Structure of Advertising Industry

STRUCTURE OF ADVERTISING INDUSTRY

INTRODUCTION

Advertising is a social and business process responsible for the mass communication of the information. Today, advertising is the fastest growing industry that has come to stay so long as the forces of competition are at constant work deciding the destinies of the firms. The size of the industry of advertising can be measured in terms of amount spent on this creative activity of education and entertainment.
Advertising industry is a social institution born specially to fulfill the human needs to acquire and send the information about the availability of products, services and ideas. It is the industry with a network of variety of divergent forces and elements. The structure of this industry gives us the picture of the active participants in the widest range of advertising activities.

The major components of the advertising industry are:

1)Advertisers

2)Media-owners

3)Advertising Agencies

4)Consumers

5)Governments
1) Advertisers

The advertising industry owes its existence to the advertisers , who are the individuals and the organizations who send the advertising message to the intended and interested parties. There are two types of advertisers ,business advertisers and non business advertisers.

Business advertisers-business advertisers are the manufacturers and dealers who are interested in disseminating the information related to a product, idea or service in order to popularize their points of sale and offers. The business advertisers want to advertise information like the availability of products in a particular store or stores, the specialty of products, and also the terms and conditions related to a product. So when an advertiser is into this type of advertising he can be called as a business advertiser.
Non-business advertisers-the other type of advertisers are non-business advertisers. These type of advertisers are interested in passing on information to an individual or a group of individuals. In the case of a non-business advertiser the information disseminated may not relate to a product, service or an idea of commercial nature. Here the information relates to things like births and deaths, functions, ceremonies, celebrations, rules regulations, arrival and departures.
Both business and non-business advertisers are a very important component of the industry .Both these advertisers are ready to foot the costs involved as sponsors to pay for highly specialized services of media owners and agencies directly and also indirectly bear the costs of the government.

2) Media owners

The main function of media owner is to transfer the message from the sender to the audience. Therefore we can say that the media owners are a medium through which the advertising message is carried or conveyed.
Classification of media-

* Television: reaches large number of people .But the costs involved in tis type of media are high. * Cable TV: Better equipped to target a specific audience both psychographically and geographically. It is more cost efficient than television, but it doesn’t reach as many people as television does. * Radio: it reaches specific target audiences. * Newspaper: Communicates details about arts organization's events; can geographically target a city/communities; lots of ad clutter, especially in the entertainment section; expensive for a "page-dominant" advertisements. * Magazines: Reach upscale audiences; higher quality graphics and environment; based on a weekly or monthly publishing cycle, it is difficult to develop an adequate frequency level; costly, especially since a color ad is necessary for impact. * Outdoor Billboards and Transit: Good image or reminder medium; can't communicate many details. * Internet: Good support medium; communicates lots of information for events; open 24/7; need to promote website address; must keep information current.
Each medium has the widest range of varieties to suit the requirements of both the advertisers and the audiences .For example dentists , architects ,industrial goods ,consumer goods will all have different types of ads.

No matter which medium is used, the aim of each advertisement is to cover the prospects for each rupee spent by the advertiser. The point lies in combining these different media and making use of it such that they are very advantageous to the advertiser. Combining the media is however not such an easy task. It is very specialized, delicate and skillful activity. A very fine combination of the media will prove to be very helpful to the advertiser. The advertiser will be better rewarded for his efforts through a proper combination of media.

3) Advertising Agency

What is an Advertising Agency?

According to American Advertising Agencies Association(A.A.A.A.) an advertising agency is: (i) An independent business organization, (ii) Composed of creative and business people, (iii) Who develop, prepare and place advertising on advertising media, (iv) For sellers seeking to find customers for their goods and services.

The role of an advertising agency is to help effect the transformation from product or service to brand by clearly positioning the offering to the consumer – its role and its benefits – and by communicating the brand’s own personality. In short its role is to provide meaningful differentiation via the consumer connection.
Most advertisers assign this job of informing the target audience and creating images to advertising agencies. Thus, the advertising agencies plan, prepare and place ads in the media. But even an advertiser can do all these things. The management can do planning of ad campaigns. For preparing ads, creative personal can be hires. And the advertiser for placing the ads can buy media space or time. So, why hire an advertising agency?

The reason can be enlisted as follows:

* Expertise and experience- An advertising agency brings together people with the required expertise and experience of the various sub-disciplines of advertising. Thus, it has the copywriters, visualizes, researchers, photographers, directors, planners and people who get business and deal with clients working in ad agencies. An agency moulds all these people into a team and gives them a highly conducive work atmosphere. The agency makes the best use of their talents and experience to deliver rapidly, efficiently and in greater depth than a company or organization could do on its own. * Objectivity and professionalism- Advertising agencies are highly professional. Objectivity is a major virtue of ad agency. They operate in a strange way. While they take up advertising for others, agencies hardly advertise themselves. Ad agencies being outside intermediaries can be objective. They thus will offer independent and detached viewpoints and suggestions based on objective analysis. * Cost effective- If an organization wants to hire people to do its advertising, it can not provide them work all through the year. Also most experts in the fields of advertising like directors, musicians, photographers, charge huge amounts and are often not affordable. Moreover, hiring, organizing and managing all talents required to produce advertising campaigns is not an easy thing. And the fact that 98% of advertisers the worlds over hire as agencies is proof enough about the cost effectiveness of the agencies. Also the kind of consistent, powerful and compelling advertising that can be created by using the expertise, experience, objectivity and professionalism of ad agencies cannot be measured economically.

There are basically 5 types of advertising agencies.

Full service Agencies
Large size agencies.
Deals with all stages of advertisement.
Different expert people for different departments.
Starts work from gathering data and analyzing and ends on payment of bills to the media people.

Interactive Agencies
Modernized modes of communication are used.
Uses online advertisements, sending personal messages on mobile phones, etc.
The ads produced are very interactive, having very new concepts, and very innovative.

Creative Boutiques
Very creative and innovative ads.
No other function is performed other than creating actual ads.
Small sized agencies with their own copywriters, directors, and creative people.

Media Buying Agencies
Buys place for advertisement and sells it to the advertisers.
Sells time in which advertisement will be placed.
Schedules slots at different television channels and radio stations.
Finally supervises or checks whether the ad has been telecasted at opted time and place or not.

In-House Agencies
As good as the full service agencies.
Big organization prefers these type of agencies which are in built and work only for them.
These agencies work as per the requirements of the organizations.

Functions of Advertising Agencies
Today advertising agencies are found in virtually every major city on the world and their role in stimulating economic growth is solidly established. To understand advertising, we need to examine the functions of an Ad Agency. These are: -

* Talent & Creative productions: The basic function of an Ad Agency is providing talent. The creative efforts of the art director, the detailed analysis of the research director and the political understanding of the campaign director, are just a few examples of the many abilities of Ad Agency personal have to offer. A business organization or person will contract the services of an ad agency to help market a product. This function involves processing the information collected from the client and through research and designing communication material in the form of advertisements and other publicity material. This also includes planning creative strategies, copy or script writing, visualization, designing, layout, shooting of films, editing, giving music, etc. * Research: The second function of an Ad agency is research. In order to distribute the message to the public successfully, the agency must first know all that it can about the product. One of the first jobs is to research the product and the company, one must learn, one possibly can about both. The research must even take one close to the heart of the firm’s inner operations. Ad agencies use research as a tool to test consumer reactions to products and services. * Distribution & Media planning: The third important function of an ad agency is distribution. Here you decide what type of message you will create for the company and what media will be most helpful in sending this message to the public. On the basis of the media habits (access and exposure) of the target audience, agency people prepare a media plan. This plan includes which media to be used, which part of the media to be used, when to place the ads and for how long to place the ads, etc. media planners keep track of the viewer ship, listener ship and readership of all kinds of media. * Monitoring Feedback: By monitoring consumer feedback, a decision on whether to revise the message, the medium, the target audience or all of them can be made. Ad agencies are developing to reach the target audience. As information is the backbone of all advertising, to prepare ads, one requires information about the product, its competitors, the market situation and trends, information about the audiences (their likes and dislikes and media habits) also need to be collected. Some of the most effective advertising includes advertisement written in their native language. All of these specialized campaigns are creating new demands on agencies and are requiring new talents for people who work in advertising.

In addition, many agencies also offer a variety of allied services. These include: * Merchandising * Public relations * Organizing exhibitions and fairs * Preparing all kinds of publicity material * Planning and organizing special events (event management) * Direct marketing

4) Consumers

The seekers for the advertising information are all the consumers – both individuals and organizations. They need this information for making their decisions to buy. The important thing is they seek this information aware or are unaware of it. The number of seekers is really very large. In India we have 850 million people – maybe manufacturers, dealers ,service organizations like hospitals, schools, colleges ,churches, temples, mosques, clubs and organizations – governmental agencies and other usual final users. The decision to buy is made either for themselves or for others on their behalf. The key economic problem of advertising industry today, is not one of conveying all the information to all the individuals and organizations of all the possible offerings available in the market. The challenge is to convey the information about what is latest in the field – may be an automobile, a television, a machinery, a suit length, a pack of eatable or a bottle of soft drink. Today's so called 'gracious living' makes it so if each consumer has a distinct patterns of consumption. That is why, people go in for just a car, a scooter, a television, a cloth, a pair of shoes but the latest in range of each line of production. The whole thing is that it is the latest that matters than the greatest. Advertising, therefore, struggles to provide this much desired information to the prospects and the consumers interested in studying and deciding.

5) Governments Government as the custodian of the people is playing an increasingly active and significant role and has become an integral part of the advertising industry. It may be the local or state or the central government that we see playing a key role in the fascinating field of advertising. It is so because these governments manage the behavior of the advertising industry. * The elected officials at all these three levels pass laws that directly or indirectly have bearing on the industry. Eg : Essential Commodities Act, M.R.T.P. Act in India affect the working of manufacturing and trading units and they are bent to the requirements of welfare state. * Appointed officials issue rules and regulations that influence the behavior of the media, advertisers, agencies – directly and the consumers indirectly. * The courts of law – district, high and supreme – establish the rules of behavior that will have bearing on the industry through the cases of individuals and organizations. In the past, the governments managed the behavior of advertising industry by directing what kind of decisions were not allowed by the sellers, buyers and the agencies. Thus, during the prohibition era, advertisements on wine or alcohols were prohibited. Of late, there has been a shift in the policy direction. Governments of today have been directly influencing the behavior by ordering a specific behavior on the part of the industry. For example, every producer is to give certain information to the consumers as a part of package or label including the statutory warning, if any.

CONCLUSION

In a nutshell, the advertising industry is made up of five major wheels that are coherently set to keep it going. Among these, the wheel that regulates other wheels has the key role to play as it balances the entire machinery of advertising. Such a balancing is a must as it results in protecting the interests of all those who are influenced by the advertising industry of today. It is not to undermine any of these wheels. Each wheel has its role- one supports another and not supplant. The outgrowth of the industry is mainly due to the constructive role of each of these components.
Like any other industry. The advertising industry is contributing to a very great extent towards increasing the national income by providing employment to several people and it is indeed a fertile ground for all those who are creative and bestowed with fertile imagination and vision.