Page 45 - Encyclopedia of Business and Finance

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Advertising Agencies

smaller niche-market magazines. Radio remains a popu- COPA and other impending legislation will affect adver-
lar advertising medium in local markets. The widespread tising agencies that conduct business globally.
availability of cable TV and satellite transmission has frag-
mented television advertising into niche markets. How- The Role of Government in Advertising. Very few indus-
ever, new and enhanced technologies plus continuing tries have been more thoroughly regulated than advertis-
innovation in product development are adding an interac- ing. Advertising’s visibility in society sometimes makes it
tive flavor to advertising. With the development of new a target for criticism. Consumers often believe that many
media channels new marketing opportunities will arise. advertisements are untruthful and manipulative, which
These developments in the advertising industry continue draws attention from citizens, the media, government,
to influence how agencies operate. The changes are dis- and competitors (Wells et al., 2000). At these times, gov-
cussed next. ernment often has taken steps to regulate advertising prac-
tices and content.
Globalization and International Marketing. Advertising The Ad Council is a private, non-profit organization
agencies are under increasing pressure to create ads for that marshals volunteers from advertising and communi-
products distributed in a global market. Costs for pro- cations, media facilities, and the resources of the business
ducing and executing advertising campaigns across inter- and non-profit communities to deliver messages to the
national markets can be very high. Success often depends American public. Since its founding in 1942 as the War
on a brand maintaining a uniform position across the Advertising Council, the Ad Council has produced public
markets in different countries. Agencies must often con- service ads and acted as an agency that addresses social
sider culture, language, and customs when designing an issues such as improving the quality of life for children,
advertisement tailored to the international market. In preventative health, education, community well being,
order to meet the demands of a global market, advertisers environmental preservation and strengthening families
are forming large multinational agencies and continuing (The Ad Council, 2005).
to debate whether to standardize advertising globally or to
segment advertisements by culture or nationality (Wells et Changing Incentives. Advertising agencies produce rev-
al., 2000). enue and profits by charging commissions and fees for
their services. The 15-percent commission has remained
Interactive Marketing and the Internet. Since 2000, a common practice, with the rate sometimes negotiated
interactive marketing has been the fastest growing area downward are account budgets become large. In recent
within marketing. Interactive marketing includes Inter- years, fees have become the largest source of revenue for
net advertising, permission e-mail, marketing web sites, agencies. Increasingly, agency revenues are based on sales
mobile media (including digital mobile communication or market distribution goals (Lane et al., 2005).
devices) and other new media (Stafford & Faber, 2005).
These media are distinctive among the mass media in that Evolving Career Fields in Advertising. Today’s advertising
they permit people the chance to communicate outside agencies include a vast array of specialists who work
the traditional medium limitations of time and space. together to create a complete and thorough advertising
The Internet allows advertising agencies to target campaign. Account managers allocate agency resources,
consumers worldwide and to conduct market research including time, money, and personnel for individual proj-
ects. An account manager often assembles a team of indi-
inexpensively. The easy access to market research infor-
viduals, each bringing a particular advertising specialty to
mation may permit advertising agencies to continue
developing ads to reach smaller and smaller niche markets the project. The team includes an art director, creative
worldwide. At the same time, certain forces are reducing director, artist(s), copywriters, and designers. The team
may also include other specialists such as media analysts,
the availability and use of information gathered over the
product testers, researchers, and public relations consult-
Internet. For example, the Children’s Online Protection
Act (1998), or COPA, is a U.S. law that affects business ants.
transactions by children using the Internet. COPA SEE ALSO Advertising
requires Web sites soliciting personal information from
children under the age of 13 to prominently post a privacy
BIBLIOGRAPHY
policy and require parental consent for the release of per- The Ad Council (2005). Retrieved March 21, 2006, from
sonal information provided by those children before any http://www.adcouncil.org.
business can be transacted. Many countries are develop- American Association of Advertising Agencies (2005).
ing laws similar to COPA, and it remains to be seen how Retrieved March 24, 2006, from http://www.aaaa.org.

22 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION