Section 5.2, Article 31

International Advertising

Susan P. Douglas and C. Samuel Craig
New York University
Stern School of Business

Prof. Susan P. Douglas
New York University
Stern School of Business
44 W. 4th Street
New York, NY 10012
USA

Phone: 212.998.0418
Email: sdouglas@stern.nyu.edu

Prof. C. Samuel Craig
New York University
Stern School of Business
44 W. 4th Street
New York, NY 10012

Phone: 212.998.0555
Email: scraig@stern.nyu.edu

Section 5.2, Article 31: International Advertising

1. Definition of International Advertising
  
               International advertising entails dissemination of a commercial message to target audiences in more than one country. 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.
               International advertising can, therefore, 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.

2. International Advertising as a Communication Process
  
               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. A message may, therefore, not get through to the audience because of people's inability to understand it (due to literacy problems), because they misinterpret the message by attaching different meanings to the words or symbols used, or because they do not respond to the message due to a lack of income to purchase the advertised product. Media limitations also play a role in the failure of a communication to reach its intended audience.
               The process of communication in international markets involves a number of steps. First, the advertiser determines the appropriate message for the target audience. Next, 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.
               In encoding a verbal message, care needs to be taken in translation. Numerous examples exist of translation problems with colloquial phrases. For example, when the American Dairy Association entered Mexico with its "Got Milk?" campaign, the Spanish translation read "Are You Lactating?" Low levels of literacy may result in the need to use visual symbols. Here again, pitfalls can arise due to differences in color association or perception. In many tropical countries, green is associated with danger and has negative connotations. Red, on the other hand, is associated with weddings and happiness in China. Appeals to humor or sex also need to be treated with considerable care as their expression and effectiveness varies from one culture to another. The dry British sense of humor does not always translate effectively even to other English-speaking countries.
In addition to encoding the message so that it attracts the attention of the target audience and is interpreted correctly, advertisers need to select media channels that reach the intended target audience. For example, use of TV advertising may only reach a relatively select audience in certain countries. Equally, print media will not be effective where there are low levels of literacy. Certain media may also be more effective in certain cultures. For example, radio advertising has substantial appeal in South America where popular music is a key aspect of the local culture.
               The cultural context also impacts the effectiveness of communication. In "high context" cultures, such as the collectivist Asian cultures of Japan and China, the context in which information is embedded is as important as what is said (Hall 1976). In low context cultures, which include most Western societies, the information is contained in the verbal messages. In these cultures, it is important to provide adequate information relating to the product or service in order to satisfy their need for content (De Mooij 1998). Conversely, people in high context cultures are often more effectively reached by image or mood appeals, and rely on personal networks for information and content. Awareness of these differences in communication styles is essential to ensure effective communication.

3. International Advertising as a Business Practice
   
               International advertising can also be viewed as a business activity through which a firm attempts to inform target audiences in multiple countries about itself and its product or service offerings. In some cases the advertising message relates to the firm and its activities, i.e. its corporate image. In other cases, the message relates to a specific product or service marketed by the firm. In either case, the firm will use the services of an advertising agency to determine the appropriate message, advertising copy and make the media placement.
               An important issue in determining international advertising strategy is whether or not to develop a global or regional advertising campaign, or rather tailor communication to differences in local markets (Peebles and Ryans 1984). If the purpose of advertising is to develop a strong corporate or global image, a uniform global campaign is more likely to be used. When, on the other hand, the objective is to launch a new product or brand, or to more clearly differentiate the product or brand from other competing brands or products, local campaigns tailored to local markets are more typical.
               A global campaign offers a number of advantages. In the first place, it can be an important means of building a strong and coherent global image for the firm and/or its products worldwide. Use of the same image in different countries builds familiarity and generates synergies across world markets. It allows utilization of good ideas and creative talent (both of which are scarce commodities) on a worldwide basis. In addition, use of a single campaign provides substantial cost savings in copy development and production costs. Conversely, development of multiple local campaigns can lead to duplication of effort, result in inconsistent brand images across countries and confusion in consumers' minds with regard to the benefits offered by the brand and corporate image.
               While use of uniform advertising appeals offers a number of advantages, differences in customer perceptions and response patterns across countries and cultures, as well as media availability and government regulation are major barriers to use of a standardized campaign. Even though technological developments allow adaptation of advertising appeals to different languages (for example, TV can have audio channels in two languages, Internet messages can be automatically translated), development of visual and verbal copy that works effectively in multiple countries poses major creative challenges.
               Faced with this dilemma, firms may use a global umbrella campaign combined with local country or product-specific advertising. The global umbrella campaign develops a uniform image for the company or brand worldwide, often relying on consistent visual images and the corporate logo. Product-specific or country advertising builds on this image, modifying the appeal and providing information tailored to the local market. The objective of the umbrella campaign is to provide an integrating force, while local campaigns provide greater relevance to specific local customers and markets.
               The organizational structure of the firm often plays a key role in the choice of global vs. locally adapted campaigns. If international operations are organized on a country-by- country or geographic basis and operate as local profit centers with local advertising budgets, pressures exist for use of local advertising campaigns. If, on the other hand, the company is organized by product divisions, with centralized advertising budgets at corporate or regional headquarters, use of regional or global advertising campaigns is more likely (See Douglas and Craig (1995) for more information on global strategy).

4. International Advertising as an Industry

               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.
In an effort to establish greater control over their advertising, many major advertisers are consolidating all their advertising with one agency. For some major advertisers such as IBM and Citibank, this represents annual advertising expenditures in excess of $500 million worldwide (Grein and Ducoffe, 1998). As a consequence, advertising agencies that do not have a global network are at a serious disadvantage when competing for new advertising accounts or attempting to retain existing ones that are expanding globally.
The majority of these large advertising agencies are headquartered in the US. Of the ten largest advertising agency groups, seven are headquartered in the US, and one each in the UK, France and Japan, although WPP, the British agency holding company, is made up of two large US-based agencies. With the exception of Dentsu, the Japanese agency, most other agency networks generate the majority of their revenues outside their home country. The largest agency group, Omnicom, places over $37 billion of advertising for its clients around the world and derives half its revenue from outside the US. Omnicom has 891 offices in over 85 countries and employs 35,600 persons worldwide (57 percent work outside the US). US-based advertising agencies and their subsidiaries are responsible for most of the advertising throughout the world. For example, of the approximately $60 billion in advertising placed by the top 25 agency networks in Europe during 1955, 89 percent of the total was placed by subsidiaries of US-based agencies. This general pattern holds in most parts of the world that do not have restrictions on foreign ownership. The major exception is Asia where the three major Japanese agencies account for 62 percent of the advertising placed by the top 25 agency networks. Current and comprehensive information on advertising can be obtained from Advertising Age's web site, www.adage.com.
               Worldwide over $400 billion is spent on advertising. Approximately half of that amount is spent in the US and the other half outside the US. Information on advertising spending can be obtained from Advertising Age's web site and from McCann-Erickson's web site (www.mccann.com). The bulk of expenditure outside the US takes place in Europe and Japan, although Brazil, Canada, Mexico, and Australia are also important advertising markets. Outside of these markets, China is the next largest advertising market and is also growing rapidly.
               The Table below shows advertising spending in the top ten global ad markets. The US and Japan account for 65 percent of the total advertising spending in these markets and the top four European markets an additional 25 percent. Apart from Brazil, no other market accounts for more than two percent of the total spending. The concentration of spending in the US in part explains the dominance of US-based advertising agencies. Not only do they work for US-based clients that continue to expand outside the US, but also they accumulate knowledge and experience in the practice of advertising that can be applied elsewhere.

               Once the advertising message has been created, a media plan must be developed and specific media vehicles purchased to deliver the message to the target audience. Media differ from country in their availability, effectiveness and efficiency in delivering a message, and, with relatively few exceptions, tend to be organized on a country-by-country basis. Notable exceptions include StarTV, MTV, CNN in television, Business Week International, the Asia Wall Street Journal, the International Herald Tribune in print, and selected industry and medical publication that are read worldwide. There is also a trend toward consolidation of media in order to achieve greater economies of scale and leverage content developed in one market to others. This consolidation facilitates purchase of media on a regional and global basis. In addition, the Internet is emerging as a truly global medium that does not conform to country boundaries.

5. International Advertising as a Social Force

               In the view of the advertiser the primary objective of advertising is to sell products or services. In achieving this primary goal, there are often profound secondary consequences. Advertising exerts a formative influence whose character is both persuasive and pervasive. Through the selective reinforcement of certain social roles, language and values, it acts as an important force fashioning the cognitions and attitudes that underlie behavior not only in the market place, but also in all aspects of life. In an international setting, advertising has an important social influence in a number of ways. First, much international advertising is designed to promote and introduce new products from one society into another. Often this results in radical change in life-styles, behavior patterns of a society, stimulating for example the adoption of fast food, casual attire or hygiene and beauty products. International advertising also encourages desire for products from other countries, it creates expectations about " the good life", and establishes new models of consumption. Advertising is thus a potent force for change, while selectively reinforcing certain values, life-styles and role models.
               Often the symbols, ideals and mores that international advertising portrays and promotes are those of Western society and culture. Through the reach of advertising, brands such as Levi's, Nike, Marlboro and McDonalds are known by and have become objects of desire for teens and young adults throughout the world. Similarly, images and scenes depicted in much international advertising are either Western in origin or reflect Western consumption behavior and values. Even where adapted to local scenarios and role models, those shown often come from sectors of society, such as the upwardly mobile urban middle class, which embrace or are receptive to Western values and mores.
               Consequently, a criticism frequently leveled at international advertising is that it promulgates Western values and mores, notably from the US, in other countries. This is viewed particularly negatively in societies with strong religious or moral values, which run counter to those of the West as, for example, Islamic societies in the Middle East. When Western advertising depicts sexually explicit situations or shows women in situations considered as inappropriate or immoral, it is likely to be considered a subversive force undermining established cultural mores and values. Equally, in some countries such as France, there is a strong negative reaction to the imposition of US culture, values and use of English in advertising. Promotion of tobacco products by US and UK companies in countries where there is no legislation regulating or banning cigarette advertising has also been criticized.
               At the same time, international advertising also acts as an integrating force across national boundaries. It disseminates messages using universal symbols and slogans, and establishes a common mode of communication among target audiences in different parts of the world. At the same time, multicultural values are reinforced by advertisers, who adopt images incorporating peoples of different nations and diverse cultural backgrounds, as, for example, the Colors of Benneton campaign or the British Airways "Peoples of the World" campaign. The impact of such campaigns is further reinforced by the growth of global media such as Star TV, CNN, MTV or print media that target global audiences worldwide. Consequently, while, on the one hand, 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.

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.

Authors
Susan P. Douglas and C. Samuel Craig
New York University
Stern School of Business

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