Costs, Institutional Mobility Barriers, and Market Structure: Advertising Agencies as Multiproduct Firms

What accounts for the diversity and limited concentration that has long characterized the organization of the advertising agency industry? This question is addressed by treating an advertising agency as a multiproduct firm. The firm's product line or service mix is defined in terms of the set of different media categories where an agency places the advertising messages that it creates on behalf of its clients. Evidence is presented indicating that the structure of demand and costs in the advertising agency industry conforms to the conditions that MacDonald and Slivinski showed were required for an industry to sustain an equilibrium with diversified firms. Building on this framework, we formulate a set of three hypotheses relating to the realization of product-specific scale and scope economies. The first two hypotheses posit that given low fixed costs and minimal entry barriers, both media-specific scale and scope economies are available and can be exploited by relatively small-size agencies. The third hypothesis suggests that large agencies may experience diseconomies of scope as a consequence of excessive diversification induced by two pervasive industry institutional phenomena: (1) “bundling” of agency services to match client demand for a mix of media advertising, and (2) “conflict policy,” which prohibits an agency from serving competing accounts and operates as a mobility constraint. Utilizing a multiproduct cost function, we estimate media-specific scale and scope economies for a cross section of 401 U.S. agencies in 1987. The results obtained support the set of three hypotheses outlined above. The paper concludes with a discussion of the implications of these findings for the restructuring currently underway in this industry.     

Transnational organization and symbolic production: Creating and managing a global brand

In recent years, there has been sustained debate pertaining to how global markets should be conceptualized, enacted, and addressed. The purpose of this study was to expose the pivotal managerial thought processes and practices of senior managers at Guinness and the actions of symblic workers involved in the reconciliation of trends toward increasing global cultural convergence and a need for local cultural differentiation within the “global culture industry.” Our findings reveal the strategic processes and mechanisms involved in the creation of a series of polysemic, multi‐vocal texts positioned to allow multi‐level interpretation of the brand in ways that permit simultaneous engagement with, and negation of, local idiosyncrasies.     

Come Downtown & Play

Abstract

The newly anointed American cities of the late capitalist moment appear preoccupied with the reconstitution of urban space. More accurately, select parcels of urban America have been reconfigured into multifaceted sport, leisure and tourism environments designed for the purpose of encouraging consumption‐oriented capital accumulation. Within this paper, the focus is a critical exploration of the ways in which tangible and intangible forms of heritage have been employed, utilized and exploited within these urban transformations. Through focus on a city emblematic of the processes that have molded downtown cores under US capitalism – Memphis – the paper points to the role of heritage in the reconfiguration of the Memphian ‘tourist bubble’. In particular, discussion centers on the often problematic selection of histories and historical elements, forms and practices within the interests of capital space and thus raises a host of localized questions about whose collective memory is being performed in the present, whose aesthetics really count and who benefits. Conclusions address how such urban space is imbued with power relations, that is, how increasingly leisure‐oriented spaces can be seen as important sites of social struggle in which dominant power relations can be constructed, contested and reproduced.     

The Emerging Position of the Internet as an Advertising Medium

This paper examines the emerging position of the Internet as an advertising medium. The nature and time path of its evolution is subject to considerable uncertainty arising from issues relating to expansion of the Internet's penetration of households; consumer demand for information; development of pricing policies and measurement capabilities; and its attractiveness to advertisers in different product/service categories. Our analyses of these issues suggest that its long-term impact on intermedia rivalry will be broad and substantial. The Internet is emerging as an adaptive, hybrid medium with respect to the factors hypothesized to affect intermedia substitutability, namely, audience addressability, audience control, and contractual flexibility. Possessing such capabilities, it looms as a potential substitute or complement for all of the major categories of existing media and appears capable of serving a wide range of communications objectives for a broad array of advertisers.