Advertising and Knowledge Intermediaries: Managing the Ethical Challenges of Intangibles

In today's business environment, the knowledge-based society, globalisation, and information and communication technologies (ICT) have increased the role of "intangible" values of assets and resources for all industries. As a result there is an increased role for knowledge intermediaries; one of these, advertising, plays an important role in affecting consumer choice and knowledge. Ethical issues which arise for traditional purveyors of intangibility – cultural industries such as art, music, or film, spread to advertising. Building on our perspective of the measurement of intangibles we propose a new categorisation of types of goods or services, and a framework for identifying some future ethical challenges in today's global knowledge based society.     

Bunce,Richard. Television in the Corporate Interest. New York: Praeger, 1976

Abstract

Conventional wisdom suggests that advertisers should approach the use of negative advertising with a great deal of caution. Perhaps because of its success in the political arena, negative advertising has recently been featured more prominently in the marketing of goods and services. Such a tactic is risky given that so little research on the subject is currently available. Prior to using negative advertising (if this genre of advertising should be used at all) in the marketing of non-political goods and services, a better understanding of the factors influencing its effectiveness must be achieved. This paper examines the literature, models, and theory applicable to the study of negative advertising. Thirteen research propositions are suggested.     

Choosing a digital content strategy: How much should be free?

Advertising supported content sampling is ubiquitous in online markets for digital information goods. Yet, little is known about the profit impact of sampling when it serves the dual purpose of disclosing content quality and generating advertising revenue. This paper proposes an analytical framework to study the optimal content strategy for online publishers and shows how it is determined by characteristics of both the content market and the advertising market. The strategy choice is among a paid content strategy, a sampling strategy, and a free content strategy, which follow from the publisher's decisions concerning the size of the sample and the price of the paid content. We show that a key driver of the strategy choice is how sampling affects the prior expectations of consumers, who learn about content quality from the inspection of the free samples. Surprisingly, we find that it can be optimal for the publisher to generate advertising revenue by offering free samples even when sampling reduces both prior quality expectations and content demand. In addition, we show that it can be optimal for the publisher to refrain from revealing quality through free samples when advertising effectiveness is low and content quality is high. To illustrate, we relate our framework to the newspaper industry, where the sampling strategy is known as the “metered model.”     

Western Concepts,Russian Perspectives: Meanings of Advertising in the Former Soviet Union

Abstract

Western advertising professionals base their interpretations of advertising in the former Soviet Union on a Western model of advertising and neglect Russian perspectives on advertising. Symbolic interactionism suggests that things have different meanings for different people at different times. The author discusses the influence of Russian culture on advertising in the former Soviet Union and the problem of imposing Western concepts. A month-long research study was conducted in Moscow, Russia in May 1991. Interviews with government officials, business and advertising industry professionals, academicians, and students were audiotaped. Findings suggest that advertising in the former Soviet Union is an interaction between social and economic realities and not just a means of uncovering a new marketplace.     

Examining Polish Market Mavens and Their Attitudes Toward Advertising

Abstract

In this paper, we offer some insights about Polish consumers with varying levels of general marketplace expertise, their role in diffusing product information, and their views of advertising. Market mavens are consumers who exhibit heightened interestin and knowledge about the marketplace. Because of their interest in communicating with others about the many aspects of the marketplace, these consumers can play an integral role for companies interested in diffusing marketing information. Our study results indicate that market mavens do indeed exist in Poland and they exhibit similar characteristics to market mavens identified in the U.S. They have more favorable attitudes toward advertising than other consumers. Additionally, they consider advertising as an important source of product and social image information. Although Polish mavens are less critical of advertising being misleading and confusing, they are concerned about advertising promoting materialistic values. Our findings imply that firms doing business in Poland would be well advised to target market mavens because they pay attention to advertising, have favorable attitudes toward advertising, and like to talk about marketplace phenomena with others.     

Advertising and Steiner’s Dual Stage Model: Our Assessment

Between 1967 and 1979, we produced a number of studies that explored different facets of the economics of advertising. This work culminated in our 1974 book entitled Advertising and Market Power. Our leading hypothesis was that heavy advertising expenditures often but not always had anti‐competitive effects. And our primary empirical evidence in support of this hypothesis was that industries with heavy advertising expenditures also reported higher profit rates, which we interpreted as indicating that higher prices followed when manufacturers can effectively spend large amounts on advertising. Since that time, Robert Steiner has developed a model of firm behaviour for consumer goods industries. He finds that distribution margins are generally higher where manufacturer prices are lower. Furthermore, heavy manufacturer advertising is likely to depress distribution margins for heavily advertised products. While our earlier work implicitly assumed that distribution margins are generally the same regardless of the volume of advertising, Steiner’s results raise doubt on this assumption. Steiner’s model must therefore be acknowledged when interpreting our earlier findings.     

The Globalization of Furniture Industries/Markets

The globalization of industries and markets represents a key trend of the last decade. This evolutionary process, anticipated to become more prevalent in the future, requires long-term strategies whereby firms, industries and nations utilize competitive advantage to expand beyond domestic borders. In order to remain competitive, manufacturers of industrial and consumer goods must address the threats of both domestic and foreign origin and, increasingly utilize a global context for strategic planning, operations and marketing. Global communications and transportation technologies for electronic data interchange, materials resource planning, international finance, management and marketing have enhanced the ability of firms to operate internationally and offer true world brands. Furniture is an example of a product that naturally lends itself to internationalization in that if performs the same basic function across geographic areas and cultures such as seating, bedding, dining, storage and display. Moreover, the use of international furniture and woodworking machinery shows rapidly diffuses new technologies and designs through the global marketplace. Wood furniture represents a prime example of a U.S. industry that has felt the competitive pressures of market globalization. In 1978, imports claimed only 6.6% of the U.S. consumption of wood household furniture. By 1990, they had reached nearly 25% of consumption. The secondary wood manufacturing industries in the United States, including wooden furniture, have been largely insulated from foreign competition due to their established position within the domestic market, abundant and high quality materials with high consumer acceptance and appeal and certain transportation barriers as associated with relatively high volume to value items. However, as the international competitive arena changes, manufacturers, industries and nations must reevaluate their future strategies in terms of the forces shaping competition. This paper presents a framework based upon a multitude of factors affecting competitive advantage in the global context using a furniture industry example. These considerations may be categorized into six domains: (1)raw material supply; (2) production/technology; (3) design and marketing; (4) related/supplying industries; (5) home country demand; and (6) government influence on trade. Global strategic options are then briefly addressed as they pertain to the wood furniture industry. The synthesis of key strategic inputs combined with a global involvement strategy may provide insight not only to wood furniture, but to many other industries attempting to cope with similar changes as evolutionary momentum builds toward global markets, consumers and competition.     

The Witches' Brew

Satellite broadcasting has been front-page news in the UK recently; thus this article is timely. Regrettably, the British Government's proposals could not be included; however, the main purpose here is to look at satellite broadcasting from the viewpoint of possible pan-European controls. As such, if this article puts the new British proposals into the context of a European framework it will have served its purpose well. To set the scene an attempt is made to outline the issues and problems which must be considered, and a summary of the main proposals for launching and operating satellites is given. The main thesis considers the powers and possible activities of the European institutions—the European Community and Council of Europe—with regard to controls of advertising on satellite broadcasting in Europe.     

Towards a Single European Market? The Evolution of the Leasing Industry

It is argued that completion of the internal market for leasing requires sufficient openness of national markets for competition between rules to take place. This study of the leasing industry in the European Economic Area analyses those aspects of the European Commission’s Single Market Programme which are intended to achieve this aim and pinpoints tax harmonisation, banking regulation and mutual recognition of accounting standards as the main areas of Commission regulatory activity which will impact on the evolution of rules for the industry. The paper looks at the structure of the national industries and highlights the constraints and driving forces within the various rule systems which will influence the process of change. It is concluded that relatively high levels of competition between rules are actually occurring. In the long term, national markets will continue to be segmented and it is questionable whether a European leasing industry will actually emerge     

The reality of integration within the european union

The European Single Market program has put in place legislation that provides the free circulation of goods, capital, and people. Further, the recent implementation of monetary union provides a single currency and a common monetary policy in 11 out of the 15 Member States. Yet significant practical barriers to European integration remain. Legislation concerning taxation and company law is still primarily nationally based. More fundamentally from a business perspective, the European environment continues to be characterized by divergent industry structures and national cultures. Although there is considerable momentum for political and economic integration at present, this deep-seated national diversity remains strong and can hinder businesses from adopting an integrated approach toward the European Union. © 1999 John Wiley & Sons, Inc.     

International advertising: Developmental and implementational issues

This paper reports on a study which investigated the international advertising practices of a sample of major advertising spending multinationals, and the rationales behind their policies. The objective was to obtain insights into the efficacy of international advertising standardization options. When the rationales behind the international advertising practices of the sampled companies were examined, it was found that the executives concerned brought a wide‐ranging agenda to the decision‐making process and that factors beyond the specific benefits of standardization influenced their policies. As regards their actual policies, the practice of some form of standardization was found to be widespread, but the practice of total standardization was rare. As such, the data indicate that standardization is a flexible option, with many possible variants, i.e. it can be adapted to circumstances and is not an either/or policy. The paper concludes that the focus on whether or not multinationals should practice international advertising is misplaced, if only because, just as at the local or national level, there will be good and bad international advertising. Accordingly, more emphasis should be placed on reviewing issues relating to how to improve the quality of international advertising campaigns.     

Government and Advertising

Abstract

The existence of any company that must bridge the gap between production and sales ultimately rests in the hands of the consumer. The quality and quantity of the advertising surrounding a product can gain a stay of execution; but ultimately the public alone, through ignorance of a product's existence, indifference, or dislike, decides that a product is going to die.

American industry for the past five years has been under continuous attack. That attack has come in many forms. Some of this outcry against advertising is simply an extension of the on-going attack on American industry. The attackers thrive on visible targets, and in this case, national advertising. Stripped of all the excess verbiage, what is really being attacked is not advertising itself but the business function of selling its products.

We don't need a bureaucratic screen to keep buyer and seller apart.     

Understanding Programmatic Creative: The Role of AI

In this article, we expand the concept of programmatic advertising to include programmatic creative as a vital component. While artificial intelligence (AI) has already automated the media buying process, the advertising creative process still requires extensive human efforts. Such discrepancy calls for AI to transform the advertising creative process. We provide a framework for understanding and investigating programmatic creative by drawing evidence from the advertising industry in China. We specifically discuss how big data and machine learning algorithms underpin programmatic advertising. We argue that AI will integrate programmatic buying and programmatic creative in the future. We also discuss the technological, regulatory, and legal challenges faced by programmatic creative. We argue that new theories and methods are needed to conduct research in this area and provide guidance for the advertising industry.     

The Changing Private Market System

Most marketing managers still function as if challenges such as scarcity of resources and “social responsibility” were simply temporary phenomena. But our “private” market system is evolving into a “public” system. Public policy and the goals of society play an expanding role in making strategy decisions.

Traditional efficiency is when a manager attempts to achieve the greatest output for a given combination of inputs. Under a contemporary definition of efficiency, each firm must produce and allocate goods and services in such a manner that the maximum possible societal utility is achieved. The marketing function is to be the “change agent.”

Marketing today is in a transition from a “passive” to an “active” phase of its ability to deal with the changes taking place. As traditionally, the marketing manager will make decisions within several areas: product offering, price, distribution and promotion efforts, including advertising and sales. The basic concept of the product will be changed to include not only physical goods, but also services, organizations, people, plans and ideas. Exchange will take place between two parties and will no longer be measured simply by a straightforward calculation of costs. Environmental quality, political considerations, consumer welfare, etc., must be evaluated along with profits in order to properly understand how well marketing is satisfying the needs of society.     

The Death of Advertising

Abstract

Mass media advertising as we know it today is on its deathbed, and its prognosis is poor. Advertising agencies are restructuring to accommodate a harsher advertising climate, agency income is flat, agency employees are being laid off, direct marketing is stealing business from traditional advertising, and the growth of sales promotion and integrated marketing communications both come at the expense of traditional advertising. The reason for advertising's impending demise is the advent of new technologies that have resulted in the fragmentation of media and markets, and the empowerment of consumers. In the place of traditional mass media advertising, a new communications environment is developing around an evolving network of new media, which is high capacity, interactive and multimedia. The result is a new era of producer-consumer interaction. Because of the speed of technological innovation, the new media advertising paradigm that results will attain prominence faster than did mass media advertising. The new paradigm of 21st Century Marketing and advertising will be dominant by 2010 and should last well into the middle of the century. If they hope to survive, university advertising departments will have about ten years to 1) think of themselves much more broadly, and 2) transform themselves into departments specializing in information transfer in the new media environment.     

A Conceptual Model of the Internationalization of Services Firms

Abstract

In the 1990s, the global marketplace is characterized by the speed and ease with which services cross over national boundaries. As a result, service industries in many countries around the world have become extremely important in the development and socioeconomic well-being of these countries. The purpose of this paper is to understand the internationalization process of services firms. It is concluded that international operations of services firms are driven by a similar set of variables used by manufacturing firms, but the intensity and direction of some key relationships require modification and adaptation.     

Chaffee,Steven H., and Petrick,Michael J. Using the Mass Media: Communication Problems in American Society. New York: McGraw-Hill, 1974

Abstract

In recent years, a number of internal and external forces have urged companies to pay increased attention to the role that corporate advertising plays in marketing communications strategy. Despite this increased importance, a comprehensive view of current corporate advertising practices does not exist. This study reports the practices of the 500 largest manufacturing and the 300 largest non-manufacturing firms in the U.S. and makes observations on several key management issues, including the definition of corporate advertising, objectives and measurement, funding, and future directions.     

Who is Surfing the Net?

Abstract

Unlike the traditional print and broadcast media, which have long-established advertising measurement standards, Web advertising is still in its infancy and lacks widely accepted standards of measurement. This article looks at the major firms offering Web measurement and auditing services for advertisers. It also discusses recent attempts by several industry groups to devise universally accepted standards. By the millennium it is expected that the Web advertising measurement industry will have grown up and will be delivering the audited numbers that clients and agencies will be demanding.     

Getting the sustainability message across: an endorsed Colombian environmental cinematographic strategy

ABSTRACT

Many ecosystems are facing environmental threats. Some of the main concerns are now focused in developing countries. Strong environmental messages by numerous stakeholders have led to varied responses on environmental issues. Companies, governmental agencies and NGOs are responding to such issues by developing campaigns to promote sustainable practices amongst key stakeholders. Green advertising is one important form of communications employed to elicit environmentally friendly attitudes and consequently promote behavioural change. This study analyses the effect of a sponsored cinematographic green advertising strategy by a NGO and a major supermarket chain in a Latin American country. Based on in-depth interviews with Colombian movie audiences, this investigation demonstrates how (1) a movie focused on nationalistic identification can effectively provoke positive attitude change toward environmental sustainable practices, (2) the movie's media format can heighten audience interest about adopting environmental sustainable practices and (3) these results benefit positively the two movie sponsors through association and affect transfer.