All businesses, from the smallest neighborhood grocery store to the largest corporation, make use of advertising in some way. However, it is the advertising operation on a large scale of the biggest corporations that is the most significant in the modern economy.
The large company operating on a national scale has an enormous and complicated selling task. It must sell its products in large quantities to millions of people living in all parts of the country.
The planning of a national advertising campaign is a complex procedure. The planners must take into consideration a variety of information about the product to be advertised and the character of the market for it. Some of the questions that must be answered before an effective campaign can be launched are: Does the product have any distinctive features as compared with competitive products? Does it have an attractive package? What category of people buy such a product and what income group are they in? Are prospective customers men only, women only, or both men and women? To what age group or groups does this type of product appeal? What advertising media will reach prospective customers most effectively? Is the product likely to sell better in one season than in another? Is it more suitable to one part of the country than another? A new campaign is usually tested very carefully in regional markets before being scheduled for national coverage. The tests show whether the marketing and advertising programs are sound. If the tests reveal mistakes or weaknesses in the program, it is revised. Then further tests are scheduled in the same or other areas. When a test or series of tests produces satisfactory results, the campaign is expanded nationally.
A large company that distributes its products nationally usually has an advertising manager and, in most cases, an advertising department. The advertising manager coordinates the advertising program with the company's sales objectives and works with the advertising agency hired by the company.
Most large corporations employ advertising agencies, which are responsible for overall campaigns. An agency prepares the ads and arranges for their insertion in publications or for broadcasting. It also conducts a number of specialized research activities. The general purpose of the research is twofold: to make sure that the agency prepares ads with effective selling power, and to make sure that the ads are run in media that reach the largest possible number of customers at the lowest possible cost.
An account executive at the agency keeps in contact with the company's advertising manager. Together they formulate advertising plans for the company and
coordinate the work done by the agency and the departmental staff. The advertising agency has a number of specialized departments.
The creative department prepares the actual advertisements. This department includes copywriters, art directors and assistants, layout men, specialists in television commercials, and other skilled workers. In many instances, copywriters are guided by a copy plan or copy platform, which is usually prepared by the agency and approved by its client. The platform briefly states the specific claims that may be made for the product and the emphasis that should be given to each.
The platform may also state that the copy and the advertisement as a whole should have a specific style or character, such as hard sell or soft sell. In a hardsell ad, the copy makes a direct and emphatic effort to persuade the consumer to buy the advertised product. The ad has a tone of urgency. Specific reasons may be given for quick action in buying the product. A soft-sell ad is more subtle and sometimes does not mention buying or selling at all. For example, such an ad may consist of a striking illustration of someone enjoying a soft drink and simply name the product.
The agency's research department is staffed by experts in various testing methods. It conducts market research to determine the public's attitudes toward specific products and to determine which people are likely to be customers for these products. It also makes copy tests to find out how much selling power specific advertisements have. Through these tests, the research department helps the agency prepare more effective advertising. In addition, the research sometimes indicates ways in which a product might be improved.
The merchandising department, sometimes called the market development department, develops ideas for special offers and other specific methods for increasing the sale of the client's product. It also studies the overall marketing problem and makes recommendations for improving the sales or marketing strategy. When necessary, the agency's merchandising men make store checks to see how well a product is selling to consumers.
The media department is responsible for gathering statistical and other information about publications and broadcasting stations. It is largely concerned with the cost of advertising in the various media and with finding the combination of media that will reach the most people at the lowest expense.
Large advertising agencies that handle important food accounts have test kitchens staffed by a home economist and his assistants. The test kitchen is an experimental laboratory for food products. It tries out new recipes that may make a product more appealing and tests new ways of preparing or serving foods.
Advertising agencies are usually paid for their services on a commission basis. As a rule they receive 15 percent of the total amount spent by the advertiser for space in publications, for broadcasting time, and for certain services. The procedure is somewhat unusual. For instance, if the rate for a page in a magazine or newspaper is $1,000, the company pays this amount to its advertising agency. The agency pays the publication only $850, keeping the remaining $150 as its commission on the transaction. If the company dealt directly with the publication, it would still have to pay the $1,000, because the commission or discount arrangement applies only to advertising agencies.
In some situations the commissions are too small to cover the value of the services rendered and the agency is paid an outright fee. Some people in the advertising industry consider the commission system undesirable, and from time to time, attempts are made to replace it with some other system.