Page 502 - Foundations of Marketing

Advertising and Public Relations | Chapter 16 469

WHO DEVELOPS THE ADVERTISING LO 3 . Identify who is
responsible for developing
CAMPAIGN? advertising campaigns.

An advertising campaign may be handled by an individual, a few people within a firm, a
firm’s own advertising department, or an advertising agency. In very small firms, one or two
individuals are responsible for advertising (and for many other activities as well). Usually,
these individuals depend heavily on local media (TV, radio, and newspaper) for copywriting,
public relations
artwork, and advice about scheduling media.
Communication efforts used to
In certain large businesses, especially large retail organizations, advertising departments create and maintain favorable
or advertising agencies create and implement advertising campaigns. Depending on the size relations between an organiza-
of the advertising program, an advertising department may consist of a few multi-skilled indi- tion and its stakeholders
viduals or a sizable number of specialists, including copywrit-
ers, artists, social media experts, media buyers, and technical
production coordinators. Advertising departments sometimes
obtain the services of independent research organizations and
hire freelance specialists when a particular project requires it.
Most large corporations employ an advertising agency to
develop advertising campaigns. E*Trade, for example, hired
advertising agency Grey New York to create its E*Trade Baby ads.
The talking toddler informs the audience of how they can perform
26
well financially using E*Trade’s financial services. When an
organization uses an advertising agency, the firm and the agency
usually develop the advertising campaign jointly. How much each
participates in the campaign’s total development depends on the
working relationship between the firm and the agency. Ordinarily,
a firm relies on the agency for copywriting, artwork, technical pro-
duction, and formulation of the media plan.
Advertising agencies assist businesses in several ways. An
agency, especially a large one, can supply the services of highly
skilled specialists—not only copywriters, artists, and production
coordinators but also media experts, researchers, and legal advis-
ers. Agency personnel often have broad advertising experience
and are usually more objective than a firm’s employees about the
organization’s products.
Because an agency traditionally receives most of its com-
pensation from a 15 percent commission paid by the media from © iStockphoto.com/EdStock
which it makes purchases, firms can obtain some agency services
at low or moderate costs. If an agency contracts for $ 400,000 of
television time for a firm, it receives a commission of $ 60,000
from the television station. Although the traditional compensa-
Public Relations
tion method for agencies is changing and now includes other Howard Schultz, CEO of Starbucks, speaks at an Apple event to
factors, media commissions still offset some costs of using an create favorable relationships with stakeholders by discussing
agency. Like advertising, public relations can be a vital element a special alliance with Apple concerning accessing music at
in a promotion mix. We turn to this topic next. Starbucks retail outlets.

PUBLIC RELATIONS LO 4 . Examine the tools used in
public relations as well as how
public relations is used and
Public relations is a broad set of communication efforts used to create and maintain
evaluated.
favorable relationships between an organization and its stakeholders. An organization
communicates with various stakeholders, both internal and external, and public relations
efforts can be directed toward any and all of them. A firm’s stakeholders can include

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