Executive Summary
The advertising industry is a dynamic sector that is currently generating young professionals and earnings worldwide. It is closely related to the growth of the business sector since it provides promotion of products and services to the masses. This paper aimed to identify the different aspects of the advertising industry, its mechanisms, trends and current issues.
It was observed that currently, advertising agencies are experiencing unprecedented growth with the trend of extending global reach to cater to the needs of large clients. New areas for advertising are also being realized such as the Internet and cable television. Accordingly, more aggressive forms of advertising are being explored in this very competitive environment. However, recurrent issues of public concerns regarding advertising content and the efficiency of government and self regulation still remain in the industry.
Introduction
Advertising is a form of communication that is unidirectional wherein the sponsor, usually featuring a product, is identified together with the intended message. This media industry includes many variations such as product endorsement, public service, sponsorship and marketing strategies to name a few. Since these are aimed at relaying the message to the masses, various channels are used (Wernick ,1991; Young, 2005). The more commonly known advertising media are television, radio and newspapers while the Internet, billboards and magazines can also serve the same purpose. Posters, flyers, stickers, shirts, public address system and many more forms are also creatively exploited for advertising.
Today, the advertising industry is proliferating since a significant amount of money is channeled to it by innumerable companies and organizations. According to a report of PricewaterhouseCoopers called Global Entertainment and Media Outlook: 2006-2010, the figure reached $385 billion worldwide and is expected to reach approximately $0.5 trillion by the year 2010 (PricewaterhouseCoopers, 2002).
This paper aims to identify the present status and trends of the advertising industry with emphasis on the mechanisms driving this evolution. Current players and their strategies will be assessed through searches on industry reports and marketing literature. In addition current issues will be discussed related to the above information.
Overview
History
Advertising seems to have a long history parallel to the development of mercantilism and political activities in early civilizations. These can be observed in relics including Greek, Roman and Middle Eastern artifacts. Paper and walls were extensively used to feature products, services and initiatives. The major development that revolutionized advertising was the introduction of the printing press. In the 17th century England, handbills and newspapers were already widely used. This practice became a common phenomenon as economies grew.
In the 19th century, advertisements filled newspaper pages in the United States of America. The first advertising company was founded in 1841 in Boston, USA by Volney Palmer who initiated the practice of charging a commission on advertisements at 25 percent. In terms of advertisement content, which was a concern for those wary of fake or false advertisement, N.W. Ayer & Son became known as the first advertising agency to assume responsibility for their services. The print media is followed by the development of radio broadcasting. Radios were first utilized for public services only but capitalist efforts opened the way for the conquest of this medium by advertising agencies. The United Kingdom and Canada were able to maintain the precedence of public interest over the commercial applications of the radio thus radio stations and broadcasting were generally funded by these two governments for many years. On the other hand, in the United States of America the 1934 Communications Act was promulgated catering to the capitalist model in relation to the use of radio broadcasts (Lears, 1995; Wernick, 1991).
During the early 1950s, television became a new tool for featuring products and other kinds of services for various sponsors. Initially, the practice was single sponsorship wherein an advertising agency ends up developing a show for a particular sponsor. At present, this practice is rarely observed among advertisers using television as medium. The 1960s became known as the period of Creative Revolution in American advertising. More ingenious ways of implanting the image of the product to television watchers were explored (Wernick, 1991).
The 1980s and 1990s paved the way for more aggressive mode of advertising through music and cable television such that channels mainly dedicated to advertising were established ushering the era of TV shopping and similar practices (Lears, 1995). With the birth of the Internet, advertising found a more extensive and personalized battleground. Websites and search engines such as Yahoo! are currently teeming with various promos and commercial advertisements characterized with easy accessibility and interaction with consumers. Although radio, television and internet spots make up the bulk of advertising media, other forms still proliferate. Newspapers, magazines, posters and other print media still remain although will a relatively smaller share of the market. Recently, more ingenious and creative ways are being pursued such as guerilla promotions characterized by unconventional approaches and infomercials featuring scientific or educational material to promote products (Gluck & Bruner, 2005).
Current Global Landscape
Today, advertising is definitely considered an enormous business sector in the United Kingdom and around the world. Approximately £16bn is allocated for advertisement in UK each year. In addition, the advertising industry employs around 12,700 workers majority of which work in London. The workforce is dominated by young individuals as indicated by the 51 percent workers under the age of 30 and 80 percent under the age of 40. This apparently lends the industry its creative and entrepreneurial spirit attested by numerous agencies cropping up and the dynamic growth of major players.
The trends indicate a shift towards consolidation of agencies and companies to gain international and global reach which translates to large scale earnings. Mergers and acquisitions are therefore a norm in the global landscape of the advertising industry. This is to complement the global reach of the advertising agencies’ clients. Publicis, a French-owned advertising agency, bought Fallon and Saatchi & Saatchi from the United States, UK’s J Walther Thompson and Ogilvy & Mather acquired Young & Rubicam while Japan’s Dentsu, US’s Leo Burnett and D’Arcy combined to form BICom3 (Whyte, 2001).
Structure
There are four main departments in a typical advertising agency. These are account management department, the planning department, the creative department and the marketing department. The chief executive officer (CEO) works directly over the heads of each department. Account managers handle the daily business of the agency. This includes the interaction with the clients and all the financial aspects of the business. The planning department takes care of the strategy of the agency in relation to the development of the brand and attracting and maintaining consumers. The creative department handles the creation of advertisements by putting into images the planning department’s ideas. The marketing department sells the services of the agency to prospective clients. The first three work hand in hand in driving the current activities of the agency while the marketing department makes sure that the business expand and continue to move forward (Young, 2005; Klepper, 1966).
In the process of getting and putting out a project, the marketing department first endeavors to put the agency to a prospective client’s pitch list. The creative department then comes up with a proposal for the advertisement campaign to be presented to the client. The client selects from the pitch list. Upon selection by the client, the creative department works again for a campaign for approval of the Broadcast Advertising Clearance Centre or equivalent. The campaign is then presented again to the client for validation after which the production budget is approved. A director or a photographer is then chosen for a television advertisement or newspaper or poster advertisement, respectively (Whyte, 2001).
Current Issues
There are three major current issues the advertising industry faces. These are the rapidly changing advertisement niches, the alleged effect of advertisements and the impact of regulation on advertisements.
The first issue stems from the increasing influence of the Internet and cable television channels. The Internet and cable TV are gaining popular usage among young and adult viewers. These give viewers more freedom and options on what they want to look at or patronize. The result is more personalized media which makes it for large advertising agencies to penetrate.
Instead of creating advertisements that could reach large masses, agencies are forced to make customized ads. This is due to the fact that there are more venues wherein other advertisers can come in. This can be observed in the sudden jump to rich media advertising as evidenced by its almost 40% patronage of Fortune 500 companies (Gluck & Rubner, 2005). The merging of television and internet company signifies the rapidly changing environment of rich text media and poses new challenges to advertising firms.
The recurrent issue of the negative effects of advertising is another issue. This includes the ads featuring cigarette and condom for example. In some countries, similar ads are regulated by the government. For instance, cigarette ads are required to put highly visible or audible warnings of the risks of smoking. In addition, the impact of such kinds of advertisements on young readers and viewers are being evaluated. These groups are considered very vulnerable to distortion of truth and related concerns (Wernick, 1991).
In terms of regulation, there are various organizations both public and private are getting more involved in protecting the rights of viewers. In the UK, the Broadcast Advertising Clearance Centre screens ads before they are even put into production. For print advertising, Advertising Standards Authority caters to the complaints of the public. In addition, the Committee of Advertising Practice, Incorporated Society of British Advertisers and Institute of Practitioners in Advertising are likewise involved in this effort (Whyte, 2001).
With the above developments, advertising in the future is seen to permeate different multimedia types particularly the sprawling Internet community and the gaming industry as well. The rich media format will be a very important tool for this shift. The government will continue to assume an active role in making guidelines for appropriate advertisements for the public especially concerning controversial products. Advertising groups will also be more involved in policing advertisements that are a concern to readers and viewers. The agencies are also seen to continue consolidating to respond to the global expansion of their clients but diversity would be an important strategy for Internet and cable television advertisements.
Summary
The advertising industry has a long and rich history parallel to the proliferation of businesses from the start of civilization and has evolved along with the emergence of different media forms such as print, radio, television and Internet. Advertising agencies were created to cater to the promotion of businesses and services and are now seen to expand globally to accommodate their clients. Newer places for advertising are continually cropping up including the websites and cable television programs. Other recurrent issues such as advertisement content and self-regulation are still a concern for advertisers and advertising groups. Overall, the advertising sector is seen as a young and dynamic sector which will continue to grow and generate more jobs and earnings in the coming years.
References
- Gluck, M. & R. Bruner. (2005). The evolution of rich media advertising: Current market trends, success metrics and best practices. Doubleclick.
- Kleppner, O. (1966). Advertising procedure, Englewood Cliffs, N.J.: Prentice-Hall.
- Lears, J. (1995). Fables of Abundance: A cultural history of advertising in America. New York: Basic Books.
- PricewaterhouseCoopers. (2002). Global entertainment and media outlook: 2002-2006. PricewaterhouseCoopers.
- Wernick, Andrew (1991). Promotional culture: Advertising, ideology and symbolic expression. Theory, Culture & Society. London: Sage Publications Ltd.
- Whyte, S. (2001) Industry Guide: Advertising. Brand Republic.
- Young, C. E., (2005). The Advertising Handbook. Ideas in Flight. Seattle, WA.
- Briggs, A. & P. Cobley (ed.) (1998). The media: An introduction. London: Person Longman.
- Johnson, J.D. (1978). Advertising today. Chicago: Science Research Associates.