Reference no: EM132814922
Read the following headings: Advertising spending and sales Word-of-mouth advertising and viral marketing
How companies advertise
Potential drawbacks of advertising
Read the text below and decide which paragraphs should be given the headings. The headings can only be used once.
Advertising informs consumers about the existence and benefits of products and services, and attempts to persuade them to buy them. Most companies use advertising agencies to produce their advertising for them. They give the agency a statement of the objectives of the advertising campaign, known as a brief, an overall advertising strategy concerning the message to be communicated to the target customers, and a budget. The agency creates advertisements (often abbreviated to adverts or ads), and develops a media plan specifying which media - newspapers, magazines, the internet, radio, television, cinema, posters, mail, etc. - will be used and in which proportions.
It is always difficult to know how much to spend on advertising. Increased ad spending can increase sales, but many companies just spend a fixed percentage of current sales revenue, or simply spend as much as their competitors (the comparative-parity method). On the other hand, lots of creative and expensive advertising campaigns, including television commercials that lots of people see and remember, and which win prizes awarded by the advertising industry for the best ads, don't lead to increased sales.
Advertising is widely considered to be essential for launching new consumer products. Combined with sales promotions such as free samples, price reductions and competitions, advertising may generate the initial trial of a new product. But traditional advertising is expensive, it doesn't always reach the target customers, and it isn't always welcome if it does reach them. People might choose to look at posters in the street or on public transport (and virtual ones in computer and video games), or look at the ads in newspapers and magazines, but many other ads interrupt them when they're trying to do something else, like read a web page, listen to the radio, or watch a TV program or a film.
This is why the best form of advertising has always been word-of-mouth advertising: people telling their friends about good products and services. For example, at the end of the last century, more and more people were saying to their friends 'Have you used Google? It's great.' Today, word-of-mouth has developed into viral marketing: companies succeed in getting people to spread commercial messages, like a virus, via peer-to-peer (P2P) networks on the Internet. The classic example is Hotmail, which added a little advertisement for itself at the bottom of every email sent using a Hotmail address. In the mid-1990s, the number of users increased from 500,000 to 12 million within a year. More and more companies are trying new strategies like setting up blogs or online forums, commenting on other people's blogs and social networking websites, making podcasts, and putting videos on YouTube, and hoping that people will use the 'Share' function to send a link to all their contacts. Viral marketing allows companies to inform and persuade, and a 'buzz', so that an idea spreads very quickly, at very little cost.