MEDIUM ADVANTAGES DISADVANTAGES

Reaches extremely large audience; uses High cost to prepare and run ads; short
Television picture, print, sound, and motion for effect; exposure time and perishable message;
can target specific audiences difficult to convey complex information

Low cost; can target specific local No visual element; short exposure time
Radio audiences; ads can be placed quickly; can and perishable message; difficult to
use sound, humor, and intimacy effectively convey complex information

Can target specific audiences; high-quality Long time needed to place ad; relatively
color; long life of ads; ads from print versions high cost; competes for attention with
Magazines
can be clipped and saved; can convey other magazine features
complex information

Excellent coverage of local markets; ads Ads compete for attention with other
can be placed and changed quickly; ads newspaper features; short life span;
Newspapers
can be saved; quick consumer response; poor color in print versions
low cost

Excellent coverage of rural and older Public concern over environmental impact
Directories segments; long use period; print and of print versions; both print and online
digital versions available 24 hours/365 days versions compete with Google, Angie’s
List, etc.

Video and audio capabilities; animation can Can be complicated with many search,
Internet capture attention; ads can be interactive display, and payment options. Advertising
and link to advertiser fatigue is common.

Low cost; local market focus; high visibility; Message must be short and simple; low
Outdoor opportunity for repeat exposures selectivity of audience; criticized as a
traffic hazard

High selectivity of audience; can contain High cost per contact; poor image
Direct mail complex information and personalized (junk mail)
messages; high-quality graphics

FIGURE 19–3
Advertisers must television, can convert ordinary television into 3D, offer voice-activated and motion controls,
consider the and allow the viewer to watch two programs simultaneously. Smart TVs combined with ser-
advantages and vices such as AI-enabled digital assistants and Amazon Prime will soon provide the opportu-
disadvantages of the nity for purchase-based target advertising.26
many media
alternatives.
Television’s major disadvantage is cost: The price of a prime-time, 30-second ad can range
from $665,667 to run on Sunday Night Football, to $135,960 to run on NCIS, to $56,270 to run
on America’s Funniest Home Videos. Because of these high charges, many advertisers choose less
expensive “spot” ads, which run between programs, or 15-second ads, rather than investing in
ads that run the more traditional length of 30 or 60 seconds. In fact, approximately 44 percent
of all TV ads are now 15 seconds long. Recent studies suggest that the placement of an ad
within a program, and longer ads relative to other ads in a sequence of ads, may influence the
ad’s effectiveness. In addition, there is some indication that advertisers are shifting their inter-
est to live events rather than programs that might be watched on a DVR days later.27
Another problem with television advertising is the likelihood of wasted coverage—having
­people outside the target market for the product see the advertisement. The cost and wasted
coverage problems of TV advertising can be reduced through the specialized channels.
­Advertising time is often less expensive on cable and satellite channels than on the broadcast

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 networks. According to the Internet and Television Associa-
tion, there are hundreds of cable channels such as Disney,
ESPN, History, MTV, Oxygen, and Lifetime. Cable channels
are also using “dynamic ad insertion” to allow advertisers to
match their ads with the scenes in a program and with the de-
mographics of the viewers. Advertisements for golf equipment,
for example, might be inserted after a scene that shows charac-
ters playing golf or targeted to viewers who are likely golfers.28

CHAPTER 19 Advertising, Sales Promotion, and Public Relations

Another popular form of television advertising is the info-
mercial. Infomercials are program-length (30-minute) adver-
tisements that take an educational approach to communication
with potential customers. You may remember seeing infomer-
cials for the Magic Bullet, ThighMaster, and OxiClean prod-
ucts, using Ron Popeil, Suzanne Somers, and Anthony
ESPN is one of many Sullivan, respectively, as the spokesperson.
specialized channels Infomercials are increasingly popular because they can be both informative and entertain-
available to advertisers on ing, and because the average cost of a 30-minute block of television time is only $425. Each
cable networks. month, JWgreensheet.com publishes a list of the top 10 infomercials from the past four weeks.
Paul Spinelli/AP Images Recent popular infomercials included LifeLock identity theft protection products, Total Gym
exercise equipment, and Crepe Erase anti-aging skin care. The industry generates more than
$250 billion in annual sales and has facilitated the long-term success of many products. The
Total Gym infomercials featuring Chuck Norris and Christie Brinkley, for example, have led
to more than $1.2 billion in sales!29

Radio The United States has more than 15,500 broadcast radio stations. These stations
consist of approximately 4,613 AM stations and 10,901 FM stations. In addition, there are
thousands of webcast Internet radio stations. The major advantage of radio is that it is a seg-
mented medium. For example, the American Forces Network, the Family Life Network, Busi-
ness Talk Radio, and the Performance Racing Network are all listened to by different market
segments. Satellite radio service SiriusXM offers more than 175 commercial-free, digital,
Magazines such as Bumble coast-to-coast channels to consumers for a monthly fee, and Internet radio services such as
Mag appeal to narrowly
525
Pandora, Spotify, and SoundCloud offer personalized channels to each listener. The large
defined segments such as number of media options today has reduced the amount of time spent listening to radio, al-
singles who use Bumble’s though radio still reaches 90 percent of all adults weekly. Millennials listen to radio an average
dating app service. of 10 hours each week, making radio an important medium for businesses with college stu-
Source: Bumble dents and recent graduates as a target market.30
A disadvantage of radio is that it has limited use for products that must be
seen. Another problem is the ease with which consumers can tune out a com-
mercial by switching stations. Radio is also a medium that competes for people’s
attention as they do other activities, such as driving, working, or relaxing. Radio
listening time reaches its peak during the morning drive time (7 to 8 a.m.),
­remains high during the day, and then begins to decline in the afternoon (after
4 p.m.) as people return home and start evening activities.31

Magazines Magazines have become a very specialized medium. In fact, there

are currently more than 7,176 consumer magazines. Some 134 new magazines were
introduced last year, including Bumble Mag, a lifestyle magazine offered by the dat-
ing app of the same name to create a tangible way for users to engage the brand;
Sports History, a magazine designed to engage readers with articles and photos re-
lated to sports history; and Oh So, a magazine dedicated to female skateboarders
and their stories. Many publishers are also taking interest in influencer-based maga-
zines such as Living Inspired, a magazine launched by Shark Tank star Lori Greiner
to offer advice and insight on money, investing, and work–life balance; The Magno-
lia Journal featuring HGTV stars Chip and Joanna Gaines; Oprah’s O magazine,
Gwyneth Paltrow’s Goop, and Ree Drummond’s The Pioneer Woman. Many print

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 magazines, of course, are also available in digital versions than can be read on their websites
through an iPad or a smartphone. Some magazines, such as Auto Trader and Computer Weekly, are
dropping their print format to offer only a digital version. Finally, magazines such as Good House-
keeping and Elle are adding voice user interface (VUI) versions of their publications so the con-
tent will be available on voice assistant devices such as Amazon’s Alexa and Apple’s Siri.32
The marketing advantage of this medium is the great number of special-interest publications
that appeal to narrowly defined segments. Runners read Runner’s World, sailors buy Yachting,
gardeners subscribe to Garden Design, and children peruse Sports Illustrated for Kids. Popular
categories of magazines include arts and antiques, fashion, travel, cooking, automobiles, sports,
and health. Each magazine’s readers often represent a unique profile. Take the Rolling Stone
reader, who tends to listen to music more than most people. SiriusXM Satellite Radio knows an
ad in Rolling Stone is reaching the desired target audience. In addition, recent studies compar-
ing advertising in different media suggest that magazine advertising is perceived to be more
“inspirational” than other media.33
The cost of advertising in national magazines is a disadvantage, but many national publica-
tions publish regional and even metro editions, which reduces the absolute cost and wasted
coverage. Time publishes well over 400 editions, including Latin American, Canadian, Asian,
South Pacific, European, and U.S. editions. The U.S. editions include geographic and demo-
graphic options. In addition to cost, another limitation to magazines is their infrequency. At
best, magazines are printed on a weekly basis, with many specialized publications appearing
only monthly or less often. Although specialization can be an advantage of this medium, con-
sumer interests can be difficult to translate into a magazine theme—a fact made clear by the
hundreds of magazine failures during the past decade. Self, U.S. News and World Report, NAS-
CAR Illustrated, CosmoGirl, PC Magazine, Men’s Vogue, Gourmet, and Mental Floss, for example,
all failed to attract and keep a substantial number of readers or advertisers. Which magazine
has the highest circulation? It’s AARP The Magazine, with a circulation of 23 million!34

Newspapers Newspapers are an important local medium with excellent reach potential.
Daily publication allows advertisements to focus on specific current events, such as a 24-hour
sale. Local retailers often use newspapers as their sole advertising medium. Newspapers are
rarely saved by the purchaser, however, so companies are generally limited to ads that call for
an immediate customer response (although customers can clip and save ads they select). Com-
panies also cannot expect newspapers to offer the same quality color reproduction available in
Shaul Schwarz/Getty Images most magazines.
National advertising campaigns rarely include this medium except in conjunction with lo-
cal distributors of their products. In these instances, both parties often share the advertising
costs using a cooperative advertising program, which is described later in this chapter. An-
other exception is the use of newspapers such as The Wall Street Journal and USA Today,
which have national print circulation of more than 1,011,200 and 866,791 readers, respec-
tively. One newspaper, Metro, offers a global audience of 18 million daily readers in Boston,
New York, Philadelphia, and 100 cities in Europe, North and South America, and Asia.35
Several important trends are influencing newspapers today. First is the decline in circula-
Metro offers a global
tion and advertising revenue. A recent report by the Pew Research Center showed that circula-
audience of daily readers.
tion has declined for the past 20 years. Further, although total U.S. daily circulation was
Bill Greene/The Boston Globe
via Getty Images
recently 31 million for weekday papers and 34 million for Sunday papers, both declined ap-
proximately 10 percent during the past year. The shift is attributed to readers’
growing preference for free websites and mobile services, as half of all Americans
now get some form of local news on a mobile device. In addition, advertising rev-
enue has declined as Craigslist and similar sites have become more popular with
consumers.
The second trend is the growth in digital newspapers. Today, hundreds of news-
papers, including The New York Times, The Wall Street Journal, Chicago Sun-Times,
and the San Francisco Chronicle, offer digital versions of their printed newspapers.
In fact, digital subscriptions account for 16 percent of all newspaper subscriptions.
The New York Times now has more digital subscribers than print subscribers. Many

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 newspapers also have online readers who are not subscribers. USA Today, for example, reports
that it has 32 million readers on the free portion of its website. A final trend is the growth in
new types of news organizations such as The Huffington Post, which covers entertainment,
media, living, business, and politics and has more than 11 million Twitter followers, and Exam-
iner.com, which utilizes a large group of freelance reporters.36

Directories Directories, often called yellow pages, represent an advertising media alterna-
tive comparable to outdoor advertising and public relations in terms of expenditures—about

CHAPTER 19 Advertising, Sales Promotion, and Public Relations

$7.9 billion in the United States. According to the Local Search Association, 40 percent of U.S.
consumers turn to print directories at least once a year and 25 percent use online
directories (desktop, tablet, and mobile) each month. While the print directories
are used by older demographics and in rural areas, their overall use is declining. In
fact, several directory producers such as Hibu (Yellow Pages) have decided to dis-
continue their print directories to focus on their online directories. Directories are
a “directional” medium because they direct consumers to where purchases can be
made after other media have created awareness and demand.
The yellow pages face several disadvantages today. First, relative to other adver-
Online yellow pages are tising options, the yellow pages have limited accountability and ROI metrics. Many advertisers
used more than 11 billion believe that yellow pages need to improve their audience measurement research and circula-
times each year. See the tion auditing practices. Second, both print and digital versions of yellow pages face competi-
text for advantages and tion from convenient alternatives such as Google and Angie’s List. Finally, yellow pages
disadvantages of this publishers are facing increasing public concern about the environmental impact of the print
media alternative. directories. One response from the industry is a website, www.yellowpagesoptout.com, that
Source: DexYP allows consumers to have an opt-out option if they prefer not to receive print directories.37

Internet The Internet represents a relatively new medium for many advertisers, although it
has already attracted a wide variety of industries. Online advertising is similar to print adver-
tising in that it offers a visual message. It has additional advantages, however, because it can
also use the audio and video capabilities of the Internet. Sound and movement may simply
attract more attention from viewers, or they may provide an element of entertainment to the
message. Online advertising also has the unique feature of being interactive. Called rich media,
these interactive ads have drop-down menus, built-in games, or search engines to engage view- 527
ers. Online advertising also offers an opportunity to reach younger consumers who have devel-
oped a preference for online communication.
There are a variety of online advertising options. The most popular options are paid search,
display (banner) ads, classified ads, and video. Paid search is one of the fastest-growing forms of
Internet advertising, as approximately 80 percent of all Internet traffic begins at a search engine
such as Google, Microsoft’s Bing, or Oath (see Figure 19–4). Experts estimate that consumers

Ask 1%

Oath
(previously
Yahoo!)
11.5%
FIGURE 19–4
Google, Microsoft, and
Oath have the largest
shares of Internet Microsoft
24.5% Google 63%
searches and offer
opportunities for
online advertising.

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 conduct 20 billion searches each month. Now search engine agencies help firms add tags, wi-
kis, and RSS (rich site summary) to the content of a site to increase search rankings. While
the use of banner ads is growing also, there is some concern that consumers are developing
“banner blindness” because the click-through rate has been declining to its current level of
0.1 percent. The effectiveness of the ads can be improved with targeted advertising, and re-
search indicates that online visitors are more likely to consent to provide information needed
for targeting if the websites suggest it is a form of reciprocity or exchange for the use of free
websites.
Classified ads, such as those on Craigslist, and video ads also contribute to the growth of
online advertising by providing many of the advantages and characteristics of other media such
as directories, magazines, newspapers, and television. Video ads also have the benefit of “going
viral” when people share the ads with friends. The widespread availability of Internet access
and the popularity of smartphones means that online advertising also provides the unique char-
acteristic of being mobile. In fact, mobile marketing now includes the broad set of interactive
messaging options that enable organizations to communicate and engage with consumers
through any mobile device. Recent research indicates that the location data available from mo-
bile devices can substantially increase the effectiveness of mobile marketing efforts.38
One disadvantage of online advertising is that because the medium is rela-
tively new, technical and administrative standards for the various formats are
still evolving. This situation makes it difficult for advertisers to run national
online campaigns across multiple sites. The Interactive Advertising Bureau
provides “Guidelines, Standards & Best Practices” and creative guidelines to
facilitate the use and growth of online advertising.
Another disadvantage to online advertising is the difficulty of measuring
impact. Several companies are testing methods of tracking where viewers go
on their computer in the days and weeks after seeing an ad. Nielsen’s online
rating service, for example, measures actual Internet use through meters in-
comScore’s service can stalled on the computers of 500,000 individuals in 20 countries. Measuring
provide an assessment the relationship between online and offline behavior is also important. Research by comScore,
of the effectiveness of a which studied 139 online ad campaigns, revealed that online ads didn’t always result in a
website by measuring its “click,” but they increased the likelihood of a purchase by 17 percent and they increased visits
impact on the digital to the advertiser’s website by 40 percent.39 The Making Responsible Decisions box describes
audience. how click fraud is increasing the necessity of assessing online advertising effectiveness.40
Source: comScore, Inc.
Outdoor A very effective medium for reminding consumers about your product is outdoor
advertising, such as the scoreboard at San Diego’s SDCCU Stadium. The most common
form of outdoor advertising, called billboards, often result in good reach and frequency and
have been shown to increase purchase rates, particularly when the billboards provide useful in-
formation in an entertaining way, in relevant locations.41 The visibility of this medium is good
supplemental reinforcement for well-known products, and it is a relatively low-cost, flexible
alternative. Also, a company can buy space in a specific, targeted geographical market. A dis-
advantage to billboards, however, is that no opportunity exists for lengthy advertising copy.
Also, a good billboard site depends on traffic patterns and sight lines.
If you have ever lived in a metropolitan area, chances are you might have seen another form
of outdoor advertising, transit advertising. This medium includes messages on the interior and
exterior of buses, subway and light-rail cars, and taxis. As the use of mass transit grows, transit
advertising may become increasingly important. Selectivity is available to advertisers, who can
buy space by neighborhood or bus route. One disadvantage to this medium is that the heavy
travel times, when the audiences are the largest, are not conducive to reading advertising copy.
People are standing shoulder to shoulder on the subway, hoping not to miss their stop, and
little attention is paid to the advertising. Other forms of outdoor advertising include street
furniture such as bus stop benches and bus shelters.
The outdoor advertising industry has experienced a growth surge recently. According to the
Outdoor Advertising Association of America, outdoor advertising generates $5.97 in sales for
every dollar spent—and expenditures have grown to $10 billion annually. Much of the growth

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 Making Responsible Decisions Ethics
Who Is Responsible for Preventing Click Fraud?
Spending on Internet advertising now exceeds $87 billion as and remember to click on the ad banners once in a while
many advertisers shift their budgets from print and TV to the to try and keep the sites free.” Stephen Dubner calls this
Internet. For most advertisers one advantage of online “webtipping”!
­advertising is that they pay only when someone clicks on As the Internet advertising industry grows, it will become

CHAPTER 19 Advertising, Sales Promotion, and Public Relations

their ad. Unfortunately, the growth of the medium has led to increasingly important to resolve the issue of click fraud.
“click fraud,” which is the deceptive clicking Consumers, advertisers, websites that
of ads solely to increase the amount adver- carry paid advertising, and the large Web
tisers must pay. There are several forms of portals are all involved in a complicated
click fraud. One method is the result of technical, legal, and social situation. The
Paid-to-Read (PTR) websites that recruit and advertising industry’s Media Ratings Coun-
pay members to simply click on ads. An- cil has suggested a possible solution: that
other method is the result of “clickbots,” 50 percent of a display ad must be in view
which are software programs that produce for one second to be an impression that
automatic clicks on ads, sometimes through brands pay for. Some advertisers such as
mobile devices. The activity is difficult to Unilever, however, require 100 percent
detect and stop. Google, for example, viewability. Similarly, some advertisers are
­recently discovered 41 apps with hidden now requesting “smart-pricing,” which
“adware” that had been downloaded means that they pay less if the click does
36 million times over a one-year period. Aleksandra H. Kossowska/ not lead to a consumer action such as a
­Experts estimate that up to 20 percent of Shutterstock purchase or an information request. Finally
clicks may be the result of fraud and may the Interactive Advertising Bureau is
be costing advertisers as much as $5.8 billion each year! ­advocating the use of ads.txt files that help identify
Investigations of the online advertising industry have dis- ­legitimate ad views.
covered a related form of click fraud that occurs when legiti- Who should lead the way in the effort to find a solution
mate website visitors click on ads without any intention of to click fraud? What actions do you suggest for the
looking at the site. As one consumer explains, “I always try ­advertising industry, websites, and consumers?

529
is the result of creative forms of outdoor advertising and the
conversion to digital billboards, which allow advertisers to
quickly present conditional content. Conditional content ads
are based on current events, weather, business conditions, and
even sports scores. Radio stations, for example, can display
the title of the song currently playing on their station, newspa-
pers can display current headlines, and retailers can advertise
umbrellas or sunscreen based on the weather forecast.
Digital billboard companies have also donated billboard
time to display public service announcements. For example,
in Minnesota digital billboards display National Weather Ser-
vice tornado warnings, and in Houston messages from the po-
lice department are displayed to help apprehend fugitives. In
Outdoor advertising can be
addition, as digital billboard technology improves, advertisers
an effective medium for
are contemplating using billboards to convert windows and entire storefronts into “digital en-
reminding consumers
gagement solutions.” While these are positive trends, the outdoor advertising industry also
about a product.
faces important environmental concerns. For example, several states have banned billboards,
Jim McIsaac/Getty Images
a judge recently ordered two billboard companies in Los Angeles to turn off about 80 digital
signs, and a district court upheld a ban on mobile billboards.42

Other Media As traditional media have become more expensive and cluttered, advertisers
have been attracted to a variety of nontraditional advertising options called out-of-home
­advertising, or place-based media. Messages are placed in locations that attract a specific target

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 audience such as airports, doctors’ offices, health clubs, theaters (where ads are played on the
screen before the movies are shown), grocery stores, storefronts, and even the bathrooms of
bars, restaurants, and nightclubs. Soon there will be advertising on video screens on gas
pumps, ATMs, and in elevators, and increasingly it will be interactive.
The $2.5 billion industry has attracted advertisers such as AT&T and JCPenney, which use
in-store campaigns, and GEICO, Sprint, and FedEx, which use out-of-home advertising to
reach mobile professionals in health clubs, airports, and hotels. Research suggests that cre-
ative use of out-of-home advertising, such as preshow theater ads, enhances consumer recall of
the ads.43

Selection Criteria Choosing between these alternative media is difficult and depends on
several factors. First, knowing the media habits of the target audience is essential to deciding
among the alternatives. Second, occasionally product attributes necessitate that certain media be
used. For example, if color is a major aspect of product appeal, radio is excluded. Newspapers
allow advertising for quick actions to confront competitors, and magazines are more appropriate
for complicated messages because the reader can spend more time reading the message. The fi-
nal factor in selecting a medium is cost. When possible, alternative media are compared using a
common denominator that reflects both reach and cost—a measure such as CPM.

Scheduling the Advertising

Out-of-home advertising There is no correct schedule to advertise a product, but three factors must be considered. First
such as this outdoor display is the issue of buyer turnover, which is how often new buyers enter the market to buy the prod-
is becoming interactive to uct. The higher the buyer turnover, the greater the amount of advertising required. A second
engage consumers. issue in scheduling is the purchase frequency; the more frequently the product is purchased, the
©Brent Jones less repetition is required. Finally, companies must consider the forgetting rate, the speed with
which buyers forget the brand if advertising is not seen.
Setting schedules requires an understanding of how the market behaves. Most companies
tend to follow one of three basic approaches:
1. Continuous (steady) schedule. When seasonal factors are unimportant, advertising is run
at a continuous or steady schedule throughout the year.
2. Flighting (intermittent) schedule. Periods of advertising are scheduled between periods of
no advertising to reflect seasonal demand.
3. Pulse (burst) schedule. A flighting schedule is combined with a continuous schedule
­because of increases in demand, heavy periods of promotion, or introduction of a new
product.
For example, products such as breakfast cereals have a stable demand throughout the year
and would typically use a continuous schedule of advertising. In contrast, products such as
snow skis and suntan lotions have seasonal demands and receive flighting-schedule advertising
during the seasonal demand period. Some products such as toys or automobiles require pulse-
schedule advertising to facilitate sales throughout the year and during special periods of in-
creased demand (such as holidays or new car introductions). Some evidence suggests that
pulsing schedules are superior to other advertising strategies.44 In addition, research indicates
the effectiveness of a particular ad wears out quickly and, therefore, many alternative forms of
a commercial may be more effective.45

LEARNING REVIEW
19-5.  ou see the same ad in Time and Fortune magazines and on billboards and
Y
TV. Is this an example of reach or frequency?
19-6. Why has the Internet become a popular advertising medium?
19-7. What factors must be considered when choosing among alternative media?

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 EXECUTING THE ADVERTISING PROGRAM
Executing the advertising program involves pretesting the advertising copy and actually carry-
ing out the advertising program. John Wanamaker, the founder of Wanamaker’s Department
Store in Philadelphia, remarked, “I know half my advertising is wasted, but I don’t know what
half.” By evaluating advertising efforts, marketers can try to ensure that their advertising ex-
penditures are not wasted.46 Evaluation is done usually at two separate times: before and after

CHAPTER 19 Advertising, Sales Promotion, and Public Relations

the advertisements are run in the actual campaign. Several methods used in the evaluation
process at the stages of idea formulation and copy development are discussed below.

Pretesting the Advertising

To determine whether the advertisement communicates the intended message or to select
among alternative versions of the advertisement, pretests are conducted before the advertise-
ments are placed in any medium.

Portfolio Tests Portfolio tests are used to test copy alternatives. The test ad is placed in
a portfolio with several other ads and stories, and consumers are asked to read through the
portfolio. Afterward, subjects are asked for their impressions of the ads on several evaluative
scales, such as from “very informative” to “not very informative.”

Jury Tests Jury tests involve showing the ad copy to a panel of consumers and having
them rate how they liked it, how much it drew their attention, and how attractive they thought
it was. This approach is similar to the portfolio test in that consumer reactions are obtained.
However, unlike the portfolio test, a test advertisement is not hidden within other ads.

Theater Tests Theater testing is the most sophisticated form of pretesting. Consumers
are invited to view new television shows or movies in which test commercials are also shown.
Viewers register their feelings about the advertisements either on handheld electronic record-
ing devices used during the viewing or on questionnaires afterward.
531
Carrying Out the Advertising Program
The responsibility for actually carrying out the advertising program can be handled in one of
three ways, as shown in Figure 19–5. The full-service agency provides the most complete
range of services, including marketing research, media selection, copy development, artwork,
and production. The most common form of compensation for an agency is a fee-based model,
although recent surveys by the Association of National Advertisers (ANA) indicate that there

TYPE OF AGENCY SERVICES PROVIDED

FIGURE 19–5
Alternative structures
Does research, selects media, develops copy, and
of advertising Full-service
produces artwork; also coordinates integrated
agencies used to agency
campaigns with all marketing efforts
carry out the
advertising program.
Specializes in one aspect of creative process;
Limited-service
usually provides creative production work; buys
(specialty) agency
previously unpurchased media space

Provides range of services, depending on company

In-house agency needs

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 may be a shift away from this method. Another form of compensation is a commission-based
model which pays a percentage of the value of media costs. Finally, advertisers that have im-
plemented integrated marketing communication approaches have utilized incentive-based
models. These plans typically link compensation to specific performance goals. The use of
incentive-based models may be declining also, however, because they can become very com-
plex with traditional and digital marketing elements.
Coca-Cola recently announced a new approach to compensating its advertising agencies
called “value based compensation.” The approach is not based on time or cost but, rather, on
value. The components of value, according to Coca-Cola, will include the work’s strategic im-
portance, the talent requirements, and whether other agencies could duplicate the work. Coca-
Cola’s director of worldwide media and communication, Sarah Armstrong, explains that “we
want our agencies to earn their profitability, but it’s not guaranteed.” This approach will add
additional emphasis on agency contributions beyond advertising. The ANA surveys indicate a
growing interest in this form of compensation for agencies.47
Limited-service agencies specialize in one aspect of the advertising process, such as pro-
viding creative services to develop the advertising copy, buying previously unpurchased media
(media agencies), or providing Internet services (Internet agencies). Limited-service agencies
that deal in creative work are compensated by a contractual agreement for the services per-
formed. Finally, in-house agencies made up of the company’s own advertising staff may
provide full services or a limited range of services.

ASSESSING THE ADVERTISING PROGRAM

The advertising decision process does not stop with executing the advertising program. The
advertisements must be evaluated to determine whether they are achieving their intended ob-
jectives, and results may indicate that changes must be made in the advertising program.

Posttesting the Advertising

An advertisement may go through posttests after it has been shown to the target audience to
determine whether it accomplished its intended purpose. Five approaches common in post-
testing are discussed here.48
The Starch test uses aided
recall to evaluate an ad on Aided Recall After being shown an ad, respondents are asked whether their previous ex-
four dimensions. See the posure to it was through reading, viewing, or listening. The Starch test shown in the accompa-
text to learn more. nying photo uses aided recall to determine the percentage of those who (1) remember seeing
Courtesy of GfK North America a specific ad (noted), (2) saw or read any part of the ad identifying the product or brand (as-
sociated), (3) read any part of the ad’s copy (read any), and
(4) read at least half of the ad (read most). Elements of the ad
are then tagged with the results, as shown in the photo.49

Unaided Recall The unaided recall approach involves

asking respondents a question such as, “What ads do you
­remember seeing yesterday?” without any prompting to deter-
mine whether they saw or heard advertising messages.

Attitude Tests Attitude tests involve asking respondents

questions to measure changes in their attitudes after an adver-
tising campaign. For example, they might be asked whether
they now have a more favorable attitude toward the product
advertised. Research suggests that attitudes can be influenced
by many factors, including the increasingly popular use of
­co-creation to develop consumer-generated ads.50

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 Inquiry Tests Inquiry tests involve offering additional product information, product sam-
ples, or premiums to an ad’s readers or viewers. Ads generating the most inquiries are pre-
sumed to be the most effective.

Sales Tests Sales tests involve studies such as controlled experiments (e.g., using radio
ads in one market and newspaper ads in another and comparing the results) and consumer
purchase tests (measuring retail sales that result from a given advertising campaign). The most
sophisticated experimental methods today allow a manufacturer, a distributor, or an advertis-

CHAPTER 19 Advertising, Sales Promotion, and Public Relations

ing agency to manipulate an advertising variable (such as schedule or copy) through cable
systems and observe subsequent sales effects by monitoring data collected from checkout
scanners in supermarkets.51

Making Needed Changes

Results of posttesting the advertising copy are used to reach decisions about changes in the
advertising program. If the posttest results show that an advertisement is doing poorly in
terms of awareness, cost efficiency, or sales, it may be dropped and other ads run in its place
in the future. On the other hand, sometimes an advertisement may be so successful it is run
repeatedly or used as the basis for a larger advertising program.

LEARNING REVIEW
19-8. Explain the difference between pretesting and posttesting advertising copy.
19-9. What is the difference between aided and unaided recall posttests?

SALES PROMOTION 533

Sales promotion is a key element of the promotional mix today; it now accounts for more than
LO 19-4 $85 billion in annual expenditures. In a recent forecast by Zenith Media Services, sales promo-
Discuss the strengths tion expenditures accounted for 18 percent of all promotional spending.52 The large allocation
and weaknesses of
of marketing expenditures to sales promotion reflects the trend toward integrated marketing
consumer-oriented and
trade-oriented sales communications programs, which often include a variety of sales promotion elements. Selec-
promotions. tion and integration of the many promotion techniques require a good understanding of the
advantages and disadvantages of each kind of sales promotion. Sales promotions can have a
positive influence on brand loyalty, perceptions of quality, purchase intentions, and sales.53
The two major kinds of sales promotions, consumer-oriented and trade-oriented, are discussed
below.

Consumer-Oriented Sales Promotions

Directed to ultimate consumers, consumer-oriented sales promotions, or simply consumer
promotions, are sales tools used to support a company’s advertising and personal selling. A
variety of consumer-oriented sales promotion tools may be used, including coupons, deals,
premiums, contests, sweepstakes, samples, loyalty programs, point-of-purchase displays, re-
bates, and product placements (see Figure 19–6 on the next page).

Coupons Coupons are sales promotions that usually offer a discounted price to the con-
sumer, which encourages trial. Approximately 256 billion coupons worth $400 billion are
distributed in the United States each year. More than 93 percent of all coupons are distributed
as freestanding inserts in newspapers. Research indicates that consumer use of coupons is

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 KIND OF
SALES PROMOTION OBJECTIVES ADVANTAGES DISADVANTAGES

Stimulate demand Encourage retailer support Consumers delay

Coupons
purchases

Increase trial; retaliate Reduce consumer risk Consumers delay

Deals against competitor’s purchases; reduce
actions perceived product value

Build goodwill Consumers like free or Consumers buy for

Premiums
reduced-price merchandise premium, not product

Increase consumer Encourage consumer Require creative or

Contests purchases; build business involvement with product analytical thinking
inventory

Encourage present Get customer to use product Sales drop after

Sweepstakes customers to buy more; and store more often sweepstakes
minimize brand switching

Encourage new- Low risk for consumer High cost for company
Samples
product trial

Encourage repeat Help create loyalty High cost for company

Loyalty programs
purchases

Increase product trial; Provide good product Hard to get retailer to

Point-of-purchase
provide in-store support visibility allocate high-traffic space
displays
for other promotions

Encourage customers to Effective at stimulating Easily copied; steal sales

Rebates purchase; stop sales demand from future; reduce
decline perceived product value

Introduce new products; Positive message in a Little control over

Product placements
demonstrate product use noncommercial setting presentation of product

FIGURE 19–6
Consumer-oriented steady at approximately 92 percent. Consumers redeemed 1.7 billion of the coupons last year,
sales promotion
for a savings of approximately $2.7 billion.
makes use of many
different tools to Companies that have increased their use of coupons include Procter & Gamble, Nestlé,
achieve a variety of and Kraft, while the top retailers for coupon redemption were Walmart, Kroger, and Target.
objectives. The number of coupons generated at Internet sites (e.g., www.valpak.com and www.­coupons.
com) and on mobile phones has been increasing as well, although they account for less than
1 percent of all coupons. The redemption rate for online coupons—approximately 12 percent—
however, is substantially higher than other forms of coupons. Daily deal sites like Groupon.
com and LivingSocial.com have helped fuel the growth in couponing. Today, coupons are
available in almost every product category and they are used by men and women of all ages.54
Do coupons help increase sales? Studies suggest that market share does increase during the
period immediately after coupons are distributed.55 There are also indications, however, that
couponing can reduce gross revenues by lowering the price paid by already-loyal consumers.56
Therefore, the 9,000 manufacturers that currently use coupons are particularly interested in

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 coupon programs directed at potential first-time buyers. One means of focus-
ing on these potential buyers is through electronic in-store coupon machines
that match coupons to your most recent purchases.
Coupons are often far more expensive than the face value of the coupon;
a 25-cent coupon can cost three times that after paying for the advertisement
to deliver it, dealer handling, clearinghouse costs, and redemption. In addi-
tion, misredemption, or attempting to redeem a counterfeit coupon or a valid
coupon when the product was not purchased, should be added to the cost of

CHAPTER 19 Advertising, Sales Promotion, and Public Relations

the coupon. The Coupon Information Corporation estimates that companies
pay out refunds worth hundreds of millions of dollars each year as a result of
coupon fraud. Recent growth in coupon fraud has marketers considering
adding holograms and visual aids to help cashiers identify valid coupons.57

Deals Deals are short-term price reductions, commonly used to increase

trial among potential customers or to retaliate against a competitor’s actions.
For example, if a rival manufacturer introduces a new cake mix, the company
responds with a “two packages for the price of one” deal. This short-term
price reduction builds up the stock on the kitchen shelves of cake mix buyers
and makes the competitor’s introduction more difficult.

Premiums A promotion tool often used with consumers is the premium,

which consists of merchandise offered free or at a significant savings over its
Coupons encourage trial by retail price. This latter type of premium is called self-liquidating because the cost charged to
offering a discounted price. the consumer covers the cost of the item. McDonald’s, for example, used a free premium in a
See the text to learn if promotional partnership with Disney during the release of Avengers: Endgame. Collectible toys
coupons increase sales. that portrayed one of seven Avengers characters were given away free with the purchase of a
Mike Hruby/McGraw-Hill Happy Meal. What are the most popular premiums? According to the Promotional Products
Education Association International, the top premiums are apparel, writing instruments, shopping bags,
cups and mugs, and desk accessories. By offering a premium, companies encourage customers
to return frequently or to use more of the product. Research suggests that deal-prone consum-
ers and value seekers are attracted to premiums.58
535
Contests As shown in Figure 19–6, contests are another
sales promotion tool used with consumers. Contests encour-
age consumers to apply their skill or analytical or creative
thinking to try to win a prize. This form of promotion has
been growing as requests for videos, photos, and essays are a
good match with the trend toward consumer-generated con-
tent. For example, Kellogg’s sponsored the Pringles Mystery
Flavor Contest, giving people the chance to guess a new flavor
of Pringles chips. To enter the contest, consumers purchased a
can of the chips, registered for the Kellogg’s Family Rewards
program, and uploaded a picture of their receipt along with their
Kellogg’s Mystery Flavor guess. Correct guesses moved to a final round where one finalist was selected to win $10,000!
Contest offered a $10,000 If you like contests, you can enter online now at websites such as www.contestbee.com.59
prize.
Source: Kellogg NA Co. Sweepstakes Sweepstakes are sales promotions that require participants to submit some
kind of entry but are purely games of chance requiring no analytical or creative effort by the
consumer. Popular sweepstakes include the HGTV “Dream Home Giveaway,” which receives
more than 90 million entries each year, and McDonald’s Monopoly, which offers a grand
prize of $1 million.60
Two variations of sweepstakes are popular now. First are sweepstakes that offer products
that consumers value as prizes. Mars Chocolate, for example, created a sweepstakes where
consumers enter a UPC code from M&M’s products for a chance to win one of five Toyota
automobiles. Pepsi created a similar sweepstakes called “Pepsi Fire” that allowed consumers
to use Snapchat to submit codes from bottles of Pepsi and Pepsi Fire to win prizes.

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 The second type of sweepstakes offers an “experience” as the prize. For example, one of
television’s most popular series, The Voice, and Nissan sponsored a sweepstakes for a chance
to win a trip for two to the season finale of The Voice in Los Angeles. Similarly, for each of the
past five years, People Entertainment Network has sponsored the Oscars Fan Experience
Sweepstakes for a chance to win a trip to the Oscars in Hollywood.
Federal laws, the Federal Trade Commission, and state legislatures have issued rules cover-
ing sweepstakes, contests, and games to regulate fairness, ensure that the chance for winning
is represented honestly, and guarantee that the prizes are actually awarded. Several well-known
sweepstakes created by Publishers Clearing House and Reader’s Digest have paid fines and
agreed to new sweepstakes guidelines in response to regulatory scrutiny.61

Samples Another common consumer sales promotion is sampling, which is offering the
product free or at a greatly reduced price. Often used for new products, sampling puts the
product in the consumer’s hands. A trial size is generally offered that is smaller than the regu-
lar package size. If consumers like the sample, it is hoped they will remember and buy the
product. Taco Bell has offered free tacos nationwide several times in the past to encourage
customers to try new products. Recently, Taco Bell gave away free Doritos Locos tacos be-
cause the Golden State Warriors “stole” an away game in the NBA finals. The taco has be-
come the company’s most successful new product. Similarly, Ben & Jerry’s offers a
complimentary scoop of ice cream on “Free Cone Day.” Some consumers watch for free
samples online at sites such as www.freesamples.org. According to Stacy Fisher, who started
trying free samples in college and now blogs about them, free samples are “a great way to try
new things and save money.”62

Loyalty Programs Loyalty programs are a sales promotion tool used to encourage and
reward repeat purchases by acknowledging each purchase made by a consumer and offering a
premium as purchases accumulate. The most popular loyalty programs today are credit card
reward programs. More than 75 percent of all cards offer incentives for use of their card. Ci-
tibank, for example, offers “Thank You” points for using Citi credit or debit cards. The points
can be redeemed for books, music, gift cards, cash, travel, and special limited-time rewards.
Airlines, retailers, hotels, and grocery stores also offer popular loyalty programs. Specialty re-
tailers such as Bed Bath & Beyond and Best Buy have enhanced their reward programs to add
value to their offerings as they compete with low-cost merchandise. The rewards program at

Ben & Jerry’s free samples

encourage customers to try
new flavors, while the
Starbucks Rewards
program rewards
customers for repeat
purchases.
(Left): Sources: Ben & Jerry’s
Homemade, Inc.; (Right): Source:
Starbucks Coffee Company

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 Starbucks lets you earn “stars” that can be redeemed for drinks, food, and merchandise and
also offers benefits such as refills and a free birthday treat. There are now more than 3.3 bil-
lion loyalty program memberships, for an average of 29 for each household in the United
States, with point balances exceeding $50 billion.63
One trend in loyalty programs today is to customize the rewards and benefits for different
segments of program members. This approach leads to promotions targeted at new members,
members with unique purchase histories, or members who have self-selected into “elite” sta-
tus groups. American Airlines, for example, has offered bonus points for new

CHAPTER 19 Advertising, Sales Promotion, and Public Relations

members, an additional 50 percent of award points for members who fly first
class, and special benefits for members who join the American Airlines Admirals
Club. Another trend is the shift away from programs where points and rewards
can be earned from only one operator to an “open economy” for loyalty where
points and rewards can be earned from many interchangeable programs. An ex-
ample of a program moving in this direction is the Chase Ultimate Rewards pro-
gram, which was recently rated highest in terms of overall customer
satisfaction.64

Point-of-Purchase Displays In a store aisle, you often encounter a sales

promotion called a point-of-purchase display. These product displays take the form
of advertising signs, which sometimes actually hold or display the product, and are
often located in high-traffic areas near the cash register or the end of an aisle. The
point-of-purchase display for new movies is designed to maximize the consumer’s
attention to DVDs and provide storage for the products. Annual expenditures on
point-of-purchase promotion are expected to grow as point-of-purchase becomes
Point-of-purchase displays integrated with all forms of promotion.
help increase consumers’ Some studies estimate that one-third of a consumer’s buying decisions are made in the store.
attention in a store. Grocery product manufacturers want to get their message to you at the instant you are next to
McGraw-Hill Education their brand in your supermarket aisle, perhaps through a point-of-purchase display. At a growing
number of supermarkets, this may be done with digital signage. Whole Foods Market, for ex-
ample, is replacing printed and written displays with digital signage that educates shoppers
about the sustainable growing practices of its suppliers. The advantage of this method of pro- 537
motion is that it does not rely on the consumers’ ability to remember the message for long peri-
ods. Other in-store promotions such as interactive kiosks are also becoming popular.65

Rebates Another consumer sales promotion tool in Figure 19–6, the cash rebate, offers
the return of money based on proof of purchase. For example, T-Mobile recently offered a
$360 to $390 rebate to smartphone owners who would trade in their phone and add a new
line. When a rebate is offered on lower-priced items, the time and trouble of mailing in a proof
of purchase to get the rebate check often means that many buyers never take advantage of it.
However, this “slippage” is less likely to occur with frequent users of rebate promotions. In
addition, online consumers are more likely to take advantage of rebates.66

Product Placements A final consumer promotion tool, product placement, involves

the use of a brand-name product in a movie, television show, video game, or commercial for
another product. It was Steven Spielberg’s placement of Hershey’s Reese’s Pieces in E.T. the
Extra Terrestrial that first brought a lot of interest to the candy. Similarly, when Tom Cruise
wore Bausch and Lomb’s Ray-Ban sunglasses in Risky Business and its Aviator glasses in Top
Gun, sales skyrocketed from 100,000 pairs to 7,000,000 pairs in five years. After Toy Story,
Etch-A-Sketch sales increased 4,500 percent and Mr. Potato Head sales increased 800 percent.
More recently you might remember seeing products from Tabasco, Sony, and Barnum’s
(Animal Crackers) in Captain Marvel; Harley-Davidson, Samsung, Apple, and Gibson (guitars)
in A Star Is Born; and Dell, CNN, and BMW in Mission: Impossible – Fallout. Which brand has
the highest level of product placement in films? It’s Apple, with 3.5 hours of screen time in
52 top films. And which film has the most product placements? Jurassic World: Fallen Kingdom,
with $51 million of advertising value for brands such as Nike, Cessna, Swatch, and Ford.

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 Product placement can
take many forms today. Are
you familiar with these
examples?
(Left): Paramount Pictures/
Photofest; (Top right): AF archive/
Alamy Stock Photo; (Bottom
right): DGA Photo/Alamy
Stock Photo

The annual value of all product placements has grown to an estimated $10 billion as con-
sumer resistance to traditional advertising has led advertisers to try new forms of promotion.
Complaints that product placement has become excessive have led the Federal Communica-
tions Commission to begin developing guidelines for TV product placements. Meanwhile, the
British government recently passed a law allowing product placement only if a bold “P” logo
is shown before and after the program. Research suggests that a product placement disclosure
such as this may lead to less favorable attitudes toward the products.67
New forms of product placement may appear to be integrated into the program. An epi-
sode of Modern Family, for example, includes a scene in an Apple store. Some programs have
recently begun digital product placement in programs after they have been filmed. Similarly,
some companies such as Amway are creating partnerships with game developers in order to be
included in video games, which can be effective if competing products are not also in the
game. A variation of product placement, called reverse product placement, brings fictional
products to the marketplace. Bertie Bott’s Every Flavour Beans, for example, began as an
imaginary brand in Harry Potter books. Similarly, the movie Forrest Gump led to the Bubba
Gump Shrimp Company restaurant chain. And fans of The Office can purchase Dunder
­Mifflin office supplies from www.quill.com!68

Trade-Oriented Sales Promotions

Trade-oriented sales promotions, or simply trade promotions, are sales tools used to support
a company’s advertising and personal selling directed to wholesalers, retailers, or distributors.
Some of the sales promotions just reviewed are used for this purpose, but three other common
approaches are targeted uniquely to these intermediaries: (1) allowances and discounts,
(2) cooperative advertising, and (3) training of distributors’ salesforces.

Allowances and Discounts Trade promotions often focus on maintaining or increas-

ing inventory levels in the channel of distribution. An effective method for encouraging such
increased purchases by intermediaries is the use of allowances and discounts. However, over-
use of these price reductions can lead to retailers changing their ordering patterns in the
­expectation of such offerings. Although there are many variations that manufacturers can use

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 with discounts and allowances, three common approaches are the merchandise allowance, the
case allowance, and the finance allowance.69
Reimbursing a retailer for extra in-store support or special featuring of the brand is a mer-
chandise allowance. Performance contracts between the manufacturer and trade member usu-
ally specify the activity to be performed, such as a picture of the product in a newspaper with
a coupon good at only one store. The merchandise allowance then consists of a percentage
deduction from the list case price ordered during the promotional period. Allowances are not
paid by the manufacturer until it sees proof of performance (such as a copy of the ad placed

CHAPTER 19 Advertising, Sales Promotion, and Public Relations

by the retailer in the local newspaper).
A second common trade promotion, a case allowance, is a discount on each case ordered
during a specific time period. These allowances are usually deducted from the invoice. A varia-
tion of the case allowance is the “free goods” approach, whereby retailers receive some amount
of the product free based on the amount ordered, such as 1 case free for every 10 cases
ordered.70
A final trade promotion, the finance allowance, involves paying retailers for financing costs
or financial losses associated with consumer sales promotions. This trade promotion is regu-
larly used and has several variations. One type is the floor stock protection program—manufac-
turers give retailers a case allowance price for products in their warehouse, which prevents
shelf stock from running down during the promotional period. Also common are freight allow-
ances, which compensate retailers that transport orders from the manufacturer’s warehouse.

Cooperative Advertising Resellers often perform the important function of promoting

the manufacturer’s products at the local level. One common sales promotional activity is to
encourage both better quality and greater quantity in the local advertising efforts of resellers
through cooperative advertising. These are programs by which a manufacturer pays a per-
centage of the retailer’s local advertising expense for advertising the manufacturer’s products.
Usually, the manufacturer pays a percentage, often 50 percent, of the cost of advertising up
to a certain dollar limit, which is based on the amount of the manufacturer’s products pur-
chased by the retailer. In addition to paying for the advertising, the manufacturer often fur-
nishes the retailer with a selection of different ad executions, sometimes suited for several
different media. A manufacturer may provide, for example, several different print layouts as 539
well as a few broadcast ads for the retailer to adapt and use.71

Training of Distributors’ Salesforces One of the many functions the intermediaries

perform is customer contact and selling for the producers they represent. Both retailers and
wholesalers employ and manage their own sales personnel. A manufacturer’s success often
rests on the ability of the reseller’s salesforce to represent its products. Thus, it is in the best
interest of the manufacturer to help train the reseller’s salesforce.
Because the reseller’s salesforce is often less sophisticated and knowledgeable about the
products than the manufacturer might like, training can increase their sales performance.
Training activities include producing manuals and brochures to educate the reseller’s sales-
force. The salesforce then uses these aids in selling situations. Other activities include national
sales meetings sponsored by the manufacturer and field visits to the reseller’s location to in-
form and motivate the salesperson to sell the products. Manufacturers also develop incentive
and recognition programs to motivate a reseller’s salespeople to sell their products.

LEARNING REVIEW
19-10. What is the difference between a coupon and a deal?
19-11. Which sales promotion tool is most common for new products?
19-12.  hich trade promotion approach focuses on maintaining or increasing
W
­inventory levels?

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 PUBLIC RELATIONS
As noted in Chapter 18, public relations is a form of communications management that seeks
LO 19-5 to influence the image of an organization and its products and services. Public relations ef-
Recognize public forts may utilize a variety of tools and may be directed at many distinct audiences. While
relations as an public relations personnel usually focus on communicating positive aspects of the business,
important form of
communication.
they may also be called on to minimize the negative impact of a problem or crisis. Companies
that have received substantial negative publicity include BP (the worst oil spill in U.S. history),
Samsung (faulty smartphone batteries that started fires), and United Airlines (forcibly remov-
ing a passenger from an overbooked flight). The most frequently used public relations tool is
publicity, which can often provide stronger marketing impact than advertising.72

Publicity Tools
In developing a public relations campaign, several publicity tools—methods of obtaining non-
personal presentation of an organization, product, or service without direct cost—are available
to the public relations director. Many companies frequently
use the news release, consisting of an announcement regarding
changes in the company or the product line. The objective of
a news release is to inform a newspaper, radio station, or
other medium of an idea for a story.
A second common publicity tool is the news conference.
Representatives of the media are all invited to an informa-
tional meeting, and advance materials regarding the content
are sent. This tool is often used when new products are intro-
duced or significant changes in corporate structure and lead-
ership are being made.
Nonprofit organizations rely heavily on public service an-
nouncements (PSAs), which are free space or time donated by
the media. For example, the charter of the American Red
Daisy Ridley receives Cross prohibits any local chapter from advertising, so to
publicity for her movies by ­solicit blood donations local chapters often depend on PSAs on radio or television to an-
visiting programs such as nounce their needs.
The Tonight Show Starring Finally, today many high-visibility individuals are used as publicity tools to create visibility
Jimmy Fallon. for their companies, their products, and themselves. Richard Branson uses visibility to pro-
Theo Wargo/Getty Images
mote the Virgin Group, Daisy Ridley uses it to promote her movies, and U.S. senators use it to
promote themselves as political candidates. These publicity efforts are coordinated with news
releases, conferences, advertising, donations to charities, volunteer activities, endorsements,
and any other activities that may have an impact on public perceptions.73

INCREASING THE VALUE OF PROMOTION

Today’s customers seek value from companies that provide leading-edge products, hassle-free
transactions at competitive prices, and customer intimacy.74 Promotion practices have changed
dramatically to improve transactions and increase customer intimacy by (1) emphasizing long-
term relationships and (2) increasing self-regulation.

Building Long-Term Relationships

Many changes in promotional techniques have been driven by marketers’ interest in develop-
ing long-term relationships with their customers. Promotion can contribute to brand and store
loyalty by improving a company’s ability to target individual preferences and by engaging cus-
tomers in valuable and entertaining communication. New social and mobile media have pro-
vided immediate opportunities for personalized promotion activities. In addition, technological
developments have helped traditional media such as TV and radio focus on individual

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 ­ references through services such as Apple TV and SiriusXM Satellite Radio. Although the
p
future holds extraordinary promise for the personalization of promotion, the industry will
need to manage and balance consumers’ concerns about privacy as it proceeds.
Changes that help engage consumers have also been numerous. Marketers have attempted
to utilize interactive technologies and to integrate new media and technologies into the overall
creative process. Ad agencies are increasingly integrating public relations, direct marketing,
advertising, and sales promotion into comprehensive IMC campaigns. In fact, some experts
predict that advertising agencies will soon become “communications consulting firms.” Fur-

CHAPTER 19 Advertising, Sales Promotion, and Public Relations

ther, increasingly diverse and global audiences necessitate multimedia approaches and com-
munication techniques that engage the varied groups.75 Overall, companies hope that these
changes will build customer relationships for the long term—emphasizing a lifetime of pur-
chases rather than a single transaction.

Self-Regulation
Unfortunately, over the years, many consumers have been misled, or even deceived, by some
promotions. Examples include sweepstakes in which the gifts were not awarded, rebate offers
that were a terrible hassle, and advertisements whose promises were great, until the buyer read
the small print. In one of the worst scandals in promotion history, McDonald’s assisted an
FBI investigation of the firm responsible for the fast-food chain’s sweepstakes because the
promotion agency security director was suspected of stealing winning game pieces.76
Promotions targeted at special groups such as children and the elderly also raise ethical
concerns. For example, providing free samples to children in elementary schools or linking
product lines to TV programs and movies has led to questions about the need for restrictions
on promotions.77 Although the Federal Trade Commission (FTC) does provide some guide-
lines to protect consumers and special groups from misleading promotions, some observers
believe more government regulation is needed.
Formal regulation of all promotional activities by federal, state, and local governments
would be very expensive. As a result, advertising agencies, trade associations, and marketing
organizations are increasing their efforts toward self-regulation.78 By imposing standards that
reflect the values of society on their promotional activities, marketers can (1) facilitate the de-
velopment of new promotional methods, (2) minimize regulatory constraints and restrictions, 541
and (3) help consumers gain confidence in the communication efforts used to influence their
purchases. As organizations strive for effective self-regulation, marketing executives will need to
make sound ethical judgments about the use of existing and new promotional practices.

LEARNING REVIEW
19-13. What is a news release?
19-14. What is the difference between government regulation and self-regulation?

LEARNING OBJECTIVES REVIEW

LO 19-1 Explain the differences between product advertising and competitive, and reminder advertisements, which are similar to
institutional advertising and the variations within each type. the product ads but focus on the institution.
Product advertisements focus on selling a good or service and LO 19-2 Describe the steps used to develop, execute, and
take three forms: Pioneering advertisements tell people what a evaluate an advertising program.
product is, what it can do, and where it can be found; competi- The promotion decision process can be applied to each of the
tive advertisements persuade the target market to select the promotional elements. The steps to develop an advertising pro-
firm’s brand rather than a competitor’s; and reminder advertise- gram include the following: identify the target audience, specify
ments reinforce previous knowledge of a product. Institutional the advertising objectives, set the advertising budget, design the
advertisements are used to build goodwill or an image for an advertisement, create the message, select the media, and sched-
organization. They include advocacy advertisements, which ule the advertising. Executing the program requires pretesting,
state the position of a company on an issue, and pioneering, and evaluating the program requires posttesting.

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 LO 19-3 Explain the advantages and disadvantages of ­ erceived value. Premiums offer consumers additional mer-
p
alternative advertising media. chandise they want, but they may be purchasing only for the
Television advertising reaches large audiences and uses picture, premium. Contests create involvement but require creative
print, sound, and motion; its disadvantages, however, are that it thinking. Sweepstakes encourage repeat purchases, but sales
is expensive and perishable. Radio advertising is inexpensive drop after the sweepstakes. Samples encourage product trial
and can be placed quickly, but it has no visual element and is but are expensive. Loyalty programs help create loyalty but are
perishable. Magazine advertising can target specific audiences expensive to run. Displays provide visibility but are difficult to
and can convey complex information, but it takes a long time to place in retail space. Rebates stimulate demand but are easily
place the ad and is relatively expensive. Newspapers provide copied. Product placements provide a positive message in a
­excellent coverage of local markets and can be changed quickly, noncommercial setting that is difficult to control. Trade-­
but they have a short life span and poor color. Directories have oriented sales promotions include (a) allowances and dis-
a long use period and are available 24 hours per day; their counts, which increase purchases but may change retailer
­disadvantages, however, are that they face competition from ordering patterns; (b) cooperative advertising, which encour-
convenient alternatives such as Angie’s List and raise concerns ages local advertising; and (c) salesforce training, which helps
about the environmental impact of print directories. Internet increase sales by providing the salespeople with product infor-
advertising can be interactive, but its effectiveness is difficult to mation and selling skills.
measure. Outdoor advertising provides repeat exposures, but its LO 19-5 Recognize public relations as an important form of
message must be very short and simple. Direct mail can be tar- communication.
geted at very selective audiences, but its cost per contact is high. Public relations activities usually focus on communicating posi-
LO 19-4 Discuss the strengths and weaknesses of consumer- tive aspects of the business. A frequently used public relations
oriented and trade-oriented sales promotions. tool is publicity. Publicity tools include news releases and news
Coupons encourage retailer support but may delay consumer conferences. Nonprofit organizations often use public service
purchases. Deals reduce consumer risk but also reduce announcements.

LEARNING REVIEW ANSWERS

19-1 What is the difference between pioneering and competitive ads? 19-8 Explain the difference between pretesting and posttesting advertising copy.
Answer: Pioneering (or informational) ads, used in the introductory Answer: Pretests are conducted before ads are placed in any medium
stage of the product life cycle, tell people what a product is, what it to determine whether they communicate the intended message or to
can do, and where it can be found. The key objective of a pioneering select among alternative versions of the ad. Posttests are conducted
ad is to inform the target market. Competitive (or persuasive) ads after the ads are shown to the target audience to determine whether
promote a specific brand’s features and benefits to persuade the tar- they accomplished their intended purpose.
get market to select the firm’s brand rather than that of a competitor. 19-9 What is the difference between aided and unaided recall posttests?
A form of a competitive ad is the comparative ad that shows one Answer: Aided and unaided recall posttests are conducted after the
brand’s strengths relative to those of competitors. ads are shown to the target audience. Aided recall involves showing
19-2 What is the purpose of an institutional advertisement? an ad to respondents who then are asked if their previous exposure
Answer: The purpose of an institutional advertisement is to build to it was through reading, viewing, or listening. Aided recall is used
goodwill or an image for an organization rather than a specific offer- to determine the percentage of those (1) who remember seeing a
ing. This form of advertising is often used to support the public rela- specific magazine ad (noted), (2) who saw or read any part of the ad
tions plan or counter adverse publicity. identifying the product or brand (seen-associated), (3) who read any
19-3 What other decisions can advertising objectives influence? part of the ad’s copy (read some), and (4) who read at least half of
Answer: Advertising objectives can influence decisions such as select- the ad (read most). Unaided recall involves specifically asking re-
ing media and evaluating an advertising campaign. spondents if they remember an ad without any prompting to deter-
19-4 What is a potential shortcoming of using a celebrity spokesperson? mine if they saw or heard its message.
Answer: The spokesperson’s image may change to be inconsistent 19-10 What is the difference between a coupon and a deal?
with the image of the company or brand. Answer: Coupons and deals are consumer-oriented sales promotion
19-5 You see the same ad in Time and Fortune magazines and on billboards tools used to support a company’s advertising and personal selling.
and TV. Is this an example of reach or frequency? A coupon usually offers a discounted price to encourage trial. A deal
Answer: This is an example of frequency—reaching the same audience is a short-term price reduction used to increase trial among potential
more than once. customers or to retaliate against a competitor’s actions.
19-6 Why has the Internet become a popular advertising medium? 19-11 Which sales promotion tool is most common for new products?
Answer: The Internet offers a visual message, can use both audio and Answer: A product sample (or sampling) is a consumer-oriented
video, is interactive through rich media, and tends to reach younger sales promotion tool that is given to consumers through the use of a
consumers. trial-size package, which is generally smaller than the regular size.
19-7 What factors must be considered when choosing among alternative 19-12 Which trade promotion approach focuses on maintaining or increas-
media? ing inventory levels?
Answer: Choosing among alternative media depends on: knowing Answer: Allowances and discounts encourage increased purchases
the media habits of the target audience; understanding the product’s by intermediaries to maintain or increase inventory levels in the
attributes (such as color), the competitive situation, and the need for channel of distribution.
a complicated message; and the cost, as measured by CPM.

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 19-13 What is a news release? restrict some promotion activities. The Federal Trade Commission
Answer: A news release is a publicity tool that consists of an an- (FTC) issues guidelines to protect consumers from misleading pro-
nouncement regarding changes in the company or the product line motions. Self-regulation involves imposing standards and ethical
to inform the media of an idea for a story. guidelines for the promotional activities of advertising agencies,
19-14 What is the difference between government regulation and trade associations, and marketing organizations that reflect the val-
self-regulation? ues of society.
Answer: Government regulation involves laws or other controls that
are set by an agency of local, state, or federal government and

CHAPTER 19 Advertising, Sales Promotion, and Public Relations

FOCUSING ON KEY TERMS
advertising p. 513 gross rating points (GRPs) p. 522 pretests p. 531
consumer-oriented sales infomercials p. 525 product advertisements p. 513
promotions p. 533 in-house agencies p. 532 product placement p. 537
cooperative advertising p. 539 institutional advertisements p. 514 publicity tools p. 540
cost per thousand (CPM) p. 522 limited-service agencies p. 532 rating p. 522
frequency p. 522 mobile marketing p. 528 reach p. 522
full-service agency p. 531 posttests p. 532 trade-oriented sales promotions p. 538

APPLYING MARKETING KNOWLEDGE

1 How does competitive product advertising differ from
Medium Cost of Ad Audience Size
competitive institutional advertising?
2 Suppose you are the advertising manager for a new TV show $5,000 25,000 543
line of children’s fragrances. Which form of media Magazine 2,200 6,000
would you use for this new product?
3 You have recently been promoted to be director of ad- Newspaper 4,800 7,200
vertising for the Timkin Tool Company. In your first FM radio    420 1,600
meeting with Mr. Timkin, he says, “Advertising is a
waste! We’ve been advertising for six months now and
sales haven’t increased. Tell me why we should con- lenses. What advantages and disadvantages of each al-
tinue.” Give your answer to Mr. Timkin. ternative should they consider? Which media would
4 A large life insurance company has decided to switch you recommend to them?
from using a strong fear appeal to a humorous ap- 8 What are two advantages and two disadvantages of the
proach. What are the strengths and weaknesses of advertising posttests described in the chapter?
such a change in message strategy? 9 Federated Banks is interested in consumer-oriented
5 Some national advertisers have found that they can sales promotions that would encourage senior citizens
have more impact with their advertising by running a to direct deposit their Social Security checks with the
large number of ads for a period and then running no bank. Evaluate the sales promotion options, and rec-
ads at all for a period. Why might such a flighting ommend two of them to the bank.
schedule be more effective than a continuous schedule? 10 How can public relations be used by Firestone and
6 Which medium in the table to the right has the lowest Ford following investigations into complaints about
cost per thousand (CPM)? tire failures?
7 Each year, managers at Bausch and Lomb evaluate the 11 Describe a self-regulation guideline you believe would
many advertising media alternatives available to them improve the value of (a) an existing form of promotion
as they develop their advertising program for contact and (b) a new promotional practice.

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