Regional and National Advertisers
by
Charles Lamson
Some companies operate in one part of the country---in one or several states---and market exclusively within that region. These are referred to as regional advertisers. Typical examples include regional grocery and department store chains, governmental bodies (such as state lotteries), franchise groups (such as the Southern California Honda dealers), telephone companies (such as SBC), and statewide or multistate banks (like Bank of America).
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Other companies sell in several regions or throughout the country and are called national advertisers. These include the consumer packaged-goods manufacturers (such as Procter & Gamble and Johnson & Johnson), national airlines (Delta, American), media and entertainment companies (Disney, Time Warner), electronics manufacturers (Apple, Hewlett-Packard), and all the auto companies. These firms also make up the membership of the Association of National Advertisers (ANA) and comprise the largest advertisers in the country. How National and Local Advertisers Differ The basic principles of advertising are the same in both local and national advertising. However, local advertisers have special challenges stemming from the day-to-day realities of running a small business. As a result, local and national advertisers differ in terms of focus, time orientation, and resources. Focus National companies are concerned about building their brands, so their advertising tends to focus on the competitive features of one brand over another, especially in conquest sales situations. Local merchants or dealers often carry hundreds of different brands or numerous models of an exclusive brand, so they focus on attracting customers to a particular point---their place of business. That is why local car dealers typically advertise their dealerships rather than the make of car. And local grocers often promote only those brands for which they receive co-op advertising or trade allowances from the national manufacturer. In every product category, big companies battle for market share against a few competitors, and every share point is worth millions of dollars. Local advertisers compete with many companies, so their focus is on gross sales or volume: 60 cars a month, five new insurance policies a week, 55 oil changes a day. National advertisers plan strategically to launch, build, and sustain brands. Local advertisers think tactically. Will a new $15,000 sign bring more people into the store? Should we stay open Labor Day? Can we attract more lunchtime customers by reducing our prices or by offering free refills on soft drinks? The relationship with the customer may be the greatest difference between national and local advertisers. National advertisers' marketing executives rarely see retail customers; instead they traditionally think in terms of large groups of people---segments, niches, target markets---with various geographic, demographic, or psychographic descriptions. They design their strategies and campaigns to appeal to these large groups. But local advertisers deal with individual customers every day. They (and their families) also interact with their customers in nonbusiness ways; they may be neighbors, friends, or schoolmates. The local advertiser gets feedback every day---on the company's advertising, prices, product performance, employee service, store decor, and the new sign out front. The national marketer gets occasional feedback---from surveys and from customer complaint lines. 
Exhibit 1 Differences between local and national advertisers.
Time orientation Due to differences in their focus and perspective, national and local advertisers also have different time orientations. National companies think long term. They develop five-year strategic plans and budget for annual advertising campaigns. Local advertisers worry that this week's ad in the Pennysaver did not pull (a term rarely used by national marketers) as well as last week's; a New York advertiser may have months to develop a network TV campaign; the little market on Main Street may have to churn out a new newspaper ad every week to reach its local customers.
Resources Finally, national advertisers have more resources available---both money and people. A local advertiser that spends $100,000 a year has a relatively large budget. A national advertiser needs to spend at least $5 million a year just to get started. (Walt Disney, by the way, spends $2.3 billion.)
The national advertiser has an army of specialists dedicated to the successful marketing of its brands. The local advertiser may have a small staff or just one person---the owner---to market the business. So the local entrepreneur has to know more about every facet of marketing communications.
How Large Companies Manage Their Advertising
In large companies, many people are involved in the advertising function. Company owners and top corporate executives make key advertising decisions; sales and marketing personnel often assist in the creative process, help choose the ad agency, and evaluate proposed ad programs; artists and writers produce ads, brochures, and other materials; product engineers and designers give input to the creative process and provide information about competitive products; administrators evaluate the cost of ad campaigns and help plan budgets; and clerical staff coordinate various promotional activities, including advertising.
A large company's advertising department may employ many people and be headed by an advertiser's manager who reports to a marketing director or marketing services manager. The exact department structure depends on many variables. Most large advertisers tend to use some mix of two basic management structures: centralized and decentralized.
Centralized organization Companies are concerned with cost efficiency and continuity in their communications programs. Thus, many embrace the centralized advertising department because it gives the greatest control and offers both efficiency and continuity across divisional boundaries. In centralized departments, an advertising manager typically reports to a marketing vice president. But beyond this one feature, companies may organize the department in any of five ways:
The cereal giant, General Mills, for example, is one of the nation's largest advertisers. It operates a vast advertising and marketing services department with some 350 employees. It spends more than $555 million annually in media advertising and other promotional activities.
General Mills' Marketing Services is really many departments within a department. Its centralized structure enables it to administer, plan, and coordinate the promotion of more than 60 brands. It also supervises five outside ad agencies and operates its own in-house agency for new or smaller brands.
Organized around functional specialties (market research, media, graphics), Marketing Services helps General Mills' brand managers consolidate many of their expenditures for maximum efficiency. The media department, for example, prepares all media plans for the marketing divisions. The production and art department designs the packages for all brands and the graphics for the company's in-house agency. From one spot, Marketing Services handles a wide variety of brands efficiently and effectively.
Decentralized organization As some companies become larger, diversify their product lines, acquire subsidiaries, and establish divisions in different regions or even different countries, a centralized advertising department often becomes impractical.
In a decentralized system, the company sets up separate ad departments for different divisions, subsidiaries, regions, brands, or other categories that suit the company's needs. The general manager of each division or brand is responsible for that group's advertising.
For large companies with many divisions, decentralized advertising is more flexible. Campaigns and media schedules can be adjusted faster. New approaches and creative ideas can be introduced more easily, and sales results can be measured independently of other divisions. In effect, each division is its own marketing department, with the advertising manager reporting to the division head.
A drawback, though, is that decentralized departments often concentrate on their own budgets, problems, and promotions rather than the good of the whole company. Across divisions, ads typically lack uniformity, diminishing the power of repetitive corporate advertising. Rivalry among brand managers may even escalate into unhealthy competition or deteriorate into secrecy and jealousy.
*SOURCE: CONTEMPORARY ADVERTISING 11TH ED., 2008, WILLIAM F. ARENS, MICHAEL F. WEIRGOLD, CHRISTIAN ARENS, PGS. 103-106*
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