ADV & SP

The Evolution of Advertising

WHAT WAS THE NEED FOR ADVERTISING??

Manufacturers attempt to gain power over the distribution channel by building brand demand. Takes consumers focus away from Retailer and Wholesaler. Mass Media telegraph enabled rapid communication, spawned global interest and fostered a sense of community. this free communication is supported by advertising.

Evolution of Advertising
Pre-1800
Print media (news books, newsletters, then gazettes) Circulation of dailies (newspapers) 1M/day Circulation increased by railroad expansion Consumer culture breeds advertising as urbanization takes hold (self-reliance no longer plausible) roaring twenties advertising was the work of the young, smart and sophisticated High standard of living A product for a cure for almost everything Ads became more visual than past

1800-1875

1875-1918

The 1920s

1929-1941

Advertising seen as villainous as millions starve Bye-bye pretty, hello ugly harsh-reality, attention-grabbing ads Radio takes hold as medium.

 1941-1960
Fear of motivation advertising research and subliminal ads Start of the babyboomer generation and women join the workforce

1960-1972 (Peace, Love and Creative Revolution)

Advertising slow to keep pace with the cultural revolution creative directors gain more control of copy and ads

1973-1980
Slowing economyads go back to hard sell Regulators: ACT, FTC, NARB

1980-1992
Designer era Greed was good, more stuff was good

1993-2000
Prediction of Interactive media enabling audit of more accountable advertising

BMW-ADVERTISEMENT IN 60S
1964

1969

70S
1972

1973

80s
1980

1983

90s

The 00s: More Hip Ads and More Technology (2001 present)
Ads seen as adsself-aware
Dot.bomb websites totally dependent on online ads for revenue (However, stock value was in potential ad revenue not real product
revenue)

E-business selling real product online Increase in web advertising Branded Entertainment (and product placement)

2005

2007-Magazine Ad

2010

2010-Inspiring Designs Dont Always Start On Paper

Where our exploration ends,yours begins

HAVE A LOOK

Advertising and Society: Ethics, Regulation and Social Responsibility

18

Advertising and Society

Advertisings visible social role makes it a target for criticism. Some of todays consumers believe that a great deal of advertising is unethical because it:
Adds to the price of products, Is untruthful, Tricks people, or Targets vulnerable people.

Ethical Criteria
Numerous Advertising-Related Issues Are Left to the Discretion of the Advertisers and Are Based on Ethical Concerns.

Advocacy

Advertising Tries to Persuade the Audience to Do Something; It is Not Objective or Neutral.

Accuracy

Subtle Messages Trouble Critics Especially When Aimed At Groups Such as Children, the Elderly, or the Disabled.
Acquisitiveness

Are We Persuaded That We Continually Need More and More New Products? Consumers Make the Final Decision.

The Problem of Being Ethical

Company's Mission

Ethical Decisions

Marketing Objectives

Based On

Reputation
Nonethical Decisions

Competition

Available Resources

Ethical Issues in Advertising

Puffery

Advertising Or Other Sales Representations, Which Praise the Item to Be Sold With Subjective Opinions, Superlatives, or Exaggerations, Vaguely and Generally, Stating No Specific Facts.

Taste and Advertising

Product Categories

Taste Issues

Current Issues

Ethical Issues in Advertising

Stereotyping in Advertising

Women in Advertisements

Racial & Ethnic Stereotypes

Senior Citizens

Gay & Lesbian Consumers

Advertising to Children

Controversial Topic

Limits Set For Amounts of Advertising

3 Hours of Educational TV Per Week

Ethical Issues in Advertising

Advertising Controversial Products

Tobacco

Alcohol

Gambling

Subliminal Advertising

A Subliminal Message is One That is Transmitted in Such a Way That the Receiver is Not Consciously Aware of Receiving It.

Regulatory Factors Affecting Advertising (Fig. 2.1)

Legislation
Social Responsibility/ Self-Regulation Organized Groups

Government Agencies

Advertisement

Media Groups

Audience Protection

Federal Case Law Affecting Advertising

First Amendment Case Law

This Protection Applies to Commercial Speech, Which is Speech That Promotes Commercial Activity. That Protection is Not Absolute.

Privacy Case Law Developments: Online Advertising

Legal Issues of Data Collection Are Troubling Consumers, Online Advertisers, and the Government. Online Privacy Alliance Has Published Guidelines.

Advertising and the Federal Trade Commission

The Federal Trade Commissions (FTC) Main Focus, Regarding Advertising, is to Identify and Eliminate Ads that are Deceptive or Mislead the Consumer. Key Areas that Concern the FTC:

Deception Reasonable Basis for Making a Claim Comparative Advertising Endorsements Demonstrations

Deception
The current FTC policy on deception contains three basic elements:
Where there is representation, omission, or practice, there must be a high probability that it will mislead the consumer. The perspective of the reasonable consumer is used to judge deception. The deception must lead to material injury. This policy makes deception difficult to prove.

Reasonable Basis for Making a Claim

Determining the reasonableness of a claim is done on a case-by-case basis. In general the FTC considers the following factors:
Type and specificity of claim made Type of product Possible consequences of the false claim Degree of reliance by consumers on the claims The type and accessibility of evidence available for making the claim.

Comparative Advertising
The FTC considers comparative advertising deceptive unless:
1. The comparisons are based on fact. 2. The differences advertised are statistically significant. 3. The comparisons involve meaningful issues. 4. The comparisons are to meaningful competitors.

Endorsements
An endorsement or testimonial is any advertising message that consumers believe reflects the opinions, beliefs, or experiences of an individual, group, or institution. Endorsers must:
Be qualified by experience or training to make judgments, and They must actually use the product.

FTC Deceptive and Unfair Advertising Remedies

Method 1. Consent Decrees

Method 2. Cease-and-Desist Orders

Method 3. Corrective Advertising Method 4. Substantiating Advertising Claims Method 5. Consumer Redress Method 6. Hold Advertising Agency Legally Responsible

Advertising and Other Regulatory Agencies

In Addition to the FTC, Several Other Federal Agencies Regulate Advertisers and Their Agencies.

Food and Drug Administration

Federal Communication Commission

Additional Federal Regulatory Agencies

Social Responsibility
Organizations Task is to Determine the Needs, Wants, and Interests of Target Markets and to Deliver the Desired Satisfactions More Effectively And Efficiently Than Its Competitors in a Way that Preserves or Enhances the Consumers and Societys Well-Being. (48) by Phillip Kotler.

Level One

Being Socially Responsible is a Business Philosophy

Level Two

Advertiser is Engaged in Prosocial Messaging

Different Levels of Self-Regulation

Self-Discipline An Organization Develops, Uses, and Enforces Norms By Itself Pure Self-Regulation Co-opted Self-Regulation

The Industry Develops, Uses and Enforces Norms

Industry Voluntarily Involves Nonindustry People in the Development, Application, and Enforcement of Norms

Economic Effects of Advertising

Effects on consumer choice Differentiation Brand loyalty Effects on competition Barriers to entry Economies of scale Effects on product costs and prices Advertising as an expense Increased differentiation

Economic Effects of Advertising

Advertising = Market Power
Advertising affects consumer preferences and tastes, changes product attributes, and differentiates the product from competitive offerings. Consumers become brand loyal and less price sensitive and perceive fewer substitutes for advertised brands. Potential entrants must overcome established brand loyalty and spend relatively more on advertising.

Economic Effects of Advertising

Advertising = Market Power Firms can charge higher prices and are not as likely to compete on quality or price dimensions. Innovation may be reduced. High prices and excessive profits accrue to advertisers and give them even more incentive to advertise their products. Output is restricted compared with conditions of perfect competition.

Economic Effects of Advertising

Advertising = Information Advertising informs consumers about product attributes but does not change the way they value those attributes. Consumers become more price sensitive and buy best value.Only the relationship between price and quality affects elasticity for a given product. Advertising makes entry possible for new brands because it can communicate product attributes to consumers.

Economic Effects of Advertising

Advertising = Information More informed consumers pressure firms to lower prices and improve quality; new entrants facilitate innovation. Industry prices decrease. The effect on profits due to increased competition and increased efficiency is ambiguous.

 It must be said that without advertising we would have a far different nation, and one that would be much the poorer-not merely in material commodities, but in the life of the spirit.

These excerpters are from a speech given by Leo Burnett on the American Association or Advertising Agencies 50th anniversary, April 20,1967