency, the timing of the advertising is more important than the weight of the advertising (in other words only buy time when you absolutely need it).

Since networks and stations do not publish their advertising rates it is next to impossible to illustrate the media buying process. The textbook does include a sample illustration of a media buy in Figure 9.6.

I.

Discounts Offered by Television A variety of discounts are offered by networks and individual stations. These include the following:

J.

1.

Frequency, Volume and Continuity - Frequency discounts consider the number of spots purchased over a period of time. Volume discounts are based on dollar volume over time and continuity discounts consider a minimum number of spots over an extended period of time. Continuity is earned when an advertiser buys a minimum number of spots over an extended period e.g., 13 weeks, 26 weeks, etc.).

2.

Seasonal Discounts - Mainly summer discounts and summer dividends that consider viewer drop-off.

3.

Package Plans – Discounts offered to sell off fringe and daytime spots, sometimes in combination with prime time spots.

4.

ROS (Run of Schedule – A discount offered for allowing the station to schedule a spot at its discretion.

The Canadian Radio Market Presently there are 686 commercial radio stations in Canada (143 AM and 543 FM). FM reaches 79percent of all persons 12 years of age and over while AM only reaches 19 percent. The radio broadcasting industry is divided between independent stations and

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networks (which accept advertising) and public networks (the CBC does not accept advertising). CBC Radio 2 is just beginning to accept advertising.

K.

Trends Influencing the Radio Industry 1. Internet Radio – Radio content streamed through the Internet for online consumption by consumers. It offers good sound quality and no advertising. It is growing in popularity!

2. Satellite Radio – Commercial-free programming offered by Sirius XM Radio by satellite. A package of themed stations is available for a monthly fee (no advertising).

Subscribers access satellite radio through their iPhone, iPad, iPod or other branded devices.

3. IPods and Portable Devices – Younger generations are tuning out radio in favour of IPods and other portable devices. Many people are listening to podcasts online.

Podcasts can be listened to whenever it is convenient for the listener.

L.

Radio Listening Highlights The average listener depending on age spends anywhere from 16 to 21 hours a week with radio. Radio is the inverse of television—it is a medium that is more important to people in the morning. Listening to a radio at home accounts for 48 percent of all listening time. Listening in automobiles accounts for 30 percent of the time and listening from work accounts for 20 percent. In terms of listening, radio is popular in the morning (high reach), with listening tapering off during the day (evening drive time excepted).

M.

Station Formats Radio stations establish a format that is geared to a particular audience. Format refers to the type and nature of programming offered. The most popular formats in Canada are country (17.2% share) and adult contemporary (11.5% share). See Figure 9.11 for details about format popularity.

N.

Advantages of Radio The major advantages are target market selectivity (based on format), high reach potential (mobility and portability), frequency (high reach at low cost), cost (attractive to local advertisers), and flexibility (creative changes on short notice and market selection decisions). Radio is an ideal medium for advertisers following a key market strategy. For

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additional insight into the benefits of radio see the action vignette “Ikea Sees Value in Radio.”

O.

Disadvantages of Radio The major disadvantages are audience fragmentation (station availability with different formats), message retention (messages are short and there is a clutter problem), and media planning considerations (scheduling headaches for national advertisers dealing with so many stations).

P.

Radio Advertising Rates Radio advertising rates are affected by four primary factors: 1.

Season - Grid schedules are used which reflect seasonal fluctuations in listenership.

The summer period (May-August) and December generally have higher rates.

2.

Dayparts - Rates vary based on the time of day the message is scheduled. Highest rates are in the breakfast (drive) period (6:00-10:00 a.m.).

3.

Reach Plans - In a reach plan, a commercial is rotated through the various dayparts in order to reach different people with the same message. The reach plan extends reach and offers a lower average rate structure for the advertiser. There are two forms of rotation: (i) Vertical - The placement of commercials based on time of day. (ii) Horizontal - The placement of commercials based on day of week.

4.

Q.

Type of Advertiser - National advertisers generally pay a higher rate than rates charged to local advertisers. National advertisers can deduct agency commissions where applicable however.

Discounts Offered by Radio Discounts offered by radio stations include the following: 1.

Frequency - Based on a minimum number of spots in a week.

2.

Volume - Based on total spots in the buy.

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3.

Continuity - Lower rate for a contract period.

4.

Reach Plans (Total Audience Plans) - Lower average rates if spots are rotated through a reach plan.

The chapter includes two examples illustrating radio buying. It is recommended that these examples be reviewed in class. Instructors can develop their own examples using the rate card in the chapter (Figure 9.13) or Canadian Advertising Rates and Data.

ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

Television and Television Advertising Isn’t Going Anywhere Doomsayers predict the demise of the 30-second commercial as people shift their television viewing habits. While headlines tout the rapid growth of digital advertising and marketing via the Internet and mobile devices, global brands continue to p their investments in a media tactic that has been around for about 70 years—television commercials.

Another option that has great appeal is product placement. North America is the largest product placement market in the world worth about $4.8 billion in spending. Placement is fueled by strong growth in television, Internet, mobile and music categories.

While television remains the most consumed medium worldwide, viewing of first-run programs on conventional TV is declining in favour of time-shifted video consumption through multimedia, often to avoid the ads. As a result, product placement has strengthened its position in the multimedia strategy mix. As well, there is a strong movement to integrate branded products into the script of the shows—the concept of branded content.

Source: “New PQ Media Data: global Product Placement Spending Up 12% to $8.3 Billion,” PR Web, April 15, 2013, www.prweb.com.

2.

Some Facts about Digital Television Viewing How Canadians view television largely depends on age. Since we are in the technology era it makes sense that younger people watch television on their electronic devices rather than the old-fashioned television screen. Right now 55% of Canadians view television digitally and use legitimate sources such as Apple TV and Netflix to do so. The number increases to 58% if illegitimate sources such as BitTorrent are included.

Illegitimate sources are the channels of choice for nearly 1 in 3 young Canadians; nearly 6 times more than older Canadians. .

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Some 56% of Canadians view television on their computers; 21% view on a mobile device and 14% view on a tablet. Regarding live viewing versus on-demand viewing, 64% of Canadians who programs live and 36% view on-demand. Of those who view on-demand 50% say they do so because of the convenience factor.

Source: “TV by the Numbers,” Strategy, July/August 2012, pp. 24-25.

3.

CBC Turns to Branded Content for Revenue You see it on many cable channels (HGTV, W, etc.) now you will see it on the CBC. The Canadian Broadcasting Corporation is opening its doors to independent producers and marketers who want to be part of the CBC’s daytime programming schedule. Through its Branded Entertainment Development Initiative, content creators and brand managers can be part of the creation and development of new daytime programs.

Facing budget cuts from the federal government the CBC sees this new strategy a viable means of increasing revenue. The corporation believes that sound strategic partnerships with outside brands represent great opportunities that go well beyond current broadcast business models.

Source: “CBC Calls for Branded Content Ideas in New Entertainment Development Program,” Mediacaster, April 1, 2013, www.mediacastermagazine.com.

2.

Teens and TV Television viewing is declining among teens and young adults. Such a trend will have major implications for marketers. Nielsen Media Research suggests marketers proceed with caution because the situation may not be as black and white as trend figures indicate.

Adults do watch more television than teenagers, however teen viewing remains at about 15 hours a week. Such a figure suggests TV isn’t a dead issue. Teens want to be seen as cool. Therefore, they spend more time online. They perceive TV to be yesterday’s news— they won’t admit to doing things their parents do!

What’s important here is the multitasking factor. Teens watch TV while they are surfing the Internet or the play video games while watching TV. These conditions are more difficult to measure, but none the less, it presents a situation where teens are exposed to television commercials.

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Perhaps the real issue is how an advertiser reallocates dollars across all relevant media to reach this target.

Adapted from William Ratcliffe, “Teens and the tube,” Marketing, January 16, 2006, p. 19.

3.

TV Advertising Clutter is a Real Issue In the early 1990s when the U.S. deregulated advertising time, the amount of advertising time per hour started to rise. Presently, in a 1-hour period there is 21 minutes of advertising—over one-third of the time is non-program material. This poses a problem for Canadian networks airing American shows. By law only 12 minutes per hour is allowed in Canada (a 1-hour show is actually only about 40 minutes). The rest of the time is filled with public service announcements and promos for programming.

Such a situation adds up to a lot of clutter. Advertisers paying significant rates get buried in the clutter. This is another reason why advertisers are reassessing the value of television advertising.

Adapted from Clutter on the rise on US TV; Canucks won’t stand for it,” Media in Canada, June 1, 2006, www.mediaincanada.com.

4.

TV Sponsorship Opportunities Deliver Brand Recognition CBC will inject 60 Think Hockey segments, sponsored by Home Depot, and an interactive Fantasy Online Pool, presented by Kia Motors, into its broadcast package for Hockey Night in Canada during the 2006-2007 broadcasts. Other major sponsors include Ford, Labatt’s, Mastercard, Subway and Moores Clothing.

Home Depot’s Think Hockey segment includes a three to four minute feature giving former NHL players and other hockey experts the chance to get on-screen with Ron Maclean and give viewers insight on how to play the game more effectively. Moores is the exclusive sponsor of the much watched Coach’s Corner with Don Cherry.

Adapted from “CBC snags HD, Kia with new HNIC opps,” Media in Canada, October 3, 2006, www.mediaincanada.com.

5.

TV Answers the “Engagement” Request Research by the Television Bureau of Canada (TVB) suggests TV keeps people more emotionally engaged than radio, print and online ads.

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In the study 100 people were shown ads in normal media settings; they watched an episode of Two and a Half Men; listened to 15 minutes of CHUM-FM; navigated MSN.ca for 15 minutes and were given 30 minutes to mull over Vancouver Sun’s Life section.

Participants were monitored for eye movement, skin response, respiration, heart rate and unconscious body movements to measure the amount of time they remained in a state of “high emotional engagement.”

For the study engagement is defined as paying attention to something that emotionally moves you. Television evoked three times more high emotional engagement than radio; 5.5 more times more engagement than newspapers and 1.8 times more than online video ads. Online video ads are similar to TV ads but apparently people are more distracted when doing things online.

Engagement is a strategic issue. If it’s important, television has to remain in the media communications mix.

Adapted from Jeromy Lloyd, “TV Ads Most Engaging: TVB Study,” Marketing, January 29, 2010, www.marketingmag.ca.

6.

Television is an Expensive Medium but Average Rates are on the Decline Time on American television is expensive but in recent years average costs for a 30second commercial have been on the decline. Several factors are in play here: less reach due to more people watching shows online; audience fragmentation; and generally poor shows. A show’s popularity (as expressed by ratings) determines the cost of placing a commercial on the show. Here’s a sampling from the Fall 2013 schedule: American Idol ($355, 900) Big Bang Theory ($316, 900) The Voice ($294, 000) Modern Family ($281, 900) New Girl ($236,800) The Following ($211,800) Scandal ($207,000) Grey’s Anatomy ($204,600) The Blacklist ($201,600) Two & A Half Men ($184,000) All rates are for 30-second spots.

Source: “How Much for a 30-Second Spot?), Advertising Age, October 21, 2013.

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All Rates are U.S rates. A small trend is occurring. Comedy rates are rising while drama rates are declining. Monday nights on CBS, for example, promoted as comedy night, is a ratings and ad revenue bonanza.

Adapted from Brian Steinberg, “What’s Worth a Price Increase on TV? A Good Laugh, Advertising Age, October 27, 2009, www.adage.com.

7.

Ad Receptivity Survey Says TV does It Best Any industry sponsored survey usually paints a good picture of itself, and the television industry is no different. If “how receptive people are to advertising” is an important strategy consideration then television advertising is truly the favoured medium. Here are the results of a recent survey conducted by BBM Analytics: • Television ads are the most noticeably type of ads • People are most receptive to ads delivered by television • People pay the most attention to ads delivered by television • By a wide margin people’s favourite advertisement is a TV commercial • TV advertising is more emotive than any other form of advertising In terms of being receptive to ads by each medium the following scores were reported in the survey: Television – 58.8% Internet – 12.6% Newspaper = 11.2% Radio – 8.6% Magazine – 2.7% Out-of-Home – 2.3% Source: “Ad Receptivity Survey, TV Basics, 2012-2013, p. 21.

8.

Mad Men Economy: Product Placement Enhances Revenue for AMC Network With the impact of the 30-second waning (according to many industry critics) and the fact that less people are watching (generally), networks are promoting other options to bring back revenue. Product placement and branded content are a great solution and they are proving to be popular with advertisers.

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On a show like Mad Men you have to have a lot of product talk. How many placements there have been isn’t known but every show usually has a few being tried or discussed by the cast. Having Dan Draper and the boys discuss the merits of London fog trench coats or referencing a bottle of Stoli in their office is no accident. Since the arrival of Mad Men AMC’s ad-related revenue has grown by $52 million. That amount of money would cover the production costs of 26 episodes. Great strategy as long as the viewer is not offended by all the product mentions.

The sale of DVD’s brings in another $18 million each season. And a deal with cable carriers such as Rogers to offer Mad Men free through on-demand portals also provides incremental revenue for the show.

Adapted from “The Mad Men Economy,” Report on Business Magazine,” October 2009, p. 14.

9.

Some Online Radio Statistics Internet radio is the future and the future is fast approaching. Research conducted by Arbitron Inc. in the U.S., reveals that technology has dramatically increased the options for audio programming. Here are some facts and figures: More than one in five people have listened to Internet radio in the past month The weekly Internet radio audience has increased 50% in the past year (2012 versus 2011) Internet radio audience skews male and younger, but attracts a wide range of ages Internet radio attracts an upper-income audience (36% have household income $100K+) 41% of listeners have visited a website because of an advertisement.

Radio isn’t going away. It is just changing with the times. There are still lots of opportunities to reach people by radio.

Source: “Online Radio Statistics,” Stratus Media, 2012, www.truemeasure.com/onlineStatistics.

10.

Hidden Benefits of Radio Radio listeners are more accepting of radio advertising than they are of ads on TV or the Internet, according to the latest report from the Radio Ad Effectiveness lab (REAL) of New York. Why? Because the emotional connections they have to their favorite stations extend to the ads.

Radio offers some emotional benefits to advertisers when compared with other popular media as indicated by the following chart:

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Strength

Radio

Internet

TV

Improves your mood Makes you relax Comforts you Helps you have a good time Makes you feel motivated

58 46 43 43 43

5 6 7 11 13

22 32 27 36 16

Newspape r 4 8 5 2 10

Adapted from Patti Summerfield, “Ears more receptive to advertising than eyes,” Media in Canada, October 17, 2007, www.mediaincanada.com.

11.

Time Spent with Radio Each Day is Impressive For a medium that is often overlooked in a key market media strategy, radio has to be granted a second look. Especially, if advertisers consider the time people spend with the medium. Studies conducted by the Television Bureau of Canada reveal the following data about time spent with each primary medium in Canada: Medium TV Internet Radio Newspaper Magazine

Hours/Week 24.1 17.9 17.5 2.0 0.6

Source: “Reach and Time Spent: Major Media Comparison,” TVB, November 2012.

ANSWERS TO END-OF-CHAPTER QUESTIONS Review Questions 1.

Time classifications, often referred to as dayparts or time blocks, are a means of establishing rate structures. Each medium recognizes that there are prime times of the day when reach increases. Rates are adjusted accordingly.

2.

Key issues confronting the television industry and advertising industry (about television) include audience fragmentation, viewing-on-demand, penetration of mobile media, technologies that encourage commercial avoidance, and media convergence.

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3.

The advantages and disadvantages of television as an advertising medium are included in the chapter highlights section.

4.

Network advertising is suitable for large budget advertisers with a broad distribution base. One commercial is provided to a central source (e.g., CBC Toronto) and from there is broadcast across the entire network. Selective spot advertising is when a local station sells space to a national advertiser wanting to have more weight in a particular market.

5.

Three factors that influence the cost of television advertising are: supply and demand (high demand for popular time slots drives up the price and vice versa), type of program (regular programs versus special programs and sports), daypart (prime time is more expensive than fringe time and day time.), and length of commercial (rates are based on 30-second commercials).

6.

Television discounts based on time purchased:

7.

(a) (b) (c)

Frequency - Based on number of spots purchased Volume - Based on dollar volume purchased in a period Continuity - Based on a maximum number of spots in an extended period

(a)

Branded Content – Placing branded product right in a television show. The brand gets exposure during the show.

(b)

Fragmentation - The variety of television stations available to an audience in a specific market.

(c)

Sponsorship – Opportunities to be a prominent part of a show. Sponsor packages usually include introductory and ongoing mentions during a show as well as preferred advertising spots during the show. Sponsors play a prominent role in a show’s presentation.

(d)

Daypart - Blocks of time during the day when viewing patterns can be distinguished.

(e)

Clutter – the sheer number of commercials people are exposed to in the course of one hour of programming.

(f)

Upfront Buying – The practice of buying all network television time during a short space of time prior to the start of a new television season. A majority of time available during the year is sold at this time

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(g)

Prime time versus fringe time - Prime time is normally 6:00 to 11:00 pm; fringe time is 4:30 to 6:00 pm and 11:00 pm to sign-off.

(h)

Package plans - The packaging of television spots by time of day (e.g., the combining of prime, fringe, and day time in a package) to facilitate the sale of less desirable time slots.

(i)

Pre-emption rate - Refers to a situation where a show and regularly scheduled commercials are preempted by a special (usually with special advertising sponsors).

The original advertisers are credited with equivalent airtime at a later date.

(j)

GRPs (Gross Rating Points) - An expression of advertising weight in a market by manipulating the reach and frequency variables (GRP = Reach x Frequency).

8.

The key issues confronting the radio industry are digital radio, Internet radio, satellite radio and usage of iPods and other portable listening devices. Conventional radio stations have to react to these new technologies that are fragmenting audiences (much like television).

9.

Station format refers to the type and nature of the programming offered by a radio station (e.g., rock, top-40).

10.

The advantages and disadvantages of radio as an advertising medium are listed in the chapter highlights section.

11.

Three factors that influence the cost of radio advertising are: time of year (rates are seasonal with the highest rates usually being in the summer period and December), daypart (rates tend to be higher in the morning when there are more listeners), reach plans (advertisers can save money if they agree to a reach plan), and type of advertisers (national advertisers pay a higher rate than local advertisers).

12.

A reach plan refers to the rotation of commercials through the various dayparts in order to reach different people with the same message. A reach plan extends reach for the advertiser and the rates charged are collectively lower than when purchasing time slots on an individual basis.

14.

The cost of the radio campaign would be: Breakfast: $79 x 4 x 28 =$8,848 Drive: $70 x 4 x 28 = $7,840 Daytime: $64 x 8 x 28 =$14,336

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Total Cost = $31,024 Reach Plan Cost: Total spots = 16 per week x 28 weeks = 448 448 spots x $62 = $27,776 The reach plan is a better deal. The advertiser saves $3,248 ($31,024 - $27,776).

15.

A large city like Vancouver there would be several competing stations catering to the same target market (e.g., a city may have several rock stations or several easy-listening stations). Advertisers would look at which stations offer the best profile match (audience listeners with product target market). If budget permits, all stations could be purchased to satisfy reach and frequency objectives. Otherwise, advertisers would evaluate CPMs for competing stations and select the most cost-efficient (rank based on budget).

16.

(a)

Vertical Rotation - Commercial placement based on time of day.

(b)

Horizontal Rotation - Commercial placement based on day of week.

(c)

Reach Plan - A radio buying plan that maximizes an advertiser’s reach over the course of a week buy following a pre-planned schedule arranged by the station.

Reach plans offer efficiency since the as average cost of a spot is lower that when requesting specific time slots.

(d)

Frequency Discount - Lower rate based on a minimum number of spots (usually in one week).

(e)

Volume Discount - Lower rate based on total spots in a buy.

(f)

Continuity Discount - Lower rate for a contract buy (e.g., 26 weeks, 52 weeks).

Discussion Questions 1.

Both the television industry and advertising industry must adapt to the latest technologies and find ways of getting the message through. The though has crossed many advertiser’s mind that television isn’t what it used to be. And they are pulling money out of television and allocating it elsewhere. This is a major issue the industry must resolve.

2.

It may not be the demise of television as we know it but the TV industry and the advertisers who rely on television are certainly going to change their ways. In the past the media was in control of the message. Now it is the consumer who is in control. It is

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possible (and very likely) that within a few years we could be viewing more TV online that rd we do in front of conventional TVs. Whether or not the 3 screen or cell phones will become a viable alternative for viewing television remains to be seen. It’s all about technology now!

3.

The television industry is becoming more specialized and this trend will continue.

Audience share for conventional networks and stations will continue to decline. These stations will have to stress commercialization and generate sufficient revenues to develop and present top quality programming. Conventional networks like the CTV and Global TV will have to stress their mass reach (even though it is less mass than in the past) in order to survive. They can argue that the niche cable channels only attract small audiences.

4.

Channel surfing, leaving the viewing area during commercial breaks and PVRs that eliminate commercials completely are threats to the television industry. Clearly, television is under the gun. With so much at stake the networks must find new ways to get advertising messages in front of viewers. Without sufficient funds from advertising the networks won’t be able to produce good shows. The way this circle is spinning has to change if television is to survive the onslaught of technology.

5.

Given the trends affecting television right now, product placement and branded content are viable means of advertising. While it introduces commercialism into the shows, viewers do not seem perturbed by its presence. Students should see this as a strategy to compensate for the ineffectiveness of regular commercials.

6.

Radio stations are becoming much like magazines. Stations are cropping up to serve specific needs and interests (e.g., the popularity of all news stations and all talk stations).

Radio stations will very likely continue in this direction and develop new formats for audiences that offer revenue potential (find a niche and satisfy it!).

7.

Internet radio and satellite radio are threats to conventional radio. The cost of entering this market is quite high so it is not taking off as fast as anticipated. Radio stations will have to protect their conventional broadcasting business while building an Internet presence. With regards to satellite it remains to be seen if people (in droves) are willing to pay for commercial-free radio. It does fragment existing audiences even further however.

VIDEO CASE 1 HSN: Direct and Online Marketing Time: 6:30

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Key Issues Media Planning Media Trends Media Integration Direct-Response Advertising Consumer Behaviour This video portrays the growth of HSN, a digital television network in the direct marketing business. The network is targeted at female shoppers who control or influence 80% of purchases. In the context of media planning the video shows how television is losing ground to digital media on many fronts. Not to suggest that television is dead—it continues to play a vital role in creating awareness and interest in a brand. But, to get people to make purchases there digital opportunities that make perfect sense, especially when used in combination with television advertising. One of the attractions of HSN is that customers willingly visit the network for specific content. They are loyal visitors who will purchase goods. That has to be of high interest to any branded good. Television advertising creates the awareness but consumers today want to engage with brands before they purchase. Building a stronger connection is important and that’s a role that HSN can play in the purchase decision process. HSN tells brand stories in different ways on multiple platforms: laptops, tablets and mobile devices. Essentially, HSN is an ideal medium for reaching the multi-tasking, multi-viewing female consumer.

Potential Discussion Questions 1. What are some of the advantages of using a network like HSN for selling branded goods?

2. What does the future of traditional television advertising? Will it be fully replaced by digital advertising?

3. What does the future hold for any form of mass market advertising?

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CHAPTER 10 ____________________________________________________ OUT-OF-HOME MEDIA LEARNING OBJECTIVES Students will be able to: 1.

Differentiate between the various types of out-of-home media

2.

Explain the advantages and disadvantages of out-of-home media

3.

Describe the factors considered and procedures used for buying the various forms of outof-home media

CHAPTER HIGHLIGHTS A.

Out-of-Home Advertising Outdoor advertising is going through a rebirth of popularity, mainly due to technology— digital boards are much more common in urban areas. Right now it is growing at a rate faster than any other medium except for the Internet. Technology has produced new, innovative formats that make the medium more dynamic than before.

In an increasingly mobile population, outdoor ads provide a convenient way to get a message to consumers. As well, media planners conscious of timing issues in terms of media strategy realize that outdoor ads reach people when they are ready to buy.

Out-of-home advertising is divided into three categories: outdoor, street level, and transit.

1.

.

Outdoor Advertising - Outdoor advertising includes posters (commonly referred to as billboards), backlit posters, spectaculars (often called superboards or bigborads), mall posters, transit shelter advertising, digital signs, and full-motion video displays.

New electronic technologies are making outdoor ads much more attractive and messages can be altered electronically in some cases to meet changing client

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needs. A showing refers to buying multiple panels to achieve a desired level of reach and frequency in a market.

2.

Street Level Advertising - The prominent forms of street level advertising include transit shelters, pillar advertising, media columns, mall banners, wall banners and murals. Many options are rear-illuminated and positioned in high traffic areas.

3.

Transit Advertising - Transit advertising includes various forms of interior and exterior transit cards, station posters and backlits, and super buses (totally painted with a single advertising message).

Advertisers purchase outdoor advertising space either in single panels or a showing. A showing refers to buying multiple panels to achieve a desired level of reach and frequency in a market. Outdoor advertising is excellent for reinforcing messages in other media such as television, magazines, and interactive media.

B.

Advantages of Outdoor Advertising The advantages of outdoor-oriented advertising include target reach and frequency (cross-section of the population daily), targeting flexibility (market-by-market selection), size and quality of message (large and visually attractive), compatibility with other media (message reinforcement), creating product awareness (ideal for launching new products), and cost (efficient when CPMs are considered). Due to technology an additional advantage is content flexibility—the message on digital signs and full-motion video signs can be changed if necessary.

C.

Disadvantages of Outdoor Advertising The disadvantages include creative limitations (instant visuals only), lack of target-market selectivity (wasted circulation), costs (production costs for backlit posters and absolute dollar costs if a regional or national market list is considered), lack of prestige (clutter of all types of outdoor), and being unobtrusive (pass by without noticing).

For more insight into the benefits of outdoor advertising see the action vignette Big, Bold and Beautiful for details about Coors use of outdoor advertising when it launched the screw top bottles.

D.

Buying Outdoor Media Space All outdoor space is sold in four-week periods and is available on a market-by-market basis. Media space is purchased on the basis of weight expressed in GRPs. In outdoor

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advertising a GRP is defined as the total circulation of a specific outdoor showing as a percentage of the market's population (e.g., a 50 GRP would reach half of the market's population). It is recommended that the rate card included in the chapter and the media buying examples be discussed in class.

E.

Transit Advertising Transit riders are a captive audience that often has a need for visual stimulation.

Therefore, it can be a good environment for advertising. Every week 5.7 million Canadians take an average of 9 trips by public transit.

Transit advertising alternatives include interior and exterior transit cards, door cards, station posters, vinyl transit wraps (full or partial vehicle wraps), station posters and backlits, platform posters, and digital subway advertising (a form of video advertising).

Some new and innovative concepts include stair risers (ads appearing on the sides of steps), ceiling decals (appearing in vehicles), and floor advertising. Station domination is another option. With domination one advertiser occupies all advertising spaces in the station (on walls, floors, etc.). Digital screens on subway platforms allow for easy viewing by waiting passengers.

The advantages of transit advertising include continuous exposure (habitual riding patterns and an average ride length of 35 minutes), reach and frequency (general crosssection of population repeatedly), flexibility (geographic market coverage), market coverage (all areas of city), and cost (cost-efficient if reaching a mass audience).

The disadvantages include lack of target-market selectivity, media environment (it’s a hectic environment with a high degree of clutter of ad messages), and creative limitations (small space parameters).

Outdoor and transit advertising are often used when target market descriptions are very broad and when local market coverage is the priority. They are media vehicles suited to shotgun media strategies. Riders pass time by using their smartphones. This gives advertisers another opportunity to reach consumers while they are on the move.

F.

Buying Transit Media Space Transit advertising is affected by factors such as the number of markets being covered, the length of the showing, the weight level desired and the size of the space required. As in outdoor, weight is expressed in GRPs. Advertising flights are a 4-week minimum.

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Transit rates and discount programs are discussed in detail in the chapter. It is recommended that the rate schedules and buying examples included in the chapter be reviewed in class.

G.

Other Forms of Out-of-Home Advertising There always seems to be a unique means of reaching consumers when they least expect it. Some of the more innovative vehicles for sending messages include airport display advertising, washroom advertising, elevator advertising, mobile signage (moving vehicles that include ads), sports and arena advertising, cinema advertising, and wild postings.

Wild postings are ads slapped on the hoardings at construction sites. Many first run advertisers are resorting to this type of tactic to generate a buzz for new product lines.

H.

At-Retail Media There is a growing interest in advertising in retail stores. This medium embraces everything from shelf-talkers to smart shopping carts to digital video screens (e.g., Home Hardware presents video demomercials for products only they sell). Tim Hortons displays products on video screens behind the counter and in plain view to all customers. The ability to reach consumers while they are in the buying decision stage offers benefit to advertisers. It also offers shoppers a more pleasant shopping experience. More than 70% of all shopping decisions are made right in the store.

I.

Other At-Retail Media The dominant reason for using point-of-purchase is to provide consumers with a reminder just prior to making a purchase decision.

Some of the more common types of point-of-purchase advertising include exterior signs, display shippers (shipping containers that become display units when opened), display cards, , floor ads, and ads on grocery carts. All of these options encourage last minute buying decisions. .

At-retail media advertising offers several advantages: message reinforcement, message receptiveness (right time and place), encourages impulse purchasing (for frequently purchased and inexpensive products), last chance or deciding factor in a sale (e.g., automobile brochures that go home with a prospect), and merchandise tie-in opportunities (promotions).

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The disadvantages include potential for poor placement (reduces effectiveness), clutter (competition for space in retail outlets), and waste (lack of cooperation for use by retailers).

ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

Outdoor Ads: Great Complementary Medium Never underestimate the power of outdoor advertising. Brand messages clearly communicated with a strong visual can have just as much impact as a TV commercial or an online video commercial.

In 2012 net advertising revenues generated by outdoor advertising amounted to $486 million in Canada. Video boards are spurring renewed interest in the medium.

Advertisers’ concerns about the fragmentation of television audiences and the tuning out of broadcast messages has also driven demand for out-of-home advertising delivery.

Media expert Sunni boot sheds some light on the matter. “They are ubiquitous touch points—they low cost reach for minimal effectiveness,” says the CEO of ZenithOptimedia, of Toronto. “It’s a matter of understanding their role. And that role is a supporting one.

They can’t stand alone but they are a great compliment to street level ad campaigns.”

Source: Canadian Media Directors’ Council Media Digest, 2013-14 and Chris Daniels, “Beyond Billboards,” Marketing, October 26, 2009, p. 38.

2.

Samsung Believes in Outdoor Advertising Samsung needed a breakthrough campaign for its mobile phones that would increase market share in a competitive market. Their strategy was to gain year-round presence in key urban markets with a message that would convey product innovation.

Outdoor advertising was a key element of the campaign. The out-of-home mix included posters, superboards, wall murals, street level, mall media and transit advertising.

Research indicated that unaided awareness increased from 46% to 63% by the end of the second wave of advertising. The brand image rating on a scale of 1 – 10 increased from 6.6 to 7.1. In terms of purchase consideration, 49% of respondents indicated they would probably or definitely buy a Samsun phone. Consumer attitudes also showed that Samsung rated highly for best technology and style.

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This example shows that the right message in the right medium does have an impact!

Source: Case Study: Samsung Mobile Phones, Pattison Outdoor Advertising.

3.

Some Facts and Figures about Outdoor Advertising Outdoor advertising seems to linger in the background of our daily lives but the fact that it is always there has an impact on consumers and how they perceive brands that use the medium. Consumers have a very positive perception of digital outdoor advertising: • 78% see it as attention grabbing • 71% say they are interesting to look at • 61% find the ads entertaining • 63% find the ad informative If a brand wants to improve its awareness scores outdoor is a good medium to consider.

The key is to deliver an entertaining message if you want to get noticed.

Source: Digital Out-of-Home Engages and Motivates Action, Out-of-Home Marketing Association of Canada.

4.

Don’t Forget about Transit Advertising Every week 5.7 million Canadians take an average of 9 trips by public transport. With transit riders spending over an hour a day commuting, there are many opportunities to interact, provide information and offer incentives.

Transit is an effective medium for reaching a broad segment of the population. Transit usage is highest among young adults (index score of 181), those that have a college or university education (index score of 131) and are employed in MOPE positions (index score of 123).

Therefore, we may conclude that even though transit is considered a mass medium, it apparently reaches a very desirable audience.

Source: Canadian Transit Users: A Captive and Tech Savvy Audience, Out-of-Home Marketing Association of Canada.

5.

Elevator Advertising: Is It Effective?

It’s easy to dismiss some of the miscellaneous media but consider some facts about people and elevators: .

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• On average, residents make four trips daily in elevators • On average, residents have two visitors per week • 85% or participants in a study had favorable attitudes about elevator advertising A recurring comment about elevator ad is “it gives you something to do.” Ah, ha…a captive audience with nothing to do but look at some ads. Sounds like a great opportunity. Pizza Pizza took advantage of that opportunity In a controlled market test in a variety of different buildings over a 6-week period Pizza Pizza experienced increases n sales ranging from 2% in a seniors’ building to 24% in a downtown building filled with younger people.

Source: The Elevator Network 6.

LED Boards Replacing Backlights in Venues The Air Canada Centre has moved quickly into the LED era by placing 320 HD-quality video display screens throughout the building.

Replacing traditional backlit posters, the nee boards includes a giant 30’ by 50’ outdoor high-definition LED board on the exterior of the building and new screen configurations and clusters spanning large 3’ by 3’ media walls. Smaller sizes are also available depending on location.

The strategy is simple. The screen configurations are interesting and present dynamic content in non-traditional formats, so you can’t help but look at them. The video displays offer an unlimited creative pallet for sponsors while providing fans with entertaining content and highlights.

Adapted from Garine Tcholaklan, “ACC bows more digi-screen might,” Media in Canada, September 21, 2009, www.mediaincanada.com.

7.

AdBikes: What Next?

It seems like something from the distant past; a car, a bull horn, and a driver. Driver announces an event to everyone he passes by. Now we will see bikes doing something similar.

AdBikes have entered Canada (Toronto-based wild On Media). The bikes are equipped with a 50-watt sound system and a “brand ambassador” ad riders (paid college students) who talk up the brand and offer promotional material.

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Advertisers can determine the routes for the ad vehicles to reach their target audience (geo-targeting). Each bike has a standard 4’ by 6’ double-sided backlit ad panel. It’s like a moving transit shelter advertisement.

Source: Garine Tcholakian, “AdBikes ride into Canada,” Media in Canada, June 25, 2009, www.mediaincanada.com.

8.

We Spend More Time with Outdoor Ads that We Think Results of a recent study conducted by the Out-of-Home Marketing Association reveal we spend more time with outdoor ads than ads in other media. Urban Canadians spend 9.3 hours out-of-home on weekdays and 6.2 hours on weekends, with exposure to outdoor advertising for 3.8 hours on weekdays and 4.7 hours on weekends. Internet exposure came close to those marks on weekdays, at 3.6 hours, but fell below on weekends, at 2.5 hours.

On the impact of out-of-home advertising the study revealed that 30% of respondents visited a website after seeing the outdoor ad; 25% visited a store after seeing an ad; 17% sought more information or bought a product; 17% attended an event; 18% became interested in a new brand; 14% visited a particular restaurant; and 4% sent a text message.

According to a Visiontrack study 53% of passersby see an outdoor ad on first pass. Drivers look at ads (2.1 times) more often than passengers (1.9 times).

Adapted from Jesse Kohl, “Association rolls out tempting stats on OOH impact,” Media in Canada, www.mediaincanada.com.

9.

Outdoor Video has a Bright Future According to e-Marketer the outdoor ad medium has a bright future, especially with the new video style boards that are replacing backlights and posters.

Technology is enhancing the quality of outdoor messages and as a result outdoor is bucking the trends facing television, radio and print media. While other advertising sectors are struggling to adapt to increasingly fragmented audiences and changing media consumption trends, out of home media are reaping the benefits of the evolving media landscape.

Out-of-home is immune to channel surfing and web surfing and the digital messaging capabilities are proving to be effective for advertisers. .

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Out-of-home video can also offer narrowcasting by delivering content to specific audiences in such places as retail stores, transit vehicles, office buildings, theatres, bars and restaurants. The future looks bright for outdoor!

Source: “Outdoor Advertising: A New Look,” eMarketer, December 27, 2007, www.emarketer.com.

ANSWERS TO END-OF-CHAPTER QUESTIONS Review Questions 1.

An outdoor poster (billboard) is composed of sheets of paper pasted to a board to form an advertising message. A backlit poster is a rear-illuminated billboard in which the message is printed on a polyvinyl type of material. A spectacular (superboard) is a larger version of an outdoor poster. It may use paper or the message may be hand-painted on wood or metal. A spectacular is a non-standardized outdoor unit designed to the customized specifications of an advertiser. A full-motion video screen is an electronic sign. With electronic signs messages can be changed based on advertiser’s needs.

2.

The advantages of outdoor advertising include target reach and frequency, geographic flexibility, size and quality of message, compatibility with other media, and cost (cost per exposure). Disadvantages include creative limitations, lack of target market selectivity, and costs (e.g., costs for customized production and widespread geographic coverage).

Cost is an advantage or disadvantage depending on a campaign's objectives.

3.

Cost of the transit shelter campaign is as follows: St. Catharines/Niagara: London: Winnipeg: Calgary: Ottawa-Gatineau: Total Cost:

4.

$20,140 x 3 = $60,420 $16, 410 x 3 = $49,230 $16, 830 x 3 = $50,490 $28, 481 x 4 = $113,924 $42, 498 x 4 = $169,992 $444,056

Cost of transit shelter campaign would be: St. Johns: Halifax: Saint John: Edmonton:

.

$5,214 x 4 = $20,856 $8,925 x 4 = $35,700 $3,048 x 4 = $12,192 $15,456 x 4 = $61,824

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Vancouver: Total Cost

$36,997 x 4 = $147,988 $278,560

5.

An exterior king poster is a large unit displayed on the sides of transit vehicles. A seventy poster is smaller and displayed on the tail end of transit vehicles. The same principle applies to other transit vehicles.

6.

Interior cards appear above the windows of transit and subway vehicles. Station posters usually appear on the walls of subway and bus stations or in hallways leading to the vehicles. Station domination gives an advertiser complete control of a subway station (one advertiser controls all the ads in the station).

7.

The major types of transit advertising are interior and exterior transit cards, superbuses and bus murals, station posters and backlits, stair risers, ceiling decals and floor advertising.

8.

The types of goods and services suitable for transit advertising include consumer packaged goods, local market retailers such as clothing stores, hardware and drug stores, hotels and banking services, shopping malls, and the like. Transit is a good medium for encouraging the use of local market services as well as securing awareness for national brands.

9.

The pros and cons of transit advertising are included in the chapter highlight section.

10.

Cost of street level campaign (Seventy Posters) as follows: St. John’s: Sudbury: Total Cost:

11.

Cost of the transit poster campaign (seventy poster size) is as follows: Quebec City: Montreal: Toronto: Vancouver: Total Cost

12.

$4,750 x 3 = $14,250 $4,340 x 3 = $13,020 $27,270

$19,375 x 3 = $58,125 $81,760 x 3 = $245,280 $82,250 x 4 = $329,000 $35,800 x 4 = $143,200 $775,605

Outdoor terms are explained as follows:

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a) Superboard (Spectacular) - A one-of-a-kind outdoor advertising structure built to the advertiser's specifications. Frequently they extend beyond the borders of the billboard and have protruding components. b) Mural Ads - Very large, hand-painted outdoor signs on the sides of buildings. c) 75 GRPs (outdoor) - An expression of media weight for outdoor advertising. In this case, 75 GRPs would deliver exposure opportunities on a weekly basis to three-quarters of a market's population. d) Backlit Poster - A luminous sign containing advertising graphics printed on translucent polyvinyl material. The lights from the back enhance the image. e) Full-motion Video Screen – A new style of outdoor advertising that shows commercials much like those seen on television. They make outdoor advertising more dynamic. f) Display Shipper - A cardboard shipping carton that is pre-packed with a set amount of merchandise. When opened and assembled it becomes a temporary display case. g) Floor Ads – Ads that appear glued on retail floors. They direct a passerby’s attention to a particular product (e.g., a candy bar on a display shelf or a beverage in a refrigerator).

Discussion Questions 1.

Out-of-home media is comprised of outdoor, street level advertising, and transit advertising. These media alternatives are usually identified as secondary media in a national advertiser's media mix. As such, they complement the use of other media often designated as primary (e.g., television and magazine). For adding weight to designated markets, outdoor and transit overlays are a common strategy. In contrast, the sellers of outdoor and transit media present favourable arguments for creating awareness of any kind of product (refer to the advantages of each). For local market advertisers they are an attractive medium, possibly the primary medium. For national advertisers, more interested in target market capabilities, other media are more appropriate.

2.

Student opinions will vary for this question. They will question whether or not outdoor advertising is suitable for a luxury product. All automobile manufacturers use outdoor advertising as it gives them an opportunity to display the vehicle—big, bold and beautiful! In the case of a luxury vehicle, outdoor boards in key urban markets are very appropriate. Locating the ads on busy expressways where commuters travel would be a good recommendation for any brand of car.

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3.

Answers to this question will vary. Should funds be diverted from traditional advertising (television, radio, magazines, etc.) to point-of-purchase? Point-of-purchase does help move merchandise at retail. It is a last chance to reach people with a message. The trade is generally receptive to promotion support in retail stores, although clutter can have a negative effect. The advertiser has to strike a balance between the needs of consumers and the needs of retailers. It should be noted that new types of point-of-purchase advertising are quite innovative and attention grabbing.

4.

Naming rights on popular sports arenas and stadiums is an expensive proposition and the true benefits are difficult to evaluate. From a public relations perspective the name of the company gets all kinds of mentions (exposure) but there is no consistency of message until something important happens. In Toronto the Air Canada Centre is well know but is often referred to as the “ACC.” Do people know what that is? Arena and stadium names change once a contract expires. This often causes some confusion when a new name comes on board. Scotiabank Place in Ottawa was recently renamed Canadian Tire Centre.

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CHAPTER 11 ____________________________________________________ DIRECT RESPONSE MEDIA LEARNING OBJECTIVES Students will be able to: 1.

Describe the various types of direct response advertising

2.

Assess the advantages and disadvantages of the various forms of direct response advertising

3.

Assess the factors considered in, and procedures used for buying direct mail

4.

Assess the strategies for delivering effective messages via direct response techniques.

CHAPTER HIGHLIGHTS A.

Direct Response Advertising Direct advertising is a form of media advertising that communicates messages directly to prospects. It is one segment of the direct marketing industry and it plays a major role in influencing consumer purchase decisions.

In terms of market development, direct advertising and direct marketing practices in Canada lag behind the United States. That said however, direct mail alone accounts for $1.24 billion or 10% of net advertising revenues in Canada. Direct mail advertising ranks fourth behind television, the Internet, and daily newspapers in terms of revenue. Such a position supports the notion of tremendous growth potential for direct-response advertising in the future, particularly among digital media options.

Technology is fueling a shift to direct-response. With so many organizations practicing database management and implementing customer relationship management programs, direct-response techniques are the vehicles for reaching customers. Direct-response can reach customers more efficiently than traditional mass media. As well, direct response techniques can engage the consumer which allows for the marketing of products that .

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require in depth sales messages. Bell, Rogers, Shoppers Drug Mart, and most financial institutions in Canada are the largest users of direct-response marketing techniques.

Direct response advertising is advertising through any medium designed to generate a response by any means that is measurable. Direct-response communication is growing as a result of technology. More communications are occurring online as people spend more time there than with traditional media.

The major types of direct-response advertising include the following: 1.

2.

3.

4.

5.

B.

Direct Mail – Advertising communicated via the postal service or delivery agents.

Direct Response Print – A response oriented message delivered by magazine or newspaper.

Direct Response Television (DRTV) – Advertising communicated by television (extended commercials or infomercials).

Direct Response Interactive – online ads that include a call to action (typically respondents click on an ad and are transferred to a site where more information is offered.

Telemarketing – personalized sales messages promoted via the telephone. .

Direct Mail Direct mail is the primary form of direct response advertising. A direct mailing has several components, each serving a specific purpose\; envelope (for attention), sales letter (personalized to encourage reading), leaflets and folders (vital information about the offer along with an incentive to motivate action), order form (so the receiver can respond easily), and a postage paid return envelope (another means of encouraging a response).

Direct mail is divided into two strategic areas: 1.

Solo (Selective) Direct Mail - Specialized or individually prepared and distributed directly to designated prospects. The advertiser pays all related costs.

2.

Cooperative Direct Mail - Mailings containing offers for non-competing products that are distributed in mass to households. The costs are shared by participants.

Another type of direct mail is dimensional mail. Dimensional mail is not flat—an object may be in the envelope or perhaps the mailing is in a unique package.

Direct mail is an established means for many consumers to learn about products and purchase products. A recent study revealed that 72 percent of Canadians use direct mail

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to buy products. From the options described above, solo direct mail generates much higher response rates.

C.

Direct Mail as an Advertising Medium Research shows that 89 percent of Canadian will open a direct mail piece if it comes from a company they know—a strong argument for implementing a direct mail campaign. The primary advantages of direct mail advertising include audience selectivity (based on accurate lists), high reach, geographic selectivity, creative flexibility (long copy), advertiser control, exclusivity (upon arrival in the household), incentive distribution (coupons and samples), and measurability (direct link to sales).

The disadvantages of direct mail include high cost per exposure, absence of environmental support (a reason for reading), image and life span (junk mail image), and potential delivery delays.

Direct mail has been around for a long time but it is just recently that blue chip companies recognized the value the medium offers. The advantages of direct mail are an attraction to companies wanting to reach customers one on one. See the vignette “Boston Pizza’s Direct Mail Yields Good Results” for more details.

D.

Buying Direct Mail There are three basic steps in buying direct mail: 1.

Obtain Lists - Securing accurate lists from internal sources, directories, and other external sources is critical. Internal lists are referred to as house lists. Shoppers Drug Mart and many other retailers now collect valuable information about their customer’s purchase behavior and use the information to advantage. List brokers are used to secure external lists. When purchasing lists of names, the price goes up as the quality of name goes up. High quality external lists are developed through a merge/purge process on a computer, whereby numerous lists are purchased, combined, and stripped of duplicate names. There are several types of lists: response lists (a list of proven buyers), circulation lists (lists of magazine or newspaper subscribers), and compiled lists (lists compiled from public or commercial registries).

2.

Production - Creative design by the agency and then printing and stuffing by other organizations.

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3.

E.

Distribution - Using the postal service or private organizations. Canada Post plays a major role and works very closely with clients to develop and implement direct mail campaigns.

Buying Direct Mail Advertising Typically, direct mail media costs are quoted on a cost per thousand basis for both printing the mailing piece and distributing it. Cooperative direct mail packages cost mush less than solo direct mail packages. Refer to the cost illustration in the text for details.

F.

Direct-Response Television There are two basic forms of direct response television: short form and long form. Short form commercials are anywhere from 30-seconds to 120-seconds in length and encourage people to buy now. Long form commercials or infomercials may last 30minutes or longer and explain an offer in great detail and are program-like in terms of content. Infomercials are presented in an entertaining manner and now rely less on “hard sell” to get the desired response. The spectrum of direct response television advertisers includes pharmaceutical companies, banks and other financial institutions, automobile manufacturers, technology companies, and not-for-profit organizations. The effectiveness of direct response ads is measured by responses such as cost per order, cost per lead, and cost per call or some other criteria. Organizations such as Pfizer, General Motors, Procter & Gamble and RBC Financial are using direct response television advertising.

G.

Direct Response Print Media Local market newspapers and magazines are good vehicles for delivering direct response print advertisements. Newspapers reach a geographic area while magazines can target certain demographic characteristics. The travel industry is one that uses direct response print techniques frequently in these media. Ads encourage potential travelers to call a 1800 number or visit a Web site for more details. Many people now make all of their travel arrangements online, a direct result of direct-response advertising efforts.

Inserts are commonly associated with direct-response print ads. An insert is a single or multiple-page document included in the publication (usually glued to another page containing an advertisement). See the example illustrations in the textbook (Figures 11.11 and 11.12).

H.

Direct Response Interactive

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With online banner advertising the objective is to get consumers to click on the message to obtain more information. Therefore, all banner ads can be classified as some form of direct response communication. That said, true direct response interactive ads include a call to action similar to those in other media. Phrases such as “Buy now” or “Explore now” are commonly used to draw attention and spur action. More details about online communications appear in Chapter 12.

I.

Telemarketing There are two types of telemarketing: inbound telemarketing and outbound telemarketing: 1.

Inbound Telemarketing - The reception of calls by an order desk from customers through toll-free 1-800 telephone numbers.

2.

Outbound Telemarketing - The placement of calls by a company to a customer in order to secure leads or close a sale.

Telemarketing activity is usually handled by a call centre. A call centre is a central operation that handles all inbound and outbound calls. The role of call centers is expected to expand in the future for several reasons: companies are aggressively mining their database for opportunities and database software and telephone system technology make it cost effective for organizations to link their database to the phone.

Telemarketing campaigns generate about $26 billion a year in sales in Canada based on an investment in telemarketing of $4.1 billion.

As a sales and advertising technique, organizations must be aware of the perils of telemarketing. Consumers voice a lot of displeasure with outbound telemarketing practices, citing aggressive and sometimes abusive behaviour by callers. They also object to the timing of such calls (usually between 5:30 and 7:30 pm). The CMA has established a “Do-Not-Call” registry that protects consumers from unwanted telemarketing calls (see Figure 11.14 for more details). Organizations that disregard do-not-call legislation risk fines up to $15,000 per call. Privacy remains a hot issue with consumers.

I.

Strategic Considerations for Telemarketing Scripting plays a significant role in the success of a telemarketing campaign. Here are some basic tips for the telemarketer: 1.

2.

.

Focus on the relationship – long-term relationships and repeat business is the key.

Adjust the script for the audience – Be flexible based on unplanned objections.

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3.

4.

5.

6.

7.

J.

Empathize with receivers – Approach each prospect as an individual Establish rapport and gain attention quickly – Be honest and sincere immediately.

Keep it short and simple – Simple messages explained clearly work better.

Be prepared – Through simulated role-play fine tune the presentation.

Make it easy to say yes – Structure the offer to reduce risk and ask for the order.

Catalogues Catalogues are reference publications usually distributed by large national chain stores and other direct marketing organizations. Sears is one of the largest catalogue operations in Canada. The Sears catalogue is distributed to 3 million households and generates about one-third of Sears annual sales revenue.

Rather than publish catalogues some companies are publishing magazines that encourage people to visit a website or a store to complete a transaction. Harry Rosen, for example, publishes Harry magazine, a lifestyle publication suitable for its upscale clientele. The magazine helps build a stronger relationship with customers.

For more insight into the usefulness of direct response communications refer to the vignette “Direct Response a Key Ingredient in Mountain Equipment Co-op’s Success.”

ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

Shoppers Optimum Program 10 Million Strong Started 10 years ago, the Shoppers Drug Mart Optimum program now has more than 11 million members (one-third of Canada’s population). The rewards component of the program has been tremendously popular with women, and in partnership with MasterCard, has evolved over the years to embrace categories such as high-end beauty products and convenience food items.

The real benefit for Shoppers is in the data they are collecting on so many people—and they know where they live and how to reach them—directly with unique offers and promotions that are geared to their buying preferences. Adding external information to the database rounds out the profile of the customer.

2.

Don’t Underestimate Phone Power If the objective is to initiate a response, telemarketing rules the day. Data provided by the Direct Marketing Association in the United States reveal very high rates of response

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for telemarketing and direct mail. These options remain the backbone of the directresponse industry. According to the DMA the customer response by channel is as follows: • Telephone – 31.3% • Direct Mail – 36.6% • Website – 12.4% • Email – 12.3% • Retail Traffic – 3.4% • Other – 4.0% Source: Marketing Research Fact Sheet: Media response Rates – U.S. Market, January 2009.

3.

Walmart Data Mines for Gold The goal of data mining is to produce lower marketing costs and to increase efficiency by identifying prospects most likely to buy in large volume. A firm’s competitive advantage may depend upon knowing the situation better than the competition and being able to take rapid action, based on that knowledge.

Look no further than Walmart to see data mining at work. Walmart is the acknowledged leader in data mining, capable of tracking sales on a minute-by-minute basis. It can quickly detect regional and local market trends. Such knowledge allows Walmart to customize each store’s offerings while keeping suppliers abreast of how well their products are selling.

4.

Canadians Don’t Mind Receiving Direct Mail Image aside, consumers realize that many good deals come their way via direct mail. Yes, it is quick to discard but it can be great at generating leads for business marketers and generating new purchases for consumer goods marketers. Here are a few facts and figures about direct mail in Canada: • • • •

87% of Canadians are likely to read mail that is addressed to them personally 43% of Canadians will read most mail promotions just in case something catches their eye 24% of Canadians pay attention to addressed direct mail It takes only 3 seconds for a person to decide to keep or discard a mailing piece

The data suggest that good creative is very important. Direct mail comes down to a few basic points—delivering a personalized message in a convincing manner will get the receiver’s attention. .

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Source: Consumer Attitudes to DM and Traditional Media, Marketing Research Fact Sheet, March 2010, Keith Thirgood, creative director Capstone Communications Group.

5.

Infomercials Move the Merchandise There are those that believe television is dead—it’s an old medium; it is out of touch with on-demand consumers who want to watch programs when they want to watch. Not so fast, says Amir Tukulj, chairman and CEO of Thane Direct Inc., a Toronto-based direct marketing company. Stop and think about those infomercials that have grabbed your attention late at night or on weekend mornings: The Flavor-Wave Oven or the Ab Doer Twist exercise machine. Ads like those carry the classic boast: “As seen on TV.” Tukulj agrees that the television universe is becoming fragmented with so many stations available but he prefers to turn that negative into a positive. “For us it will mean the ability to target consumers in a more accurate manner and at lower cost,” he says. His pitch to potential clients goes a step further. “Proving sales are a direct result of a particular ad campaign has always been a dark art. Infomercials provide a direct and traceable link between advertising and sales.” For clients concerned about financial accountability, direct response television is an ideal fit.

So what makes a consumer pick up the phone to place an order? According to Tukulj, “The message has to be clear and concise; it has to resolve a specific problem which the consumer is experiencing. It has to provide the consumer instant gratification, it has to be a good price point, it has to provide value, and it has to be demonstratable.”

The success of a direct response campaign also considers consumer behaviour. “With direct response television it’s an impulse buy. Consumers aren’t looking for the kinds of products we offer. When they’re passive, watching TV, that’s when we get their attention, strike a chord, and cause them to purchase,” says Tukulj.

Adapted from Simon Houpt, “Call now to take advantage of this special TV advertising offer,” The Globe and Mail, December 16, 2011, p. B5.

6.

Does DRTV Harm Brand Image?

The quick answer is no it does not but there are skeptics out there than still can’t get their head around General Motors or Ford selling cars using infomercials and long form DRTV. Personal skepticism should not be a factor in developing a media plan. Consequently, the merits of DRTV should be evaluated in the context of the brand and its life cycle. For

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example, there are products and services that have a limited life span so the goal is to sell as many as possible in the shortest period of time. Hard core DRTV works well in this situation.

However, there are just as many DRTV commercials for nationally branded products and it is the fastest growing segment of the business. Brands such as Disney, Dell, Apple, ING, General Motors and Ford produce long form commercials within the framework of their brand’s overall marketing strategy. The commercials do not undermine messages in other media. Quite the opposite, the commercials deliver tangible results, measurable results that enhance brand image.

Adapted from “Direct Response Television Marketing FAQs,” Canadian Marketing Association, October 26, 2009, www.the-cma.org.

7.

Protecting Consumer Privacy Privacy is a controversial issue in the direct-response industry. The Canadian Marketing Association (CMA) is a leader in industry self-regulation and ensures marketers remain ahead of the curve in protecting consumer privacy through its comprehensive Code of Ethics and Standards of Practice. All CMA members must follow these regulations.

The CMA’s Privacy Code gives consumers the right to: • Consent before your personal information is transferred to a third party • Access information held about you • Obtain the source of your name on marketing lists • Correct erroneous information • Have your name removed from telephone and direct mail list The Code of Ethics and Standards of Practice is a detailed document. It is available for viewing at www.the-cma.org/consumer/ethics.cfm.

ANSWERS TO END-OF-CHAPTER QUESTIONS Review Questions 1.

The major types of direct-response advertising are direct mail, direct-response television, direct response print, direct response interactive and telemarketing. Catalogues and telemarketing also play key role in encouraging customers to buy products.

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2.

The components of a direct mail package include a letter to introduce the offer; leaflet, flyer or folder that explains the offer in more detail; an incentive to stimulate immediate action; and a postage-paid return envelope.

3.

A solo direct mail campaign is an individualized mailing aimed directly at a specific buying group (designated target). For example, a direct mailing for Canon copiers to all purchasing agents in Canadian educational institutions is a solo direct mailing.

Cooperative direct mail refers to mailings for non-competing products in the same envelope and usually distributed by the postal service.

4.

The advantages and disadvantages of direct mail are included in the chapter highlights section of this chapter. Audience selectivity, geographic flexibility, and control are factors important to a business advertiser. Image and life span would be a concern on the negative side of things. Clutter (the amount of similar messages received by the customer) is also a concern.

5.

The list is a critical component of a direct-response campaign. A higher quality list (from a broker) may cost more but it will produce better results. An organization should try to rent a list that matches their target market profile as closely as possible. Higher costs in this initial stage will be covered by better ales results at the tail end. Companies should keep their customer lists up-to-date and have a database management system that evaluates customer purchases over time. Such a system will identify key customers to focus on in the future.

6.

A response list is a list of proven mail order buyers (tend to be more costly to obtain). A circulation list is a list of names obtained from a publisher of a magazine or newspaper. A compiled list is a list that is developed by a list broker whereby names are obtained from public sources (e.g., telephone books, motor vehicle registries and so on).

7.

A list broker is a company that specializes in compiling lists for companies wanting to reach customers possessing certain characteristics. The broker compiles the list based on the specifications established by the organization.

8.

Explanations of various terms: a) A bounce back is an offer included with a request for payment for a previous offer. It rides along free as part of a mailing (e.g., the offers that are included by banks in their monthly credit card mailing). b) A house list is an internal listing of customers

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c) An insert is a direct-response message glued to a page in a magazine. It can also be an advertising message inserted loosely into a cooperative direct mail package (e.g., one of many offers in the mail package) d) Merge/purge is a computerized system that eliminates duplicate names on a mailing list. e) An infomercial is usually a 30-minute commercial that presents the benefits of a product in endless detail. f) Inbound telemarketing is the reception of calls at an order desk. Outbound telemarketing refers to calls a company makes to customers. g) A call centre is the central point for conducting inbound and outbound telemarketing programs. All calls are channeled in and out of the call centre.

9.

The primary advantage of telemarketing is cost efficiency. It costs significantly less than any other form of communications and yields good results in the process. The disadvantages focus on consumer disenchantment with the practice. Consumers tend to react negatively when approached in an aggressive manner or an inappropriate time.

Discussion Questions 1.

Most students who possess limited knowledge of direct mail advertising adopt the familiar consumer attitude—its junk mail which is easily discarded. The purpose of this question is to get the student thinking about the positive aspects of direct mail. Direct mail is attracting more and more advertisers based on the merits of the medium. As indicated in the Sales Promotion chapter, cooperative direct mail provides the highest rate of coupon redemption among media delivered coupons. Consequently, it is quite effective in generating trial purchase. As well, business advertisers now value the targeting capabilities of direct mail advertising.

2.

For now invasion of privacy is an issue. Consumers generally, do not like to receive unsolicited mail and telephone calls from marketing organizations. Rules and regulations have been established to monitor the practice of marketing organizations and “Do Not Call” programs are available to consumers. However, this type of program must be initiated by the consumer. Invasion of privacy remains a controversial issue for the directresponse adverting industry.

3.

Direct response television advertising will play an event greater role in the future. Right now there is a lot of direct response television advertising appearing on late night

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television and daytime television on weekends. The broad range of companies and notfor-profit organizations that are involved with DRTV suggests that more will follow. The image of DRTV is changing—it is more positive now and the quality of the commercials and infomercials is so much better that more people are watching them.

4.

The purpose of the question is to have students discover a few success stories. When they see the results they will start to recognize the true benefits of direct response advertising and perhaps change their perception of this technique.

VIDEO CASE 1 NutriSystem Time: 3:33 Key Issues Direct-Response Advertising Direct Marketing This video quickly portrays the value of direct-response advertising and direct marketing. Often denigrated for its aggressive message strategies, direct-response is ideally suited for certain industries and product categories. NutriSystem is a weight loss program that is ideally suited to this medium. In fact, direct-response communications has helped transform the company from a $38 million a year operation to a $1.5 billion a year operation! There’s no disputing those results! The video highlights several key concepts associated with direct-response: results are immediate and measurable and you will always succeed if you constantly listen to your customers. While NutriSystem is popular with females a campaign to target males (who are typically not interested in dieting) is profiled.

Questions for Discussion 1. The dollars invested in direct-response advertising (mail, print, television or online) are wasted, owing to the poor image of the medium. Is this statement true or false?

Discuss.

2. Direct-response communications played a key role building the NutriSystem business.

Can other industries such as banking, insurance and automobiles enjoy similar success using direct-response communications techniques? What is your opinion on the matter?

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VIDEO CASE 2 HSN: Direct and Online Marketing Time: 6:30 Key Issues Media Planning Media Trends Media Integration Direct-Response Advertising Consumer Behaviour This video portrays the growth of HSN, a digital television network in the direct marketing business. The network is targeted at female shoppers who control or influence 80% of purchases. In the context of media planning the video shows how television is losing ground to digital media on many fronts. Not to suggest that television is dead—it continues to play a vital role in creating awareness and interest in a brand. But, to get people to make purchases there digital opportunities that make perfect sense, especially when used in combination with television advertising. One of the attractions of HSN is that customers willingly visit the network for specific content. They are loyal visitors who will purchase goods. That has to be of high interest to any branded good. Television advertising creates the awareness but consumers today want to engage with brands before they purchase. Building a stronger connection is important and that’s a role that HSN can play in the purchase decision process. HSN tells brand stories in different ways on multiple platforms: laptops, tablets and mobile devices. Essentially, HSN is an ideal medium for reaching the multi-tasking, multi-viewing female consumer.

Potential Discussion Questions 1. What are some of the advantages of using a network like HSN for selling branded goods?

2. What does the future of traditional television advertising? Will it be fully replaced by digital advertising?

3. What does the future hold for any form of mass market advertising?

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CHAPTER 12 ____________________________________________________ INTERACTIVE MEDIA LEARNING OBJECTIVES Students will be able to: 1.

Describe the various elements of interactive communications

2.

Evaluate the various interactive advertising models available to marketing organizations

4.

Identify key aspects of audience measurement systems

5.

Assess the potential of the Internet and mobile devices as advertising media

6.

Describe and apply various models for pricing and buying online advertising

7.

Assess the role of social media in the marketing communications mix.

CHAPTER HIGHLIGHTS A.

Interactive Communications Online communications has changed the nature of marketing communications from a one-way (interruptive) process) to a two-way (participative) process. Interactive media allows an organization to listen to and respond to consumer input.

Advertising on the Internet has grown significantly. Now a primary medium, it ranks second to only television in terms of advertising revenue. Many analysts predict online advertising will surpass television in Canada by the end of 2014 (that’s being optimistic!).

Consumer behavior in terms of how attached or engaged people are with their electronic devices, is forcing advertisers to shift their budgets from traditional media to various forms of digital communications: online, on tablets, and mobile devices.

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The challenge for clients and media planners is to find the correct balance between traditional media and interactive media. It’s not one or the other but rather some combination that will lead to successful campaigns.

B.

Internet Penetration and Consumer Behaviour The IAB reports advertising revenues of $2.6 billion in 2011, a 16 percent increase over 2010. Canada leads the digital revolution as Statistics Canada reports that 79 percent of Canadian households have access to the Internet. Such high penetration affects the amount of time spent will all media. More time spent online means less time for other media.

The average Canadian spends 45 hours a month browsing the Internet; a majority of that time spent on social sites such as Facebook. The Internet ranks second to television in terms of time spent with the media on a weekly basis.

Usage depends on age. Generally, younger people spend more time with interactive media, for example, the 18 to 34-year-old age group spends more time online than they do with television. Baby boomers still spend more time with television but there is a shift in the direction of interactive media. Figure 12.2 offers a detailed description of the target audiences reached by the Internet.

The Internet is a mass medium much like television or daily newspapers as 80 percent of Canadians use the Internet for personal reasons. Further, just over 50 percent of Canadians are on Facebook, some 17 million people.

Consumers use the Internet to research products prior to purchase. Consequently, advertisers must publish information online if they are to be on the “to consider” list.

Since the Internet is a participative medium, advertisers must adapt their communications to fit the medium. What works on television does not work online. A new breed of ad agency is serving the needs of advertisers wanting to be online.

C.

Interactive Communications Planning and Targeting Decisions about what media to use are based on who the advertiser wants to reach, the communications objectives, and the budget. Once it has been decided to include online advertising the options available include search, display, rich media, video, sponsorships and permission-based email. Mobile options must also be considered.

One of the key benefits of online advertising is the targeting capability it offers.

Demographic targeting and geographic targeting are possible—advertisers need only

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specify the precise target they wish to reach at a particular website (e.g., TSN.ca attracts an over-indexed male audience 18 to 24 years old and has a half a million visitors daily).

Daypart targeting is another option. Daytime is actually prime time for online communications (when people are at work).

Behavioural targeting involves the delivery of ads based on a consumer’s previous surfing behavior. Through behavioural targeting an advertiser is capable of achieving better results. It’s not about how many people an advertiser reaches that is important. A well planned online communications strategy can reach fewer people and produce better business results. With behavioural targeting you reach someone at an opportune time.

E.

Interactive Communications Objectives Online media communications helps an advertiser achieve its marketing and marketing communications objectives. Online media are effective at achieving the following objectives:  Creating brand awareness

 Building and enhancing brand image  Offering incentives  Generating leads

 Conducting transactions

F.

Online Advertising Strategies The Internet provides an opportunity to really “tell as story.” Significantly more detail can be communicated on the Internet. Therefore, advertising in traditional media forms should always include a Web site address and encourage customers to visit that site.

Among the advertising options available online are the following: Search advertising is an advertiser’s listing placed within or alongside search results in exchange for paying a fee each time someone clicks on the listing in those search results.

Also known as pay-per-click advertising.

Display advertising includes banner ads in a variety of sizes. A banner ad refers to third party advertising on a Web site. Typically, they stretch across the screen or appear in some unique shapes and sizes: rectangles, big box, leaderboard, and skyscraper.

Research data show bigger ads get better results. Size matters!

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Rich media is a technique that includes animation, audio and video, and interactivity.

Often referred to as animated banners, the click rates on these ads is higher than for regular banners.

Video advertising is the Internet’s version of a television commercial. Many television shows are streamed online for consumer viewing any time. Ads are placed before (preroll), during (mid-roll) and after (post-roll) the online TV show. With the Internet being more of a mass medium, users are now more accepting ads similar to those shown on television.

Sponsorships are the second most popular advertising tool. With sponsorships, an advertiser commits to an extended relationship with another Web site. The advertiser targets the content of the Web site (e.g., a golf manufacturer may target a golf-oriented Web site (e.g., The Golf Channel online). Sponsorships are quite popular on sports oriented Web sites. Refer to the TSN/Kraft example in the textbook for details.

E-mail advertising (permission-based e-mail) means that consumers have chosen to receive messages from a particular advertiser. It is very similar to direct mail advertising in terms of how it operates. The difference is that e-mail ads are generating higher response rates (users can subscribe and unsubscribe at any time).

Similar to direct mail, e-mail success depends on the quality of the list. An opt-in list is one in which people have agreed to receive messages (permission-based email). Sending mail to people not on an opt-in list is called spam. Spam refers to the inappropriate use of a mailing list. It is unsolicited junk mail.

E-mail provides opportunities for viral marketing. Viral marketing refers to a situation when a receiver of a message is encouraged to pass it on to friends or they find it interesting and simply pass it to friends. Research indicates that people do share content among friends. Advertising which is compelling may also be transferred. A viral campaign creates “buzz” for a product. Advertisers must also be aware that bad news about a brand travels online even faster.

Webisodes involve the production of an extended commercial but includes entertainment value in the communications. The popularity of You Tube Channels has sparked interest in content marketing. Content marketing involves the creation and sharing of content in order to acquire customers. Refer to the Mercedes-Benz content marketing campaign in the textbook for a good example.

G.

Measuring the Impact of Online Advertising

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The success of online advertising is measured based on the following:  Impressions – the number of times a banner image is downloaded

 Frequency – the number of times an ad is sent to the same browser

 Clicks (Clickthroughs) – the number of times a user clicks on a banner ad

 Clickthrough Rate – the number of clicks divided by the number of impressions  Visits – a sequence of page requests made by a visitor to a Web site

H.

The Internet as an Advertising Medium The advantages of Internet advertising include:  Targeting capability – Based on browsing preferences or demographic and

geographic targeting options are available  Broad Reach – The size of the online audience is growing rapidly. An advertiser can buy as much or as little of the audience as they desire.  Depth of Content – The ad is simply the beginning of the process. Detailed information is only a click away.  Tracking and Measurement – Ad programs are monitored for success in a timely manner  Timing – the Internet doesn’t sleep; it’s a 24/7 medium  Interactivity and Action – the opportunity to interact (entertain) users as they view messages and participate in an activity Some of the disadvantages include:  Too Measurable – A marketer can be overburdened with too much information  Consumer Frustration – from an abundant amount of spam and unsolicited

advertising

 Advertising Overload – Many sites are cluttered so nothing really stands out. In

this situation consumers tune out the ads  Privacy Concerns – the transfer of sensitive information is an issue I.

Buying Media Space Essentially there are three different buying systems: CPM, pay for performance and flat fee.

CPM is the price charged for displaying an ad one thousand times. Agencies are comfortable with this model for it is used in the traditional media. The advertiser pays a rate for every thousand impressions made. CPM rates vary according to the level of

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targeting desired by the advertiser. For example, a ROS ad (run of site) is low cost where as an ad targeted by some key word (such as RRSP or investments) will be higher cost.

See the rate card in the chapter for additional details.

In a pay-for-performance model rates are pegged to the click ratio (e.g. you pay on a cost per click basis). Since clicking is the desired action (to get the user to a Web site) the advertiser is only paying for the desired result. Such a system devalues advertising and the other objectives that advertising can accomplish (e.g., raising awareness for a brand).

Some Web sites charge a flat fee—a set amount for the length of time an ad appears on the site. Sponsorships are commonly sold on this basis.

J.

Social Media Networks A social media network connects people with different types of interests at one website. At the site people become friends and form communities. The reach of social networks is growing steadily. Consider the impact of Facebook alone with over 1 billion members. Social media are popular with all age groups though it is reported that teens are losing interest and moving to newer, more cool social sites.

Research indicates that Canadians spend 25 percent of their Internet time on social media and that 17.1 million people are members of a social network.

Social media can be used effectively for marketing purposes. One of the key benefits is word-of-mouth, a phenomenon marketers have little control over. Many people recommend products online and many more seek out product recommendations from their friends online. These are good reasons for advertisers to be online.

For advertisers the most important benefit from social media is engagement with the brand. Other benefits include direct contact with potential customers, and the quick speed of feedback (actual results from the effort).

K.

Consumer Control of Social Networks Advertisers must adapt to the fact that consumers control social media—a concept called brand democratization. Messages delivered on social networks are created by amateurs. Consumer generated content refers to content created by consumers for consumers. In many cases brand content is presented favorably and is a benefit to the brand. For many this type of content is more credible than marketer-

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generated content. As a result, many marketers are inviting the public to create brand content.

Some social media phenomena include crowdsourcing and flash mobs.

Crowdsourcing uses the collective intelligence of the public at large to complete a task that a company would normally undertake or outsource to a third party (e.g., using user-generated content on television). These tasks can be created faster and at lower cost while the collective creativity of the public is used to advantage.

L.

Types of Social Network Advertising and Marketing Communications Several advertising options are available in social media: Direct Advertising on a Site – Demographic profiling allows for effective placement of banner-style ads that reach a desired target. A process of social and demographic filtering ensures effective placement of ads. Click rates are low on sites like Facebook.

Brand Page or Fan Page – An organization (brand) can create its own page that users may join. The page builds a fan base or people that can then be reached directly with messages. Contests and other incentives are used to drive consumers to the brand page. Presently, marketers evaluate the success of their brand pages by the number of likes they have, but the true value of a like is often questioned— 0nly 5 percent of people who like a brand return to the brand page. Marketers are starting o place more value in “engagement” rather than “likes.”

Friend Networks – Encouraging friends to send positive brand messages to others is possible. As mentioned earlier some people are becoming suspicious of these messages—they exploit personal relationships.

Corporate Blogs - A blog is a website where journal entries are posted on a regular basis in reverse chronological order. A blog includes text, images, and links to other blogs. People can comment on the blog’s content—a form of consumer-generated content. Many companies now have their own blog. Blogs allow an organization to present relevant information in a positive manner. They encourage feedback from customers and prospective customers—information that may be useful at some point.

YouTube Channels – Having your won YouTube channel is gaining ground due to the popularity of video viewing. Subscribers to a brand channel will be advised when new content is posted.

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M.

Buying Social Media Advertising CPM (cost per thousand) and CPC (cost-per-clock) models are common on social media networks. In the CPC model a bid price is first determined. The bid price is a maximum amount an advertiser is willing to pay for each click. On Facebook, people are targeted based on criteria such as age, education, likes and interests.

Facebook now offers promoted posts (ads that your friends like). In this case ads are more prominently presented in news feeds.

Google offers AdWords, a model also based on CPM and CPC. If awareness is the objective, the CPM model is suggested. If generating traffic to a website is the objective, the CPC model is suggested. The advertiser pays when the desired action is accomplished.

N.

Types of Social Network Advertising and Marketing Communications Click rates on social media are very low so advertisers should consider a different set of tools to judge the effectiveness of social media advertising. The amount of time (quality time) a person spends at a site and the extent of involvement they may have with a brand is more important. IAB Canada has established a set of terms t measure social media efforts.

• Interaction Rate – the proportion of users who interact with an ad or application • Time Spent – amount of time devoted to a visit • Conversation Reach – the number of unique visitors per month in all sites related to a conversation in which a brand is participating • Conversation-relevant Links – the number of links to and from content that contains phrases from all sites that are part of a brand campaign O.

Benefits and Drawbacks of Social Media Advertising Key benefits of social media advertising include: Targeting – all age groups are present online so it is a good complementary medium in the communications mix. Customers can be reached with unique ads and offers based on their online behavior (which is tracked).

Word-of-Mouth – consumers willingly engage with brands and pass on information of interest to their friend network.

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Some drawbacks of social media advertising include: Absence of Sound Metrics – while the value of a “like” is questioned a brand can secure buzz from online conversation. Coca-Cola believes that a combination of owned, earned, shared and paid media is the best combination to use today. Who’s to dispute this belief!

Integration Issues – advertisers are still experimenting with social media advertising and have yet to determine how best to use the medium and how much to spend in it. Much effort and dollars are needed to encourage consumers to interact with brands—it’s not a natural occurrence.

P.

Mobile Communications Some 26 million Canadians have a cell phone and 50 percent of them have a smart phone. There is a strong emotional attachment to the phone—79% of people won’t leave home without their phone (sounds like an addiction!).

Mobile advertising is growing slowly but most analysts see mobile as the next big communications medium. The phone will become the hub of our online communications and entertainment. Already the medium offers location-based targeting potential. Consumers can be reached with an advertising message at a time when and where they are ready to purchase.

Opportunities to advertise include text messaging, video messaging, cell phone applications, and online video games.

Text Messaging – teens and young adults use text messaging a lot due to its portability and low cost. For marketers looking for mass market reach text messaging is a viable option.

Video Messaging – The next generation of messaging is video. Cell phones are referred to as the “small screen.” They are a convenient supplement to television and laptop screens. For advertisers video messaging offers intimacy and immediacy.

Mobile Applications – Including ads in “apps” is one thing, but which apps to utilize is quite another. There are so many apps for different interests and lifestyles that to reach a target using apps becomes to challenging. Nonetheless, apps do present an advertising opportunity.

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QR Codes – QR codes are an advertisement. Consumers scan the code and are taken to a location for more detailed information in a cost-efficient manner Video Game Advertising – Games are now popular with a wide cross-section of the population. They are a mainstream choice for family entertainment. Placing ads in games is a sound strategy. Players actually like the appearance of ads as it makes the game more “real.” In games there are several advertising options: product placements; outdoor-style boards, video spots and audio clips. Ads get noticed in video games due to the heightened attention of people while playing the games.

ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

Direct Response Rules Work on the Internet What’s good for the goose is good for the gander. Simply put the basic rules of direct response advertising also apply to Internet advertising. Those basic rules are the “4 Ts”: Targeting, Tracking, Testing, and Transaction. 







Targeting – The goal is to place ads only where your best prospects are.

Therefore, buy media on Web sites that match target criteria and look for specific areas or pages on these sites that best deliver your audience (e.g., the sports page of a news organization). Then, target specific messaging to specific audiences based on which site the ad appears on.

Tracking – You can track, collect, and analyze customer behaviour and response rates almost immediately. This can be done through independent sources and media networks such a DoubleClick or by analyzing data in the server logs of sites that you advertise on. Thos e sites should provide advertisers wit the data.

Testing – Test banners on specific Web sites and immediately evaluate how they perform. Also test various creative executions to find out what designs and colours, etc., perform better.

Transaction – Think transaction in the development process. If the customer is ready to buy you should let them. Build in adequate technology at the back end.

Adapted from Tracey Trottenberg, “Old Rules Work on the Net,” Marketing Direct, April 6, 1999, p. MD7.

2.

Why Advertise Online?

Data from Canada’s Internet Use Survey show that 80 percent of Canadians or 27 million people use the Internet for personal reasons. As well, 50 percent of Canadians are on .

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Facebook, some 17 million people. In comparison, Canada’s most watched television shows, such as The Big Bang Theory and Grey’s Anatomy, average 2.5 million viewers per episode. There are millions of reasons to advertise online or be involved with social media communications.

Source: Michael Oliveria, “Fewer Canadians Using Facebook,” Toronto Star, June 13, 2011.

3.

Ad Measurement in the Online World: Engagement versus Click rates Clicks and click rates are one means of measurement but perhaps not the most effective means of measurement. Eyeblaster has developed a measurement technique called “dwell rate.” Dwell rate deals with the amount of time someone spends with an ad, including mouse-overs, user-initiated video duration, and user-initiated expansion duration. In other words how much time does one spend once the click on an ad or view a video.

“Technology allows us to analyze consumer time spent with display advertising and indicates that consumers intentionally spend nearly a minute with online ads on average.

To demonstrate, North American expandable banners had only a 0.3% click rate, but a 7.1% dwell rate and an average user dwell time of more than 45 seconds.

The moral to the story: advertisers should consider engagement as a more important metric than clicks.

Adapted from “Clicks don’t give the full picture,” eMarketer, August 24, 2009, www.emarketer.com.

4.

Online Investment is Time and Dollars Well Spent Factors such as time spent and reach are forcing advertisers to invest more dollars in online advertising; they are shifting funds from conventional media to online, mobile, and social media campaigns. While a balanced campaign (traditional and digital combined) is the goal of many advertisers, PepsiCo has gone a step further. PepsiCo transferred a full third of its advertising budget online and is even using the Internet as a primary medium for launching new products. Simply put, online advertising and social media communications are now an integral aspect of their marketing communications mix.

5.

Nissan Altima Goes with Digital Media The 2013 launch of the Nissan Altima embraced the concept of integrated marketing communications and included a significant digital media component. The creative for the .

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campaign revolved around the tagline “Innovation that Excites.” Naturally, the latest in technological developments are mentioned in the advertising; improvements such as the redesigned suspension, a category-unique, tire-fill alert system, zero gravity seats and a 3D driver display. Nissan decided to use “innovation” as a means to differentiate the Altima from competitor brands.

The campaign was launched with a 60-second spot shown on cinema screens and 3D cinema screens. Computer graphics show how the car has evolved from its predecessor.

On the digital front, animated banners say things like “Wouldn’t it be cool if your car was as smart as your smartphone?” and “Wouldn’t it be cool if your car was as fast as it looked?” Print ads used phrases like “go further. Go faster. Go lighter.” Out-of-home ads use short messages like “38 miles per gallon” and “Vroomier” and include a beauty shot of the vehicle.

Nissan sees the digital component of the plan as absolutely vital. According to director of marketing Vinay Shahani, “We know the majority of our customers are leveraging the Internet to do research and perform shopping tasks, so it makes sense to be there. The percentage of digital is much higher than in the past.”

To engage consumers with the brand Nissan offered an opportunity for customers to submit personal essays on why they should be chosen to participate in an Altima driving experience. In a contest format, five lucky people were then chosen to visit the automaker’s proving grounds in Arizona to drive the new Altima. Videos of their driving experiences were produced and placed on Facebook, Twitter and YouTube.

Nissan has been very active in social media; in fact, they have the highest consumer engagement percentage on its Facebook brand page of any automaker. If “likes” are an important measure of success in social media then Altima is a clear winner with more than one million of them. According to Nissan’s director of interactive and social media marketing Erich Marx, “Everybody at Nissan understands that social space is different and quirky and we are trying to take advantage of that with what we do there.”

Source: Karl Greenberg, “Nissan rolls out biggest campaign for Altima,” Marketing Daily, June 18, 2012, www.mediapost.com and Rich Thomaselli, “Nissan looks to Facebook to help launch five new models,” Advertising Age, June 25, 2012, www.adage.com.

6.

Make Room for Transaction Capability with Online Communications Simply stated, Canada lags behind in consumer e-commerce transactions despite the fact that we lead the world in penetration and time spent online. Advertisers are investing more dollars with interactive media but the immediate challenge is to convert awareness

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and interest into a buying transaction. If you move people to your website, make sure they can make a purchase.

Statistics Canada recently reported that the value of online transactions totaled $18.9 billion in 2012, a 24% increase over 2010. On the surface that looks like a significant gain.

But, $18.9 billion only represents 4% of Canada’s retail sales in 2012. In the U.S., online sales account for 8% of retail sales.

Canadians still seem reluctant to buy online. Only 56% of adult Canadians said they ordered something online in 2012, up modestly from 51% in 2010.

Source: David Parkinson, “Canadian Retailers Slow Out of Online Gate,” The Globe and Mail, October 29, 2013, p. B4.

7.

Consumer-Generated Content: An Issue for Advertisers The popularity of social networking sites such as YouTube has created a new breed of amateur creators of advertising. Is this good or band for the advertisers and the agencies that produce professional-level content.

Few ad campaigns are considered complete anymore without an online presence, preferably with an interactive component to draw consumers and get them to engage with the brand. Typically, this involves some kid of message customization, or allowing consumers to make the ads themselves. Consumers will take an ad they see on TV and produce there own version of it—often more humorous or more risky version. Is this good for the brand?

This practice could prove to be chaotic. On the other hand, advertisers have to recognize that user-generated content and social networking allow people to control the message—there is nothing an advertiser can do about that. Sometimes what is unplanned works better than what was planned! Ad agencies beware the amateur.

Adapted from Eric Pfanner, “On Advertising: A move to anarchy,” International Herald Tribune, July 30, 2006, www.iht.com.

8.

Mobile Communications Have an Impact on Canadians A survey commissioned by Bell Media Digital among 1064 Canadians revealed the following about mobile communications: • 82% of mobile media users say it is a good medium to learn about products • 80% say mobile could persuade them to investigate new products • 71% say mobile media could change their perception of a brand .

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• 53% of mobile media users say they cannot leave home without their phone The data suggests that advertisers should consider a high quality mobile media experience in the future.

Source: Matt Semansky, “Topline: Bell Finds Mobile Drives Brand Awareness,” Marketing, August 18, 2011, www.marketingmag.ca.

9.

Durex Gets Couples In Sync with Facebook App Durex hopes to get loving couples in sync with one another by offering an application that helps them find the perfect love song for their style of lovemaking. The Facebook application is part of the marketing strategy for the new Durex Performax range of products that are designed to “speed her up and slow him down.”

The application called “The Durex In-Sync Song Generator” asks a series of questions about preferences for time of day in lovemaking as well as how varied, energetic and loud one’s routine is. Then, the user sends a request to his or her partner on Facebook to complete the survey, or has the partner fill in the questions at the same time if they are together.

Here’s an example of how it works. If a couple is identified as “Romantic & Racy (one partner is eager in the evening and the other likes to get naughty at night) the generator selects a song with a titillating tempo and a sensuous sound. Peter Gabriel’s “In Your Eyes” might be the song recommended.

This innovative social media effort is part of a bigger campaign to reposition Durex in the condom market. According to Kevin Harshaw, personal care marketing director for Reckitt Benckiser, “Lovers are a neglected group in this market. Going forward we want to be the brand of choice for lovers age 25 to 39.”

To achieve that goal Durex is offering a suite of products to get them in sync. The “speed her up” condom has extra ribs and dots for added sensation. The “slow him down” condom has a climax-delay lubricant on the inside. All of this to build market share. Durex (15% market share) is a distant second to Trojan (69% share) in a North American market worth about $430 million.

Other components of the $15 million marketing communications campaign include digital and social media, radio, public relations and product placement.

Source: Jack Neff, “Durex offers Facebook app to find just the right song to go with condom,” Advertising Age, June 28, 2012, www.adage.com.

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ANSWERS TO END-OF-CHAPTER QUESTIONS Review Questions 1.

The Internet is a true source of information and entertainment and it’s a participative medium, a two-way medium. In contrast, traditional media are interruptive and communications are one-way. Therefore, advertisers must adapt their communications strategies to meet different consumer expectations.

2.

Behavioral targeting involves tracking an Internet user’s surfing preferences and then devising unique advertising messages based on those preferences.

3.

Explanations of various Internet advertising terms: a) Click – the number of times a user clicks on a banner ad b) Click Rate – clicks divided by impressions ( a measure of and ads ability to attract visitors to click on an ad for more information) c) Impression – the number of times a banner is downloaded to a page being viewed by a visitor d) Frequency – the number of times an advertisement is downloaded to the same browser.

4.

Search advertising refers to ads that are included on a web page once a user keys in a certain word. For example, if the key word is “automobiles” and ad for an automobile manufacturer or a car dealership may appear on the page. Advertisers place bids on the words with the highest bid becoming the first ad listed on the page.

5.

Display advertising refers to banners in a variety of shapes and sizes: big box, rectangles, leaderboard, and skyscraper. Rich media ads are ads that include an audio component, full motion video and some kind of interactivity.

6.

Explanations of various interactive communications terms: a) Permission-based e-mail – a situation where a user agrees to accept advertising messages via e-mail. b) Opt-in – an e-mail advertising term referring to users that have agreed to have their names on a list for e-mail marketing purposes.

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c) Spam – inappropriate use of a mailing slit to deliver advertising messages (this is unsolicited e-mail or junk e-mail). d) Webisode – the production of an extended commercial offering entertainment value in the process of sending out a brand message. e) Pre-roll and Post-roll – respectively, ads that appear before a video plays and ads that appear after a video has played. f) Consumer-generated Content – Social media content created by consumers for consumers. The content may have a brand focus. g) Crowdsourcing – using the public to crate material that is usually created by an organization or a third party such as an advertising agency (e.g., using material created by amateurs to promote the merits of a brand) 7.

Brand democratization refers to the shift in control on the Internet from marketer control to consumer control. The consumer controls the message; they can alter the message is so inclined and can influence others with their message.

8.

Advantages of Internet advertising include: targeting capability (one-on-one), depth of content, better tracking and accountability for funds invested in advertising, timing (message delivery any time all of the time), and interactivity and action (people reacting immediately). Disadvantages include: selective reach (demographic profile is mid to upper end of socioeconomic scale), consumer frustration (unwanted ads suddenly appear), advertising overload (too much clutter at websites) and invasion of privacy (the collection and transfer of sensitive information about users).

9.

Advertising options on social media sites include direct advertising via banners, brand or fan pages, and advertising from a friend network. See above section for descriptions.

10.

In a CPM pricing model the price is established based on an ad reaching one thousand viewers. The mathematical calculation for CPM is cost divided by impressions. The range in Canada is $10.00 to $100.00 per thousand. Costs go up as more quality is built into the targeting. Various categories are described as run of site (low CPM, run of category (midrange CPM), and keyword targeting (higher CPM).

11.

The total cost of this campaign would be: $30.00 x 1 500 = $45 000.

12.

The total cost of this campaign would be: $30 000 divided by 1 200 = $25.00 (CPM).

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13.

In the pay-for-performance model an advertiser only pays for the ad space one a user clicks on the ad. In the CPM model the advertiser pays when the ad appears on the screen (it counts as an impression by being there).

14.

Advergaming refers to the placement of ads in any form of video game.

15.

The key benefits of social media advertising include targeting based on interests that consumers’ express when browsing online and word-of-mouth buzz based on messages that friends may pass on to their network of friends. Essentially, social media can “engage” consumers with brands for an extended period.

16.

Location-based targeting involves placing ads on consumers’ smartphones at a time when and where they are ready to buy. Through the GPS signal in the phone, consumers’ whereabouts can be tracked.

Discussion Questions 1.

For now invasion of privacy is an issue. With so much information about Internet usage being recorded there is cause for concern. Information in the wrong hands can be deadly! As the Internet grows consumers will become more comfortable with it. Like any new product it is very early in its life cycle and the adoption process. Once the majority of people become users and once the commercialization aspect of the Internet becomes accepted, the issue of privacy will wane. Opinions on this topic will vary considerably.

2.

The youth generation has grown up with technology. As indicated by some illustration in the previous section, mobile devices are tethered to them. Consumers will initially view cell phone ads as an intrusion, but in such a fast-paced environment the ads will eventually blend in just like they do in any other medium, and they will be accepted by consumers. Free content available online has to be subsidized by advertising so the publishers. The web publishers have to make the advertising model work.

3.

Students should see the pay-for-performance model has some flaws. In any other medium once the ad is placed it is up to the creative (message) to do the work (attract attention). Should the situation be different online? The media get paid for placing the message.

VIDEO CASE 1 Bzz Agent Time: 4:52

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Key Issues Social Media Marketing Word-of-Mouth Interactive Communications This video demonstrates the activities of a word-of-mouth media company. Essentially, the company is comprised of network of people 500,000 strong who pass along information about products to people in their social network. Members are not recruited but rather volunteer to participate. Members sample the products and then are free communicate information and opinions, both good and bad. The message is not controlled in any manner, a concept that can be frightening to marketers. For marketers, the agency is selling social currency—the desire people have in sharing something with their friends that they perceive is interesting. Word-ofmouth marketing communications through social media is growing in importance and will continue to grow as social media evolves.

Discussion Questions 1. In the context of communicating branded product information are consumers really influenced by the views that their friends express in social media? What is your opinion? rd

2. Are consumers weary of 3 party branded product information they receive on social media? Is such information trustworthy? What is your opinion?

VIDEO CASE 2 HSN: Direct and Online Marketing Time: 6:30 Key Issues Media Planning Media Trends Media Integration Direct-Response Advertising Consumer Behaviour

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This video portrays the growth of HSN, a digital television network in the direct marketing business. The network is targeted at female shoppers who control or influence 80% of purchases. In the context of media planning the video shows how television is losing ground to digital media on many fronts. Not to suggest that television is dead—it continues to play a vital role in creating awareness and interest in a brand. But, to get people to make purchases there digital opportunities that make perfect sense, especially when used in combination with television advertising. One of the attractions of HSN is that customers willingly visit the network for specific content. They are loyal visitors who will purchase goods. That has to be of high interest to any branded good. Television advertising creates the awareness but consumers today want to engage with brands before they purchase. Building a stronger connection is important and that’s a role that HSN can play in the purchase decision process. HSN tells brand stories in different ways on multiple platforms: laptops, tablets and mobile devices. Essentially, HSN is an ideal medium for reaching the multi-tasking, multi-viewing female consumer.

Potential Discussion Questions 1. What are some of the advantages of using a network like HSN for selling branded goods?

2. What does the future of traditional television advertising? Will it be fully replaced by digital advertising?

3. What does the future hold for any form of mass market advertising?

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CHAPTER 13 ____________________________________________________ SALES PROMOTION LEARNING OBJECTIVES Students will be able to: 1.

Identify the roles of various consumer and trade promotion activities in the marketing communications process

2.

Outline the nature of various consumer and trade promotion activities

3.

Assess the strategies for integrating sales promotions into the marketing communications mix

CHAPTER HIGHLIGHTS A.

Sales Promotion Sales promotion is defined as activity that provides special incentives to encourage fast response from consumers, distributors, and the sales force. Promotion activity is subdivided into two broad categories:

B.

1.

Consumer Promotion - Activities designed to encourage purchase by ultimate users (pull the product through the channel).

2.

Trade Promotion - Activities to encourage distributors to purchase additional volume or provide additional support to stimulate consumer purchase (push the product through the channel).

Promotion Strategy There are two basic types of promotion strategy: pull and push. Refer to Figure 13.1 for an illustration of these concepts.

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



Pull – Creating demand by directing promotional efforts at final users. A combination of advertising and consumer promotions is effective for pull strategies.

Push – Creating demand by directing efforts at channel members who in turn promote the product to final users. Trade promotions and price discounts are effective push strategies.

A combination of pull and push works best in most situations. For any promotion strategy to succeed it may require adverting support to create awareness. Successful promotions are promotions that are effectively integrated with brand advertising.

C.

Consumer Promotion Planning Consumer promotions are activities designed to encourage consumers to take action (but the product). They help pull the product through the channel of distribution. Consumer promotions have three basic objectives: trial purchase, brand loyalty, and induce multiple purchases. 





D.

Trial Purchase – The objective is initial trial for a new product (an incentive reduces the risk associated with a first purchase).

Protect and Build Loyalty – offering incentives to encourage repeat purchase (protection against brand switching) Multiple Purchases – incentives to get customers to stock up (a form of brand loyalty as well)

Types of Consumer Promotion Activity Financial incentives are attractive to consumers contemplating purchases—they act as the final nudge that causes consumers to take action.

1.

.

Coupons - Price-off incentives to stimulate more immediate purchase. Coupons are distributed through the media (primarily trial purchase), the package (repeat purchase or cross-trial), and in-store distribution systems. Of the media alternatives, newspaper and direct mail distribute the majority of media-delivered coupons. Consumers are now very accepting of digitally delivered coupons. With reference to redemption rates (the number of coupons returned as a percentage of the total distributed), selective and cooperative direct mail options rank the highest. Other factors influencing redemption rates include the face value and the

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perceived value of the discount offered. The objectives commonly associated with coupons include trial purchase, maintenance of current users, securing new product acceptance, and multiple purchases.

Coupons are used to plan shopping trips. Large packaged goods companies such as P&G, Kraft and General Mills continue to place high value in coupons and invest in them each year.

2.

Free Samples - Free distribution of product (also cross-sampling one product with another). Samples are distributed in stores, by products themselves, through direct mail, or by private home-delivery services. Competition from generic brands in food marketing has resulted in more sampling programs by national brands in recent years. Cross sampling refers to an arrangement whereby one product carries a sample of another product. Sampling combined with a coupon is the best way to convert trial to immediate purchase. It is also the fastest way to kill an inferior product. On-site sampling is becoming popular. Also referred to as experiential marketing, these promotions involve audience interaction with the product at some kind of event or location. Branded vans traveling across the country (street teams) is a common means of distributing on-site samples.

Refer to the “Full Steam Ahead for McDonald’s Coffee” vignette for details of a successful sampling program implemented by McDonald’s.

3.

Contests - Create excitement for a product or service temporarily. They include sweepstakes (cash prizes, vacations, and merchandise giveaways) and instant wins (in-package or in-store prizes). Both are geared to current users and multiple purchase objectives. Contests generally require advertising support to generate excitement for the offer. The success of a contest depends on the consumer’s perception of the value and umber of prizes to be awarded, and the odds of winning. The “Wendy’s/TSN “Kick for a Million” contest (now in its sixth year) is heavily supported with advertising and promotions and generated all kinds of excitement. It is important that a contest match the image of the product.

4.

Cash Refunds and Rebates - A refund (rebate) is a predetermined amount of money returned directly to a consumer by a manufacturer after a purchase has been made. Refunds are frequently designed to encourage multiple purchase of the sponsoring brand. Rebates are also popular with expensive, durable goods such as appliances and automobiles. In-store advertising is essential to generate awareness of the offer. Current users of a product are the quickest to take advantage of rebate offers.

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E.

5.

Premium Offers - Items offered free or at bargain price. There are several types of premiums: mail-in offers (send in proofs of purchase and a specified amount of money), self-liquidating premiums (send in proof-of-purchase and money to cover all or part of the costs of the premium, postage, and handling), in- and on-pack premiums (free items appended to or included with the product), and near-pack premiums (premiums placed near in-store product displays). Premiums achieve certain objectives. They can increase brand purchases, help retain present customers, attract competitor brand users, and encourage in-store display activity.

6.

Loyalty (Frequent-Buyer) Programs - Such a program offers the customer a small bonus, such as points or play money, when a purchase is made. The bonus accumulates with each purchase and can be redeemed on another purchase at a later date (e.g., Shoppers Drug Mart’s Optimum card or Canadian Tire money).

Offering rewards is a good strategy to build loyalty and prevent brand switching.

These companies are collecting valuable information about customer purchase behaviour. This information will be useful for developing more targeted offers in the future. Loyalty programs are popular with Canadians—s86 percent of Canadians participate in a loyalty program of some kind.

7.

Delayed Payment Incentives - Such a promotion grants a customer a grace period during which no principal or interest payments are made (e.g., Leon's "Don't Pay a Cent Event"). Home Depot offers 1-year “0%” financing on major purchases and renovation projects.

Trade Promotion Planning Trade promotion is activity directed at distributors to push a product through the channel of distribution. Typically, trade promotions achieve three basic objectives: secure a listing, build volume and encourage merchandising support.

Secure Listing – A listing occurs when a distributor agrees to buy a new product. It gets the product into the computer system so that retailers can start ordering it.



Build Volume – On a seasonal basis or on a pre-planned cycle, organizations offer discounts to encourage volume buying (wholesalers and retailers load up for a special sale)



Secure Merchandising Support – Offering incentives to encourage display activity, feature pricing, and retail advertising support.



F.

Types of Trade Promotion Activity

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1.

Trade Allowances - Temporary price reductions to encourage larger volume purchases by distributors.

2.

Performance Allowance - Additional discounts to encourage distributors to perform a merchandising function.

3.

Cooperative Advertising Allowance - Funds to sponsor retail advertising (e.g., ad mentions in weekly specials).

To maximize the effectiveness of allowances offered the trade, manufacturers will combine the allowances just listed to develop a fully integrated promotion plan. Much of the in-store promotional activities that occur in supermarkets and drug stores are heavily supported by trade promotion offers from manufacturers of the goods involved in a promotion.

4.

Retailer In-Ad Coupons - Coupons included in a retailer's weekly advertising (redemption costs usually absorbed by manufacturer as part of a promotion agreement).

5.

Dealer Premiums - Merchandise incentives offered to distributors to encourage special purchase or merchandise support. Their use is often controversial and some distributors forbid them (e.g., in some cases the buyer is the party that benefits from them, rather than the buying organization). Often referred to as payola, such practices are perceived to be unethical by many. However, such practice does exist.

6.

Collateral Materials - Catalogues, brochures, pamphlets, etc. Electronic brochures now available at company Web sites are popular for communications detailed information

7.

Dealer Display Material - Posters, shelf-talkers, ad-pads, display shippers, etc., used in merchandising support programs.

8.

Trade Shows – Trade shows organized by industries and associations are an excellent means of bringing a product to customers en masse. Customers attending shows are interested in the “latest and greatest” products.

9.

Branded Promotion Merchandise – Merchandise bearing the logo of a company or brand is a common strategy. When properly integrated into a marketing communications strategy branded merchandise helps build awareness and loyalty.

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Customers like receiving this kind of merchandise as these items are retained for a long period.

For additional insight into the effectiveness of sales promotions see the action vignette “Knorr’s Shopper Marketing Program is a Hit with Consumers and Distributors.”

G.

Integrating Promotions with Marketing Communications Sales promotion is not usually the focal point of a brand’s marketing communications strategy, but they are integrated within strategies periodically. Decisions are made regarding the frequency of promotions, the relationship between the brand and the promotion, creative strategy and media strategy. 







.

Promotion/Product Relationships – The promotion (contests, sweepstakes, etc.) must fit the image of the brand and it must be of interest to the target market. Fit is the key criteria.

Creative Strategy – Separate yet integrated message strategies must be considered. The combination of a strong offer integrated with an ongoing sales message should help the short-term and long-term objectives of the brand.

Research shows that certain types of promotion-oriented ads are more effective than others. Generally, ads with premiums, cents-off coupons, and free samples have higher than average day-after-recall levels. Ads with sweepstakes or contest promotions and information request coupons have lower than average levels.

Media Strategy – A sales promotion plan requires media support. A media mix is usually required to maximize the potential of the promotion. The broadcast media is usually used to create awareness and interest. It can also direct people to A Web site where detailed information can be communicated. Print media can also communicate details. In fact, people are conditioned to look for details at point-of-purchase, particularly for contest and sweepstakes information. Online media now play a greater role in promotions. Registration for contests and contest details are available at a website. Print and broadcast media direct people to the website for details. Adequate information and materials should be provided to the organization’s sales force so that the trade customers will be informed about consumer promotion activities.

Promotion Fit with Other IMC Activities – Planners must be careful not to offer financial incentive offers too frequently. If too frequent there are consequences for brand image. Consumers get used to buying the product at the lower price and balk when the product is back at regular price. That said, well planned

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promotions can play a key role in building brand equity. No promotion demonstrates this better than the annual Tim Hortons’ Roll up the Rim contest.

ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

Words of Wisdom for Planning Promotion Offers Consumers have changed and so must the way manufacturer offer promotions. For any promotion to attract the attention of time-challenged, value-conscious consumers, the offer has to take into account the realities facing these consumers. Offers need to be easy to use and provide a meaningful incentive with true value. This will induce incremental purchases.

Consumers should be able to immediately see that a promotional offer provides significant real value. This means that the saving has to be meaningful in relation to the purchase price of the product, and must also make sense in relation to the market strength and purchase frequency of the brand.

Bottom line…consumers are looking for value and often a good promotional offer will tip the scales on what brand to buy! This principle still applies today. Consider that Walmart and McDonald’s were two of the few retailers to benefit from the recession (2008-09) and that car marketers rely excessively on rebates and other special incentives to sell cars.

2.

Promotion Planning: Trade Gets Biggest Slice of the Pie It may be hard for students to believe but trade promotion spending gets the largest slice of the promotion dollars. The most recent data available from the United States (2004) indicates that on average trade promotion share is 54.0%; consumer promotion is 28.5%, and consumer advertising is 17.5%. Similar figures are not readily available for Canada but trade spending does get the lion’s share of the budget here as well.

Adapted from “Promos cut into advertising’s share of market,” Media Post, April 5, 2004.

3.

Quick Serves Battle with Promotions There’s a breakfast war going on between several big names in the quick serve restaurant market. Breakfasts are the fastest growing segment of the industry so the battle for market share means lots of trial incentives for consumers!

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Burger King, a late entrant to the breakfast market offered free breakfasts to get things rolling but have retreated to something less expensive recently—free coffee every Friday.

The free coffee makes sense since the customer is bound to buy a food item at the same time.

McDonald’s has been very active with periodic free coffee offers lasting at least a week or two, in the past two years. McDonald’s coffee is good and they want people to know about it. Their target is a Tim Horton’s customer.

These types of promotions were originally cast as traffic builders during the recession but the restaurants have continued with them because they have an impact on market share.

In other words, satisfied customers return to the restaurant and buy meals at regular prices. Mission accomplished!

McDonald’s is very pleased with the results of its free coffee offers. “Aggressive trial tactics have brought people in at record numbers and dramatically changed the way people look at our brand,” says Louis Payette, spokesperson for McDonald’s. McDonald’s objective is to change one’s breakfast routine, that is, to get people to stop at McDonald’s instead of Tim Hortons. Tasting McDonald’s coffee for free helps make that happen.

Source: Jason Kirby, “Free food fight,” Maclean’s, June 13, 2011, p. 42.

4.

Canadian Tire Money Keeps Customers Happy: The Key to Loyalty Canadian Tire ‘Money’... a simple concept. Yet it is the cornerstone of Canadian Tire’s marketing mix. “Canadian Tire ‘Money’ is a most successful and popular customer reward program that has a 90 percent redemption and participation level. It is the very heart of what Canadian Tire stands for in today’s competitive marketplace.”

The program has evolved over the years but stays true to its original premise: reward good customers for their loyalty! To keep customers truly happy, the program lets customers determine what their reward will be. Unlike many other loyalty programs that are much more complex and only allow customers to select rewards from predetermined merchandise, Canadian Tire’s program allows customers to claim their reward anytime and on anything the store sells. That formula still works today. Collecting Canadian Tire money represents a successful promotion that people have come to know, expect, and love. It encourages people to come back to the store.

Canadian Tire retains a focus on its loyalty program because the money is an important element of the customers’ shopping experience. From a marketing perspective it allows the company to differentiate itself and provides immense competitive advantage. For the

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record, Canadian Tire is the most-shopped store in Canada: 90 percent of Canadians shop there. And the Canadian Tire brand is one of the top five most recognized brands in Canada.

Canadian is presently testing an electronic loyalty card, “The Canadian Tire Money Advantage” card in Nova Scotia. To encourage Nova Scotia consumers to switch to the electronic card the discount incentives are much higher. As a loyalty program, and regardless of whether its paper money or electronic money, the Canadian Tire rewards program is successful because of its simplicity. It offers instant rewards to its customers and it keeps them coming back!

Source: Marina Strauss, “Canadian tire’s ‘funny money’ dilemma,” The Globe and Mail, February 16, 2012, p. B3.

5.

Product Sampling Works It is quite common for food products to offer samples in supermarkets. Simple premise: taste it, like it, buy it! It’s a strategy that makes perfect sense. Research done by the Promotion Marketing Association reveals that “Targeted, well thought out sampling programs are the way to go in today’s market.” Some 94 percent of respondents view sampling as a way of increasing their comfort level when buying a product. A further 68 percent said they were excited about receiving the sample.

Source: Geoff Dennis, “Sampling Growth Spurs Creativity,” Strategy, May 20, 2012, p, 1, 10.

6.

Denny’s Offer was a Grand Slam Talk about a great offer. Who wouldn’t want a free Grand Slam at Denny’s? Danny’s offered a free Grand Slam breakfast (a one day event in February 2010) which consists of 2 eggs, 2 pancakes, two sausage links and two pieces of bacon. The offer attracted two million customers. Each restaurant served an average of 1000 breakfasts with some surpassing 2000.

Why does such a well known and popular restaurant offer such a promotion? Even though the brand has 95% awareness and 90% trial rate in the United States, it had slipped from popular consciousness recently.

Some benefits of the offer included $50 million in free publicity (on the news everywhere). It drove significantly positive guest count for that day and a period of time thereafter. And visitors bought additional items, such as coffee, juice, extra bacon and toast. More than 2 million people visited Denny’s that day. The company sees the offer as a means of protecting its future.

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Adapted from Mark Chmiel, “A Grand Slam Strategy,” Advertising Age, February 15, 2010, p. 16

7.

The Power of Coupons According to a 2012 coupon report, 80 percent of American adult consumers use coupons regularly. Apparently, consumers are looking for ways to save money (the valueconscious trend). Data available from the Canadian Deals Association reveals that more than 6.8 billion coupons are distributed annually in Canada. A total of 86 million are returned for an average redemption rate of 1.26 percent. The most popular categories for distributing coupons are food, personal care, and household products.

Source: “Coupon Redemption Canada: Some Interesting Data,” Canadian Deals Association, www.canadiandealsassociation.com.

8.

Smarties Promotion Engages Customers Smarties launched a “design the box” promotion in 2007 inviting customers to have their design appear on the Smarties package. The winning design would stay on the market for 5 months.

The promotion offer invited customers to visit their microsite and play with various background templates, stamps, patterns and colors to create their own Smarties box.

Their design would be submitted (by PIN) for evaluation by the judging panel.

The top 10 were to be announced in February based on the design’s originality and how well it reflects the Smarties brand. The winning design would appear on the special edition box.

The initiative arose from discussions about new ways to engage consumers generally and have fun with the brand. According to Paul Hodges, marketing manager at Nestle, “It’s all about interaction and play and spontaneity. The offer is a good fit for the new era of two-way communications that younger consumers expect.

Adapted from David Brown, “Smarties begins box design contest,” Marketing, July 11, 2007, www.marketing,ag.ca.

ANSWERS TO END-OF-CHAPTER QUESTIONS Review Questions

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1.

Consumer promotion objectives include encouraging trial purchase, achieving repeat purchase (loyalty), and multiple purchases (temporary loading). Trade promotion objectives include: securing listings with distributors, building volume, and obtaining merchandising support.

2.

A pull promotion strategy means that promotions are directed at final users so that they put pressure on channel members to buy and sell the advertised products. A push strategy means that promotional efforts are directed at channel members to encourage them to buy and provide merchandising support as the product moves through the channel. Organizations usually employ some combination of both strategies.

3.

In the early stages of the product life cycle, media-delivered coupons are more effective since they encourage trial purchase by new users. In the mature stage, when products are adopting maintenance strategies, product-delivered coupons designed for repeat purchase are more effective. Potential overlap is recognized.

4.

The major reasons for using coupons as a form of promotion are to generate trial, introduce new products and sizes, increase market share, and defend a brand's consumer franchise.

5.

Samples rank second to coupons in terms of usage so there must be some significant benefits from free sample offers. They are effective in securing trial; they eliminate the financial risk associated with the first purchase; and product satisfaction (based on trial) leads to repeat purchase.

6.

Experiential marketing is a form of promotion whereby the product and consumer interact with each other at an event or location. Teams (e.g., hired students and a branded van) travel to venues promoting a particular product. Part of the promotion is a free sample giveaway. Experiential marketing engages consumers with the brand.

7.

Elements that contribute to a successful contest promotion include adequate levels of support to create awareness and interest, a multi-media mix (balanced media strategy), positive consumer perception of prizes and the prize structure, and integration with trade programs to maximize support from distributors.

8.

Explanations of various terms: a) Cross-ruff – A cross-coupon. One brand carries a coupon for another brand b) Redemption Rate - The number of coupons returned expressed as a percentage of the total distributed.

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c) Instantly Redeemable Coupon - Removable coupon appended to the product being purchased. d) Instant Win Promotions - Prizes are awarded in the package or at point-of-purchase (instant gratification for the winner) e) Rebate - Money returned to consumers by the manufacturer after a specified purchase has been made. f) Delayed Payment Incentive - A promotion that does not call for a principal payment or an interest payment for an item that is purchased. The purchase is actually financed over a longer period of time. g) Slippage – a situation in where a consumer starts collecting necessary requirements for a cash refund or premium offer. The consumer doesn’t follow through and complete the requirement to take advantage of the offer. The consumer slips out of the promotion offer but did purchase some product along the way.

9.

A premium provides added value (some tangible benefit beyond the product itself). They are good at getting current customers to buy more goods (from am manufacturer) or generate more traffic (in a restaurant). Restaurants like McDonald’s and others use premium offers frequently.

10.

A frequent-buyer program offers a purchaser a bonus once a purchase transaction has been completed. For example, if a customer pays cash for an item at Canadian Tire, play money is returned to the customer for use in another purchase. The objective of the promotion is to encourage the customer to keep shopping at Canadian Tire rather than switching to a competitor (a hardware store or department store who sells similar merchandise). There are many variations of this type of program (e.g., frequent-guest programs in hotels and frequent-flyer programs with airlines).

11.

A trade allowance is a temporary price reduction offered by manufacturers to distributors, whereas a performance allowance is an additional discount offered to distributors to perform a specific merchandising function.

12.

Cooperative advertising funds are used to cover the costs or share the costs of obtaining advertising mentions in retailers' advertising. In conjunction with other trade allowances, a complete trade promotion program can be implemented to get maximum support from distributors.

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13.

Explanations of various trade promotion terms: a) Retail In-Ad Coupon - Coupons printed in a retailer's weekly advertising. b) Dealer Premium - Incentives (free merchandise, etc.) offered to secure special merchandising support or additional volume from distributors. c) Collateral Material - Sales aids such as catalogues, brochures, specification sheets, and so on, used in the direct-selling process. d) Branded Promotion Merchandise – Giveaway items such as glasses, mugs, T-shirts, and key chains bearing the logo of a brand or company.

Discussion Questions 1.

The allocation of funds between the consumer (consumer promotion and advertising) and the trade (trade promotion) is controversial. Manufacturers often feel that they lose control of the funds and how they are spent when money is placed in a trade promotion account. In effect, the distributors plan how the money will be spent even though the manufacturer derives benefit. By contrast, the manufacturer controls the situation with regard to spending advertising and consumer promotion funds. With regard to the ratio of spending between trade and consumers, manufacturers must maintain an equitable balance if long-term product objectives are to be achieved.

2.

Answers to this question will depend on the nature and extent of the secondary research. The brand in question is a mature one so the promotion strategies will reflect this status. The objective will be to build loyalty and encourage multiple purchases.

Maintaining trade support will also be important for this is a big and profitable category for the manufacturer and the distributors.

3.

Trade shows are growing in importance. For example, the do-it-yourself consumer trend has spawned all kinds of shows for the home and garden industry, the home repair industry, and so on. Customers look forward to shows to find out “what’s new” in the marketplace. Therefore, participation in an industry show provides good opportunity to connect with potential and current customers.

Video Case 1 Nudie Time: 10:49

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Key Issues B2B Communications Personal Selling Sales Promotion In-store Advertising This video portrays the marketing and communications strategies employed by an Australian juice brand called Nudie. The brand is positioned as a healthy alternative based on the fact it has no additives. Nudie is the fastest growing juice beverage in Australia. In terms of marketing and communications strategy the video shows how personal selling and sales promotion activities combine to achieve marketing objectives. The company provides small refrigerators to retailers to merchandise the drinks, uses sampling techniques to get consumers to try the product, and employs various forms of in-store communications to create awareness an interest in the brand. On-site radio promotions combined with product sampling help build relationships with customers. The video shows how a company can with a small marketing budget can compete with much bigger brands, and succeed!

Discussion Questions 1. Are there any other sales promotion activities that Nudie should consider in order to grow the brand further?

2. Will the lack of media communications (mainstream or digital) hinder the growth potential of Nudie?

3. As the brand grows will it have Nudie have to adjust its marketing communications strategy? If so, what strategies should it employ?

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CHAPTER 14 ____________________________________________________ PUBLIC RELATIONS AND EXPERIENTIAL MARKETING LEARNING OBJECTIVES Students will be able to: 1.

Identify the role of public relations, experiential marketing, and event marketing and sponsorships in achieving organizational objectives.

2.

Describe the various types of public relations activities

3.

Identify the steps involved in the public relations planning process

4.

Assess the usefulness of a variety of public relations tools

5.

Evaluate public relations, experiential marketing, and event marketing and sponsorships as a communications medium

6.

Identify the unique considerations involved in the planning and evaluation of event marketing programs

CHAPTER HIGHLIGHTS A.

Public Relations Public relations is the strategic management of relationships between an organization and its diverse publics, through the use of communication, to achieve mutual understanding, realize organizational goals and serve the public interest. For relationships between publics and organizations to be positive, communications must be open, honest, and forthcoming.

Public relations is different from advertising: 

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Advertising is concerned with brand image; public relations is often concerned with corporate image (e.g., handling a crisis situation).

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Advertising is paid for by a sponsor; public relations is controlled by the media and not paid for by the organization. The media dictates how the facts about a situation are communicated to the public.

At the brand level, publicity is used to help marketing. Publicity is the communication of newsworthy information about a brand to the public.

Social media now play a role in public relations strategy. With social media, organizations can move from earned media (traditional press coverage) to shared media (where consumers interact and exchange information with others.

B.

The Publics There are internal and external publics. Internal publics include employees, distributors, suppliers, shareholders, and regular customers. They are publics an organization frequently communicates with. External publics include the media, governments, prospective shareholders, the financial community, and community groups. Typically, they are communicated with on an as needed basis via the press.

C.

The Role of Public Relations Generally, roles fall into six key areas: 



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Corporate Public Relations – The building and protecting of an image. Frequently, PR is called upon to quell a crisis situation. On a more positive note, an organization could take a stand on an issue and communicate that stand publicly (referred to as issue management). In this area, companies use corporate advertising. Corporate advertising is paid communications that create a positive attitude and goodwill toward a company.

Reputation Management – How a firm uses PR to handle a crisis situation is critical. Being forthcoming and dealing with the press under stressful conditions is a difficult for any organization. Throughout the process the critical element for an organization is leadership. A strong leader that is visible on all issues is essential.

Refer to the Joe Fresh example in the chapter. The brand was associated with the factory disaster in Bangladesh but some good public relations helped the brand recover. In situations like this one it is important that the CEO of the organization is front and centre in dealing with the public and the press.

Product Publicity – The delivery of good news about a product (e.g., new product information, new research information, new job creation, or achieving a

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significant milestone). Newsworthy information is usually communicated by press release. Technology now allows an organization to engage with the public on its own. Organizations are creating their own PR materials (e.g., videos) and posting them on YouTube and other sites. Press releases are also posted in the media sections of their websites. Refer to the Red Bull – Felix Baumgartner jump from space example in the chapter for a good illustration of how to generate brand publicity. 







D.

Product Placement and Branded Content) refers to the insertion of brand logos or branded merchandise into movies and television shows. It is an effective form of publicity. Branded content goes a step further and integrates the brand right into the script of the TV show or movie. Both activities are now a part of a carefully planned media strategy. Branded content may also be standalone video content (webisodes) that promotes the merits of a product. The webisode is posted online by the advertiser. Both options are attractive since viewers are playing less attention to television advertising or they are just watching less.

Either way the advertiser has to respond to get a message delivered. Many advertisers now believe these options offer more credibility and impact than traditional forms of advertising. Apple is an innovator in product placement; their laptops and phones appear in all kinds of television shows.

Product Seeding – These are activities that companies undertake to generate personal recommendations for a branded product. There is a belief on the part of managers that independent endorsements by regular people (influencers) carry more weight than a conventional commercial message. A seeded product is given to a group of influencers who are then responsible for chatting up the brand to anyone they come in contact with. Seeding is a low cost strategy but it can backfire—the product must meet the expectations of the influencer, otherwise some negative information could be passed on. Seeding is a useful option when launching a new product.

Community Relations – In an era of social responsibility, organizations are placing a priority on programs that foster good public image in the communities in which they operate (refer to the Tim Horton’s example in this section of the text for details).

Fundraising – PR plays a key role in the not-for-profit sector by helping organizations such as the United Way, Cancer Society and Heart Fund raise money.

Public Relations Planning

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Public relations plans are devised in a similar fashion to any other strategic plan. For many organizations today, PR plays an important role right from the beginning of the strategic planning process. Good PR can engage consumer and create interest and excitement for new product launches. With planning the typical steps are s follows: 









.

Situation Analysis – Exploratory research is undertaken to assess and evaluate the problem or opportunity.

Establish Objectives – Like advertising, both qualitative and quantitative objectives are identified (e.g., awareness, building recognition, creating a positive image, altering a perception and so on).

Public Relations Strategy – Deals with how the plan will be implemented.

Typically this involves designing a timetable so that the message will reach opinion leaders, maximize the news value of whatever is being undertaken, timing any events to coincide with advertising and promotion campaigns, and reaching secondary markets that may not be covered with advertising and promotion plans. Some PR plans include a borrowed-interest strategy whereby an activity associated with a brand or company is brought to the attention of editors.

A brand’s association with the Olympics (see McDonald’s example in the chapter) or a professional sports league is an example of a borrowed-interest strategy. The relationship must be leveraged by further investing in advertising to make the public aware of the relationship.

Implementation – Detained action plans are written. The plans specify what will occur, who will do it, when it will be done, and at what cost. To get the message out PR employs press releases, press conferences, annual reports, websites, and social networks.

Evaluation – Results have to be measured against the plan’s objectives. If for example, the objective was to alter a perception, some research is necessary to measure shifts in attitudes held by the public. If the attitudes are more positive than before, then the PR plan has made a contribution. Companies also evaluate the extent of the exposure they received. Independent organizations can record what is being reported, where, to how many people, over what period of time, and in which media. This record keeping process is called content analysis. The Canadian Public Relations Society has developed a new evaluation system. It considers the type of media the message appeared in, whether a photograph appeared, if colour was used, if the spokesperson was quoted, the tone of the

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article (positive or negative) and the numbers of people reached based on audited data for the medium. See Figure 14.5 for more details.

Refer to the action vignette Special Events and Social Interaction Click with Consumers for more insight into the usefulness of public relations in the communications mix.

E.

The Tools of the Trade Some of the more common communications tools are: 









F.

Press Release – A document that contains all essential elements of a story (who, what, when, where and why).

Press Conference – A gathering of news reporters invited to witness the release of important information. Typically a press kit is circulated along with video news releases that may or may not be used by the broadcast media.

Social Media – With social media people share content, insights and experiences.

Companies can do the same by using tools such as blogs, podcasts, bookmarks, wikis, and vlogs (video blogs). A corporate blog which contains consumer generated content has more weight than information communicated in traditional PR ways. Blogs enable companies to speak directly to consumers and as a result are pushing the news media out of their central roles in public relations. A social media news release can include a variety of social media elements including photos and video, links to blogs, digital tags, and RSS feeds. PR experts suggest a change in tone with social media communications. Rather than being associated with “spin” in traditional media, it is now time to show more humility and transparency if the goal is to engage the public in the conversation.

Reports and Publications – Ongoing communications vehicles such as house organs, annual reports, special interest reports, alumni news magazines, and so on. Many organizations have a house organ that keeps employees informed of business and social happenings.

Web Sites – Corporate and brand Web sites are now an integral element of communications. They can distribute detailed and complex information while providing visitors with some kind of entertainment.

Advantages of Public Relations Public relations properly executed are perceived as a credible source of information. The use of third party endorsements in PR communications can help drive sales and public .

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relations provides assistance in building relationships with consumers and other publics.

Relationship building is important given the rising costs of communicating via media advertising, the fragmentation of media, and the clutter of commercial messages in all forms of media. Good PR encourages dialogue between the public and the organization.

G.

Disadvantages of Public Relations Lack of control is the biggest drawback. The media dictates the extent of coverage and the content. Sometimes the facts are misinterpreted or simply reported incorrectly.

Catching the eyes and ear of editors is also a problem. Consequently, lots of information that reaches an editors desk often winds up in the waste bin. What is important to a company may not be important to the media. As well, a lot of video information posted online goes unseen. People need a good reason to view something about an organization and its products.

H.

Experiential Marketing Experiential marketing creates an emotional connection with consumers in a personally relevant and memorable way. The organization plans an activity that gets the consumer to interact with the brand (e.g., delivering samples of a product by boat to people sitting on their docks).

Experiential marketing is a new term but many of its activities are not new: product sampling, PR stunts, product seeding, and special events and sponsorships all fall under the XM umbrella. These activities are in vogue since they engage consumers with the brand. IN an online environment consumers are more open and responsive to communications and in many cases take control of the brand. Consumers are tinkering with brands—creating their own commercials and promoting their favourite brands to others—quite an experience! Several experiential examples are cited in the chapter including Kraft’s “Jell-oh Face” promotion and Tourism Nova Scotia’s “Take Yourself There” campaign.

Investment in experiential marketing is justified based on changing market conditions and changing consumer behaviour. Making an impression on prospective customers is one thing but having the consumer interact with your brand (build a relationship) is quite another thing.

I.

Event Marketing and Sponsorships Both of these activities are growing in importance in the marketing communications mix.

Let’s distinguish between the two terms:

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



Event Marketing – The process, planned by a sponsoring organization, of integrating a variety of communications elements to support and event theme.

Sponsorship – The financial support of an event by a sponsor in return for advertising privileges associated with the event (typically an event has many sponsors).

The Canadian sponsorship market is estimated to be worth $1.54 billion. Sports sponsorships get a big slice of the sponsorship pie. The sponsorship pie is divided between sports; causes; arts; festivals, fairs and annual events; and entertainment.

J.

Sports Sponsorship The largest segment of the sponsorship market is dominated by automobile manufacturers, financial institutions, and package goods companies. Some of the largest contributors are companies like Bell Canada, Molson, Labatt, RBC Financial Group, BMO Financial Group, Visa and MasterCard. BMO’s sports sponsorship investment is profiled in the chapter.

A recent phenomenon in sports marketing is something called ambush marketing.

Ambush marketing is a promotional strategy used by non-sponsors to capitalize on the prestige of an event by giving the false impression that they are sponsors. In the Vancouver Olympics, Scotiabank was accused of ambushing RBC Financial by promoting its “Show your colours” campaign during the Olympics. The campaign featured former Olympic athletes Cassie Campbell (hockey). Such a campaign has the potential to confuse consumers about who the real sponsor of the event is. Ambush marketing tactics can cause hardship for the event if it loses its credibility. Why should sponsors pay big bucks when they can ambush for much less? Refer to the action vignette “Nike’s Ultimate Ambush” for more details about ambush marketing.

An offshoot of sports event marketing is venue marketing or venue sponsorship. This refers to the naming of arenas and stadiums after corporations (e.g., Canadian Tire Centre in Ottawa, Bell Centre in Montreal and Air Canada Centre in Toronto). These companies paid a lot of money for the privilege. Air Canada paid $20 million for a 20-year agreement in Toronto. The Leafs and Raptors play in the Air Canada Centre.

Companies also form partnerships with star athletes, hoping to capitalize on the aura that surrounds the athlete. Reebok and Gatorade sponsor Sidney Crosby of NHL fame.

Pepsi-Cola sponsors Georges St. Pierre of UFC fame. Relationships with celebrities come with risk. If the star behaves inappropriately and falls out of favour there can be

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headaches for corporate sponsors. The Tiger Woods extramarital scandal proves this point. Many of his sponsors dropped the golfer when his exploits became public. Nike, a brand that lives on the edge, was a sponsor that stood by Tiger when he was facing rather tough times. With Tiger in full rebound and at the top of his gold game, it was a good decision by Nike.

Sports event marketing is often associated with grand scale marketing on an International level (e.g., the Olympics or some World Championship event). However, many organizations can produce great results by simply doing good things in the communities in which they operate. The collection of local market activities can help produce good business results. Tim Hortons is a strong advocate of giving back to the communities it operates in.

K.

Entertainment Sponsorships This involves the sponsoring of concerts or endorsements from high profile personalities.

Teen and young adults, a tough target audience for advertisers to reach, can be effectively reached by entertainment sponsorships. Molson Canadian Rocks, for example, is a hit with the 19 to 24 year-olds, so it is a vital component of Molson’s communications mix. In Quebec, Budweiser is synonymous with rock music.

L.

Festival and Fair Sponsorship Festivals (film, comedy, and music) represent opportunities to reach the adult population. The Montreal International Jazz Festival, for example, has been running for more than 28 years. Its sponsors include Bell Canada, TD Bank and Loto Quebec. The Just for Laughs comedy festival attracts more than 1.7 million people annually to Montreal.

Festival audiences tend to be smaller but desirable. For example, the Toronto International Film Festival (TIFF) reaches a young, urban, affluent audience.

M.

Arts and Culture Sponsorship Sports and entertainment sponsorships reach the mass audience. Cultural and arts sponsorships reach the class audience. Quite a difference! The primary benefit of arts sponsorship is the creation of goodwill with the public. Most firms view this type of sponsorship as part of their corporate citizen objectives (e.g., being a good, contributing member of society).

Recently however, companies are finding ways to expand their presence at cultural events. Advertisements in lobbies and the distribution of product samples are ways of

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increasing exposure. These kind of activities help justify continued financial support of the event.

N

Cause Marketing Sponsorships Cause marketing involves the partnering of companies with worthy causes so that both parties benefit. For example, CIBC and numerous other companies support the “run for the Cure (Canadian Breast Cancer Foundation). Cause marketing is a means of connecting with consumers on an emotional level. While raising funds for a good cause companies are perceived to be giving back to society while building their charitable reputation.

People like to do business with companies that support their favourite causes.

O.

Strategic Considerations for Event Marketing All activities must be strategically planned and implemented with precision. The investment is significant so it is imperative that a good plan be put into place. Effective plans adhere to the following principles: 1) Select Events Offering Exclusivity 2) Use Sponsorships to Complement Other Promotional Activity 3) Choose the Target Carefully 4) Select an Event with an Image that Sells 5) Establish Selection Criteria

P.

Measuring the Benefits of Sponsorship The basic appeal of event marketing and sponsorships is that it provides an opportunity to communicate with a target audience in an environment in which they are already emotionally involved (e.g., a motor race, a figure skating event, a theatrical production).

The following are indicators of success of an event sponsorship: 





.

Awareness – Awareness is improved and there is an association of the brand or company with the event (e.g., Pontiac with skiing and Labatt with Hockey Night in Canada).

Image – Has consumer perceptions changed? Has the organization enhanced its credibility with its target audience?

New Clients – Quantitatively speaking did new business relationships develop as a result of the association with the event?

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





Sales – Did sales or market share increase in the post-event period? They impact of event sponsorship may be in the longer term. Typically, sponsors remain loyal to events that are producing good business results over the longer period of time.

Specific Target Reach – The event must deliver constituency—reach the intended target effectively and at reasonable cost.

Media Coverage – How much media coverage was generated from the event?

Was the company mentioned in news reports and so on?

Successful sponsorships are the ones that are integrated with corporate and marketing communications strategies seamlessly. Success is often the outcome of financial commitment to the event. For every dollar spent on securing sponsorship rights, and additional investment of $2 or $3 is needed to advertise and promote the company’s (brand’s) association with the event.

Q.

Advantages of Event Marketing and Sponsorships The primary advantage is the ability to reach a target audience. Participating in the right event means that messages are delivered in a friendly environment—they are accepted more readily. Events are an essential tool for building a company’s public image. Image is improved by participating at any kind of even—small (local) or big (national or international).

R.

Disadvantages of Event Marketing and Sponsorships The biggest drawback is cost (high cost). Any event at a national or international level has a huge price tag. Another problem is the clutter of messages by the various sponsors at an event—they compete for available space. Blending in with the scenery is not part of the plan. Finally, accurately measuring results is difficult—the impact of event sponsorships is hard to isolate from other advertising and promotional strategies. As indicated earlier the threat posed by ambush marketing has turned some sponsor away from sports marketing opportunities.

ADDITIONAL ILLUSTRATIONS OF KEY CONCEPTS 1.

Good Intentions but Message Misinterpreted Cheerios simply wanted to present a “modern” family in one of its television commercials. The commercial portrayed an interracial couple and their daughter. It seemed like a concept just right for the times. When the ad debuted on YouTube it

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sparked comments like “troglodytes” and “racial genocide.” Other people vented on Facebook, with one person suggesting the father would eventually leave the family. In response to the racist backlash, Camille Gibson, vice-president of marketing said, “Consumes have responded positively to our new Cheerios ad. At Cheerios we know there are many kinds of families and we celebrate them all.”

This example shows the instant power of social media communications. Many organizations have been forced to alter their strategies based on quick and negative public response. This wouldn’t have happened in the past. To their credit Cheerios kept the ad alive.

Source: “Love,” http://www/sunnewsnetwork.ca/sunnews/business/archives/2013/05/2.

2.

Canadian Club – Mad Men Connection: Placement and Branded Content Pays Off No brand has benefitted more being associated with the popular show mad men, than Canadian Club. Canadian Club was a popular brand back in the 1960s, the era in which mad men is set. Some 4 million cases of Canadian Club were shipped annually to the U.S back then.

Now there is much renewed interest in the brand. In fact, Canadian Club is “cool” again with sales expected to reach 3 million cases in 2013. Hard liquor, especially rye, has been declining in sales volume for years. For season five of Mad Men, Canadian Club partnered with Alliance Films. The partnership includes a national retail promotion featuring shelftalkers and neck tags promoting a contest for a trip for two to New York, digital integration and mad men season five launch events in Vancouver and Toronto that feature era-appropriate cocktails. The promotion will e amplified through the brand’s social media channels. A new line extension was also launched—Canadian Club Classic 12 Small Batch. It is positioned as a “premium” component of the brand.

Source: Chris Powell, “Riding High on Retro Buzz, Canadian Club Teams with Mad Men,” Marketing, October 18, 2012, www.marketingmag.ca.

3.

Ten Rules for Crisis Management Once the crisis situation has been analyzed from every possible direction and stakeholder’s point of view, how should a company handle things? Here are some rules to consider: •

.

Respect the Role of the Media – The media are not the enemy. Use them as a conduit to communicate key messages.

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•

Communicate, Communicate, Communicate – Early hours are crucial. Get the message out and do it in frequent intervals; whenever there is news to report.

•

Take Responsibility – Be prepared to empathize, even publicly apologize for the events that have transpired.

•

Centralize Information – Ensure that appropriate levels of management are updated with information from all sources; access to what’s going on is essential.

•

Establish a Crisis Team – Create and train a team and establish a situation room.

Ensure the team has access to the highest levels of management.

•

Plan for the Worst; Hope for the Best – Assume worst case scenarios. Develop contingencies for the hours and days ahead.

•

Communicate with Employees – Employees are frontline ambassadors in a crisis.

Make them aware of what the company is doing.

•

Use Third Parties to Speak on Your Behalf – Third parties can be character witnesses and when they speak they may offer more credibility than the organization itself.

•

Use Research to Determine Responses – Keep track of how the public is reacting by undertaking research polls and focus groups. Monitor Internet chatter as well.

•

Create a Website – A website can give quick, up-to-the-minute information and get the company’s story out, unedited by the media.

Source: David Weiner, “Crisis Communications: Managing Corporate Reputation in the Court of Public Opinion,” Ivey Business Journal, March/April 2006, pp. 4, 5.

4.

North American Sponsorship Spending Sponsorship spending continues to attract big sponsors and big bucks! In 2011, total sponsorship spending in North America amounted to $18.2 billion. The activity breakdown is as follows: • Sports – $12.2 billion • Entertainment Tours and Attractions - $1.85 billion • Charities - $1.7 billion • Festivals, Fairs and Events - $820 million .

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• Associations and Member Organizations - $543 million An interesting sidebar to sports sponsorship is the popularity of motorsports.

Motorsports attracted $3.5 billion in 2011, about 30% of the sports sponsor pie.

Source: Grant Robertson, “Fast Bucks,” Report on Business, July/August 2011, p. 12.

5.

Film Festivals Attract Big Advertiser Categories Wanting to mingle with Hollywood actors, directors and producers, many leading brands and product categories jump on the film festival bandwagon. The ten most active categories sponsoring film festivals include: • TV and Cable Companies • Beer • Entertainment • Hotels & Resorts • Airlines • Banks • Telecommunications • Auto • Spirits • Newspapers Sponsorship revenue generated by the Toronto International Film Festival (TIFF has jumped by 25% over the past two years. Among the sponsors are Audi Canada, L’Oreal, Bell, RBC Financial, Canada Goose, Reckitt Benckeiser, and Durex.

Source: “Toronto International Film Festival Posts 25 Percent Increase in Sponsorship Revenue,” http://www.sponsorship.com/IEGSR/2012/08/13/Toronto-Int-L-Film-Festival.

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Bell Canada’s Sponsorship Criteria At Bell Canada, the customer drives everything, including sponsorship choices. Bell favors innovative, dynamic and high-quality sponsorship opportunities to provide added value to its customers, partners and collaborators.

Bell has established criteria for every sponsorship decision it makes:

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• Niches – The sponsored event should, for the most part, be aligned with our target sponsorship niches: golf, hockey, arts and entertainment, and activities related to the Olympics.

• Relevance – Proposals must be tailored to the Telecom industry.

• Placement – Proposals must provide opportunities fro Bell to showcase its products and services.

• Exclusivity – Proposals must include national marketing rights and/or exclusive content for wireless, Internet and satellite TV. Bell does not exchange products or services as part of a sponsorship arrangement. They are not a supplier of promotional items for golf tournaments and other such events.

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Canadian Brands Associated with Hockey When you say “hickey” what brands come to mind. Answering such a question is important to sponsors. It’s the association with the team, activity or event that makes the investment worthwhile.

According to research conducted by Northstar Research Partners, four Canadian brands have a strong connection to hockey. In order they are Tim Hortons, Molson, Canadian Tire and Scotiabank.

Molson and Canadian Tire have a long standing association with Hockey Night in Canada and Tim Hortons comes to mind because of its community involvement in hockey—kind of a grassroots connection with parents of young hockey players.

Source: Chris Powell, “Northstar Research Suggests Female Hockey Fans are Overlooked by Advertisers,” Marketing, June 12, 2012, www.marketingmag.ca.

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Red Bull Sold on Sports and Venue Sponsorships How does buying a struggling sports team contribute to selling more Red Bull? Sport marketing is a very expensive proposition. Yet that’s exactly the strategy that Red Bull is using in the U.S. The strategy was unleashed in 2010 when Red Bull opened the new $220 million Red Bull Arena in Harrison, New Jersey.

Paid for without a loan, the team and stadium represent the biggest foreign investment ever made in professional soccer in the U.S. “As soon as we decide to take part in a sport,

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we either do it properly or we don’t do it at all,” says Red Bull founder and CEO Dietrich Mateschitz, who also owns soccer teams in Austria and Germany.

Red Bull is in fierce competition for market share in the U.S. Sales having been flat and market share sits at 33 percent. Red Bull leads the category but Monster, a coca-Cola brand has 27% market share and Pepsi’s Rockstar isn’t far behind.

Red Bull wields an identity as a rebellious brand associating mostly with activities and athletes that display a mix of courage and daring. Soccer is somewhat off this strategy but it is a growing sport in North America. “Everything we do is for the value and the image of the brand,” says Mateschitz.

Adapted from Matthew Futterman, “Red Bull sets sights on scoring with New York-area soccer stadium,” Globe and Mail, March 18, 2010, p. B11.

ANSWERS TO END-OF-CHAPTER QUESTIONS Review Questions 1.

Advertising and public relations attempt to communicate the same message but the basic difference is in the area of how the message is controlled. With advertising the message is carefully planned and placed in the media; the space and time being bought and paid for. With public relations, at least with traditional PR the media is a gatekeeper which means that can communicate all or only part of the message—they control the situation. Today, many firms are doing their own PR and distributing the message via digital media. In a way control of the message has returned to the organization.

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See Section C above for explanations about reputation management, publicity generation, product placement, product seeding, community relations, and fundraising.

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The key elements of a public relations strategy are: situation analysis (exploratory research to identify the real problem or opportunity), setting objectives (clearly outlining what has to be accomplished with a public relations program), developing a strategy (a program that shows how a program will be implemented), executing the plan (a detailed action plan showing the activity, who is responsible for it, when it will occur, and at what cost), and evaluation of the plan (a process of comparing results to objectives to determine relative degree of success).

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A borrowed-interest strategy occurs when a brand or company uses an activity the brand is associated with to drum up publicity for the brand (company). Bell’s huge investment in the Olympics in 2010 and beyond falls into this category of public relations. .

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A press kit is usually distributed to attendees of a press conference. It contains a schedule of conference events, a list of participants with biographical information, a press release, photographs, copies of speeches, videos and other relevant information.

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Some advantages of public relations include the fact that it is a good complementary activity to advertising and sales promotions. If implemented effectively, the information communicated is perceived as credible information. Public relations can help drive sales when it is integrated with other forms of marketing communications. Some disadvantages include the lack of control by the organization. It is the media that determines if public relations information is communicated As well; the media can misconstrue facts and perhaps communicate incorrect information about a company.

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Experiential marketing tries to create an emotional connection with the consumer in a personally relevant way. Through events, free product giveaways in unique settings and other activities a brand attempts to engage with consumers. Sometimes consumers just engage with their favorite brands by visiting their page on Facebook or creating video th messages about the brand for posting on YouTube. Dairy Queen’s 25 anniversary tour for the Blizzard is a good example of experiential marketing. People all across North America are participating in the tour which brings much publicity to the DQ brand.

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Event marketing involves planning an event and then developing communications plans to promote the event (one organizations creates, promotes and implements the entire event). Event sponsorship is the provision of financial resources to an event in return for advertising privileges (typically a large scale event will have many sponsors that share the available advertising space—the multiple sponsors such as Coca-Cola, McDonalds and Bell at the Olympics)

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Ambush marketing is a promotional strategy used by non-sponsors of an event that capitalize on the prestige and status of an event by giving the false impression that they are sponsors (e.g., they may advertise near the event to confuse the public as to who the official sponsor is). Typically, a competitor of one of the event sponsors implements an ambush campaign. Venue marketing involves the naming of a sports or cultural building after a sponsoring organization (e.g., Scotiabank Theatre in Toronto and Rogers Arena in Vancouver). These and other companies pay considerable sums of money to the building’s owners for the privilege.

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Before deciding whether to participate in an event an organization must consider how the event strategically fits with other communications activities. An organization should select events that offer exclusivity, complement other communications activities, reach the target audience effectively, and have lots of promotional and publicity value.

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The primary benefits of event marketing include: being associated with a good event can help build awareness and enhance an organization’s image (e.g., it can create or enhance a perception of leadership among potential clients), an event can deliver new clients and help build sales, and it presents media coverage opportunities that could not be afforded by other means.

Discussion Questions 1.

As companies move toward integrated marketing communications programs they are reviewing how each element of the mix fits in with their strategic plans. In the past, public relations was dismissed as “spin” by many organizations but in the age of a more sophisticated public they are definitely starting to see the value that PR offers. PR will continue to grow and play a more important role in the future. Already, its role in crisis management is growing. Organizations have to see the positive side of things and implement more proactive PR programs.

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PowerAde remains a relatively small brand in the sports drink market. So, one way to build credibility is to employ the services of a high profile athlete. Students will have all kinds of ideas on who to employ. Encourage students to think beyond the traditional sports like hockey, football and basketball. Gatorade, the leading brand, also uses athletes (Sidney Crosby among them) and they are strongly associated with mass audience sports like those just mentioned. Options for PowerAde may include sports where individuals perform (as opposed to teams) and extreme sports where niche opportunities prevail.

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Many experts firmly believe the practice of public relations will never be the same since virtually everyone can publish an opinion on any given issue or subject. A different type of practitioner will emerge and the nature of communications will be very different in the future. Messages can be safely placed in the digital media and there will be less reliance on traditional media and the nuances of trying to persuade the media to run a story.

Students should have a cross-section of opinions in this issue.

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Responses to this question will vary. Students are asked to evaluate each site based on how well it performs PR functions. Since Web communications allows for communicating detailed information there should be lots of company and product information available at each site. Is the information valuable? Will it attract potential employees or shareholders? Or, is it simply hype?

5.

Each brand is different (e.g., they have a different target audience—some have mass appeal while others have class appeal). The advertising manager for Gillette has a variety

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of potential events to associate with. Gillette is a well-known grooming aids company (particularly male products), so it is likely the company would sponsor sports events that are national in scope. Traditionally, Gillette has sponsored motor sports and boxing, and has had some association with hockey at both the professional and amateur level (numerous consumer promotions have been implemented in association with major league sports such as hockey and baseball). Gillette may want to consider more trendy sports such as beach volleyball, a sport that is growing in popularity. Gillette should also consider television program sponsorship.

6.

The benefits of event marketing and sponsorships are difficult to measure. In assessing the value gained for the investment required organizations do factor in criteria such as goodwill and a more positive public image. If the public perceives an organization in a positive way the effect on sales and profits may be indirect (as opposed to direct) and in the long-term (as opposed to the short-term). If viewed this way, the benefits outweigh the costs. An organization’s view on things will depend on their corporate culture and their attitudes about how to manage a business.

7.

Opinions may vary but students will no doubt see great value in a company associating itself with a high-profile and worthy cause. In the age of social responsibility marketing it is simply the right thing to do assuming a company can afford to do so. This kind of activity creates much goodwill but translating the benefits to the bottom line is not possible. However, there is a saying that “people have to like you before they will buy from you.” Cause related marketing practices should help on the “likeability” scale.

VIDEO CASE 1 Nike Time: 9:21 Key Issues Experiential Marketing Event Marketing Generating Brand Buzz The video starts by introducing the various sports segments that Nike participates in and then focuses on shoes and its association with soccer. Nike is positioned as an “inspirational” brand as its advertising focuses on athletes (and everyday athletes) always testing their limits and performing at their very best. Getting into the soccer market was vital for Nike’s expansion as a global marketer. While Nike has always done much mainstream adverting to build its image this video focuses on its association with World Cup Soccer, a truly global marketing .

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opportunity. The video shows how various activation activities such as media advertising, contests, social media combine to effectively engage consumers with the Nike brand.

Discussion Questions 1. How can a company measure the effectiveness of its participation in an event such as World Cup soccer (or any other global marketing event)? Do the benefits exceed the costs?

2. Being associated with an event is a starting point. How can a company maximize (take full advantage of) its association with an event?

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Advertising Case Studies Some Thoughts on How to Use Cases This instructor’s manual includes three case studies that will test the student’s ability to apply advertising and marketing communications concepts. They are presented in a “Communications Brief” format. Each assignment can be completed using the standard case study format or by using the advertising or marketing communications plan format. Refer to both models that are included in this section. Each of these cases has been class tested. They work! Students will identify with the various products and situations quickly.

Naturally, cases become outdated as soon as they are written so it is assumed that you will instruct your students to conduct appropriate secondary research to update essential case facts. Each case provides some data about market size, sales volumes and market shares, but conditions in the marketplace change quickly as new brands, new trends, and other external influences enter the picture.

Each of the three cases requires as a minimum a good advertising strategy (creative and media) but it is up to the students to look at the bigger picture and determine how the other components of the marketing communications mix will be useful in finding a solution for the challenges that are presented.

The instructor can also play a role in determining which components of the mix should be considered.

You have the flexibility to be very focused (advertising only) or very broad (any and all components of the IMC mix). Set the parameters in accordance with your course expectations and outcomes.

Each case can be used for the purposes of a written submission or as a written submission with presentation. Since time is always a problem, my preference is for one case to be a written submission using the case study or communications plan format and another case to be a written submission with a presentation near the end of the course. Personal experience shows that only one or two cases can be accommodated in a one-semester course. Three cases are provided for you to choose from.

The case studies and the key challenge in each case are as follows: 7Up Canada The challenge in this case is to devise an advertising strategy (creative and media) to launch a new flavor of 7Up on the market. The students have flexibility in determining the flavor based on their examination of the market and trends they discover in the beverage industry.

Beiersdorf Inc. – Nivea for Men The challenge in this case is to devise a new marketing communications strategy that will rejuvenate interest in a once innovative brand in the men’s grooming market. The marketing objective is to regain some market share that was lost over the past five years in a highly competitive market.

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Case Study Model The following is a proposed case study model. Feel free to adapt and modify it to suit your own teaching and learning needs.

When preparing a case solution it is expected that students will conduct additional secondary research.

The capture of good information will enhance the quality of the analysis and the recommendation.

Executive Summary (Written Report Only) The executive summary should include a concise statement of the problem, a short summary of the major points arising from your analysis, and the major recommendations from your analysis.

Introduction The decision to include and introduction is left to the discretion of the writer. If it is included, the introduction should be brief and include information regarding the nature of the company, the product, the market, etc.).

Problem Identify the problem in a clear, concise manner. Ensure that the problem is distinguished from symptoms. Don’t state the problem as choosing from between a number of alternative strategies. The problem should pose a question searching for a solution.

Situation Analysis Most reports include some form of “situation analysis” (often referred to as SWOT analysis). In this phase it is important that you don’t regurgitate the facts of the case. The reader/listener is only concerned about strengths, weaknesses, opportunities, and threats that have implications for the problem or solution of the problem. Interpretive comments should be provided for strengths, weaknesses, opportunities and threats. Typically, strengths and weaknesses are internal in nature (e.g., corporate objectives, resources, expertise, etc.) while opportunities and threats are external in nature (e.g., competition, market characteristics, technology, social trends, etc.).

Alternatives Identify a series of alternatives that could resolve the problem. Make sure that issues such as segmentation and targeting, positioning, and the pros and cons of each alternative are discussed.

Recommendation Make a specific recommendation to resolve the problem. Proper justification must accompany the recommendation, and the recommendation must consider company objectives, marketing objectives, and the resources of the company. See the next section for more details.

Summary Plan Being concise as possible while providing proper detail on the various components of the marketing communications mix you are recommending, provide details about the following: 1. Marketing Objectives 2. Marketing Communications Objectives 3. Target Market Profile .

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4. Positioning Strategy Statement From this point on the content will include specific objectives, strategies, and executions (or appropriate details based on your preferences) for whatever components of the marketing communications mix you are recommending.

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Advertising Objectives Creative Plan • Objectives • Strategies • Execution Media Plan • Objectives • Strategies • Execution Timeline for Activities Budget Allocation for Recommended Activities

Advertising and Marketing Communications Plan Model The following is a proposed model for completing an advertising plan / marketing communications plan.

Please adapt it so it meets your own teaching style and needs.

Marketing Background External Influences • Economic Trends • Social and Demographic Trends • Technology Trends • Regulatory Trends Market Analysis • Market Size and Growth • Market Segments (Product Classifications) • Seasonal Analysis Competitor Analysis • Market Share Trends • Marketing / Marketing Communications Strategy Assessment Target Market Analysis • Consumer Data • Consumer Behaviour (Loyalty)

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Product (Brand) Analysis • Sales Volume Trends • Market Share Trends • Marketing / Marketing Communications Assessment • Image and Reputation Marketing Communications Plan Target Market Profile • Demographic • Psychographic • Geographic Positioning Strategy • Positioning Strategy Statement • Positioning Grid (optional) Budget • Budget Available for Plan (total only; hold allocations for media plan section) Advertising Objectives (whatever is relevant to plan) • Awareness • Preference • Trial • Image • Buzz • New Targets Creative Plan • Creative Objectives (list format) or Key Benefit Statement with Support Claims Statement • Creative Strategy (tone, style, theme, appeal techniques) • Creative Execution Media Plan • Media Objectives • Media Strategy • Media Execution Should any of the marketing communications mix components listed below be included in the plan, appropriate objectives, strategies, and execution details will be included for each.

Direct Response Interactive Communications Sales Promotion Public Relations Experiential Marketing, Event Marketing and Sponsorships Personal Selling .

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Media Blocking Chart • By Media (use appropriate charts to present spending information for each medium included in the plan) • By time of year (month or quarter, and total ) Calendar for Advertising and Other IMC Activities • By Activity • By time of year Budget Summary • Allocation of dollars by various media, activities, region, time of year, etc.

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PepsiCo Beverages Canada 7Up – Advertising Brief PepsiCo Canada requires a new advertising plan for its 7Up brand. Actually, the plan is for a new flavour of 7Up. In recent years 7Up has been somewhat of a neglected brand in the PepsiCo empire. PepsiCo is an extremely large food and beverage manufacturer marketing brands such as Pepsi-Cola, Gatorade, Tropicana, Quaker and Frito Lay. The Market The carbonated soft drink market is the largest segment among non-alcoholic beverages in Canada.

Annual sales of carbonated soft drinks are in the $4-billion range in Canada, but the market is mature. In the past decade consumption in Canada is down 30 percent.

On a dollar sales basis the decline isn’t as severe (price increases considered). Over the past five years annual sales are dropping marginally in the wake of consumers’ preferences for healthier beverages.

Product categories such as water, fruit juices, sports drinks, energy drinks and coffee and tea are taking business away from soft drinks.

Despite the trend toward healthier drinks, carbonated soft drinks remain the largest cold beverage category accounting for about 16% of the total market by volume. Coffee (hot coffee products) also account for about 16% of the beverage market.

Within the soft drink market it is estimated that flavoured drinks account for 25% of sales or $1-billion.

This is the segment that 7Up competes in.

By company both Coca-Cola and Pepsi-Cola dominate the soft drink market. In the United States, CocaCola has 34% market share and PepsiCo has 27% market share. It is estimated that both companies have a similar share of the Canadian market.

Packaging A majority of carbonated soft drinks are sold in aluminum cans and PET (polyethylene terephthalate) bottles. All manufacturers are demonstrating concern for the environment and are investing in packaging innovation. PepsiCo started marketing 7Up in an eco-green bottle in 2011—the bottle is made of 100% PET plastic. See image below. The product is also available in aluminum cans.

Distribution Soft drinks are mainly sold in retail stores such as supermarkets and convenience stores and this market is referred to as the “take home” market. Soft drinks are also sold in hotels, restaurants and vending machines. This market is referred to as the “on-premise market”. In the take home market shelf image and shelf position are vital to the success of a brand. The competition for shelf space is very intense between Coca-Cola and Pepsi-Cola brands.

Marketing Communications There is a high degree of brand loyalty in the cola segment of the soft drink market (Coca-Cola loyalist versus a Pepsi-Cola loyalist). In the flavoured segment purchases are often based on impulse—the consumer simply wants a refreshing change. Regardless of the degree of loyalty factors such as brand .

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name, product quality, and advertising play a key role in stimulating interest in a product. Top-of-mind awareness is important when the consumer is contemplating a purchase.

Business Strategy Both Pepsi-Cola and Coca-Cola (arch-rivals) have embarked upon a diversification strategy to pursue growth in the beverage industry. Both companies market a complete range of beverages that embrace carbonated soft drinks, bottled water, juices, fruit-flavoured beverages, diary beverages, iced tea, readyto-drink iced coffee, sports drinks and energy drinks. In these market segments PepsiCo offers PepsiCola, Diet Pepsi, 7Up, Mountain Dew, Aquafina, Lipton Brisk, Amp, SoBe and Starbucks. Coca-Cola has a similar range of brands in most segments.

Industry Issues The soft drink industry has many issues to deal with, some of which may have an impact on the new 7Up product. Among the primary issues are the following: • Market control by relatively few prominent retailers makes it difficult to secure and maintain shelf space • The growth of warehouse clubs (Costco) that emphasize value puts price pressure on suppliers to keep prices low • Escalating packaging costs and concerns for the environment are having an impact on manufacturers’ profits • Concerns for childhood obesity though the industry supports healthy eating habits and active lifestyles Current Situation PepsiCo has devoted considerable sums of money to support Pepsi-Cola and Mountain Dew brands.

These brands are very successful. In the process of building these brands 7Up has been languishing in the market. Well known for its lemon-lime flavour, 7Up is a leader among its direct competitors (mainly private label brands marketed by Loblaws, Metro, Sobeys and other supermarkets).

To ignite interest in 7Up PepsiCo has decided to launch a new flavour tentatively named 7Up “Razzle Dazzle Raspberry.” You may change the flavour and name if you so desire. Pepsi Co feels the key to growth for 7Up is to attract a new, younger target to the brand. They believe the new flavour will appeal to a younger target if it is advertised effectively. The company has not decided if it should pursue the tween market or the teen market and is looking forward to a recommendation from its advertising agency on this matter. Obviously, the target market description will have a big impact on how the brand is positioned, the style of creative, and how and where the budget will be spent.

Client Expectations The client expects a thorough advertising plan (creative and media) for a Canada-wide launch in June 20XX. The budget for the Year 1 campaign is $2-million. The planning year will cover the period January 1, 20XX to December 30, 20XX. The key elements that must be addressed in the plan include: • Defining the primary target market • Determining the flavour to be introduced • Designing a package (can and/or bottle) • Recommending appropriate creative and media strategies and executions to impact the target

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In terms of creative, a minimum of two executions is required. The media plan must include all appropriate charts to communicate exactly how the budget will be spent.

You must conduct some secondary research on the Canadian beverage market to update case facts and figures and to familiarize yourself with the advertising activities of competitors. ©Tuckwell Marketing Limited, 2014.

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Beiersdorf Inc. Nivea for Men – Advertising Brief Men and grooming is suddenly an exploding market! In the U.S. right now Nielsen Research estimates the market which is comprised of deodorants, hair care, body wash and skin care products to be worth about $3.2 billion. The Canadian market is estimated to be worth $320 million and is growing at a rate of about 5% a year. (These figures are several years old and should be updated via research).

Men today are into looking better and feeling better. Gender stereotypes are changing. Apparently, the pressure to look good is stronger than it has been in the past. Lifestyle factors and a desire to please a partner are having a positive impact on this market.

Manufacturers of personal care products have to work hard to gain brand loyalty among their male consumers since relatively few men say that they have strong feelings or attachments toward personal care brands. In men’s grooming a lot brand switching occurs so the potential influence of advertising is significant. The “Smell like a man, man” platform (TV and video ads featuring a handsome black guy) that Old Spice launched a few years ago had a significant impact on Old Spice sales. The campaign gave Old spice a completely new image.

Other competitors in the market include Gillette, Biotherm Homme, L’Oreal Men Expert and Axe. Gillette is a division of Procter & Gamble so these brands have significant financial resources to draw upon. Unilever markets Axe, the leading brand of deodorant and body wash and they have just introduced Dove Men+Care.

It was Nivea for Men that started the ball rolling in the men’s grooming category. About ten years ago Beiersdorf Inc. the makers of Nivea took a risk and launched Nivea Skin Care for Men. Nivea markets a complete range of products for a male’s face, body and hair. The brand is marketed as a family of products with all packaging featuring the colour blue, a colour that is strongly associated with Nivea products for women.

The estimated market shares for the various brands (all product lines combined) are as follows: Gillette (P&G) Old Spice (P&G) Axe (Unilever) Biotherm Homme L’Oreal Men Expert Nivea for Men All Other Brands (Including private labels)

20% 15 15 10 10 10 20

Since introduction Nivea for Men has employed a rather conservative and predictable advertising strategy. Print ads and television commercials show a handsome young male using one of the products while looking into a mirror. There is a sense of satisfaction on his face. The initial tagline for the campaign was “More evolved personal care.” More recently Nivea moved to a new tagline “What men want.” Again, the satisfied male plays a key role in the ads.

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Challenge Nivea’s immediate challenge is to reinvigorate the brand and gain back some lost market share. The VP Marketing would like market share to increase to 11.5 percent. To do so, the brand requires a new advertising plan (creative, media and any other form of communications deemed relevant) that will give it a fresh start in a very competitive market. To grow the brand Nivea for Men must attract new users and encourage users of other brands to switch to Nivea. Any urban male between the age of 18 and 35 is the primary target. Older males (in their 40s and 50s) would be a secondary target. The precise target the brand should pursue is a recommendation the advertising agency should make.

The creative strategy that is recommended must fit with the core attitudes and expectations of the target market. The client expects to see two executions of the creative strategy you recommend.

A complete media plan is also required. The plan must delineate objectives, strategies and all execution details in a proper plan format. The budget for the assignment is $3 million. A 1-year media plan is required. ©Tuckwell Marketing Limited, 2014

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