3. What is Advertising?
Advertising informs the perception of
goods and services to influence
consumers and to reassure investors as
well as distributors and retailers
4. Advertising Industry Structure
• Advertising traditionally has been
dominated by four major conglomerate
holding companies:
– Omnicom and Interpublic of New York
– WPP of London
– Publicis of Paris
• These advertising groups account for
some 250,000 employees and own
subsidiaries spread among many
countries throughout the world
5. Advertising Industry Structure
• Google quickly became a powerhouse in the
advertising field reaching revenues of over
US$20 billion by 2010
6. Why Advertise?
Advertising is best seen within a context of
competing against other companies with
similar goods or services for sale. It is
useful for companies that may want to
increase competitive advantage in a
crowded market
7. Why Advertise?
The more competition in an environment, the more
the need to advertise?
O – market structure
8. John Kenneth Galbraith
• As a famous economist on modern industrial
society Galbraith pointed out the two major
reasons for advertising:
– Manipulate market demand
– Guard against sudden shifts in demand
13. Why Advertise?
• As a barrier to entry to gain competitive
advantage
• Impose high start-up costs on new
entrants
• Especially in a digital environment?
– No natural economies of scale to ward off
competitors
