Advertising informs consumers about the existence and benefits of products and services, and attempts to persuade them to buy them. The best form of advertising is probably word-of mouthadvertising, which occurs when people tell their friends about the benefits of products or services that they have purchased. Yet virtually no providers of goods or services rely on this alone, but use paidadvertising, which is designed to build up their reputation rather than to sell particular products.
Although large companies could easily set up their own advertising departments, write their ownadvertisements, and buy media space themselves, they tend to use the services of large advertising agencies. These are likely to have more resources, and more knowledge about all aspects of advertisingand advertising media than a single company. The most talented advertising people generally prefer to work for agencies rather then individual companies as this gives them the chance to work on avariety of advertising accounts. It is also easier for a dissatisfied company to give its account to another agency than it would be to fire its own advertising staff.
The client company generally givesthe advertising agency an agreed budget; a statement of the objectives of the advertising campaign, know as a brief; and an overall advertising strategy concerning the message to be communicated tothe target customers. The agency creates advertisements, and develops a media plan specifying which media – newspapers, magazines, radio, television, cinema, posters, mail, etc – will be used and inwhich proportions. Agencies often produce alternative ads or commercials that are pre-tested in newspapers, television stations, etc. in different parts of a country before a final choice is made priorto a national campaign.
The agency´s media planners have to decide what percentage of the target market they want to reach and the threshold effect – the point at which advertising becomes...