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ENDORSERS AND MESSAGE APPEALS IN ADVERTISING Chapter Objectives 1. Describe the role of endorsers in advertising. 2. Explain the requirements and receiver processing modes for an effective endorser. 3. Appreciate the factors that enter into the endorser-selection decision. 4. Discuss the role of Q Scores in selecting celebrity endorsers. 5. Describe the role of humor in advertising. 6. Explain the logic underlying the use of appeals to fear in advertising. 7. Understand the nature of appeals to guilt in advertising. 8. Discuss the role of sex appeals in advertising, including the downside of such usage. 9. Explain the meaning of subliminal messages and symbolic embeds. 10. Appreciate the role of music in advertising. 11. Understand the function of comparative advertising and the considerations that influence the use of this form of advertising. Chapter Overview This chapter focuses on endorsements and message appeals. The Kelman source attribute model (credibility, attractiveness, power) provides an important framework for understanding how sources (such as endorsers) may or may not be effective through underlying processes, such as internalization, identification, and compliance. The following factors are explained: (1) celebrity and audience matchup, (2) celebrity and brand matchup, (3) celebrity credibility, (4) celebrity attractiveness, (5) cost considerations, (6) working ease or difficulty factor, (7) endorsement saturation factor, and (8) likelihood-of-getting-into-trouble factor. Discussion of celebrity endorsers indicates that endorsers have an influence on consumers via the attributes of credibility and attractiveness. Credibility functions via the process of internalization, whereas attractiveness operates through an identification mechanism. Widely used advertising techniques discussed in this chapter include humor, appeals to fear, appeals to guilt, sex appeals, subliminal messages, the use of music, and comparative advertisements. Chapter Outline I. Introduction This chapter reviews the use of endorsers in advertising and five types of messages prevalent in advertising. II. The Role of Celebrity Endorsers in Advertising Endorsements in advertising can be celebrity endorsements or typical personal endorsements. We will focus on celebrity endorsers. Table 11.1 lists the top endorsement incomes among U.S. athletes. III. Source Attributes and Receiver Processing Modes Social psychologist, Herbert Kelman, states that there are three basic source attributes relevant to an endorser’s effectiveness. These are credibility, attractiveness, and power. Table 11.2 shows Kelman’s source attributes and receiver processing modes to explain how endorsers work as a source in advertising. A. Credibility: The Process of Internalization Credibility refers to the tendency to believe or trust someone. When an information source is believed as credible, audience attitudes are changed through a psychological process called internalization. Internalization occurs when the receiver accepts the endorser’s position on an issue as his or her own. Two important dimensions of source credibility are expertise and trustworthiness. Trustworthiness refers to the honesty, integrity, and believability of a source. Expertise refers to the knowledge, experience, or skills possessed by an endorser as they relate to the endorsed brand. B. Attractiveness: The Process of Identification Source attractiveness consists of three related dimensions: similarity, familiarity, and liking. C. Power: The Process of Compliance Compliance occurs when an individual is persuaded by an advertised source because they hope to achieve a favorable reaction or approval from this source. This process may take place through direct advertising materials. D. Practical Issues in Selecting Celebrity Endorsers Advertising executives use a variety of factors in selecting celebrity endorsers: 1. Celebrity and Audience Matchup An endorser much matchup well with the endorsed brand’s target market. 2. Celebrity and Brand Matchup The celebrity’s behavior, values, appearance, and decorum must be compatible with the desired brand image. 3. Celebrity Credibility People who are trustworthy and perceived as knowledgeable about a product category are best able to convince others to undertake a particular course of action. 4. Celebrity Attractiveness Advertising executives generally regard attractiveness as subordinate in importance to credibility and endorser matchup with the audience and the brand. 5. Cost Considerations Brand managers must perform a cost-benefit analysis to determine whether a more expensive celebrity can be justified in terms of a proportionately greater return on investment. 6. Working Ease or Difficulty Factor Some celebrities are easier to work with than others. 7. Saturation Factor If a celebrity is overexposed (i.e., endorsing too many products) his or her perceived credibility may suffer. 8. The Trouble Factor Must evaluate the likelihood that a celebrity will get into trouble after an endorsement relation is established. E. The Role of Q Scores Celebrities have Performer Q Scores that are commercially available from the firm Marketing Evaluations (the Q signifies quotient). Q Scores are obtained on 1,800 public figures from questionnaires mailed to a representative, national panel of individuals. The surveys ask whether the respondent has heard of each person and how they rate the person in terms of popularity. The Q Score, or quotient, is the percentage of people who respond that a particular performer is “one of my favorites” divided by the percentage indicating they have heard of that person. This rating simply reveals the proportion of a group familiar with a person and who regard that person as one of their favorites. IV. The Role of Humor in Advertising Humor typically uses incongruity resolution—the meaning of the ad is not completely clear, which prompts the viewer to pay more attention and resolve the meaning of the ad. Figure 11.1 provide an example of a humorous ad from E*TRADE. Humor is effective for attracting attention and elevating recall. It can enhance liking. Still, advertisers should be cautious because what is funny to some may not be funny to others. This is particularly true for global advertising campaigns. V. Appeals to Consumer Fears Appeals to fears in advertising are especially effective for enhancing motivation. Appeals to fears usually identify the negative consequences of either not using the advertised brand or engaging in unsafe behavior. A. Fear-Appeal Logic Fear appeals stimulate audience involvement with the message and thereby may promote acceptance of message arguments. Appeals to consumer fears may take the form of social disapproval or physical danger. B. Appropriate Intensity Aside from the ethical issue of whether fear should be used at all, the fundamental issue for advertisers is determining how intense the threat should be. The greater the relevance, the lower the intensity needed to activate a response. C. The Related Case of Appeals to Scarcity Things become more desirable when they are in great demand but short supply. The theory of psychological reactance helps explain why scarcity works. This is related to fear in that people are reacting to a fear of not having a choice. People react against any efforts to reduce their freedoms or choices. VI. Appeals to Consumer Guilt Like appeals to fear, appeals to guilt attempt to trigger negative emotions. Appeals to guilt are powerful because they motivate emotionally mature individuals to undertake responsible action leading to a reduction in the level of guilt. Appeals to guilt are ineffective if advertisements containing guilt appeals lack credibility or advertisers are perceived as having manipulative intentions. VII. The Use of Sex in Advertising A. What Role Does Sex Play in Advertising? Sex can attract and hold attention for a longer time—stopping-power role. It can enhance recall for message points (but only if it is appropriate to the product category and the creative advertising execution). It can evoke emotional responses, such as feelings of arousal or even lust. Whether sexual content elicits a positive or a negative reaction depends on the appropriateness or relevance of the sexual content to the advertised subject matter. B. The Potential Downside of Sex Appeals in Advertising Explicit sexual illustrations in advertisements may interfere with consumers’ processing of the message arguments and reduce message comprehension. VIII. Subliminal Messages and Symbolic Embeds Subliminal messages are presentations of stimuli at a rate or level below the conscious threshold of awareness, but are still perceived subconsciously. Historically, the issue began 50 years ago when a researcher claimed to have flashed the messages “Drink Coca-Cola” and “Eat Popcorn” for 1/3,000 of a second during a movie. He claimed sales of both significantly rose; however the experiment is scientifically meaningless because he failed to use proper experimental procedures. A. Why It Is Unlikely That Subliminal Advertising Works Psychologists and marketing researchers have long refuted Key’s claims. Part of the difficulty in arriving at clear answers as to who’s right and who’s wrong stems from the fact that commentators differ in what they mean by subliminal advertising. 1. A Unique Situation Where Subliminal Stimuli May Influence Brand Choice Subliminal priming can affect consumer’s brand choices. IX. The Functions of Music in Advertising Music can provide communication functions that include attracting attention, putting consumers in a positive mood, making consumers more receptive to message arguments, and communicating meanings about advertised products. Music may work through classical conditioning. X. The Role of Comparative Advertising Comparative advertising is the practice in which advertisers directly or indirectly compare their products against competitive offerings, typically claiming that the promoted item is superior in one or several important purchase considerations. Figure 11.2 shows an example of a direct comparison ad and Figure 11.3 shows an indirect comparison ad. A. Is Comparative Advertising More Effective? Findings are inconclusive. B. Considerations Dictating the Use of Comparative Advertising 1. Situational Factors Characteristics of the audience, media, message, company, and product all play important roles. 2. Distinct Advantages This type of advertising is particularly effective for promoting brands that possess distinct advantages relative to competitive brands. 3. The Credibility Issue The effectiveness of comparative advertising increases when comparative claims are made to appear more credible. To enhance credibility, brands can have an independent research organization support the superiority claims, present impressive test results to back up claims, and use a trusted endorser as the spokesperson. 4. Assessing Effectiveness Measurement techniques are most sensitive when questions are worded in a relative fashion. The question context, or wording, should match the consumer’s encoding mind-set. Chapter Features The Use of Humor and Comparisons in Advertising In the US, television advertisements comparing Apple’s Mac computer and PCs showed a relatively hip guy wearing cool office casual clothing personified the Mac. A nerdish, bumbling character in more formal business clothing personified the generic PC. The hip Mac character put down the nerdish PC person and implied superiority of the Mac computer. In Japan, Apple had to alter the campaign substantially. Whereas direct comparisons are commonplace in U.S. advertising, Japanese consumers are put off by this type of advertising, which is considered to be rude, immodest, and lacking class. The formal clothing style worn by the PC character in the American version of this advertising campaign is evaluated more positively in Japan than the office-casual clothing of the Mac computer persona. So, for the Japanese versions, friendly banter between the Mac and PC characters replaced the more confrontational form of U.S. advertising. Two Unknowns (to Americans) Connect in China Li Ning is the largest supplier of sports shoes in the People’s Republic of China, producing shoes and sportswear mostly for the Chinese market. Damon Jones, has played for ten NBA teams since 1998. With sales less than $1 billion, Li Ning executives desired to further grow the brand and to offset the rapid gains in China from global brands Nike and Adidas. NBA basketball is very popular in China. Damon Jones was chosen to endorse the brand as his career as an NBA player matches well with Li Ning’s slogan “anything is possible.” Jones was an undrafted player who worked extremely hard first to get into the league and then to stay there. His career demonstrates to young basketball fans that hard work enables unexpected achievement—anything is possible! Additionally, Li Ning wanted an endorser “hungry” for a shoe contract, willingly to travel to China regularly, happily meet with Chinese youth and demonstrate his skills while wearing Li Ning shoes and apparel. Subliminal Priming and Brand Choice Researchers in the Netherlands studied the effects of subliminal advertising by showing participants strings of capital B’s intermingled occasionally with small b’s, but also, unbeknownst to them, separate images of subliminally primed words that appeared on the screen prior to the images containing strings of B’s. The primed words were on the computer screen for an extremely short duration (i.e., 23/1,000 second). Half of the participants were assigned to a “treatment” group and the other half were assigned to a “control” group. The “treatment group” participants were primed on multiple occasions with the brand name “Lipton Ice,” whereas “control group” participants were primed an equal number of times with “Npeic Tol,” which is a nonword containing the same letters. Prior to participating in the visual detection task and before being exposed to primed words, half of the participants ate a salty food item. Following the visual detection task, participants were asked to indicate which of two beverages they would prefer to drink—either Lipton Ice tea or Spa Rood, a Dutch brand of mineral water. About 85 percent of participants in the “thirsty condition” who received the Lipton Ice prime selected the Lipton Ice brand; only 20 percent of participants in the “thirsty condition” who received the Npeic Tol prime selected Lipton Ice. Participants in the “non-thirsty condition,” who received the Lipton Ice prime were more likely to select Lipton Ice than were those participants who received the Npeic Tol prime, but the differential in choosing Lipton Ice (about 54 percent versus 32 percent) was far less than the differential for those participants in the “thirsty condition” (80 percent versus 20 percent). Findings from this study make it clear that subliminal advertising—in the form of subliminally primed words—is capable of influencing consumer choice behavior under ideal conditions, namely, when brand choice closely follows exposure to subliminally primed words. TRADITIONAL ADVERTISING MEDIA Chapter Objectives 1. Describe the four major traditional advertising media (newspapers, magazines, radio, and television). 2. Discuss the strengths and weaknesses for each of the major traditional advertising media: newspapers, magazines, radio, and television. 3. Describe how each of these traditional media choices has changed with the appearance of new media options (e.g., social media, online advertising). 4. Appreciate the research methods that are used for each ad medium to determine the size of the audience exposed to advertising vehicles. Chapter Overview This chapter focuses on the four major mass advertising media: newspapers, magazines, radio, and television. Primary emphasis is devoted to each medium’s strengths and limitations. No advertising medium is always best, and the value or worth of a medium depends on the circumstances confronting a brand at a particular time. Newspaper’s strengths include (1) readers are in the right mental frame to process advertisements, (2) mass audience coverage, (3) flexibility, (4) ability to use detailed copy, and (5) timeliness. Limitations include (1) clutter, (2) not a highly selective medium, (3) occasional users (i.e., national advertisers) pay higher rates, (4) mediocre reproduction quality, (5) buying difficulty, and (6) changing composition of newspaper readers. Factors influencing the choice of magazine in which to advertise include the type of people who constitute the advertiser’s target market and cost considerations. Media kits provide a magazine’s readership in terms of demographic profiles and cost information. Magazine’s strengths include (1) very large audiences, (2) selectivity, (3) long life, (4) high reproduction quality, (5) can provide detailed product information, and (6) consumers are involved. Limitations are (1) not intrusive, (2) long lead times, (3) clutter, (4) fewer geographic options, and (5) variability in circulation patterns from market to market. Simmons and MRI reports provide useful information. Considerations influencing the choice of radio vehicle include station format, choice of geographic areas to cover, and choice of daypart, with “morning drive” and “afternoon drive” being the most expensive. Strengths include (1) ability to reach segmented audiences, (2) ability to reach prospective customers on a personal and intimate level, (3) economy, (4) short lead times, (5) transfer images from television, and (6) local personalities. Limitations include (1) clutter, (2) unable to employ visualizations, (3) audience fractionalization, and (4) difficulty in buying radio time. Two specific aspects of television are covered: (1) different programming segments (i.e., dayparts) and (2) the alternative outlets for television commercials (network, spot, syndicated, cable, and local). Television’s strengths are (1) can demonstrate a product in use, (2) intrusion value, (3) ability to provide entertainment and generate excitement, (4) ability to reach consumers one on one, (5) able to use humor, (6) effective with a company’s sales force and the trade, and (7) ability to achieve impact. Limitations are (1) rapidly escalating advertising cost, (2) erosion of television viewing audiences, (3) audience fractionalization, (4) zipping and zapping, and (5) clutter. Infomercials and brand placements are discussed. Chapter Outline I. Introduction The four major mass advertising media are newspapers, magazines, radio, and television. A. Some Preliminary Comments No one medium is always best. II. Newspapers Newspapers were once the leading advertising medium. Newspaper readership has been on a constant decline for years. Local advertising is clearly the mainspring of newspapers. The National Advertising Bureau (NAB), a nonprofit sales and research organization, offers a variety of services that assist both newspapers and national advertisers by simplifying the buying process. A. Buying Newspaper Space The industry adopted the Standardized Advertising Unit (SAU) system, which makes it possible for advertisers to purchase any one of the 56 standard ad sizes in all newspapers in the United States. Under this system, newspapers sell space in column widths and depths in inches. There are six column widths, and columns are in rough multiples of 2 1/16 inches (e.g., 1 column is 2 1/16 inches and 6 columns is 13 inches). Space depth varies from 1 inch to 21 inches. Space rates only apply to advertisements placed ROP (run of press), which means that the ad appears in any location, on any page, at the discretion of the newspaper. Premium charge may be assessed for preferred positioning and is a matter of negotiation between the advertiser and the newspaper. B. Newspaper Advertising’s Strengths and Limitations Table 12.1 lists newspaper advertising’s strengths and limitations. 1. Newspaper Advertising’s Strengths • Because people read newspapers for news, they are in the right mental frame to process advertisements. • Mass audience coverage (broad reach) is possible because coverage is not restricted to specific socioeconomic or demographic groups. • Flexibility is perhaps the greatest strength. Advertising copy can be adjusted to match the specific buying preferences and peculiarities of localized markets, can vary copy through in-paper inserts targeted to specific zip codes, and can place an ad in a newspaper section that is compatible with the advertised product. • Ability to use detailed copy—is unparalleled by any other medium. • Timeliness—short lead times (the time between placing an ad and having it run) permit advertisers to tie in advertising copy with local market developments. 2. Newspaper Advertising’s Limitations • Clutter is a problem, but a study indicated that consumers perceived newspaper as being significantly less cluttered with ads than other media. • Newspapers are not highly selective; they are unable to reach specific groups of consumers effectively. • Occasional users of newspaper space (i.e., national advertisers) pay higher rates than local, heavy users, and have difficulty in securing non-ROP positions. Newspapers’ price lists (called rate cards) show higher rates for national than local advertisers. • Reproduction quality is mediocre. • A national advertiser has difficulty buying in a variety of markets. Each newspaper must be contacted individually, and higher rates are typically charged to national advertisers. • The changing composition of newspaper readers—readership has declined progressively over the past two decades, and the most faithful newspaper readers are aged 45 and older. III. Magazines There are literally hundreds of special-interest magazines, each appealing to audiences that manifest specific interests and lifestyles (e.g., SRDS Media Solutions identifies over 3,000 consumer print magazines and hundreds of others classified as farm and business publications). A. Buying Magazine Space Factors to consider when buying magazine space include the type of people in the magazine’s audience and the cost of advertising. A magazine’s media kit provides demographic and lifestyle information about a magazine’s readership. A rate card, included in a media kit, includes advertising rates for different size pages (i.e., full page, 2/3 page, ½ page, etc.) and for 4-color, 2-color, and black and white ads. SRDS Media compiles media kits and then makes them available to advertisers and their agencies. Figure 12.1 presents the demographic profile for Golf Digest magazines from its media kit. Figure 12.2 illustrates a partial rate card from Sports Illustrated’s media kit. Although each magazine develops its own media kit, agencies rely on organizations like SRDS to compile the kits and make them available. Advertisers use the CPM measure to compare magazine buys. Companies doing research on magazine advertising include GfK Mediamark Research and Experian Simmons. B. Magazine Advertising’s Strengths and Limitations 1. Magazine Advertising’s Strengths • Some magazines reach very large audiences (e.g., Better Homes & Gardens, Reader’s Digest, Sports Illustrated, and Time exceed 29 million readers). • Selectivity, the ability to pinpoint specific audiences, is the feature that most distinguishes magazine advertising from other media. • Magazines are noted for their long life because they are kept around the home or office and used for reference for weeks. • Magazines as an advertising medium are exceptional with regard to elegance, quality, beauty, prestige, and snob appeal—features that result from a high level of reproduction quality. • Magazines can provide detailed product information and convey this information with a sense of authority. • Magazines have the creative ability to get consumers involved in ads, or, in a sense, to attract readers’ interest and to encourage them to think about the advertised brands. 2. Magazine Advertising’s Limitations • Magazines are not intrusive—readers control whether to be exposed to a magazine ad. • Magazines have long lead times that require advertising materials to be on hand for weeks in advance of the actual publication date. • Clutter is a problem with magazine advertising because readers can become engrossed in editorial content and skip over advertisements. • Magazine advertising provides fewer geographic options than other media do. • Variability in circulation patterns from market to market may necessitate the placement of ads in more than one magazine to provide uniform market coverage.  C. Magazine Audience Measurement The number of subscriptions to a magazine and the number of people who actually read the magazine are not the same for the following reasons: • Magazine subscriptions are collected through a variety of intermediaries, making it difficult to obtain accurate lists of who subscribes to what magazines. • Magazines are often purchased from newsstands, supermarkets, and other retail outlets, which eliminates knowledge of who purchases them. • Magazines are available at public locations (i.e., doctors’ offices, beauty salons) where they are read by numerous people. • Individual magazine subscribers often share issues with other people. GfK Mediamark Research and Experian Simmons take large, national probability samples, identify the sample’s media habits and determine their purchase behaviors for an extensive variety of products and brands. There are problems with magazine audience measurement: • Respondents are asked to rate numerous magazines (and other media), which can be fatiguing. • Sample sizes are small, particularly for limited circulation magazines, leading to high margins of sampling error when generalizing to the total population. • Samples may be unrepresentative of actual audience readership. D. Using Simmons and MRI Reports  Table 12.3 provides a pared-down report for beer/ale consumption to explain the construction and interpretation of Experian Simmons and GfK MRI reports. Each table in these reports present cross-tabulations of demographic segments or media by product or brand usage. An index is a measure of the particular demographic group compared with the total population such that an index of 100 means that a specific characteristic is exactly average, an index of 80 means that specific measurement is 20 percent less than average, and an index of 140 means that measurement is 40 percent more than average. In using data in the reports, the advertiser must weigh the following information: • Size of the potential audience that a vehicle might reach, • Attractiveness of coverage as revealed by the total product purchasers exposed to that vehicle in comparison with other media, • Vehicle’s cost compared to alternatives, and • Vehicle’s appropriateness for the advertised brand. E. Customized Magazines Relatively recently, marketers of specific brands are developing newsletters and magazines focused on their brands, issues related to the brands, and the interests of the brand purchasers. These are distributed free of charge as e-zines or in print form to brand users. Customized magazines have a unique role in a brand’s overall marcom program of maintaining a continuous dialogue with current brand users. IV. Radio Radio is a nearly ubiquitous medium. Always favored by local advertisers, radio’s advantages as an advertising medium have recently begun to be appreciated by regional and national advertisers. A. Buying Radio Time Several considerations influence the choice of radio stations: • Station format (classical, progressive, country, top 40, etc.). • Choice of geographic areas to cover—locating stations in preferred metropolitan statistical areas (MSAs) or areas of dominant influence (ADIs). • Choice of day part—rate structures vary depending on the attractiveness of the day part. ‘Morning drive’ and ‘Evening drive’ refer to 5:00 to 10:00 a.m. and 3:00 to 7:00 p.m., respectively, when audiences are largest. Rate and station information is available in Spot Radio Rates and Data, a source published by SRDS Media Solutions. B. Radio Advertising’s Strengths and Limitations 1. Radio Advertising’s Strengths • Radio is second only to magazines in its ability to reach segmented audiences. • Radio advertising can reach prospective customers on a personal and intimate level—a form of “friendly persuasion.” • Economy—radio advertising is considerably cheaper than other mass media in terms of target audience CPM. • Short lead times—because production costs are typically inexpensive and scheduling deadlines are short, copy changes can take advantage of important developments and changes in the marketplace. • Radio can transfer images from TV advertising by having radio spots use audio from TV ads to evoke memory of the TV ad. • Radio advertising is able to take advantage of the reputations and the sometimes bigger-than-life persona of local personalities. 2. Radio Advertising’s Limitations • Radio is cluttered. • Radio advertising is unable to employ visualizations. • Radio advertising has a high degree of audience fractionalization, which results from radio’s selectivity. • Difficulty of buying radio time—particularly for national advertisers wanting to place spots in different markets throughout the country. C. Radio Audience Measurement Arbitron is the major company at both the national and local levels involved with measuring radio listenership and audience demographics. At the national level, Arbitron’s service called RADAR (Radio’s All Dimension Audience Research) produces ratings from 70,000 listeners who make diary entries on their listening daily for a week. It provides ratings estimates for network radio programming and audience demographic characteristics. Advertisers use this information to select network programming that matches their intended target market. At the local level, Arbitron measures listening patterns in over 250 markets throughout the U.S. by gathering data in each market from 250 to 13,000 randomly selected individuals, age 12 and older, who maintain diaries for a seven day period. V. Television Television sets are present in over 98.9 percent of all American households. A. Television Programming Dayparts Advertising costs, audience characteristics, and programming appropriateness vary greatly at different times of the day (referred to as day parts). 1. Daytime Begins with the early morning news shows and extends to 4:00 p.m. (EST). Early daytime appeals first to adults with news programs and then to children with special programs designed for this group. Afternoon programming, with its special emphasis on soap operas and talk shows, and financial news, appeals primarily to people working at home, retirees, and even young males. 2. Fringe Time The period preceding and following prime time. Early fringe starts with afternoon reruns and is devoted primarily to children but becomes more adult oriented as prime time approaches. Late fringe appeals primarily to young adults. 3. Prime Time The period between 8:00 p.m. and 11:00 p.m. (or between 7:00 p.m. and 10:00 p.m. in some parts of the country). The best and most expensive programs are scheduled during this period. B. Network, Spot, Syndicated, Cable and Local Advertising Television messages are transmitted by local stations, which are either locally owned cable television systems or affiliated with the six commercial networks (ABC, CBS, NBC, Fox, Univision, and The CW) or with an independent cable network (i.e., Turner Broadcasting System, TBS). 1. Network Television Advertising Companies that market products nationally often use network television to reach potential customers throughout the country. Time slots purchased from a network allows ads to be shown at these times on all local stations that are affiliated with the network. The cost of such advertising depends on the time of day when an ad is aired, the popularity of the television program in which the ad is placed, and the time of the year (e.g., rates are typically higher in the fourth quarter—October through December). Although expensive in terms of per-unit cost, network advertising can be a cost-efficient means to reach mass audiences. Inefficient if the national advertiser chooses to concentrate efforts only in select markets. 2. Spot Television Advertising Spot television advertising is placed only in selected markets. This is desirable when: • a company rolls out a new brand market by market before it achieves national distribution, • a marketer needs to concentrate on particular markets due to poor performance, • a company’s product distribution is limited to one or a few geographical regions, or • advertisers using network advertising need to supplement the national coverage with greater amounts of advertising in select markets with high brand potential. 3. Syndicated Advertising Syndicated programming is sold by independent companies to different network-affiliated or cable TV stations. In some markets a syndicated show could be on NBC and on CBS or a cable station in other markets. Syndicated programs are either original productions or shows that first appeared on network television and are subsequently shown as reruns. 4. Cable Advertising Cable television requires users to subscribe to a cable service and have their sets specially wired to receive signals via satellite or other means. Advertisers are able to reach more finely targeted audiences (in terms of demographics and psychographics). The combination of high network rates and declining audiences has compelled advertisers to experiment with media alternatives such as cable. The demographic composition of cable audiences—cable subscribers are more economically upscale and younger than the population as a whole. 5. Local Television Advertising Local advertisers are discovering the CPM advantage of television and the advantage of product demonstration. Local advertisers are using cable stations to an unprecedented degree, growing at a faster rate than other ad media. C. Television Advertising’s Strengths and Limitations Table 12.7 summarizes television’s strengths and limitations. Table 12.8 shows the top 10 prime time broadcast television programs for a week in 2012. 1. Television Advertising’s Strengths Beyond any other consideration, television possesses the unique capability to demonstrate a product in use. Television has intrusion value, the ability to provide entertainment and generate excitement, the ability to reach consumers one on one, the ability to use humor, and work with other marcom tools. The greatest relative advantage is television’s ability to achieve impact—the ability to activate consumers’ awareness of ads and enhance their receptiveness to sales messages. 2. Television Advertising’s Limitations Rapidly escalating advertising costs with respect to buying time and producing commercials is the main limitation. Clutter of ads is also a problem. Erosion of viewing audiences—syndicated programs, cable television, the Internet, and other leisure and recreational alternatives have diminished the number of people viewing network television. There also has been substantial audience fractionalization. Audiences increasingly switch stations and zap commercials. D. Infomercials Infomercials are full-length commercial segments run on cable television that typically last 28 to 30 minutes and combine product news and entertainment. The infomercial format is in lockstep with increasing demands for marketing accountability as most orders occur within 24 hours of airing. E. Brand Placement in Television Programs Product placement in TV programs helps combat zipping and zapping. Brand placement is the appearance of brands in television programs, movies, music videos, video games, and even in novels. Compared with movie placements, brand appearances in TV programs have the advantages of (1) much larger audiences, (2) more frequent exposure, and (3) global reach, especially when programs are rerun around the world under syndication. Brands placement on TV can be very effective provided the brand is displayed in a context that appropriately matches the brand’s image. The downside is that brand managers relinquish the full control available to them when providing the final approval for TV commercials. F. Recent Developments in TV Advertising Addressable ad technology allows TV commercials to be targeted to individual homes and is projected to total $1.5 billion by 2015. G. Television Audience Measurement Prices and ratings go hand in hand, so the accurate measurement of program audience size—the basis on which ratings are determined—is a critically important, multimillion-dollar industry. 1. National (Network) Audience Measurement: Nielsen’s People Meter Technology The people meter, by Nielsen Media Research, represents perhaps the most important and controversial research innovation since the advent of television audience measurement. A national sample of households is outfitted with TV set-top boxes that require consumers to punch a button to record their viewing. Information from each household’s people meter is fed daily into a central computer via telephone lines, although typically only about 80 percent actually transmit data to Nielsen. Viewing information is combined with each household’s demographic profile to provide a single source of data about audience size and composition. The major networks are growing increasingly critical of Nielsen’s data, claiming it undercounts major segments of the population, especially young people and viewers watching TV outside the home. Figure 12.3 shows a people meter. 2. Local Audience Measurement: Nielsen’s Diary Panels Nielsen also uses alternative data collection procedures for estimating viewership in local markets. It uses paper diaries so that households in local markets can record program viewing. 3. Local Audience Measurement: Nielsen’s Local People Meters Nielsen also uses local people meter technology. 4. Measuring Away-from-Home Viewers (and Listeners) Much listening and viewing happens outside the home. Portable meters attempt to capture media consumption outside the home. 5. Challenges to Nielsen Nielsen is often criticized for its monopoly powers because it has been the only major service involved with estimating national and local TV audiences. In 2008, TNS Media Research began collecting data from 100,000 set-top boxes of subscribers to DIRECTV. Another competitor is Rentrack and its “TV Essentials.” Chapter Features Has TV Advertising Lost Its Effectiveness? Or Has It Simply Changed Its Look? Television as an advertising medium has changed in the past decade or so: consumers now have hundreds of TV channels from which to choose, they have more entertainment options, households with digital video recorders (DVRs) which allow viewers to skip ads is increasing, and the cost of TV advertising continues to increase. Recent studies show that a high percentage of ads for mature brands in the consumer packaged goods category do not yield positive ROIs. Newer brands and those representing meaningful new products were substantially more likely to yield positive returns than were mature brands. However, TV has also become more valuable and in demand, increasing the cost of TV ads by 17 percent in the last year. TV aids consumer awareness, and social media is becoming more integrated with TV, providing new delivery of content. The Rising Cost of Super Bowl Advertising The Super Bowl is one of the few remaining television spectaculars that can be described as mass television, and the sponsoring TV network is able to command huge prices for 30-second commercials because advertisers know they can reach over 100 million people. Advertising rates have basically doubled in 16 years (i.e., $1.1 million in 1995 to $2.7 million in 2012 (adjusted for inflation to 2000 dollars). A table provides ad rates for every Super Bowl from its inception in 1967, with prices for each year adjusted for inflation in constant 2000 dollars. For example, the actual price in 2012 was $3.5 million, but when it is adjusted, it amounts to $2.7 million in 2000 dollars. Place-Shifting TV Viewing Travelling to other countries limits your ability to watch your usual television programming, especially troublesome for those that enjoy watching sporting events that are recorded and telecast live. The Slingbox provides the solution for a little less than $200. By connecting the Slingbox to a TV in the region where the shows are televised, software allows the program to then be sent to a computer or Windows-enabled mobile video phone via the internet anywhere in the world. In addition to allowing consumers to watch their favorite programs away from home, the Slingbox gives consumers more control over their TV viewing. ONLINE AND MOBILE ADVERTISING Chapter Objectives 1. Appreciate the magnitude, nature and potential for online and mobile advertising. 2. Describe how the online advertising process works. 3. Understand the various forms of online advertising: search engine advertising, display or banner ads, rich media, websites and sponsorships, blogs and podcasts, e-mail advertising, mobile advertising, and advertising via behavioral targeting. 4. Describe the nature of mobile advertising: its forms (e.g., short message services, location-based services, benefits and costs, and strategies. 5. Understand the issues associated with privacy and online behavioral targeting. 6. Appreciate the importance of measuring online advertising effectiveness and the various metrics used for this purpose. Chapter Overview This chapter has covered a variety of online advertising media with a special emphasis on mobile advertising. Figure 13.1 explained the overall online advertising process and the major parties involved. Table 13.1 structured the discussion by identifying specific forms of online advertising. Spending on online advertising (especially mobile advertising) is growing at an exponential rate in the United States as well as elsewhere around the globe. In comparison to most other advertising media, the Internet possesses the two key features of individualization and interactivity. Search engine advertising (SEA) commands the largest online advertising investment at about 48 percent of all online ad expenditures. The fundamental concept underlying SEA is that advertisements can be located where consumers and B2B customers are searching. In other words, SEA increases the odds of encountering the ready consumer. Two forms of SEA are widely used: keyword matching and placing ads on content-oriented websites that match the advertiser’s offering. Display ads are a popular form of online advertising, although click-through rates are notoriously low. Because CTRs to displays are small, online advertisers have turned to new technology and larger ad sizes to attract the online surfer’s attention. Rich-media formats such as pop-ups, interstitials, superstitials, and video ads have experienced increased usage due to their ability to engage online viewers. The downside of rich-media ads is that online users may find them intrusive and annoying at times. Websites were considered the centerpiece of companies’ online advertising efforts, with other advertising formats (e.g., paid searches, banners, and e-mail) serving to drive traffic to companies’ sites. Web logs (blogs) were described as a potential advertising vehicle, but one with an uncertain future because users’ reasons for blogging may be antithetical to the role and purpose of advertising. The ubiquity of blogs, including the radio-type version known as podcasts, makes this an attractive prospect for advertisers, but only time will tell whether advertising on blogs and podcasts is an economically viable option. E-mail advertising was once a widely used form of online advertising, although excessive spamming has compromised the effectiveness of this format. Permission-based, or opt-in, e-mail is an effort to legitimize the use of e-mail advertising, but many consumers simply do not like being advertised to online. E-mail magazines (e-zines) represent a more acceptable advertising medium because ads are clearly labeled for what they are, which explains why this form of sponsored e-mail is on the rise. Perhaps the fastest-growing sector of online advertising is that of mobile advertising. Very creative and exciting uses of this online option include location-based check-ins, ability to scan shelf tags and quick response (QR) codes, and use as an electronic payment system. Behavioral targeting is a final form of online advertising discussed in this chapter. This form of advertising directs ads just to those individuals who most likely are interested in purchasing a particular good or service as indicated by their past online site-selection behavior. Behavioral targeting takes online advertising to a level higher than even SEA. Yet, privacy concerns remain with many in the form of recently proposed “do not track” legislation and millions of consumers downloading anti-tracking software. The final topic discussed was measuring online ad effectiveness. The choice of metrics for measuring the effectiveness of online advertising is somewhat of a “moving target” due to the dynamic nature of online advertising and the many formats available to advertisers for reaching prospective customers online. Three specific measures for measuring ad performance were described: click-through rates (CTR), cost per thousand impressions (CPM), and cost per action (CPA). This last measure is growing in usage because advertisers are interested in achieving particular results—e.g., influencing people to purchase products—and this is precisely what the CPA measures. Chapter Outline I. Introduction The Internet performs a multifaceted marketing function, serving as a mechanism for building demand, conducting transactions, filling orders, providing customer service, and serving as a versatile advertising medium. The chapter is not about e-commerce but rather is restricted to looking at the Internet as a rapidly growing advertising medium. A. Online Advertising: Benefits and Costs There are several benefits of online advertising including individualization, interactivity, immediate publishing, and cost efficiency. Online advertising is not without its disadvantages. Some include user distraction and interruptions, wide range of choices, global coordination, short lead times, and tough decisions. B. The Online Advertising Process Figure 13.1 depicts the process flows in an illustration of the online advertising process. The process might begin with an advertiser contacting an interactive agency with campaign objectives and a plan to buy ad inventory online. The agency might supply the ad materials to a third-party server like Google’s DoubleClick who either contacts a publisher directly or works with an ad network/exchange. The ad network is an intermediary between the publisher and advertiser that helps to sell inventory. The agency may use a service like comScore to screen potential publisher outlets. C. Online Advertising Formats Table 13.1 lists the various forms of online advertising described in this chapter. These include search engine advertising, keyword-matching advertising, content-targeted advertising, display or banner ads, rich media, pop-ups, interstitials, and more. II. Search Engine Advertising Search engine advertising (SEA) refers to a method of placing online ads on Web pages that show results from search engine queries. Search ads usually are targeted to match key search terms called keywords. This is an important point because it means that the advertising attempts to place messages in front of people at the exact point at which their search efforts indicate interest. Figure 13.2 shows the role of keywords in increasing the odds that consumers will encounter an ad. A. Purchasing Keywords and Selecting Content-Oriented Websites There are two forms of SEA, keyword search and content orientation. Content orientation means that the ads are placed on websites with appropriate context. The advantages of these forms of media are cost efficiency, targeting, and measurement of effectiveness. 1. Keyword-Matching Advertising Advertisers bid for specific keywords from search engines like Google. Google calls its keyword ad program, AdWords. 2. Content-Targeted Advertising Google’s other program is called AdSense. With this program, Google enables online advertiser to run ads on sites other than Google. Advertisers specify the sites on which they want their ads to appear. B. SEA Problems The major problem with SEA is click-through fraud. Click fraud occurs when a competitor or other party poses as a legitimate user and clicks on a sponsored link repeatedly in order to bias advertising effectiveness. Another version is when employees of a content-oriented website clicks on ads to generate additional revenue. III. Display or Banner Ads The most popular advertising format has been the static ad known as a display, or banner, ad. These are typically small, static ads placed in frequently visited websites. A. Click-Through Rates Click-through rates (CTRs) are very low, averaging less than 0.3 percent, but they are higher for B2B ads. Research has found that CTRs are a function of brand familiarity, with brands that consumers know best receiving substantially higher click-through rates than unfamiliar brands. Because of the low CTRs, online advertisers have turned to new technology and larger ad sizes to grab the online surfer’s attention. B. Standardization of Banner-Ad Sizes The Internet Advertising Bureau (IAB) is a trade association that has sought to standardize banner ads, which are shown in Table 13.2. IV. Rich Media: Pop-Ups, Interstitials, Superstitials, and Video Ads Newer online formats that are more dynamic than banners in their use of motion, sights, and sounds include pop-up ads, interstitials, superstitials, and video advertisements. Pop-ups are ads that appear in a separate window that materializes on the screen seemingly out of nowhere while a selected Web page is loading. Interstitials—based on the word interstitial, which describes the space that intervenes between things—are ads that appear between (rather than within, as is the case with pop-ups) two content Web pages. Superstitials, are short, animated ads that play over or on top of a Web page. Online video ads, also referred to as streaming video, are audio/video ads that are similar to standard 30-second TV commercials but may be 15 seconds or several minutes in length. A. Video Ads and Webisodes Webisodes are video ads that run as a series of episodes. V. Websites and Sponsored Sites A company’s website is like an ad for the company. Online advertising is primarily used to drive traffic to the company website. When people visit the website, it is considered a high value interaction because people chose to visit. This is akin to pull marketing, when consumers pull the product information to them. VI. Blogs and Podcasts A. Blogs The word blogs is short for web logs. Originally blogs were primarily a form of online diary but over time they have also become a place to house online articles. Marketers can develop blogs or post ads on blogs that are relevant to their target audience. B. Podcasts Podcasting is an audio version of blogging. Podcasting is a way of publishing sound files to the Internet. Users can choose to subscribe to a feed and receive new audio files automatically. VII. E-mail Advertising E-mail advertising is simply the use of the Internet for sending commercial messages. Messages appear in many forms, ranging from pure-text documents to more sophisticated versions that use all the audio-video powers of the Internet. E-mail can be a highly effective marcom tool for delivering advertising messages and providing sales incentives to mass audiences or to smaller targeted groups. A. Opt-In Emailing versus Spam The word “spam” is used in reference to unsolicited and unwanted commercial e-mail messages. Opt-in e-mailing is the practice of marketers asking for and receiving consumers’ permission to send them messages on particular topics. Anti-spam legislation (i.e., CAN-SPAM) has been passed in the U.S., and regulations against unsolicited e-mail are even more stringent in Europe. 1. Phishing It takes place when criminals send e-mail messages appearing to be from legitimate corporations and direct recipients to phony websites that are designed to look like companies’ actual websites. B. E-mail Magazines (E-zines) This is a type of sponsored e-mail that distributes free magazine-like publications. They tend to focus on trendy issues such as entertainment, fashion, and food and beverages. Most contain a small number of ads that link readers to the websites of stores and brands. VIII. Mobile Advertising Mobile phones are also an advertising medium. Depending upon the phone, the device may offer many features including texting, GPS, camera capabilities, online connectivity, music, and more. Many critics of wireless advertising are concerned that unwanted messages represent an invasion of privacy. Some argue that the last thing people want is to receive unwanted, interrupting advertising messages. Another limiting factor is that the small screens limit the space for presenting creative advertising messages. IX. Advertising via Behavioral Targeting and Privacy Issues The essence of online behavioral targeting is a matter of directing online advertisements to just those individuals who most likely are interested—as indicated by their online site-selection behavior—in making a purchase decision for a particular product category. The disadvantage is that this form of targeting can be viewed as an invasion of people’s privacy. It is technologically simple to identify Web users’ site-selection behavior by inserting “cookies” on computers that indicate what websites have been visited. X. Measuring Internet Ad Effectiveness A variety of firms offer measurement and analysis of online audiences, advertising, video, social media, and online behavior. Most use a paid panel of Internet users and measure unique audience visits, page views, time spent, loyalty, demographic information, and consumer behavior. A. Metrics for Measuring Internet Ad Performance The word metric refers, in general, to a unit of measurement. There are at least four general objectives for assessing website effectiveness and a variety of metrics (in parentheses): • The exposure value or popularity of a website or Internet ad (e.g., number of users exposed to ad, number of unique visitors, click-through-rate). • The ability of a site to attract and hold users’ attention and the quality of customer relationships (e.g., average time per visit, interval between visits, number of unique visits). • The usefulness of websites (e.g., the proportion of repeat visitors). • The ability to target users (e.g., profile of site visitors, previous search behavior). While there are many metrics available, three widely used ones are: • Click-through rates—represent the percentage of people exposed to an Internet-delivered ad that actually clicked their mouse on it. • Cost per thousand impressions (CPM)—how much it costs on a per-thousand basis to place an ad on a particular website. Measures Internet users’ opportunity to see (OTS) an ad but provides no information about the actual effect of an ad. • Cost-per-action (CPA)—determining the number of users who actually click on display or rich-media ads, visit a brand’s website, register their names on the brand’s site, or actually purchase the advertised brand. Chapter Features Mobile Headache: The Excitement and Challenges of Mobile Advertising An interview with five advertising executives revealed that although mobile advertising can be challenging, it is alluring due to its global reach, integration, and consumer utility. Executives note that more apps are not necessarily better apps. Cookie cutter approaches do not work globally. Advertising Age makes three important suggestions for maximizing retail mobile marketing: (1) make websites mobile-friendly, (2) watch out for scan and scram shoppers, and (3) have a tablet-optimized app or site. Web Videos for Johnson’s Baby Lotion Johnson’s Baby Lotion has been on the market since 1942. Referred to as the “Pink brand” in reference to the package color; Johnson’s has about half the market in a product category with nearly $1 billion in annual sales. It has done little advertising in recent years and yet continued to enjoy growth; its last TV commercial was in 1990, and the last print advertising was in 1991. A new advertising strategy was needed due to recent competition. The decision was made not to advertise extensively on TV but instead online using a series of animated Webisodes. Johnson’s believes the Internet is a main source of information for young parents seeking baby-care advice. Based on research it is promoting its baby lotion brand as a means for parents to develop deeper bonds with their babies. To drive traffic to the website, a series of ads were placed on other parent-focused websites. Nescafé’s Viral E-mail Effort in Argentina In Argentina and other countries, Nescafe markets a brand named Café con Leche, which is a mixture of coffee with milk. Given a small budget to work with, Nescafe used e-mails to create brand buzz. Users of the brand were sent an e-mail and were asked to pass it along to at least 15 other people. Also included was a link to a website containing a virtual kitchen with the intent of increasing user involvement with the brand and to demonstrate its variety of uses. Within one month, the e-mail message was forwarded 100,000 times, and 20 percent of visitors to the website responded to a survey by providing information about the brand and its uses. Why are people willing to pass messages along? The major motives are because they enjoy doing so and find it entertaining and possibly of help to others. Mobile Phone Advertising in India Mobile phone usage is increasing rapidly in India. Because many Indians lack access to major media, mobile phone adoption provides a valuable communication channel. However, phone usage is expensive and one way of subsiding the phone access is to offset the costs with advertising. SOCIAL MEDIA Chapter Objectives 1. Describe what exactly is meant by “social media.” 2. Discuss the advantages and disadvantages of social media compared to traditional media choices. 3. Explain some of the major social media categories and different social media brands (e.g., Facebook, Twitter, Google+, LinkedIn) within those categories (e.g., Communication—social networking). 4. Provide examples of some successful social media campaigns and how these were integrated into a company’s IMC efforts. 5. Explain the privacy issues and other major concerns with social media. 6. Understand how social media effectiveness is best measured and what metrics are used. Chapter Overview This chapter presented material on perhaps the most exciting and ever-growing and changing tool found in IMC today, that is, social media. We first describe exactly what “social media” means. We then discuss the advantages and disadvantages of this evolving media option compared to traditional media choices. Many of the major social media categories and different social media brands (e.g., Facebook, Twitter, Google+, Pinterest, LinkedIn) within those categories (e.g., Communication—social networking) are then presented with special attention paid to Facebook and Twitter social networks. Then, 19 of some of the best social media campaigns of all time are presented. We then discuss organizational issues associated with social media, as well as how to advertise on social media networks. Privacy and other major areas of concern are described and then followed by an in-depth discussion of current metrics used in evaluation the return on investment (ROI) for investments in social media campaigns. Chapter Outline XI. Introduction What is social media? Social media represents web-based and mobile technology used to turn communication into interactive dialogue. Business firms may refer to social media as “consumer-generated media.” XII. Social Media Background and Landscape Facebook is the major social network but Twitter is also important. Messages on Twitter are called tweets. Figure 14.1 illustrates the social media landscape made up of hundreds of social media brands. Table 14.1 lists even more social media brands. A. Comparisons with Traditional Media There are five points of comparison between social media and traditional media. • Reach – both offer scale but traditional media is more centralized. • Accessibility – social media are more accessible at little or no cost assuming there are no country-specific restrictions. • Usability – social media requires no need for digital expertise to use. • Immediacy – traditional media time lags can be quite long while social media can be immediate. • Permanence – traditional media cannot be altered once distributed, but social media can be changed immediately. XIII. Social Media Advantages and Disadvantages Current advantages include flexibility, reach, consumer engagement, two-way dialogue, integration and ability to drive traffic, improved metrics and research, and cost effectiveness. Disadvantages include privacy and censorship, lost productivity, meaningless comments, hackers and fraud, and dealing with negative comments. XIV. Social Media Categories and Brands Table 14.1 lists the major categories and brands in social media. The table breaks down examples into communication sites, collaboration sites, and entertainment/multimedia sites. XV. Social Networking As many as a billion people participate in social networking sites. A. Facebook Facebook is profitable and is now a publicly-traded company. Its revenue comes from ads which appear on the right side of the user’s page. Click-throughs on these ads have been lower than those on other sites. Figure 14.2 shows the share of time spent on Facebook by content section. B. Twitter Twitter is an online social networking and micro-blogging services that allows users to send and read text-based posts called tweets. Users may follow other users’ tweets if they wish. Twitter has become popular as a channel for voicing consumer complaints. Many Twitter users also use the service to follow celebrities like Lady Gaga. XVI. Successful Social Media Campaigns This section offers a review of some of the more successful social media and networking campaigns. However, we can debate what it means to be successful. While these campaigns were cited as successful, social media campaigns may not have performed well on common marketing metrics. • Alamo Rent-A-Car’s “Ultimate Escapes” • Beats Electronics “Humble Beginnings” • Blendtec’s “Will It Blend?” • Burger King’s “Subservient Chicken” • Burger King’s “Whopper Sacrifice” • Evian’s “Roller Babies” • Craftsman Tools “Neighborhood Park Renovation” • Mattel’s Barbie and MGA Entertainment’s Bratz Online Dolls • National Geographic’s “Remembering 9/11” • Nike’s “Write the Future” • Graudbunden Tourism’s “Obermutten Goes Global” • Old Spice’s “Smell Like a Man, Man” • Olla Condoms’ “Unexpected Babies” • Pepsi’s “Refresh” • Philippines Department of Tourism’s “It’s More Fun in the Philippines” • Procter & Gamble’s “People’s Choice” and “Capressa” networking sites • Stella Artois UK’s “DVD Film Contest” A. Common Objectives and Themes for Successful Social Media Campaigns These campaigns have several commonalities. • Some have an objective to enhance public relations. • They share creativity, humor, and other ad executions. • They stress deals and contests. • They encourage dialogue and two-way communication. • They may involve causes and sponsorships. • They may involve having fun with games. • They may elicit consumer-generated stories. B. Factors That Work in Social Media Campaigns and Why Story-telling about the brand tends to work. Connecting and engaging consumers through empathy, understanding, and openness with real life tends to work. A third recommendation is to evolve with the customers in being social and human. XVII. Organizing Social Media Efforts There are marketing jobs focused on social media work. Some organizations have added social media departments but remember that the point of IMC is to integrate communications. XVIII. How to Advertising on Social Networks This section explains the types of ads which can appear on Facebook and Twitter. comScore indicates several choices advertisers can use to create impressions on Facebook. • Page Publishing: unpaid impressions appearing on the fan page wall and may appear in the news feed of a fan or friend of a fan. • Stories about Friends: unpaid impressions that occur when a friend actively engages with a brand (e.g., Amy “likes” Southwest Airlines). • Sponsored Stories: paid impressions that are similar to Stories about Friends, but are described as being actively distributed more broadly and appear in the right-hand column to fans and friends of fans. • Ads with Social: branded and paid impressions that come directly from advertisers with a social message that appears to friends of fans (e.g., Roger Tison likes Southwest Airlines at the bottom of the ad). Facebook provides a five step process for using ads on the site. The steps include: (1) identify goals, (2) target the right people, (3) design engaging ads, (4) manage the ad budget, and (5) review and improve. Options on Twitter include promoted tweets, promoted trends, and promoted accounts. XIX. Privacy and Other Concerns There are four general privacy principles: notice, consent, access, and security. This section explains some past privacy concerns related to Facebook. A. Other Social Media Network Concerns According to researchers, people who abstain from social media describe the experience as though it is an addiction. There is also a question of how old someone should be to participate in social networks. XX. Measurement of Social Media Campaigns Companies still struggle with measuring the effectiveness of social media campaigns. Companies like Google Analytics and Omniture offer standard metrics. There are also several social media monitoring firms like Radian6. Facebook offers an EdgeRank Score that is an algorithm that Facebook uses to determine which of a page’s statuses the online community will see in the news feed. EdgeRank Score is equal to affinity times weight times time decay. The affinity score is the number of times you send a friend messages and check the person’s profile. The greater the number, the higher the affinity score. Weight is based on the type of interaction with pictures carrying the highest weight score. Time decay reflects the fact that the older the interaction, the less important it becomes. Companies like Radian6 offer summary dashboards with information like sentiment, share of voice, and share of conversations. Table 14.2 illustrates unpaid brand impressions on Facebook. Chapter Features Is Facebook Becoming Passé? Facebook has more users than any other social networking site. Despite its strong membership base, some describe having “Facebook fatigue.” Click-through rates are lower on Facebook than on other sites. So far, Facebook’s ad revenue continues to increase but this is due to increases in size, not improvements in ad effectiveness. The Great Firewall: China’s Social Media Clones China has the largest market of online consumers but companies may be blocked. China has its own social media channels. Renren is an example. In fact, China offers its own counterpart to the major social media channels such as Twitter, LinkedIn, and Foursquare. Pinterest: Fast and Furious Growth yet Potential Legal Issues Pinterest is for sharing images. It has grown quickly. It has become a valuable traffic generation tool for brands whose product images have been pinned. There are legal issues, though. The images may be copyrighted DIRECT MARKETING AND OTHER MEDIA Chapter Objectives 1. Explain direct marketing and the reasons underlying its growth. 2. Describe the characteristics of direct-response advertising. 3. Discuss the distinctive features of direct-mail advertising. 4. Appreciate the role of database marketing, data mining, and lifetime-value analysis. 5. Discuss the advantages and disadvantages of outbound and inbound telemarketing. 6. Explain the value of other media options, including brand placements, yellow pages advertising, video game advertising (advergaming), and other “alternative” media. Chapter Overview This chapter examined a variety of advertising media used in direct marketing. Figure 15.1 helped differentiate among key “direct” terms, such as direct marketing, direct response advertising, direct mail, and direct selling. Direct mail received the most extensive coverage in view of its widespread usage and huge investment in this medium. The functions and advantages and disadvantages of cataloging, and inbound and outbound telemarketing also were examined. Direct (response) advertising is increasingly viewed as a critical component of successful IMC programs. The increased sophistication of database marketing has been largely responsible for the growing use and effectiveness of direct advertising. Major advances in computer technology have made it possible for companies to maintain large databases containing millions of prospects and customers. This can enable the calculation of a customer’s lifetime value and help to build long-term relationships with consumers. Sophisticated data mining can look for interesting relationships used to target prospective customers, develop cooperative marketing relations, and otherwise better understand who buys what, and when, how often, and along with what other products and brands they purchase. The chapter examined “other media,” such as brand placements in movies and in TV programs. These placements provide advertisers with an opportunity to reach consumers in a rather subtle fashion and to portray brands positively by connecting them with entertainment plots and characters. Yellow-pages advertising and video-game advertising (also known as advergaming) also received coverage in the chapter. The yellow pages (online as well as in print) are virtually a must for local advertisers in their quest to attract prospective customers and repeat purchases. The final section includes a medley of alternative advertising media (i.e., advertising options that generally are used to supplement mainstream media rather than to carry the full advertising load). Chapter Outline I. Introduction Historically traditional ad media have been used to reach mass audiences and have been judged in terms of cost efficiencies. Direct advertising and database marketing can help marketers to fine tune their customer selection and achieve advertising results which can be measured by actual sales response. This chapter covers the related topics of direct and database marketing which collectively include direct-response advertising, direct mail, telemarketing, and direct selling. The term “other media” or alternative media includes all forms of advertising that were not previously covered or will be subsequently treated in this text. II. Direct Marketing Direct marketing is defined as an interactive system of marketing which uses one or more advertising media to effect a measurable response and/or transaction at any location. Direct marketing is easier to measure because purchase responses to direct marketing are more immediate and can be tracked. Figure 15.1 explains distinctions among various direct marketing concepts. Indirect marketing includes the use of intermediaries in the channel of distribution. Disintermediation occurs when manufacturers bypass retailers and sell directly to consumers. Direct response advertising involves the use of any of several media to transmit messages that encourage buyers to purchase directly from the advertiser. Direct mail is an important medium but direct-response advertising also uses television, online websites, social media, magazines and other media with the intent of creating immediate action from customers. Telemarketing includes making outbound calls from telephone salespersons and handling inbound orders, inquiries, and complaints from present or prospective customers. Direct selling is the use of salespeople to sell directly to the final consumer. Direct selling may rely upon single-level marketing or multi-level marketing. Direct marketing really relies on the practice of database marketing, which is a process in which companies collect information on consumers, analyze it to predict who will buy, and then develop tailored marketing messages to those consumers. A. Direct Marketing’s Phenomenal Growth Direct marketing is a major form of business with marketers spending more than $150 billion on direct marketing per year. There are several reasons for direct marketing’s growth including societal changes, technology and database management, and expansion of applications of direct marketing. Table 15.1 shows ad expenditures and sales estimates for direct marketing categories. III. Direct-Response Advertising Direct-response advertising includes direct mail and other media. Direct mail is the most prominent. Three distinct features characterize direct-response advertising: (1) it makes an offer, (2) it contains all the information necessary for the prospect to make a decision, and (3) it includes a response device to facilitate immediate action. Figure 15.2 shows an illustration of a direct-response ad. The direct advertiser’s objective is to select a medium that provides maximum ability to segment the market at a reasonable cost. Figure 15.3 includes a direct-response ad for DIRECTTV satellite service. IV. Direct Mail Chapter 13 discussed online advertising including email and mobile advertising. This section includes detailed coverage of direct mail advertising excluding direct online advertising. These ads take many forms including letters, postcards, programs, calendars, catalogs, etc. A. Illustrations of Successful Direct Mail Campaigns Three examples of successful campaigns are described. These include Caterpillar 414E Industrial Loader campaign, the Stacy’s Pita chip campaign, and the Saab 9-5 campaign. B. Direct Mail’s Distinctive Features Direct mail offers five distinctive features compared to mass forms of advertising. These include targetability, measurability, accountability, flexibility, and efficiency. • Direct mail is capable of targeting a precisely defined group of people. • It is possible with direct mail to determine exactly how effective the effort was by knowing how many mailings were sent and how many people responded. • Accountability is simplified because results can be readily demonstrated. • Direct mail can be produced quickly, accommodate small to large campaigns and has no constraints in terms of form, color, or size. • Direct mail is efficient in reaching a highly targeted group. Some say that direct mail is expensive and it is true that on a cost-per-thousand basis (CPM), direct mail is more expensive than other media. The major problem with direct mail though is its perception as being intrusive and invasive of privacy. C. Who Uses Direct Mail and What Functions Does It Accomplish? All kinds of marketers can use direct mail. Direct mail functions include the following: • Increase sales and usage from current customers • Sell products and services to new customers • Build traffic at a specific retailer or website • Stimulate product trial • Generate leads • Deliver product-relevant information and news • Gather customer information that can be used in building a database • Communicate with individuals in a relatively private manner and thereby minimize competitive detection. D. The Special Case of Catalogs and Audiovisual Media 1. Catalogs Cataloging is considered effective because it is supposed that more than two-thirds of catalog recipients visit the respective company’s website, sales to catalog recipients are over 150 percent greater on average compared to consumers who do not receive a catalog, and catalog recipients buy more items on average and spend more money than do non-recipients. From the consumer perspective there are many advantages including saving time, being safe, and being convenient. 2. Audiovisual Advertising This form of direct advertising includes the use of videotapes and DVDs. It is more effective and less expensive than print advertising delivered via direct mail. Consumers are less likely to throw away audiovisual messages. E. The Use of Databases Successful direct mailing necessitates the availability of computer databases and the addressability inherent in the databases. An up-to-date database provides firms with a number of assets: • Ability to direct advertising efforts to those people who represent the best prospects, • Offer varied messages to different groups of customers, • Create long-term relationships with customers, • Enhance advertising productivity, and • Calculate the lifetime value of a customer or prospect. 1. Lifetime-Value Analysis Customer lifetime value is the net present value (NPV) of the profit that a company stands to realize on the average new customer during a given number of years. Table 15.2 provides an illustration. There are five ways to augment lifetime value: • Increase the retention rate—the more customers a firm has and the longer they are retained, the greater the lifetime value. • Increase the referral rate—positive relations created with existing customers can influence others to become customers through positive word of mouth expressed by satisfied customers. • Enhance the average purchase volume per customer—existing customers can be encouraged to purchase more by augmenting their brand loyalty. • Cut direct costs—by altering the channel of distribution via direct marketing efforts, a firm may be able to cut costs and increase profit margins. • Reduce marketing communication costs—effective database marketing can lead to meaningful reductions in marketing communication expenses because direct advertising often is more productive than broadcast advertising. 2. Types of Mailing Lists Success with direct mail depends on the quality of mailing lists contained in a company’s database. There are two broad categories of lists: internal (house) lists and external (public) lists. External lists may be house lists of other companies or compiled lists. 3. The Practice of Data Mining The goal of data mining is to discover hidden facts contained in databases by looking for revealing relations among the variables contained in a database. The purpose is to better target prospective customers, develop cooperative marketing relations with other companies, and otherwise better understand who buys what, when, how often, and along with what other products and brands. Another use of databases is to segregate a company’s customer list by the recency (R) of a customer’s purchase, the frequency (F) of purchases, and the monetary value (M) of each purchase. The R-F-M system offers tremendous opportunities for database manipulation and mail targeting. Another application of the R-F-M categories is for a company to divide customers into equal-sized groupings such as quartiles or quintiles (four or five equal-sized groups, respectively) for each of the R, F, and M categories. A company can then test the effectiveness of a proposed p-mailing by determining the response rate and average expenditure for each R-F-M cell. Testing such as this represents a systematic approach that likely will produce a more profitable outcome compared with blanketing a mailing to all database occupants. V. Outbound and Inbound Telemarketing Telephone marketing is a dominant form of direct advertising. It entails both outbound usage to sell products over the phone and inbound marketing directed at taking orders and servicing customers. A. Outbound Telemarketing Many companies use telephone to support or replace their conventional sales forces. It can be used to open new accounts, qualify advertising leads, and service existing customers. 1. Who Should Use Outbound Telemarketing? Telemarketing is not appropriate for all. Eight factors should be used to determine suitability. • Importance of face-to-face contact • Geographical concentration • Economic considerations • Customer decision criteria • Number and type of decision makers • Nature of the purchase • Status of the major decision maker • Specific selling tasks B. Inbound Telemarketing 1. Toll-Free (800, 855, 866, 877, 888 Numbers) An important part of inbound telemarketing. Figure 15.4 shows a display of a toll-free number. Customer service representatives who receive 800 calls can provide immediate responses to requests for merchandise and product information and can handle complaints. ACDs (automatic call distributor) is call-center technology which can help measure the effectiveness of an ad campaign. 2. Pay-Per-Call (900 Numbers) Service is the only national communication medium that can accept simultaneous calls by a large number of people at a flat rate. C. Major Telemarketing Regulation The FTC introduced the Telemarketing Sales Rule (TSR) in 1995. Table 15.3 lists the key provisions of the rule. These include that the business must identify itself, odds of winning must be disclosed for prize draws, the offer must be completely explained, authorization for recording the call must be expressed, and the company must maintain and comply with a list of customers who request that they not be contacted again. Telemarketers must not call before 8 a.m. or after 9 p.m. In 2003, the FTC and the Federal Communications Commission initiated the National Do Not Call Registry based on a Congressional mandate allowing consumers to register to keep their phones on a do-not-call list. The FTC regulations prohibit telemarketers from calling a cellular number with an automatic dialer. VI. Other Media Table 15.4 lists other advertising media which are used as supplements. These include brand placements, yellow-pages advertising, video-game advertising, cinema advertising, and a collection of alternative ad media. VII. Brand Placement Brand placement, also called product placement, is a marketing strategy whereby an advertiser promotes a brand by placing it within the context of a selected medium. Branded entertainment includes brand placement as well as event and sponsorship marketing. These are covered in Chapter 21. Brand placements have advantages such as being less intrusive than regular ads and being connectable to the plot or characters. Good placements can create a memorable association. However, they may be disliked and discounted as being just another ad. Advertisers may lose control over how the brand is positioned in the program. Prices of brand placements are also increasing. A. Brand Placements in Movies The chapter describes some examples of brand placements in television and in movies. In a study of 928 brand placements in 159 films, researchers found an inverted U effect between brand stock returns and time. That means that returns gradually increased to a point followed by price stabilization and decline. Several factors determine how much a brand placement is worth and thus how much it should cost a brand marketer to place a brand in a particular movie: (1) time brand gets on screen, (2) whether characters use the brand and mention the brand, and (3) whether the brand appears during an important plot point. Younger consumers appear to be the most responsive to brand placements in movies. B. Brand Placements in TV Programs A study of prime-time TV programs determined brands are placed an average of once every three minutes. Advertising Age has cited some of the best and worst brand placements in television programming. VIII. Yellow-Pages Advertising The yellow pages represent a complement to other advertising media. Despite offering print and online versions, yellow pages advertising is on the decline. It is estimated that 60 percent of all American adults use the yellow pages at least once a week. IX. Video-Game Advertising (a.k.a. Advergaming) Electronic games (videogames) provide an excellent advertising medium for reaching difficult-to-reach consumers such as young males. The games are available on game consoles or online, and marketers either customize their own games or incorporate their brands in existing games (a form of brand placement). Producers of games now actively pursue tie-ins with brand marketers, who pay for advertising space within the games. A. Measuring Video-Game Audiences Nielsen (of TV ratings fame) has developed a service to measure videogame audiences. X. Cinema Advertising The movie theater has in recent years itself become a medium for placing advertising message prior to feature films. XI. Potpourri of Alternative Advertising Media There is also a medley of creative alternative media which have potential roles in an integrated marcom program. Figure 15.5 is an ad from 3M. Figure 15.6 is a photo of a professional football stadium. Chapter Features During a Recession, ShamWow Marches On This insight box explains how direct response television advertising has flourished in recent years. DRTV takes two forms: long form and short form. Long form advertising is known as infomercials. Short form commercials are best for products that are easily understood. Many famous personalities are used in DRTV sales pitches including Chuck Norris, George Forman, and Jack LaLanne. Others are also noted. How a Major Production Mistake Turned into a Huge Direct-Mailing Success Scotland is the home of Scotch Whiskey. The most famous brands of Scotch are “single malt” (from a single distillery and a single malted grain, barley). Generally, less expensive whiskies, “blended whisky”, represent blends of two or more different versions. The “major production mistake” involves the Glenmorangie Distillery and its brands Ardbeg and Glen Moray, both single malt whiskies. Accidentally, these were blended together—resulting in an inferior blended Scotch whisky. Rather than destroy 15,000 bottles, the “production mistake” was introduced as a unique new brand, named Serendipity. A direct-mail campaign (termed “Pity to Waste It”) was developed with a mailer distributed to 30,000 loyal Ardbeg drinkers. A booklet described Glenmorangie’s production mistake and asked recipients to sign an “official pardon,” actually an order form for Serendipity. The mailing generated a 23 percent response rate and brought in sales of nearly $1 million at a cost of only $100,000. Profile of the Video-Gaming Community Research firm NPDand the Entertainment Software Association have studied video gamers to better understand who plays games and where and what games they play. Women comprise slightly over 42 percent of the total video game audience. The average household income for online gamers ranges between $35,000 and $75,000. The average gamer today is 34 years old. Xbox 360 owners are disproportionately more likely to play games online than any other console owners at 7.1 hours per week. Instructor Manual for Advertising Promotion and Other Aspects of Integrated Marketing Communications Craig J. Andrews, Terence A. Shimp 9781111580216, 9788131528242, 9781133191421, 9781337282659

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