Kotler Pom15 Im 15

Chapter 15ADVERTISING AND PUBLIC RELATIONS

MARKETING STARTER: CHAPTER 15Allstate: Bringing Mayhem to the Auto Insurance Advertising Wars

SynopsisThrough its clever “Mayhem” advertising campaign, Allstate has put a contemporary, attention-grabbing twist on the company’s long-standing “You’re in good hands with Allstate” slogan, helping to position the brand as a superior alternative to price-oriented competitors. Why was this unconventional campaign necessary? As it turns out, mayhem doesn’t just describe the Allstate campaign—it characterizes the entire world of auto insurance advertising over the past decade. Not long ago, big auto insurance companies spent modestly on sleepy ad campaigns featuring touchy-feely, reassuring messages such as Allstate’s “You’re in good hands,” or State Farm’s “like a good neighbor.” However, the serenity ended with the first appearance of the now-iconic GEICO Gecko in 2000, backed by a big budget and pitching direct sales and low prices. Other competitors quickly followed suit. Amid this surge in competition, Allstate struggled just to hold its own, let alone to grow. The new Mayhem campaign quickly won many top ad industry awards, but it has also become ingrained in pop culture and social media channels. Mayhem is also right on message. At the end of each ad, he warns, “If you’ve got cut-rate insurance, you could be paying for this yourself.” Then a reassuring spokesman provides the solution: “Are you in good hands?” he asks. “Get Allstate. You can save money and be better protected from Mayhem.” This “worth-paying-a-little-more” message puts Allstate back at the top in terms of customer value.

Discussion ObjectiveA discussion of the chapter-opening “Mayhem” campaign from Allstate will drive home the point that ad campaigns can make a substantial impact on how customer perceive and respond to a brand. The goal is to compare and contrast the traditional low-key advertising of the insurance industry with the more recent, high-profile, unconventional advertising campaigns undertaken by Allstate and its competitors. What made each campaign successful, and why would consumers respond to them?

Starting the Discussion Develop the discussion around a walk through the ad campaigns discussed in the Mayhem story. For a selection of the best, most recent television commercials by Allstate, GEICO, Progressive, and State Farm, visit www.youtube.com. View two or three ads from each company. These should help students to explore the nature of each campaign. How do they resemble yet differ from one another? Students should be familiar with most of the campaigns, and seeing them should generate much useful discussion. The point—a well-crafted advertising campaign can grab a market by the collar, change consumer opinions and emotions, and increase sales and market share. Use the questions below to guide the discussion.

Discussion Questions1. In your mind, how strong is the Allstate Mayhem campaign compared to those launched by competitors

several years earlier? How does Allstate distinguish itself in a crowded field of competitors? (Despite the strength and uniqueness of this campaign, Allstate has still had to play “catch-up” with GEICO and Progressive, which switched over to edgier advertising approaches several years ago. This is not an optimal position for any business. At the same time, the sleepy “You’re in Good Hands” slogan was long overdue for a facelift. Allstate’s unaided brand awareness of 74 percent following the Mayhem campaign underscores its success.)

Copyright©2014 Pearson Education

http://www.youtube.com/

2. Can one ad campaign make a difference for Allstate or any of its competitors? Have your opinions of the major insurance companies shifted as you observed their television commercials? (Bring in details that highlight and illustrate how one campaign certainly can make a difference. For the past decade, GEICO increased its “cool” factor along with sales and market share as a result of the “civilized caveman” and “Gecko” campaigns. When Allstate finally made a move, they were able to achieve an unaided brand awareness of 74 percent, and make a dent in State Farm’s large market share.)

3. How does Allstate’s Mayhem campaign story relate to this chapter on advertising? (This story is purely focused on ad campaigns. Each campaign in the story was based on a well-designed message that accomplished specific advertising objectives. The actors (sources) used were perfect for conveying key messages, and each campaign has generated a certain amount of buzz among television viewers.)

CHAPTER OVERVIEW Use Power Point Slide 15-1 here

In this chapter, we look at advertising and public relations. Advertising involves communicating the company’s or brand’s value proposition by using paid media to inform, persuade, and remind consumers. Public relations involves building good relations with various company publics—from consumers and the general public to the media, investor, donor, and government publics.

As with all of the promotion mix tools, advertising and public relations must be blended into the overall IMC program.

CHAPTER OBJECTIVESUse Power Point Slide 15-2 here

1. Define the role of advertising in the promotion mix.2. Describe the major decisions involved in developing an advertising program.3. Define the role of public relations in the promotion mix.4. Explain how companies use public relations to communicate with their publics.

CHAPTER OUTLINE

p. 432 INTRODUCTION

Does advertising really make a difference? Auto insurance companies think so. All of their advertising spending—plus ever-more-creative ad campaigns—has created an auto insurance advertising war.

To stay in the fight, Allstate has created its own brand of advertising “mayhem.” Here, the creepy “Mayhem” character portrays all of the unlikely events that can lead to a major auto insurance claim.

The campaign has won many top ad industry awards, but has also become ingrained in pop culture and social media channels.

p. 433Photo: Allstate


More than just popular, Mayhem is right on message. At the end of each ad, he warns, “If you’ve got cut-rate insurance, you could be paying for this yourself.”

This message puts Allstate back at the top in terms of customer value.

Assignments, ResourcesUse Web Resources 1 and 2 here

Opening Vignette Questions1. Through their catchy advertising campaign,

which advertising objectives did Allstate pursue? How about GEICO? Progressive?

2. Can Allstate or its competitors use the same advertising campaigns indefinitely? Why or why not?

3. If not, what ideas would you suggest next for the insurance giants?

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ADVERTISING

U.S. advertisers now spend in excess of $144 billion yearly on advertising.

The four decisions to make when developing an advertising program are (see Figure 15.1):

1. Setting advertising objectives2. Setting the advertising budget3. Developing advertising strategy4. Evaluating advertising campaigns

Setting Advertising Objectives

Advertising objectives should be based on past decisions about the target market, positioning, and the marketing mix, which define the job that advertising must do in the total marketing program.

An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time.

Advertising objectives can be classified by primary purpose (Table 15.1):

Informative advertising is used heavily when

Chapter Objective 1

p. 435Figure 15.1: Major Advertising Decisions

Chapter Objective 2

p. 435Key Term: Advertising Objective

p. 436Table 15.1: Possible Advertising Objectives


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introducing a new product category. Persuasive advertising becomes important as

competition increases. Here, the company’s objective is to build selective demand.

Comparative advertising is directly or indirectly comparing one brand with another.

Reminder advertising is important for mature products—it helps to maintain customer relation-ships and keep consumers thinking about the product.

Setting the Advertising Budget

Specific factors to consider when setting the budget include: Stage of the PLC Market share

Developing Advertising Strategy

Advertising strategy consists of two major elements:

Creating advertising messages Selecting advertising media

Advertisers are orchestrating a closer harmony between their messages and the media that deliver them.

Creating the Advertising Message

Consumers are exposed to as many as 3,000 to 5,000 commercial messages every day.

Breaking Through the Clutter. Ads are sandwiched in with a clutter of other commercials, announcements, and network promotions, totaling nearly 20 minutes of nonprogram material per prime-time hour with commercial breaks coming every six minutes on average.

Such clutter in television and other ad media has created an increasingly hostile advertising environment.

Just to gain and hold attention, today’s advertising messages must be better planned, more imaginative, more entertain-ing, and more emotionally engaging to consumers.

p. 438Ad: Sara Lee vs. Kraft

p. 437Key Term:Advertising Budget

p. 437Ad: Audi

p. 437Key Term: Advertising Strategy

p. 438Photo: Advertising Clutter


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Merging Advertising and Entertainment

To break through the clutter, many marketers are now subscribing to a new merging of advertising and entertainment, dubbed “Madison & Vine.”

The aim of advertainment is to make ads themselves so entertaining, or so useful, that people want to watch them.

Branded entertainment (or brand integrations) involves making the brand an inseparable part of some other form of entertainment.

Message Strategy

The first step in creating effective advertising messages is to plan a message strategy—the general message will be communicated to consumers.

Developing an effective message strategy begins with identifying customer benefits that can be used as advertising appeals.

The advertiser must next develop a compelling creative concept—or “big idea”—that will bring the message strategy to life in a distinctive and memorable way.

Advertising appeals should have three characteristics:

1. They should be meaningful2. Appeals must be believable3. Appeals should be distinctive

Message Execution. The advertiser has to turn the big idea into an actual ad execution that will capture the target market’s attention and interest.

Execution styles include the following:

Slice of life: This style shows one or more “typical” people using the product in a normal setting.

Lifestyle: This style shows how a product fits in with a particular lifestyle.

Fantasy: This style creates a fantasy around the product or its use. For instance, many ads are built

p. 439Key Terms: Madison & Vine, Creative Concept

p. 439Photo: Madison & Vine

p. 440Key Term:Creative Concept

p. 440Key Term: Execution Style

p. 441Ad: Benjamin Moore


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around dream themes.

Mood or image: This style builds a mood or image around the product or service, such as beauty, love, or serenity.

Musical: This style shows people or cartoon characters singing about the product.

Personality symbol: This style creates a character that represents the product.

Technical expertise: This style shows the company’s expertise in making the product.

Scientific evidence: This style presents survey or scientific evidence that the brand is better, or better liked than one or more other brands.

Testimonial evidence or endorsement: This style features a highly believable or likable source endorsing the product.

The advertiser must choose a tone, words, and format for the ad.

Assignments, ResourcesUse Real Marketing 15.1 hereUse Discussion Questions 1, 2, and 3 hereUse Marketing Ethics hereUse Additional Projects 1 and 2 hereUse Small Group Assignment 1 hereUse Individual Assignment 1 hereUse Outside Examples 1 and 2 hereUse Video Case here Use Web Resources 3 and 4 here

Troubleshooting TipMessage execution is also a key concept. Many students will have trouble with the various execution styles and will particularly have difficulty with slice of life versus lifestyle. There may also be difficulty in understanding the difference between fantasy and mood or image. Again, use examples of your own and from the class, as well as those shown in the text.

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Consumer-Generated Messages. Taking advantage of today’s interactive technologies, many companies are now tapping consumers for message ideas or actual ads.

p. 442Ad: Doritos


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If done well, consumer-generated advertising efforts can produce big benefits.

For little expense, companies can collect new creative ideas.

These campaigns can boost consumer involvement and get consumers talking and thinking about a brand and its value to them.

Selecting Advertising Media

The major steps in advertising media selection are: (1) defining reach, frequency, and impact; (2) choosing among major media types; (3) selecting specific media vehicles; and (4) choosing media timing.

Defining Reach, Frequency, and Impact. Reach is a measure of the percentage of people in the target market who are exposed to the ad campaign during a given period of time. Frequency is a measure of how many times the average person in the target market is exposed to the message.

The advertiser must determine the desired media impact—the qualitative value of a message exposure through a given medium.

Typically, the advertiser wants to choose media that will engage consumers rather than simply reach them.

Choosing Among Major Media Types. The media planner has to know the reach, frequency, and impact of each major media type. As summarized in Table 15.2, the major media types are newspapers, television, direct mail, radio, magazines, outdoor, and the Internet. Each medium has advantages and limitations.

Media planners must also decide between narrowcasting and shotgun approaches.

More and more, advertisers are turning to alternative media in an effort to get their message through.

Selecting Specific Media Vehicles. The media planner now must choose the best media vehicles—specific media within each general media type.

p. 443Key Term: Advertising Media

p. 444Ad: Ford

p. 445Table 15.2: Profiles of Major Media Types

p. 446Photo: Caribou Coffee


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Media planners must compute the cost per 1,000 persons reached by a vehicle.

The media planner must also consider the costs of producing ads for different media.

The media planner must balance media costs against several media effectiveness factors:

Audience quality Audience engagement Editorial quality

Deciding on Media Timing. The advertiser must decide how to schedule the advertising over the course of a year.

Some marketers do only seasonal advertising.

The advertiser has to choose the pattern of the ads.

Continuity means scheduling ads evenly within a given period.

Pulsing means scheduling ads unevenly over a given time period.

Assignments, ResourcesUse Discussion Question 4 hereUse Marketing Technology hereUse Think-Pair-Share 1, 2, and 3 hereUse Web Resources 5 here

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Evaluating Advertising Effectiveness and Return on Advertising Investment

Measuring advertising effectiveness and the return on advertising effectiveness has become a hot issue for most companies.

Measuring the communication effects of an ad or ad campaign tells whether the ads and media are communi-cating the ad message well.

Sales and profit effects of advertising are often harder to measure. Sales and profits are affected by many factors besides advertising—such as product

p. 447Key Term: Return on Advertising Investment


features, price, and availability.

One way to measure the sales and profit effects of advertising is to compare past sales and profits with past advertising expenditures.

Assignments, ResourcesUse Real Marketing 15.2 hereUse Marketing by the Numbers here

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Other Advertising Considerations

Organizing for Advertising

Different companies organize in different ways to handle advertising.

In small companies, advertising might be handled by some-one in the sales department.

Large companies set up advertising departments whose job it is to set the advertising budget, work with the advertising agency, and handle advertising not done by the agency.

Advertising agencies employ specialists who can often perform advertising tasks better than the company’s own staff.

Most large advertising agencies have the staff and resources to handle all phases of an advertising campaign for its clients, from creating a marketing plan to developing ad campaigns and preparing, placing, and evaluating ads.

International Advertising Decisions

International advertisers face many complexities not encountered by domestic advertisers.

The most basic issue concerns the degree to which global advertising should be adapted to the unique characteristics of markets in various countries.

Standardization produces many benefits—lower advertising costs, greater global advertising coordination, and a more consistent worldwide image.

p. 448Key Term: Advertising Agency

p. 449Ad: Havaianas


There are also drawbacks—it ignores the fact that country markets differ greatly in their cultures, demographics, and economic conditions.

Global advertisers face several special problems:

Advertising media costs and availability differ vastly from country to country.

Countries also differ in the extent to which they regulate advertising practices.

Although advertisers may develop global strategies to guide their overall advertising efforts, specific advertising programs must usually be adapted to meet local cultures and customers, media character-istics, and advertising regulations.

Assignments, ResourcesUse Additional Project 3 here Use Small Group Assignment 2 here

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PUBLIC RELATIONS

Public relations is designed to build good relations with the company’s various publics by obtaining favorable publicity, building a positive corporate image, and managing unfavorable rumors, stories, and events.

Public relations departments may perform any or all of the following functions:

Press relations or press agency: Creating and placing newsworthy information in the news media to attract attention to a person, product, or service.

Product publicity: Publicizing specific products.

Public affairs: Building and maintaining national or local community relations.

Lobbying: Building and maintaining relations with legislators and government officials to influence legislation and regulation.

Investor relations: Maintaining relationships with shareholders and others in the financial community.

Development: Working with donors or members of nonprofit organizations to gain financial or volunteer

Chapter Objective 3

p. 450Key Term: Public Relations (PR)

p. 450Photo: NHLBI


support.

Public relations is used to promote products, people, places, ideas, activities, organizations, and even nations.

Assignments, ResourcesUse Discussion Question 5 hereUse Additional Project 4 hereUse Think-Pair-Share 4 here

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The Role and Impact of PR

Public relations can make a strong impact on public aware-ness at a much lower cost than advertising can.

The company does not pay for the space or time in the media.

If the company develops an interesting story or event, it could be picked up by several different media, having the same effect as advertising that would cost millions of dollars. And it would have more credibility than advertising.

Public relations is sometimes described as a marketing stepchild because of its often limited and scattered use.

Advertising and public relations should work hand in hand within an IMC program to build brands and customer relationships.

Major Public Relations Tools

Public relations professionals use several tools. PR professionals find or create favorable news about

the company and its products or people. Another common PR tool is special events,

including news conferences, press tours, or educational programs designed to reach and interest target publics.

Public relations people also prepare written materials to reach and influence their target markets. These materials include annual reports, brochures, articles, and company newsletters and magazines.

Audiovisual materials, such as slide-and-sound programs, DVDs, and online videos are being used increasingly as communication tools.

Chapter Objective 4

p. 452Ad: Coca-Cola


Corporate identity materials can also help create a corporate identity that the public immediately recognizes.

Companies can improve public goodwill by contributing money and time to public service activities.

As discussed above, the Web is also an increasingly important PR channel, Web sites, blogs, and social networks such as YouTube, Facebook, and Twitter are providing interesting new ways to reach more people.

A company’s Web site can be a good public relations vehicle. Web sites can also be ideal for handling crisis situations.

Assignments, ResourcesUse Discussion Question 6 hereUse Critical Thinking Exercise 1 hereUse Company Case hereUse Additional Project 5 hereUse Individual Assignment 2 hereUse Think-Pair-Share 5 and 6 hereUse Web Resources 6 here

Troubleshooting TipPublic relations is a mystery to almost everyone. There will be some questions regarding the product publicity done by public relations versus that done by a marketing manager, but these questions can be answered by the notion of free, because the vast majority of what PR does is to get the company in the press. One of the examples of masterful public relations that the book points out is Nintendo and its introduction of its groundbreaking Wii game console. This example alone is often enough to explain the importance of this communication channel.

END OF CHAPTER MATERIAL

Discussion Questions

1. Describe the decisions marketing managers must make when developing an advertising program. (AASCB: Communication)


Answer:

Marketing management must make four important decisions when developing an advertising program (see Figure 15.1): setting advertising objectives, setting the advertising budget, developing advertising strategy (message decisions and media decisions), and evaluating advertising campaigns.

An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time. Advertising objectives can be classified by primary purpose—whether the aim is to inform, persuade, or remind.

After determining its advertising objectives, the company next sets its advertising budget for each product. Four commonly used methods for setting promotion budgets are discussed in Chapter 14. A brand’s advertising budget often depends on its stage in the product life cycle, market share, and number of competitors.

Advertising strategy consists of two major elements: creating advertising messages and selecting advertising media. Creating messages involves planning a message strategy, developing a compelling creative concept, selecting an appropriate appeal, determine how the ad will be executed (e.g., slice of life, fantasy, musical, testimonial, and so on), and determine the format elements of the ad. Media decisions are based on the reach and frequency needed to achieve the advertising objectives. Major media types include televisions, the Internet, newspapers, direct mail, magazines, radio, and outdoor.

Advertisers should regularly evaluate two types of advertising results: the communication effects and the sales and profit effects. Measuring the communication effects of an ad or ad campaign tells whether the ads and media are communicating the ad message well. However, sales and profit effects of advertising are often much harder to measure.

2. Why is it important that the advertising media and creative departments work closely together? (AACSB: Communication)

Answer:

In the past, companies often viewed media planning as secondary to the message-creation process. The creative department first created good advertisements, and then the media department selected and purchased the best media for carrying these advertisements to desired target audiences. This often caused friction between creatives and media planners. Today, however, soaring media costs, more-focused target marketing strategies, and the blizzard of new media have promoted the importance of the media-planning function. The decision about which media to use for an ad campaign—television, magazines, mobile phones, an Internet site, or e-mail—is now sometimes more critical than the creative elements of the campaign. As a result, more and more, advertisers are orchestrating a closer harmony between their messages and the media that deliver them.


3. Discuss the characteristics advertising appeals should possess to be effective. (AACSB: Communication)

Answer:

Advertising appeals should have three characteristics. First, they should be meaningful, pointing out benefits that make the product more desirable or interesting to consumers. Second, appeals must be believable. Consumers must believe that the product or service will deliver the promised benefits. However, the most meaningful and believable benefits may not be the best ones to feature. Appeals should also be distinctive. They should tell how the product is better than competing brands.

4. What are the pros and cons of standardization for international advertising? How do most companies approach the complexities of international advertising? (AACSB: Communication)

Answer:

Standardization produces many benefits—lower advertising costs, greater global advertising coordination, and a more consistent worldwide image. But it also has drawbacks. Most importantly, it ignores the fact that country markets differ greatly in their cultures, demographics, and economic conditions. Thus, most international advertisers “think globally but act locally.” They develop global advertising strategies that make their worldwide efforts more efficient and consistent. Then they adapt their advertising programs to make them more responsive to consumer needs and expectations within local markets.

5. What are the role and functions of public relations within an organization? (AACSB: Communication)

Answer:

Public relations builds good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. Public relations departments may perform any or all of the following functions:

Press relations or press agency: Creating and placing newsworthy information in the news media to attract attention to a person, product, or service.

Product publicity: Publicizing specific products. Public affairs: Building and maintaining national or local community relations. Lobbying: Building and maintaining relations with legislators and government

officials to influence legislation and regulation. Investor relations: Maintaining relationships with shareholders and others in the

financial community. Development: Public relations with donors or members of nonprofit organizations to

gain financial or volunteer support.

6. Discuss the tools used by public relations professionals. Is public relations free promotion for a company? (AACSB: Communication)


Answer:

Public relations uses several tools. One of the major tools is news. PR professionals find or create favorable news about the company and its products or people. Sometimes news stories occur naturally, and sometimes the PR person can suggest events or activities that would create news. Speeches can also create product and company publicity. Increasingly, company executives must field questions from the media or give talks at trade associations or sales meetings, and these events can either build or hurt the company’s image. Another common PR tool is special events, ranging from news conferences, press tours, grand openings, and fireworks displays to laser shows, hot air balloon releases, multimedia presentations, or educational programs designed to reach and interest target publics. Public relations people also prepare written materials to reach and influence their target markets. These materials include annual reports, brochures, articles, and company newsletters and magazines. Audiovisual materials, such as slide-and-sound programs, DVDs, and online videos are being used increasingly as communication tools. Corporate identity materials can also help create a corporate identity that the public immediately recognizes. Logos, stationery, brochures, signs, business forms, business cards, buildings, uniforms, and company cars and trucks—all become marketing tools when they are attractive, distinctive, and memorable. Finally, companies can improve public goodwill by contributing money and time to public service activities.

When using public relations, the company does not pay for the space or time in the media. Rather, it pays for a staff to develop and circulate information and manage events. If the company develops an interesting story or event, it could be picked up by several different media and have the same effect as advertising that would cost millions of dollars. What’s more, public relations has the power to engage consumers and make them a part of the brand story and its telling.

Critical Thinking Exercise

1. The Public Relations Society of America (PRSA) awards the best public relations campaigns with Silver Anvil Awards. Visit www.prsa.org/Awards/Search and review several case reports of previous winners. What does the field of public relations seem to encompass? Write a report on one of the award winners focusing on marketing-related activities. (AACSB: Communication; Use of IT; Reflective Thinking)

Answer:

Students’ examples will vary, but several examples focus on marketing-related activities. This site provides summaries of case studies of awards since 1968, with multiple categories such as branding, crisis management, ethics, public service, and social responsibility across approximately twenty industries. Outcomes include brand awareness, market share, fundraising, employee morale, and public policy, to name just a few. Instructors may want to assign specific categories, industries, and outcomes to get a wide variety of award-winning public relations activities.


http://www.prsa.org/Awards/Search

Marketing Technology: Twitter—Media Friend or Foe?

Visit any media outlet’s Internet site and you’ll see the familiar Facebook and Twitter icons. Traditional news media have migrated to online versions and beyond through social media. But social media have become a major source of news for many people. Sixty percent of respondents in one study indicated Facebook as a source of news and 20 percent used Twitter to learn what’s happening in the world. Twitter might have a growing advantage because of the nature of short tweets and how quickly they spread. Most news outlets have a presence on Twitter, promoting their content and directing audiences to their online sites. But Twitter has found a way to make money through advertising and is hiring editorial personnel to produce and manage content. It appears that Twitter is moving away from being just a media platform to becoming a media entity, which concerns traditional media outlets. Twitter has been a partner with traditional media, but now it appears to be moving in the direction of being a competitor. Twitter’s NASCAR and Olympics Hub editorial offerings were just the beginning. Part of Twitter’s success is due to the relationships it has fostered with these outlets, but now Twitter is building a digital-media business on content provided by its media partners as well as eye-witness input from people located where the news is happening.

1. Explain how Twitter makes money through advertising. Find examples of companies using Twitter as a promotional tool. (AACSB: Communication; Reflective Thinking)

Answer:

Twitter generates advertising revenue through “Promoted Tweets,” “Promoted Trends,” “Promoted Accounts,” and “Enhanced Profiles.” See www.buzzle.com/articles/how-does-twitter-make-money.html for an explanation each. Coca-Cola, Disney, and Starbucks are examples of companies using Twitter as a promotional tool. Even though tweets are limited to 140 characters or less, hashtags can be used to link to other content, such as online sites and articles. See https://support.twitter.com/articles/49309-what-are-hashtags-symbols# for an explanation of how hashtags are used in tweets. For an example of how Disney is using Twitter, visit https://twitter.com/Disney.

2. How does social media advertising spending compare to traditional mass media advertising spending? How likely is it that Twitter can become a media entity rather than just a media platform and what are the implications for advertisers? (AACSB: Communication; Reflective Thinking)

Answer:

Predictions of the growth of online advertising spending versus traditional media can be found at www.emarketer.com/PressRelease.aspx?R=1008788. While spending in traditional print media exceeded online spending, online is expected to exceed print spending in 2012 and grow. Television ad spending is predicted to still exceed online spending. The real growth in online advertising for social media is in mobile advertising, and it is expected to grow 62 percent worldwide in 2012 (see http://phys.org/news/2012-08-mobile-ad-tops-japan-survey.html). Even in the face of declining total ad spending in May 2012, Twitter tripled its


http://phys.org/news/2012-08-mobile-ad-tops-japan-survey.html

http://phys.org/news/2012-08-mobile-ad-tops-japan-survey.html

http://www.emarketer.com/PressRelease.aspx?R=1008788

https://twitter.com/Disney

https://support.twitter.com/articles/49309-what-are-hashtags-symbols

http://www.buzzle.com/articles/how-does-twitter-make-money.html

http://www.buzzle.com/articles/how-does-twitter-make-money.html

share of ad dollars spent in social media. Facebook is still the giant of social media ad spending at an almost 50 percent share, but that share is decreasing (see www.businessinsider.com/twitter-triples-market-share-as-total-ad-spending-drops-in-may-2012-7?op=1). Most comparisons of advertising spending by media do not break out social media as a separate medium and may not even include it in online spending because of it is still considered an unmeasured medium.

There are articles describing how social media are encroaching on the news industry (for example, see http://mashable.com/2012/04/18/social-media-and-the-news/). This example includes useful graphics that can be used in a classroom presentation. There are several bloggers tracking Twitter and its activities in building a media business (for example, see http://gigaom.com/2012/07/11/twitter-is-building-a-media-business-using-other-peoples-content/). One key difference between Twitter and traditional media outlets is the editorial review of content, but Twitter is moving in that direction by hiring editors and reviewing content that is placed on editorial Twitter sites. The primary implication for advertisers is that they have to become part of the discussion in social media for their message to spread rather than the current media model in which ads interrupt viewers’ and readers’ media consumption.

Marketing Ethics: Don’t Say That!

If you like a restaurant…Yelp about it! If you don’t…Yelp about it! Yelp is an online guide that posts customers’ reviews of local businesses such as restaurants, spas, and even doctors. Businesses are rated based on the reviews posted about them, with 5-stars being the best. Although almost 60 percent are 4- or 5-star reviews, the remainder are less positive. Bad reviews can be the kiss-of-death for a small business. Businesses do not put this information on the Yelp site—others do. This is creating a problem for many businesses. Some customers demand something in return for posting a positive review, or worse, for not posting a negative review. One restaurant owner claimed a customer threatened to post a “scathing” review after allegedly getting food poisoning from eating at the restaurant unless he received a $100 gift card. This is not much different than the unethical customers who put glass shards or a dead cockroach on their plates and demand their meal for free (conveniently when they’ve almost finished the dish). Most restaurants capitulate to avoid a scene. But a negative Yelp or other online review is more ominous with “word-of-mouse” having such far-reaching and lasting consequences. Some medical professionals have gone so far as to require new patients to sign anti-defamation contracts called “medical gag-orders” before receiving treatment. These waivers attempt to prevent patients from posting negative reviews online and often include signing over copyrights of any reviews posted in an attempt to gain leverage in removing any negative content from rating sites. Some sites, such as Angie’s List, flag physicians requiring such waivers, and one state—Michigan—has introduced a bill deeming such waivers illegal.

1. Visit Yelp and other sites such as Angie’s List, RateMDs.com, and Rate My Professor. Are reviewers limited in any way regarding what they can say on such sites? Should they be limited? (AACSB: Communication; Ethical Reasoning; Reflective Thinking)

Answer:


http://gigaom.com/2012/07/11/twitter-is-building-a-media-business-using-other-peoples-content/

http://gigaom.com/2012/07/11/twitter-is-building-a-media-business-using-other-peoples-content/

http://mashable.com/2012/04/18/social-media-and-the-news/

http://www.businessinsider.com/twitter-triples-market-share-as-total-ad-spending-drops-in-may-2012-7?op=1

http://www.businessinsider.com/twitter-triples-market-share-as-total-ad-spending-drops-in-may-2012-7?op=1

Information about Yelp can be found at www.yelp.com/faq. Yelp has a sophisticated filtering system to weed out illegitimate reviews, such as fake positive self-reviews from businesses or negative reviews from competitors. The filtered reviews are still visible; however, site visitors must click on “filtered reviews” link that follows all the other reviews.

Individuals are allowed free speech, but they need to be cautious of defaming others, which could result in legal action against them.

2. Discuss the arguments for and against doctors’ rights to require medical gag-orders. Recommend how doctors should handle this situation. (AACSB: Communication; Ethical Reasoning; Reflective Thinking)

Answer:

Medical professionals’ comments are restrained because of the Health Insurance Portability & Accountability (HIPAA) Privacy Rule. Even though a site may allow rebuttals to negative reviews, medical professionals cannot disclose patient information, which severely limits what, if anything, they can say in a rebuttal. Some physicians see this as making it a mutually-beneficial private relationship. Doctors cannot publically reveal information about their patients, so why should patients be allowed to publically reveal information about their doctors? An argument against such waivers is that patients have been talking about their doctors to others long before the Internet. However, word-of-mouse can have a much greater impact than word-of-mouth. One point of differentiation is the type of information being revealed. Patients are discussing how the doctor performed the treatment sought and other aspects about the service received, whereas doctors could be revealing information about a patient’s medical condition. The former is considered free speech, while the latter is private information protected by law.

Most patients will likely be concerned if asked to sign such as waiver. The patient-doctor relationship should be built on mutual trust, and requiring a waiver such as this sends a signal that the doctor doesn’t trust the patient. Worse, it could result in the patients doubting the quality of care he or she is about to receive.

Marketing by the Numbers: C3, CPM, and CPP

Nielsen ratings are very important to both advertisers and television programmers because the cost of television advertising time is based on these ratings. A show’s rating is the number of households in Nielsen’s sample that are tuned to that show divided by the number of television-owning households—115 million in the United States. One rating point represents one percent of the TV market, so one point equals 1.15 million households. Nielson’s TV ratings are referred to as C3 and measure viewers who watch commercials live or watch recorded commercials up to three days later. A common measure of advertising efficiency is cost per thousand (CPM), which is the ad cost per thousand potential audience contacts. Advertisers also assess the cost per rating point by dividing the ad cost by the rating. These numbers are used to assess the efficiency of a media buy. Use the following average price and rating information,


http://www.yelp.com/faq

which was used to pre-sell advertising for the 2012-2013 television season, to answer the questions:

Program Cost per :30 spot C3 RatingSunday Night Football $425,000 11.8American Idol $475,000 9.0Grey’s Anatomy $225,000 5.3Two and a Half Men $215,000 6.0The Vampire Diaries $75,000 1.2

1. How many households are expected to watch each program? (AACSB: Communication; Analytical Reasoning)

Answer:

1 percent of 115 million households is 1,150,000 households (HHS). To determine the total number of expected households watching a program, multiply the rating by 1,150,000. Therefore:

Sunday Night Football = 11.8 x 1,150,000 = 13,570,000 HHSAmerican Idol = 9.0 x 1,150,000 = 10,350,000 HHSGrey’s Anatomy = 5.3 x 1,150,000 = 6,095,000 HHSTwo and a Half Men = 6.0 x 1,150,000 = 6,900,000 HHSThe Vampire Diaries = 1.2 x 1,150,000 = 1,380,000 HHS

2. Calculate the cost per thousand (CPM) and cost per point (CPP) for each program. How should advertisers use these measures when planning a television media buy? (AACSB: Communication; Analytical Reasoning; Reflective Thinking)

Answer:

Ad cost x 1,000 CPM = ———————————

Number of households

Therefore, the CPMs for each show are:

$425,000 x 1,000 Sunday Night Football = ———————— = $31.31 per thousand HHS

13,570,000 HHS

$475,000 x 1,000 American Idol = ———————— = $45.89 per thousand HHS

10,350,000 HHS


$225,000 x 1,000 Grey’s Anatomy = ———————— = $36.91 per thousand HHS

6,095,000 HHS

$215,000 x 1,000 Two and a Half Men = ———————— = $31.15 per thousand HHS

6,900,000 HHS

$75,000 x 1,000 Vampire Diaries = ———————— = $54.34 per thousand HHS

1,380,000 HHS

The cost per point (CCP) is calculated as:

Ad cost CPP = ———————

C3 Rating

Sunday Night Football = $425,000/11.8 = $36,016.95 per point

American Idol = $475,000/9.0 = $52,777 per point

Grey’s Anatomy = $225,000/5.3 = $42,453 per point

Two and a Half Men = $215,000/6.0 = $35,833 per point

The Vampire Diaries = $75,000/1.2 = $62,500 per point

CPM and CPP give advertisers an indication of the efficiency of a TV buy, but comparing the CPMs and CPPs of these specific shows must be done with caution because these shows are scheduled at different times on different days and may have different audience makeups. CPM and CPP comparisons should be done on a similar basis, such as comparing programs appearing on Monday night at 9:00 p.m. EST with similar audience breakdowns in terms of demographic variables such as age and gender.

Company Case Notes

The Super Bowl: More Than a Single Advertising Event

Synopsis

Current trends in advertising seem to favor the non-traditional. And yet the Super Bowl as an advertising event enjoys more success than ever. That is because perhaps more than any other


television event, the Super Bowl has emerged as the perfect traditional advertising vehicle to provide a springboard to new trends in social media, public relations, and other growing forms of promotion. This case illustrates how companies have turned a single event (the Super Bowl) into an advertising showcase for campaigns that span elements of the promotional mix, promotional media, and time. If executed properly, a single Super Bowl ad provides fuel for promotional activity that starts weeks (if not months) before the big game and keeps going for months after.

Teaching Objectives

The teaching objectives for this case are to:

1. Consider the past, present, and future of advertising and the factors that are affecting it. 2. Evaluate the concepts of reach, frequency, and impact relative to a specific media vehicle

like the Super Bowl. 3. Which factors should be considered when assessing advertising return-on-investment. 4. Gain practical experience by designing an advertisement for the Super Bowl and

integrating it to a full campaign.

Discussion Questions

1. What factors have played the biggest role in changing the dynamics of Super Bowl advertising in recent years? Cost – the cost for a Super Bowl ad has continued to grow, reaching record prices every year. This has put more pressure on marketers to get the most bang for their buck. Scope – viewership for the big game also continues to rise. It’s the biggest television event of the year in the U.S., and globally. That’s a hard venue for advertisers to ignore. Media devices – Mobile devices are exploding. That provides an opportunity for marketers to reach viewers before, during, and after the game in different ways. Growing importance of public relations – the “earned” aspect of promotional delivery is on the rise. Marketers are looking for more ways to seed good brand information and let journalist and bloggers do the rest. And the Super Bowl is made for PR. As a game, it’s huge. As an advertising event, it’s even bigger. Social media – everyone is on it one way or another. And, social media provides an opportunity for real time communication from company to customer, customer to company, and customer to customer. With this in mind, more marketers are turning to this method in order to more fully engage viewers and maximize their advertising investment.

2. Discuss the concepts of reach, frequency, and impact as they relate to Super Bowl advertising. How does consideration and planning for these concepts differ between the Super Bowl and other television events? Reach – the size of the Super Bowl audience is huge. That audience is even bigger when the pre- and post-event audiences are factored in. Frequency – this is low in terms of how many times the ad actually runs during the program. But it can be very high when combined with online sources. Consider VW’s “The Bark Side” ad. The ad was viewed by at least half of the audience watching the


Super Bowl (almost 60 million). Then, the ad was viewed another 63 million times by the end of the year on YouTube alone. Many of those views likely represented multiple views by the same viewers. Impact – given how much the engagement factor has increased with the advent of mobile and social technologies, the impact of a Super Bowl ad can reach unprecedented heights. Consider the Coca-Cola (Polar Bowl) example from the case.

3. When assessing return on investment, what objectives must Super Bowl advertisers consider? Assessing sales and profits directly is only one-way to measure advertising ROI. And as the chapter points out, this is somewhat tenuous. Advertisers must consider setting goals and assessing the communication effects of advertisements. For example, Coca-Cola set goals for fan RSVP to its Polar Bowl as well as for the average time each would spend on the site. After the game, it found that it had exceeded its goals many times over. While its tough to say exactly how many Cokes were sold as a result, it isn’t hard to figure out how much more bang-for-the-buck Coca-Cola got from the methods it employed.

4. Choose a brand that has not recently run a Super Bowl ad. Design an effective campaign with before, during, and after game promotional tactics. This is a good activity to run in groups as an in-class activity. Obviously, responses will vary. However, students should take care to plan out a full palette of promotional techniques like those described in the case. They should also tailor such to the nature of the brand they chose.

Teaching Suggestions

Have students respond to the question, “What was your favorite ad from this year’s Super Bowl?” As they respond, ask them why? They will likely focus on some of the characteristics of the ad itself (“It was funny”, “It grabbed my attention”). Ask follow-up questions to determine if anyone had any exposure to their favorite Super Bowl ad outside of the game itself. As this discussion develops, move into the discussion questions to more fully explore these concepts.

This case can also be used with the IMC chapter (Chapter 14), the marketing environment chapter (Chapter 3), and the online marketing chapter (Chapter 17).

ADDITIONAL PROJECTS, ASSIGNMENTS, AND EXAMPLES

Projects

1. Pick up a Sunday newspaper (they are always full of advertisements). Remember the conversation on advertising objectives. Now find two examples of advertisements that inform, persuade, and remind. (Objective 2)


2. Find an example of a promotional campaign that has employed messages through at least three different media types. How does each media type affect the message being communicated? (Objective 2)

3. Go to Coke’s Web site (www.cocacola.com). From their U.S. site and their various international sites (the links are contained on their homepage), compare their advertisements here and abroad. (Objective 2)

4. Visit www.benjerry.com. Find all aspects of this Web page that are public relations oriented and describe them. (Objective 3)

5. Johnson & Johnson made very good use of public relations to introduce and grow the Aveeno Positively Ageless project line. Take a look at the Aveeno homepage and discuss the public relations activities in which they are currently involved (see http://aveeno.com/). (Objective 4)

Small Group Assignments

1. Form students into groups of three to five. Each group should read Real Marketing 15.1: Consumer-Generated Advertising: Fresh Consumer Insights and Brand Development, and answer the following questions. (Objective 2)a. List three major benefits of consumer-generated advertising. Next, list three major

risks. b. What, specifically, do you believe is more effective about this type of advertising?

Why does it connect so well with most consumers? c. Do you believe that consumer-generated advertising signals a permanent shift in the

advertising business, or is it just a passing fad? Explain your answer. 2. Form students into groups of three to five. Each group should read the opening vignette

to the chapter on the Allstate Mayhem campaign. Each group should then answer the following questions. (Objective 2)a. Through their catchy advertising campaign, which advertising objectives did Allstate

pursue? How about GEICO or Progressive? b. Can these insurance companies use the same advertising campaigns indefinitely?

Why or why not? c. If not, what ideas would you suggest next for the insurance giants?

Individual Assignments

1. Saatchi & Saatchi is one of the most successful advertising companies in existence today. Take a look at their Web site (www.saatchi.com/) and examples of the advertising campaigns they have created over the years. Find and discuss examples of both informative advertising and persuasive advertising. (Objective 2)

2. President Barack Obama made excellent use of public relations as a candidate for the presidency in 2008 and 2012. He has continued to use public relations activities. Review the six public relations functions (p. 460) and discuss how the Obama administration made use of each. (Objective 3)


http://www.saatchi.com/

http://aveeno.com/

http://www.benjerry.com/

http://www.cocacola.com/

Think-Pair-Share

Consider the following questions, formulate an answer, pair with the student on your right, share your thoughts with one another, and respond to questions from the instructor.

1. What is the main difference between reach and frequency? Write a definition of each. (Objective 2)

2. What are the advantages and disadvantages of the various types of media? (Objective 2)3. What form of media do you believe would be best for reaching a 70-year-old retired

school teacher? For reaching a 12-year-old girl? (Objective 2) 4. How is public relations different from advertising? (Objective 3)5. List and briefly identify the major public relations tools. (Objective 4)6. How can public relations be used on the Internet? (Objective 4)

Outside Examples

1. Examine the advertising for cigarettes over time. Spend some time researching how advertising for cigarettes has changed over the past 50 years. Look at old ads from the 1950s and 1960s and compare them with modern ads. How has the message changed? During which time frame do you believe the advertising to be the most effective? Why? (Objective 2)

Possible Solution:This will be a fun exercise for students who may not previously have been exposed to many of the old cigarette ads from the 1950 and 1960.

One of the most striking facts that will emerge deals with how the medical community at one time endorsed smoking as a healthy way to calm the nerves! Many of the advertisements from the past made claims tied to relaxation, social prowess, and sex appeal, when promoting cigarettes. They were viewed as a healthy indulgence. Nothing was ever mentioned about the dangers of smoking.

Cigarette advertising from the past was probably more effective because at that time it was not necessary to point out (however slightly) the dangers associated with smoking.

2. Comparative advertising can be a very powerful form of advertising—if used correctly. Watch some of the Apple iMac ads comparing (favorably) a Mac to a PC. Discuss what makes these ads so effective. (You can find many of the ads on Apple’s Web site: www.apple.com.) (Objective 2)

Possible Solution:

Much has been made of this ad campaign. Apple has gotten an untold amount of free publicity off of this campaign. From the Apple site, you can access these comparison ads from as far back as 2006 (the introduction of the campaign).


http://www.apple.com/

The ads point out the superiority of the Mac along a number of points:

Ease of use Style Lack of viruses Superiority over Vista (most recently)

The comparisons are never made in a manner of superiority or talking down to the PC (and by extension, the PC user); rather, the comparisons are made in a playful, engaging, bantering manner that delivers the message of advantage or superiority, but in a non-threatening way.

Web Resources

1. http://247.prenhall.comThis is the link to the Prentice Hall support link.

2. www.allstate.com Here is Allstate’s Web site. Use it when you begin this chapter.

3. www.examstutor.com/business/resources/studyroom/marketing/advertising/2-advertisingobjectives.phpThis site gives great examples of the different major objectives of advertising.

4. www.miniusa.com/The Web site for MINI is busy and exciting. It is a great example of creativity at work.

5. http://doritos.com/This is a great site. Here you can find excellent examples of consumer-generated messages.

6. http://us.wii.com/On Nintendo’s Wii site you will find examples of their advertisements and their use of public relations.


http://us.wii.com/

http://doritos.com/

http://www.miniusa.com/

http://www.examstutor.com/business/resources/studyroom/marketing/advertising/2-advertisingobjectives.php

http://www.examstutor.com/business/resources/studyroom/marketing/advertising/2-advertisingobjectives.php

http://www.allstate.com/

http://247.prenhall.com/

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