Lesson 11, How companies advertise

HOW COMPANIES ADVERTISE

    Advertising informs consumers about the existence and benefits of products and services, and attempts to persuade them to buy them. The best form of advertising is probably word-of-mouth advertising, which occurs when people tell their friends about the benefits of products or services that they have purchased. Yet virtually no providers of goods or services rely on this alone, but use paid advertising instead. Indeed, many organizations also use institutional or prestige advertising, which is designed to build up their reputation rather than to sell particular products.

    Although large companies could easily set up their own advertising departments, write their own advertisements, and buy media space themselves, they tend to use the services of large advertising agencies. They are likely to have more resources, and more knowledge about all aspects of advertising and advertising media than a single company. The most talented advertising people generally prefer to work for agencies rather than individual companies as this gives them the chances to work on a variety of advertising accounts(contracts to advertise products or services). It is also easier for a dissatisfied company to give its account to another agency than it would be to fire its own advertising staff.

    The client company generally gives the advertising agency an agreed budget; a statement of the objectives of the advertising campaign, known as a brief; and an overall advertising strategy concerning the message to be communicated to the target costumers. The agency creates advertisements (the word is often abbreviated to adverts or ads ), and develops a media plan specifying which media-newspapers, magazines, radio, television, cinema, posters, mail, etc-will be used and in which proportions. (On television and radio, ads are often known as commercials.)Agencies often produce alternative ads or commercials that are pre-tested in newspapers, television stations, etc. in different parts of a country before a final choice is made prior to a national campaign.

   The agency's media planners have to decide what percentage of the target market they want to reach(how many people will be exposed to the ads) and the number of times they are likely to see them. Advertising people talk about frequency or 'OTS' (opportunities to see) and the threshold effect - the point at which advertising becomes effective. The choice of advertising media is generally strongly influenced by the comparative cost of reaching 1,000 members of the target audience the cost per thousand (often abbreviated to CPM, using the Roman numeral for 1,000). The timing of advertising campaigns depends on factors such as purchasing frequency and buyer turnover (new buyers entering the market).

     How much to spend on advertising is always problematic. Some companies use the

comparative-parity method - they simply match their competitors' spending, thereby avoiding advertising wars. Others set their ad budget at a certain percentage of current sales revenue. But both these methods disregard the fact that increased ad spending or counter-cyclical advertising can increase current sales. On the other hand, excessive advertising is counter-productive because after too many exposures people tend to stop noticing ads, or begin to find them irritating. And once the most promising prospective customers have been reached, there are diminishing returns, i.e. an ever-smaller increase in sales in relation to increased advertising spending.

Summary

   Advertising sets several goals: informs people about benefits of different products by using methods to rely on like word-to-mouth or paid advertising; attempts to persuade the potential costumers to buy them and builds up the reputation of large organizations.

   Despite the fact that large companies have all means, like resources and knowledge, for setting up their own advertising departments, they tend to use specialized agencies which offer a variety of contracts and safer work places for employees.

   The stages that precede the creation of final advertisement are the allocation of a specific budget by the client company to the advertising agency, of a brief of objectives, strategy and indication of the target costumers, all these helping the agency in charge to choose the media and to broadcast the alternative advertisement as a test.

   It is also important to analyze different indicators in creating the advertisement: the percentage of target market, the frequency of the broadcasting, the threshold effect of the target audience which may be changed by buyer turnovers and of course the purchasing frequency.

   Another key point to be taken into account is the expenditure for the creation of the advertisement which may be found out after methods like comparative-parity, current sales revenue, but it remains important to be attentive at he moment the most promising prospective customers' attention was reached, because further spending may lead to diminishing returns i.e losses.

Translation (Russian version) 

Как компании рекламируют?

Реклама информирует пользователей о существовании и преимуществах товаров и услуг, пытается убедить их купить эти товары. Пожалуй, лучшей формой рекламы выступает передача из уст в уста, которая происходит, когда люди рассказывают своим друзьям о преимуществах купленных ими товаров или услуг. При этом, практически ни один поставщик товаров или услуг не полагается только на это, используя вместо этого оплачиваемую рекламу. Действительно, многие организации также используют однообразную или престижную рекламу, которая спроектирована скорее для того, чтобы создать репутацию, чем для того, чтобы продавать конкретный продукт.

Несмотря на то, что крупные компании могли бы легко сформировать свои собственные рекламные отделы, писать собственную рекламу и самим покупать медийное пространство, они стремятся пользоваться услугами крупных рекламных агентств. Последние, вероятно, обладают большими ресурсами и большими знаниями в области аспектов рекламы и рекламной среды, чем одна компания. Самые талантливые специалисты по рекламе обычно предпочитают работать в агентствах, а не в индивидуальных компаниях, потому что это предоставляет им возможность работать с различными клиентами (контракты на рекламу товаров или услуг). Недовольной компании также намного проще передать дело другому агентству, чем уволить весь маркетинговый персонал.

Компания-клиент чаще всего передаёт рекламному агентству согласованный бюджет, сформулированные задачи рекламной кампании, также называемые сводкой; и общую рекламную стратегию касательно сообщения, которое необходимо донести до целевой аудитории. Агентство создаёт рекламу (слово advertisements часто сокращают до adverts или ads) и разрабатывает медиа-план, в котором указывается, какую среду (газеты, журналы, радио, телевидение, кино, плакаты, почта и т.д.) будут использованы и в каком объеме. (Для телевизионной и радиорекламы в английском существует специальный термин.) Агентства часто проводят альтернативную рекламу, которая проходит предварительное тестирование в газетах, на телевизионных станциях, и т.д. в разных регионах прежде чем будет принято окончательное решение для всей страны.

Медиа планировщики должны решить, какую долю целевого рынка они хотят охватить (как много людей увидит рекламу) и количество раз, которое, они, скорее всего, её увидят. Специалисты по рекламе говорят о частоте или ВУ (возможность увидеть) и об эффекте порога – точка, с которой реклама становится эффективной. Обычно, на выбор рекламной среды оказывает влияние сравнительная стоимость достижения 1000 представителей целевой аудитории, стоимость на тысячу (обычно, применяется аббревиатура CPM, в которой используется римская цифра 1000). Время рекламных кампаний зависит от таких факторов, как частота покупок и оборот покупателей (вхождение новых покупателей на рынок).

Всегда актуальной остаётся проблема того, как много тратить на рекламу. Некоторые компании используют метод сравнительного паритета – они просто держат свои расходы на уровне с конкурентами, тем самым избегая рекламных войн. Другие просто устанавливают свой рекламный бюджет на уровне с определенным процентом текущих доходов от продаж. Оба этих метода не учитывают то, что повышение затрат на рекламу или нециклическую реклама могут поднять текущие продажи. С другой стороны, чрезмерная реклама даёт негативный эффект, потому что после слишком большого количества просмотров люди перестают замечать её, или считают её раздражающей. Как только наиболее многообещающие, перспективные клиенты были проинформированы, начинается убывающий возврат, т.е. уменьшающийся рост продаж в соотношении с ростом затрат на рекламу.

 (Romanian version)

Cum companiile fac publicitate

 Reclama informează consumatorii despre  existenţa şi beneficiile produselor şi serviciilor, şi încearcă să ii convingă să le cumpere. Cea mai bună formă de publicitate este, probabil,publicitatea verbala, care apare atunci când oamenii informeaza prietenii lor despre beneficiile produselor sau serviciilor pe care le-au procurat.Cu toate acestea, practic nici furnizorii de bunuri şi servicii nu se bazează numai pe asta, dar utilizeaza publicitatea platita în schimb. Într-adevăr, multe organizaţii folosesc, de asemenea, publicitatea instituţională sau de prestigiu, care este proiectata pentru a construi mai degraba reputaţia lor decât sa vinda anumite produse.

Desi companiile mari ar putea stabili cu uşurinţă propriile servicii de publicitate, sa scrie reclamele lor, si sa cumpere spatiu media, ei au tendinţa de a folosi serviciile agenţiilor de publicitate mari. Acestea sunt susceptibile de a avea mai multe resurse, şi mai multe cunoştinţe despre toate aspectele legate de mass-media şi publicitate, decât o singura companie. Cei mai mulţi oameni talentaţi in publicitate, în general, preferă să lucreze mai degraba pentru agenţii, decit in companiile individuale în care acestea le oferă şansa de a lucra pe o varietate de conturi de publicitate (contracte de publicitate pentru produse sau servicii). De asemenea, este mai usor pentru o companie nemulţumita de a da contul  sau către o altă agenţie decât sa concedieze  personalului de publicitate propriu.
Compania client, în general, oferă agenţiei de publicitate un buget convenient; o declaraţie a obiectivelor a companiei de publicitate, cunoscut ca o schita, şi o strategie de publicitate peste toate cu privire la mesajul care urmează să fie comunicat clientilor tinta.Agentia creează reclame ( lumea este de multe ori abreviata la reclame sau anunţuri), şi dezvoltă un plan media specificând care mass-media-ziare, reviste, radio, televiziune, cinema, postere, mail, etc-vor fi utilizate şi în ce proporţii. (la televiziune şi radio, anunţurile sunt adesea cunoscute ca reclame). Agenţiile produc adesea anunţuri alternative sau reclame care sunt pre-testate în ziare, posturi de televiziune, etc în diferite părţi ale unei ţări înainte de alegerea finală efectuata de compania naţionala.
Planificatorii media din cadrul agentiei trebuie sa decida ce procent din piata tinta ei doresc sa obtina(citi oameni vor fi expusi publicitatii) si numarul de ori acestia sunt dispusi sa o vada. Expertii in reclama vorbesc despre frecventa sau OTS ("opportunities to see" ocazii de a vedea) si pragul de efect-momentul in care reclama devine eficienta. Alegerea modalitatii de a reclama este puternic influentata de pretul atingerii nivelului de 1000 de membri ai audientei tinta, pretul pro mila. Organizarea in timp a campaniilor publicitare depinde de factori precum frecventa de cumparare si fluxul cumparatorilor.
Alegerea cheltuielilor necesare reclamarii etse intotdeauna dificila. Unele companii aplica metoda egalitatii - se portiveste cheltuielilor cuncurentilor, astfel evitind razboaie publicitare. Altii isi stabilesc bugetul reclamei intr-o anumita proportie din venitul din vinzari. Dar nici unul din procedee nu ia in considerare ca cresterea cheltuielilor pentru publicitate sau reclamele contra-ciclice pot mari vinzarile actuale. Pe de alta parte, excesul de reclame este contra-productiv deoarece in urma unui numar exagerat de expuneri oamenii inceteaza sa mai observe reclamele, sau le gasesc iritante. Odata ce a fost atins cel mai promitator client, incepe diminuarea, adica micsorarea vinzarilor in raport cu cresterea cheltuielilor pe reclamare.
Exercises:

Vocabulary 

Find the terms in the text which mean the following.

1 free advertising, when satisfied customers recommend products to their friends.

2 advertising that mentions a company’s name but not specific products

3 companies that handle advertising for clients

4 a contract with a company to produce its advertising

5 the amount of money a company plans to spend in developing its advertising and buying media time or space

6 the statement of objectives of an advertising campaign that a client works out with an advertising agency

7 the advertising of a particular product or service during a particular period of time

8 a defined set of customers whose needs a company plans to satisfy

9 the people who choose where to advertise, in order to reach the right customers

10 the fact that a certain amount of advertising is necessary to attract a prospective customer’s attention

11 choosing to spend the same amount on advertising as one’s competitors

12 advertising during periods or seasons when sales are normally relatively poor

Discussion

Which of the following claims do you agree with?

        1.       Advertising is essential for business, especially for launching new consumer products.

        2.       A large reduction of advertising would decrease sales.

        3.       Advertising often persuades people to buy things they don’t need.

        4.       Advertising often persuades people to buy things they don’t want.

        5.       Advertising lowers the public’s taste.

        6.       Advertising raises prices.

        7.       Advertising does not present a true picture of products.

        8.       Advertising has a bad influence on children.

In a well-known survey, the Harvard Business Review asked 2,700 senior business managers whether they agree with these statements. The survey produced some unexpected results. Which of the following percentages do you think go with which of the statements above?

41%     49%     51%     57%     60%     72%     85%     90%

Answer Keys

Vocabulary

1.
2.
3.
4.
5.
6.
7.  alternative advertisement
8.  target costumers
9.  media planners
10.frequency or the OTC(opportunities to see)
11.comparative-parity method
12.counter-productive

 Discussion

1.
2.
3.
4.
5. I do not agree,because the major goal itself of the advertising agencies is to obtain the approval of the people, the more qualitative advertisement there are, the greater will be the public's taste
6. I agree, as increasing the frequency of the advertisement needs additional resources
7. I agree,because in order to sell the product and to resist the competition the companies tend to exaggerate the quality of the product/service.
8. Yes, in some proportions it does, because there are sometimes even indecent scenes

The results of the survey are:
1. 90%
2. 72%
3. 85%
4. 51%
5. 41%
6 49%.
7. 60%
8. 57%


Edited by: Boldurat Mariana

and Cheptea Nicoleta