Role of international advertising in International marketing

Role of international advertising in International marketing

International advertising entails dissemination of a commercial message to target audiences in more than one country. China has a long history of engaging in international trade. The famous “Silk Road” leading to the Central and West Asia (in the West Han Dynasty 206B.C.—25) and Zhenghe’s seven times of sailing to the South Indian Sea (in the Ming Dynasty 1368—1644) have marked the periods of great prosperity in the Chinese history. We can be sure that advertising was used in these international trade activities, as peddling and displaying were just the typical advertising forms in the early time. But they were applied in a spontaneous manner. In the 19th century, with the rapid development of science and technology, the West acquired an unprecedented momentum to develop its economy and provided optimum conditions of a market economy for advertising to get mature. But China’s commodity economy had long been kept in a state of inhibition due to the dominant ideology of “emphasizing agriculture and debasing trade”, so it failed to accelerate into the modern market economy. Consequently, advertising in this country was deprived of the right soil to attain normal growth. Since the 1980s, China has regained vitality to carry out her economic construction. Guided by the policy of “reform and opening-up”, she has been progressing by large strides, and now has almost succeeded in getting accession to the World Trade Organization. International marketing is the multinational process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. International advertising can, be viewed as a communication process that takes place in multiple cultures that differ in terms of values, communication styles, and consumption patterns. International advertising is also a business activity involving advertisers and the advertising agencies that create ads and buy media in different countries. The sum total of these activities constitutes a worldwide industry that is growing in importance. International advertising is also a major force that both reflects social values, and propagates certain values worldwide. In international markets the process of communicating to a target audience is more complex because communication takes place across multiple contexts, which differ in terms of language, literacy, and other cultural factors. In addition, media differ in their effectiveness in carrying different appeals. Target audiences differ from country to country in terms of how they perceive or interpret symbols or stimuli; respond to humor or emotional appeals, as well as in levels of literacy and languages spoken. How the advertising function is organized also varies. In some cases, multinational firms centralize advertising decisions and budgets and use the same or a limited number of agencies worldwide. In other cases, budgets are decentralized and placed in the hands of local subsidiaries, resulting in greater use of local advertising agencies. The process of communication in international markets involves a number of steps. • The advertiser determines the appropriate message for the target audience. • The message is encoded so that it will be clearly understood in different cultural contexts. • The message is then sent through media channels to the audience who then decodes and reacts to the message. • At each stage in the process, cultural barriers may hamper effective transmission of the message and result in miscommunication. The world advertising industry is characterized by a large number of small and medium sized advertising agencies that operate primarily in one country and by a small number of very large advertising agencies with operations in many countries. These agencies have developed extensive networks of offices throughout the world in order to coordinate the advertising process in all the countries where their clients do business. These networks often include both wholly-owned subsidiaries and formal relationships with local advertising agencies to establish a presence in new markets, particularly in emerging markets. Russia and India will record the strongest growth in advertising spend over the coming year, according to the latest international ad forecast. predicts that Russia will increase expenditure by 16.5%, followed by India (14.0%), China (11.5%) and Brazil (8.5%).The picture is very different outside the BRIC quartet, especially in Europe, where three countries - Germany (1%), France (0.8%) and Italy (-0.2%) - are now expected to record the worst year-on-year performances. All three economies are facing the possibility of renewed recession due to the euro zone debt crisis. Taking into account the likelihood of inflation, all three countries are likely to see a decline in advertising spend in 2012. The forecast for the UK is more positive, with predicted growth of 4.2%. But Warc, the marketing intelligence service, points out that the figure will be boosted by two sporting events - the London Olympics and European football championships. As for the United States, which is forecast to see a 4.1% increase in ad spend, its TV broadcasters will undoubtedly benefit from the presidential election. Indeed, across all 12 countries covered by the survey, TV is predicted to increase its share of main media advertising, growing by 5.3% compared to the overall media total of 4.5%. International Advertising Infrastructure Infrastructural facilities for international advertising can be done in the following ways . 1. Develop ads in-house 2. Local advertising agencies 3. Home-country agencies 4. International agencies a. Top agencies are: i. Omnicom Group ii. Inter public Group iii. Young & Rubicam (U.S.) iv. WPP Group (U.K.) v. Dentsu, Inc. (Japan) International advertising Advantages 1. Economies of scale in production, distribution. 2. Lower costs with less in planning and control. 3. Lower advertising production costs. 4. Ability to exploit good ideas worldwide. 5. Ability to introduce products quickly, worldwide. 6. Consistent international brand, company image. 7. Simplification of coordination and control. Barriers of International Advertising • Communication infrastructure • Agencies might not serve a particular market • Consumer literacy • Legal restrictions and self-regulation • Differing values and purchase motivations • Attitudes toward product country of origin • Promotional mix elements • Differences in culture, market and economic development make it difficult to use global advertising. • Consumer needs and usage patterns often vary by country or region. • Media availability or usage may vary by country or region • Legal restrictions may make it difficult to develop an effective universal appeal Criteria for Selecting an international advertising Agency • Ability of agency to cover relevant markets. • Quality of agency work. • Market research, public relations, and other services offered by the agency. • Relative roles of company advertising department and strategy. • Level of communication and control desired by company. • Ability of agency to coordinate international campaign. • Size of company’s international business. • Company’s desire for local versus international image. • Company organizational structure for international business and marketing (centralized versus decentralized). • Company’s level of involvement with international operations. International Advertising & Promotion expense Rank Advertiser Outside U.S. Inside U.S. 1 Proctor & Gamble $4,995 $3,527 2 Unilever 3,689 848 3 General Motors 1,145 2,208 4 L’Oreal 2,336 753 5 Toyota Motor Corp. 1,895 1,203 6 Ford Motor Co. 1,168 1,701 7 Time Warner 298 1,838 8 Nestlé 1,509 605 9 Johnson & Johnson 674 1,351 10 Daimler/Chrysler 578 1,425 From the above table identify the variations of expenditure of different companies with in US and out side market .Proctor and Gamble, uniliver, LOreal,Toyota,and Nestle have more advertising expense in international market during the period of 2011. Two of the hardest hit sectors during the global downturn, automotive and finance, returned from their recession hiatus and increased ad spend by 20.3 percent and 17.9 percent respectively. Six automotive companies were among the top 20 global advertisers in2010.Ad spends for fast moving consumer goods (FMCG) increased 14.6 percent in 2010 and the sector’s share of ad spend also increased from 23.9 percent to 24.9 percent. FMCG spend in Middle East/Africa increased by 34.3 percent, Latin America (+23.9%) and Asia Pacific(+16%).“Fast moving consumer goods and emerging markets will continue to lead global advertising trends,” said Beard. “One in every four ad dollars spent last year was on fast moving consumer goods (FMCG) and the focus remains firmly on key developing regions.” All traditional advertising media types showed increases in 2010, particularly television which rebounded 13.1 percent and increased to 62 percent of all ad spend share – the highest on record and up from 60.6 percent the previous year. Radio advertising rose 8.5 percent, followed by newspapers (+7%). Magazines recorded the slowest growth of all media types at 4.9 percent globally, and only posted double-digit growth of 14.9 percent in Latin America. Emerging markets with their younger populations, increasing disposable incomes and hungry consumption appetites attracted advertisers to new booming markets in Egypt (+40.8%), Pan-Arab (+43%) and Argentina (+38.9%), which recorded the highest percentage advertising increases .The USA, the world’s largest advertising market, had one of the slowest growth rates of 5.6 percent year-on-year, but is back in positive territory after advertising expenditure dropped nine percent in 2009. The only market to experience a decline in advertising in 2010 was the United Arab Emirates (-4.4%) while advertising remained flat in economically battered markets of Japan (+1.3%) and Spain (+0.4%). In Asia Pacific, nine out of 13 markets enjoyed double-digit growth compared with the previous year, with strongest rebounds from India (+28.1%) and Taiwan (+19.1%). China, the world’s second largest ad market, which accounts for half of Asia Pacific’s total ad spend, gained more of the region’s total ad expenditure in 2010 at 51.4 percent, up from 51 percent in 2009, complementing a 10.9 percent increase in ad expenditure for the market .Latin America, in addition to posting the second highest regional ad spend increase (+21.2%) in 2010, spearheaded by Argentina, also benefited from the highest ad increases across the Financial (+37.2%), Entertainment (+17.8%), Clothing/Accessories (+22%) and Media (23.8%)sectors. In Europe, where most markets cautiously emerged from recession last year, Belgium, France, Sweden, Switzerland and UK posted approximately 10 percent increases. Advertising spend during 2010 peaked during the second quarter with the World Cup driving the highest year-on-year increases of almost 13 percent. Conclusion International advertising can be viewed as a colonizing force propagating Western values and mores throughout the world, it is also an important force integrating societies and establishing common bonds, universal symbols and models of communication among peoples in different parts of the globe. Generally, advertising campaigns should first excavate a national culture that has a common ground with a certain brand to build a national brand, and then spread as elaborately planned to the foreign markets, where the advertising should play the role of combining the original culture with the target one. Source • American Marketing Association (AMA) • http://people.stern.nyu.edu/sdouglas/rpubs/intad.html • De Mooij, M. 1998, Global Marketing and Advertising: Understanding Cultural Paradoxes. Sage Publications, Thousand Oaks, CA. • Douglas, S.P. and Craig, C.S. 1995, Global Marketing Strategy. McGraw Hill, New York. • Grein, A. and Ducoffe, R. 1998, Strategic Response to Market Globalization among Advertising Agencies. International Journal of Advertising, 17, 301-319. • Hall, Edward T. 1976, Beyond Culture. Anchor Press, Garden City, NY. • Peebles, D.M. and Ryans, J.K., Jr. 1984, Management of International Advertising: A Marketing Approach. Allyn and Bacon, Boston. • Rijkens, R. 1992, European Advertising Strategies. Cassell, London. • http://www.guardian.co.uk/media/greenslade/2012/feb/06/advertising-russia • http://www.ccpcc.com/jjxj/jr/990295.htm • http://www.nielsen.com