The Advertising Industry

By: Jenna Ritter

What is it?

Advertising is a non-personal communication method of persuading an audience member to buy goods, services, and ideas. But the advertising industry does much more then sell us things. As Sut Jhally analyzes the industry, he concludes advertising sells us ourselves and who we want to be in the name of private profit. Below is a lecture done by him where he discusses that advertising creates commodity fetishism with the ad and the product because through advertisements commodities are given human qualities.

History

 Advertising started to get moving in the 17th century when advertisements started appearing in weekly newspapers in England. In the 19th century the economy started getting larger, so did advertising. Advertisements were usually completely done by the company who wanted to advertise. They did the layout, design and paid the media for space. In the late 19th century N.W. Ayer and Son was formed in Philadelphia and things changed in this industry. This was the first advertising agency in the U.S. that offered services to plan, make and execute completed advertising campaigns for all different kinds of customers.

How is it relevant now?

Well, since capitalism thrives on corporations and corporations thrive on profit, corporations need to sell things. How are they going to do that? Advertisements. In the book Advertising and Market Power, by William S. Comanor and Thomas A. Wilson; the authors highlight how advertising increases profit for corporations. Corporations need advertising, thus advertising is a HUGE industry.

Now a days there are holding companies that control advertising agencies. There are four main holding companies or let me say BOHEMITHS. The main holding companies (The Big Four), control half of this industries revenue. They offer one stop marketing plans for businesses and in our global economy that is attractive.

Who controls this industry:

The Big Four includes: Interpublic, Omnicom, Publicis Groupe and WPP. These companies sit at the very top of the advertising industry. They control a huge number of agency brands across the globe. They are usually not involved in day-to- day strategies, but they work to gain “intra-group synergy” with subsidiary businesses.

Here is a company profile of Omnicom. It ranked as the world’s #1 corporate media services conglomerate in advertising, public relations, and marketing services with over 5,000 clients in more than 100 countries.

Some of the Top 100  advertiser in US include American Express, AT&T, Time Warner, L’Oreal, Walt Disney, Coca-cola, and more. These companies most likely work with an agency who is controlled by a holding company, like one of the Big Four. As you can see, the advertising industry is horizontally integrated because the holding companies control  additional business activities at the same level of production (by owning many different advertising agencies) . This leads to increased market power, synergy, and the ability to have content across all markets, as well as larger economies of scale for these gigantic holding companies.

Problems

Now you have four megacompanies with revenues that are staggering, bigger than some of the companies they serve, said O. Burtch Drake, president and chief executive of the American Association of Advertising Agencies, the industry trade group.

Having this huge of market control is known as concentration or consolidation. Unfortunately, concentration does give into problems like: less diversity, no healthy competition, and the silencing of minority voice. Another way concentration leads to problems is when one agency works for competing clients. For example, Omnicom serves Chrysler, General Motors, Nissan, and Volkswagen.  Some companies don’t like this; Coca-Cola switched the Sprite brand from Interpublic to WPP because it did not want to have put all their eggs in one basket and felt like the holding company had too much control over the brand.

Censorship in the Media

Another issue in advertising deals with censorship. Mainstream media will not run stories that may offend their advertisers and/or their owners. Some refer to this as market censorship and it leads to problems because the media does not report on important issues (like corporate practices). For controversial advertisements the Federal Communications Commission (FCC) helps with regulation and complaints in this area.

Pulling it all together:

Advertisements in Health Magazine are for big popular brands done by agencies that are most likely controlled by a holding company. This profit motive that corporations live by, deeply impacts the content we get in ad-supported media.

These big companies end up having power in what articles Health Magazine will publish.

Besides dominating commercial speech,a $500-billion-a-year industry,

these agency companies and the men who run them —

John D. Wren at Omnicom, John J. Dooner Jr. at Interpublic,

Sir Martin Sorrellat WPP and Maurice Lévy at Publicis

— also hold incredible sway over the media.

By deciding when and where to spend their clients’

ad budgets, they can indirectly set network television

schedules and starve magazines to death or help them to flourish

-NYTimes.

 

These companies control the majority of the world’s ad spending and huge shares of many other businesses as well.

Our entire media system is developed so marketers can sell us things. Sut Jhally explains that our advertising used to be about creativity and sharing your brand or product, but now due to  the expansion of agency companies and the power by which they are controlled, originality is smothered and we get a message that they want us to hear.

Advertising History

Advertising and the Perfect Storm

Duke Library

NY Times Big Four Article

The Power of Advertising

Agency Family Trees

Advertising and PR

The FCC

Publicis USA

Structure of the Ad Industry

WPP

WPP Annual Reports

Omnicom

Intercom

Advertisements

Health Magazine

An Overview of Health Magazine and Advertising

By: Jenna Ritter

Time Inc. brands reach more than 138 million consumers monthly across multiple platforms, more than half of the U.S. adult population”- Time Inc.  For the quarter ending in June 2011, the company’s total revenues were $7.03 billion –NYtimes. Here is a look at Health Magazine, just one of Time Inc.’s  hundreds of media commodities.

Time Inc. - About Us - Company Profile

History/Context

Health Magazine has been around since 1987. It is the 13th largest magazine reaching affluent women. It is a health and lifestyle magazine that focuses on exercise, diet, beauty, relationships, food, sex, and more. This media commodity is part of the larger Health brand and they are content partners with Healthwise, HealthDay, and HealthLine. Health Magazine is owned by Time Inc., which is a division of Time Warner, who also owns Health.com.  Health.com also offers easy links to All*You, Coastal Living, Cooking Light, Food&Wine, My Recipes, Southern Living, and Sunset magazines,as well as  Fit Sugar, MSN health & fitness, CNN, Fox, TIME who all are owned by Time Warner. Health Magazine has had a +70 growth over the last five years and has over 2.5million readers. Magazines are in monopolistic competition and with Health being such a popular magazine, competitive brands want and will advertise in it.

Production

Most of the production for Health Magazine is funded by advertisements. The editorial structure of Health Magazine is based on seasons, focusing on food, fashion, and beauty for that specific month. Advertisers will produce certain ads to complement or fit into articles. Want to advertise in Health magazine? For $108,270 you can have a full page in the magazine. There are many markets involved in creating this magazine including: photography, writing, modeling, and the consumer market.

Distribution

Health Magazine is distributed in the United States and Canada 10 times annually. This magazine is on almost every news stand, grocery store check out, and book store (if there are any left). The average price for the magazine on a newsstand is $3.99. Subscribers get the magazine mailed to their house for an average price subscription price of $16.50, which equates to $1.04 and issue. Within a period there are over 601,617 total subscriptions sold.

You can also access information (as well as advertisements) from Health Magazine at health.com as well as signing up for a daily newsletter. This media blast comes into your e-mail selling you the latest health food, clothes, and workout tips. The demographics that consume Health Magazine are adults with a median age of 48, 75% of the readers are women and 58% are employed.

Why it matters?

Audiences are bought and sold by demographics. Certain magazines offer a certain audience demographic. Advertising companies need to know who they are so they can advertise accordingly. Essentially, audiences are packaged up and sold.

According to Dallas Smythe, magazines main revenues come from selling ads, and therefore they sell access to their demographic to companies in advertising, thus the audience is a commodity bought and sold in a market.  “The specifications include age, sex, income level, family composition, urban or rural location, ethnic character, ownership of home, automobile, credit card statues and social class.”  He also says that audiences never get leisure time because we are constantly working for the advertiser while we consume media.


When looking at main advertises in Health Magazine you see large brands such as Target, CoverGirl, Tampax, Nike, Kraft Foods, R.E.I, Weight Watchers, Estee Lauder and more. These products are being sold as ‘health’ and cater to the certain demographics that read this magazine.  The whole idea of health is now a media commodity sold to you by brands. And, what do you know Time Warner interlocks with Corporate America and is partners with Estee Lauder.

Breaking it down: Advertising effects content in magazines because the advertisers want the articles  to cater to the ads. Like the Estee Lauder example displays; Time Warner magazines advertise this brand because they are partners with it and it will gain them profit. It’s all connected. Ben Bagdikian said “The dumbing down” of the content also acts to promote a “buying mood.”The Media Monopoly, Sixth Edition, (Beacon Press, 2000), p.138. Articles that are scientific and critically based are rarely written in consumer magazines because then it is likely the reader will not give into the advertisements that may follow. As my research shows, since advertising is how magazines eat, breath, and sleep they will conform to advertising conglomerates desires. The result: now we get articles that are mostly written solely to attract certain readers who will most likely buy the products(that the media company is partners with) advertised in the magazine. Or even worse, there are whole magazines created just to sell us things.

About Health

The Audience Commodity

The Audience as the Product

Health Advertising Rates

Health Magazine Demographics

Dallas Smythe on Audience Commodity

Media Kits for Time inc.

Media connects with Corporate America

Monopolistic Competition

New York Times : Time Inc Revenue

Print Ownership Chart

Time Inc. Company Profile

Time Warner

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