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  • Project assignment: The client details his business objectives to the account manager, and together they define the role that advertising is expected to play. The account manager collects as much information as possible and briefs the key agency departments – strategic planning, creative, and media. Strategic Development: As a group, the agency team analyzes the assignment – what type of people would use this product? Why would they use it? What would compel someone to purchase it? Research is vital at this stage, and can be conducted among consumers, industry experts or published reference materials. The goal of strategic development is to find a compelling story about the product (referred to as the positioning) and a unique message for the advertising creative (the creative brief). Media Development is typically initiated alongside of strategic development. The media team creates a detailed profile of the target consumer -- how old are they? How much money do they earn? Where do they live? What are their hobbies? A media plan is developed to reach these consumers based on their media consumption habits. The plan is presented to the client and (when approved) is purchased by the media buyers. Creative Development: the creative team develops rough versions of ads. After input by the creative director, the account manager and strategic planner are consulted for further fine-tuning. Creative work is then presented to the client and, when approved, is often tested among consumers. The advertising will be judged a success if it grabs consumer attention and motivates him to try the product – changes may be made if necessary at this point. Once finalized, TV spots are shot, radio spots recorded, and the print ads produced. Campaign Debut: The Traffic Manager sends the advertising where it is needed and ensures it debuts in accordance with the media plan. This can get quite complicated, as each type of ad must be finished at varying times prior to debut - magazine ads will need to arrive as much as a month prior to publication, while TV and Radio spots may be needed by stations just a few days before air. Tracking of an advertising campaign is essential, allowing client and agency to gauge the impact of their efforts and signal changes that might need to be made. Tracking can be done in a variety of ways, depending on the client’s business goals. Product sales are evaluated. Changes in consumer opinion may be measured. Media purchases will checked to ensure they ran as purchased.
  • Full-Service Agencies Represent the majority of ad dollars spent worldwide. These agencies come in various sizes with various strengths. Often global in scale, catering to multinational corporations and large domestic companies with heavier advertising needs. They can offer assistance with other needs such as PR or Direct Response via sister companies Regional agencies A good fit for clients who do not have the need for a global agency. Offer expertise within specific US states or regions and the agency principals may be actively involved in the client’s business – a rarity with global agencies. Minority Agencies specialize in reaching specific ethnic groups, such as African Americans or Hispanics. While structured much like traditional full-service agencies, minority agencies are better versed in the lifestyles, habits and buying patterns of their target group. Boutiques are smaller advertising organizations that focus almost exclusively on the creative product. These agencies offer the services of a creative development department, but do not typically provide media or strategic planning services. Clients who work with boutiques often need to retain a separate agency for these services or do it themselves. Media Agencies specialize in the planning and buying of all types of media. Increasingly, these agencies are formed from the combination of media departments of multiple full-service agencies. By joining their purchasing power, media agencies are often able to command lower rates from TV networks and magazine publishers and pass the savings on to their clients. Industry Specialty Agencies concentrate on particular industries with unique set of advertising-related issues. For example, pharmaceutical advertising is subject to strict advertising guidelines imposed by the FDA and manufacturers may seek out a Healthcare specialty agency. Specialty agencies exist for a number of categories, including computers and technology, employee recruitment, and retail. Agency Holding Companies Consolidation allows agencies to provide greater reach and a broader array of services for their clients. And it also allows agencies to operate more cost-efficiently and be more profitable.

Transcript

  • 1. CS 618 - Day 2 The Need for IMC Wednesday, January 30 2002
  • 2. The IMC Process
  • 3. Why marketing is changing
    • Fragmentation of the mass market
      • Demographics, Lifestyles (baby boomers and beyond)
      • Media use: Network television and newspaper readership decline, smaller and more selective audiences for TV, radio, magazines and newspapers
      • Buying and shopping patterns
    • Explosion of new technologies that allow consumers greater control over the communication process
    • Desensitization of audiences to advertising messaging
    • Emergence of global markets, merging cultures
    • A shift in marketplace power from manufacturers to retailers who demand larger promo fees and can offer better retail info from checkout scanner technology.
    Marketing campaigns need to be responsive to changes in our world:
  • 4. How marketing is changing
    • Shifting marketing dollars from media advertising to other forms of promotion, particularly consumer and trade-oriented sales promotion
    • Exploring lower-cost and more targeted communication tools such as event marketing and direct mail instead of mass media
    • Development of database and relationship marketing
    • Demands for greater accountability from ad agencies and changes in compensation and incentives
    • Using the Internet to change how a company does business and how they communicate and interact with customers
    • Demanding a uniform marketing strategy. Ad agency handled advertising, other areas handled by other depts internally or by other out-sourced agencies. Rarely communicating back and forth.
    • Demanding measurements and expectations from marketing strategy.
  • 5. Tools for IMC and the participants in the process
    • Elements of the promotional mix (recap)
      • Personal Selling: Direct and/or Indirect channels of distribution
      • Sales Promotion: Direct and/or Indirect channels of distribution
      • Advertising: Ad agency, retailer, in-house
      • Publicity: PR firm
      • Direct Marketing: Database managed by IT
      • Interactive/Internet Marketing (website/email): Website hosted by webmaster or by 3rd party host
    • Other participants include:
      • Media organizations
      • Consumer to consumer
  • 6. Advertising and Ad Agencies
  • 7. Advertising Classifications - Consumer
    • National Advertising: Typically prime-time network TV, major regional/national media (newspapers, magazines). Goal: To inform or remind consumers of the company or brand and to reinforce its brand image. (Coke)
    • Retail/Local Advertising: Typically done by retailers or local merchants. Emphasis on price, service, merchandise assortment. Goal: To generate store traffic and sales with more direct action advertising. (Filene’s)
    • Primary Demand Advertising: To stimulate demand for the general product class or industry. (Milk)
    • Selective Demand Advertising: To stimulate demand for a specific company’s brands. (Ford)
  • 8. Advertising Classifications - B2B
    • Business-to-Business Advertising: Targeted at individuals who buy or influence the purchase of industrial goods or services for their companies. (IBM)
    • Professional Advertising: Targeted to professionals to encourage them to use a company’s product in their business operations or to recommend their products to the end-user. (Pfizer pharmaceuticals)
    • Trade Advertising: Targeted to marketing channel members such as wholesalers, distributors and retailers. To encourage re-stocking, promoting and reselling to end customers. (P&G to Grocers)
  • 9. Copy of the advertisement in Benjamin Franklin's Pennsylvania Gazette which ran July 2, 1761 and July, 9 1761.  “ A LIST of CHILDREN now at the State-House, in Philadelphia, who in the Course of the War, were taken Captives from several Parts of this Province by the Indians, and have been lately released by his Excellency General AMHERST, and sent to this Government, in order to their being delivered up to their Parents, or other Relations, who are hereby desired forthwith to come and receive them." The History of the Ad Agency
    • In 1704 a newspaper in Boston prints advertising
    • Benjamin Franklin’s Pennsylvania Gazette
  • 10. The first ad agencies
    • The first advertising agencies were:
      • Brokers of media space.
      • Staffed by a couple of people
      • Motivated by maximizing profit on transactions like a stock broker.
      • Not interested in the in the adveritising results or the well-being of their customers.
    • The first advertising agencies had no copywriters.
    • They had no art directors
    • They had no account executives either.
  • 11. How the world has changed!
    • Businesses and products have become more complex:
      • Simple products have become multifaceted brands.
      • Manufacturing companies have given way to marketing-driven corporations.
      • And communications have become increasingly vital to their existence.
    • Media has also become an extremely sophisticated world:
      • Consumers have access to hundreds of channels on broadcast TV, cable, and satellite.
      • There are thousands of newspapers and magazines for people to read and millions of web sites to access.
      • Advertising is everywhere and companies more than ever need help identifying the right opportunities.
  • 12. Advertising Agencies filled a valuable need
    • Advertising agencies have grown incredibly:
      • Today, the largest agencies employ thousands of professionals across the globe and manage billions of dollars in business every year.
      • And advertising agencies offer more diverse services than ever, serving as strategic partners with their clients and helping them increase the value of their business.
      • They offer services from creative, to media brokerage, to marketing strategy, to business development and profit sharing.
  • 13. Agency Structure
    • A typical full-service advertising agency typically involves 4 main departments:
      • Account Management
      • Creative Services
      • Media Planning and Buying
      • Research and Account Planning
  • 14. Account Management
    • Works closely with the client to map out their communications needs and define the role the agency can play in helping meet their business objectives.
    • Engages agency resources as appropriate and ensures all the work done for the client is suitable for their business and that projects run smoothly.
    • On a day-to-day basis, this means creating agency teams to work on specific projects, communicating the agency opinion in formal points of view, presenting work, and setting timelines and budgets.
    • There are a number of levels within the account management group. The most common positions (starting from the more senior) are as follows:
      • Management Representative
      • Account Supervisor
      • Account Executive
      • Assistant Account Executive
  • 15. Creative Services
    • Advertising can take many forms (TV commercials, radio spots, print ads, and outdoor billboards to name a few), but collectively they are referred to as “the creative.”
    • Development of the creative is typically done in teams of two. A Copywriter (words) and an Art Director (visuals) work together to create rough versions of the ads including: TV storyboards, print layouts, and radio scripts. Creative teams can work successfully together for years -- often hired, fired and promoted together.
    • The Creative Director , who approves all the work before it is shared with the client, has a tremendous influence on all the work an agency develops, ensuring that the work is unique and appealing while strategically on target.
    • Once an idea for a radio or TV ad is ready to be brought to life, a Producer joins the team. The producer coordinates with the outside resources necessary to produce finished ads. He estimates the cost to produce the ads, writes contracts, and coordinates the production from start to finish.
    • The Traffic Manager performs a similar function for print ads, estimating costs and coordinating these jobs from start to finish. In addition, the Traffic Manager is also responsible for getting all ad materials where they need to go.
  • 16. Media Planning and Buying
    • Typically, the largest portion of a marketer’s budget goes towards buying media. This places a huge responsibility on the media planning and buying department.
    • Media Planners determine what combination of TV, Radio, Magazines, etc., would reach as many target consumers as possible at the lowest cost. The result of their research and analysis is the Media Plan, a calendar of scheduled advertising
    • The measurements they use include:
      • Reach: what percentage of the target audience will be exposed to the ad
      • Frequency: how many times the average consumer in the target audience will be exposed to the ad
      • Effective Reach: also referred to as ‘3+ reach,’ quantifies the percentage of the target audience that will be exposed to the ad more than three times
    • Media Buyers take the media plan recommended by the planners and negotiate its purchase as inexpensively as possible.
  • 17. Research and Account Planning
    • Advertising agencies began actively doing research in the 1920s. This research was focused on answering specific business questions about products and consumer preference.
    • Research was typically not an integral part of the creative development process until the introduction of Account Planning.
    • Account Planning began in England during the 1960s. It focuses on consumer attitudes and branding for the goal of creating a unique identity for the client’s brand which is distinct from the competition and compelling to the target consumer.
    • Research centers around focus groups where small groups of consumers tell agencies a lot more about what consumers think and feel than a nationwide survey.
    • Account Planners use this information to weave facts together into compelling stories. These stories can form the basis of a brand positioning, a unique product benefit or perhaps even a commercial storyline.
    • Many agencies have created unique planning processes. For example, J Walter Thompson relies on TTB (Thompson Total Branding), McCann has the Brand Footprint, and Bates offers the Brand Wheel.
  • 18. How Agencies Work
    • Chronology of how most advertising is generally created:
      • Project assignment
      • Strategic Development
      • Media Development
      • Creative Development
      • Campaign Debut
    • The process is collaborative with multiple agency departments involved at key points along the way. This may seem a bit chaotic at times, but the process encourages input from diverse points of view, stimulates healthy debate and allows strong ideas to emerge regardless of the source.
  • 19. Types of Agencies
    • Full-Service Agencies: Typically global
    • Regional agencies: Focus on a state or region
    • Minority Agencies: Specialize in reaching specific ethnic groups, such as African Americans or Hispanics
    • Boutiques: Smaller advertising organizations that focus almost exclusively on the creative product.
    • Media Agencies: Planning and buying of all types of media.
    • Industry Specialty Agencies: Concentrate on particular industries with unique set of advertising-related issues.
    • Agency Holding Companies:
      • Last year, nearly 40% of all global advertising was managed by just three companies.
      • The industry has seen many big mergers and acquisitions resulting in vast entities known as Holding Companies.
      • The world’s largest holding companies (WPP Omnicom, Interpublic) may be unfamiliar to many outside the industry. That’s because the agencies they own typically continue to operate under their original names – BBDO, McCann, Ogilvy & Mather.
  • 20. Agency Compensation
    • Historically, agencies were paid a commission based on a percentage of the cost of media they bought for clients.
      • It is based on the spending level of clients, not on the amount of work an agency performs.
    • Increasingly, agencies are being compensated under a fee arrangement either billing for services by the hour or the agency and client can develop a project list and agree on a flat amount for each project.
      • In 2000, more than 75% of clients compensated their agency under a fee arrangement, up from just 15% in 1985.
    • Another popular trend in compensation is the performance incentive, where the agency’s pay is contingent on the success of its work (success being defined jointly by the agency and the client). The appeal of this arrangement for clients is obvious, and in 2000 about 10% of agency relationships included a performance component.
  • 21. Publicity and Public Relations
  • 22. Traditional Public Relations Objectives
    • The determination and evaluation of public attitudes
    • The identification of policies and procedures of an organization with a public interest
    • The development and execution of a communications program designed to bring about public understanding and acceptance.
  • 23. Marketing Public Relations Objectives
    • Building marketplace excitement before media advertising breaks
    • Creating advertising news where there is no product news
    • Introducing a product with little or no advertising
    • Providing a value-added customer service
    • Building brand-to-customer bonds
    • Influencing the influentials
    • Defending products at risk and giving consumers a reason to buy
  • 24. Public Relations Tools
    • Press releases
    • Press conferences
    • Exclusives
    • Interviews
    • Community involvement
    • The Internet
  • 25. Changing Fundamentals of Publicity
    • Corporate Websites offer greater control over their message.
      • Post testimonials from satisfied buyers
      • Make new product announcements
      • Allow the company to respond publicly to events—particularly crises
    • PR roles take on added responsibilities:
      • Sales: With the link to consumers via company Web sites, press releases may now be geared up as sales vehicles.
      • Become a headline writer: The “subject” line in e-mail exchanges between PR reps, clients and the media.
      • Online editor: corporate Web sites are responsible for presenting each company’s branding-marketing message.
    • PR will go multimedia
      • Attaching audio and video clips to e-mails
      • Creating company Web sites that use animation, sound and three-dimensional imaging.
  • 26. Direct Marketing
  • 27. Direct Marketing Objectives
    • Generating Qualified Responses
      • Potential customers either call, mail a response card, visit a store in person or register at a Website.
      • Prepared staff can collect contact information and get more data about that person's particular needs.
      • This information can either be used to mail an information packet, or salespeople can follow-up directly.
    • Converting Prospects
      • Rather than just collecting data for follow-up, staff can take orders.
      • Generally, this objective works better for more intuitive products and services.
    • Building Customer Relationships: Direct response campaigns can be used for existing customers as well.
    • Developing a Customer Database
      • When transferring data from an old system to the new one, there may be gaps in the data about certain customers such as a lack of e-mail addresses.
      • The direct response campaign would encourage those customers to call in and update their account information, perhaps in exchange for a premium.
  • 28. Elements of Direct Marketing
    • Creative: The creative element of the campaign is the advertising.
      • Requires consistent focused message, attention -getting without being distracting, etc.
      • While the advertising should fit in with existing branding and marketing campaigns, the focus should be on the call to action rather than just brand building or name recognition.
    • Media: The media element is the time slots where the ad will run.
    • Fulfillment: Quite simply, if potential customers are given a call to action, the company must be prepared to receive that action.
      • Typically, this means staffing a telephone call center with operators to either take orders or record contact information.
  • 29. Monitoring Results - Cost per Lead
    • Return on investment (ROI) for direct response advertising is measured in terms of cost per lead. In other words, how much did the company spend on advertising and marketing costs for each lead that resulted from the effort?
    • The cost per lead figures are derived from an analysis of three numbers:
      • Frequency of ad
      • Cost per ad
      • Number of leads generated
    • Such analysis can be completed daily if necessary. Adjustments can be made to the media mix, run times and frequency of buys to adjust the campaign and bring cost per lead numbers in line with expectations.
    • When managed properly, a direct response advertising campaign can effectively generate leads and sales while at the same time enabling marketers to get the most from their marketing spending.
  • 30. Combining Direct Marketing with other Promotional tools
    • Direct marketing with Advertising - ads or infomercials
    • Direct marketing with Publicity/PR - call to action
    • Direct marketing with Personal Selling - telemarketing and direct selling (Amway, Mary Kay)
    • Direct marketing with Sales Promotion - sweapstakes, contests, etc.
    • Direct marketing with Database marketing - most valuable customer lists, direct mail
  • 31. One-to-one marketing
    • The concept of one-to-one marketing is not new to American business. In fact, one-to-one relationships were prevalent during the early colonial period. It was commonplace to have direct contact with the person with whom one was doing business. As a result, specific bonds of trust were established between farmers, traders, merchants, shopkeepers and artisans and their customers.
    • This changed over the course of the late 18th and 19th centuries. Several new technologies permanently altered the old economic landscape: railroads, steam ships, cable cars, the telegraph, and the telephone. Urban centers grew at phenomenal rates, a long-distance economy grew, and in some ways, the familiar, one-to-one nature of commerce diminished.
    • These new modes of transportation, communication, and the quick access to information had a dramatic impact on the American social and commercial landscape. Not only did different groups relate to one another for the first time, but also the ways in which people related and communicated changed.
  • 32. Benefits of Direct Marketing
    • Selective reach
      • Eliminates waste coverage
      • Targets audience with the highest potential
    • Segmentation capabilities
      • Purchase lists by demographics and consumer behavior, etc.
    • Frequency
    • Flexibility
    • Timing
    • Personalization
    • Cost - while CPM can be high on an absolute, with the targeted audience and minimal waste, can be much cheaper
    • Measures of effectiveness
  • 33. Disadvantages of Direct Marketing
    • Image factors - “Junk mail”
    • Accuracy
    • Content Support
  • 34. Case: Apple and iPod
    • Provide a brief but thorough analysis of the current situation
    • Analyze the current segmentation and targeting strategy and recommend a positioning strategy
    • Address issues pertaining to the media strategy
    • Elaborate in the creative strategy and present creative boards that communicate your strategy
  • 35. Resources
    • Apple Computer's Homepage: www.apple.com
    • US Census statistics on Computer use
    • Competitive Products, Placement and Reviews
      • Best Buy, Circuit City, CNET
      • NYT review & San Francisco Chronicle reviews
    • Corporate story
      • Time's Cover Story
    • Product Life Cycles
  • 36. Apple’s Marketing Mix for iPod
    • Product
    • Placement
    • Price
    • Promotion
      • Apple's Promotional Mix for iPod:
        • Sales
        • Advertising
        • Publicity
        • Direct Marketing
        • Interactive/internet
        • Sales Promotion
  • 37. Discussion Questions
    • Who is the typical Apple customer?
      • Why are they loyal to Apple products?
      • What are the most popular Apple products and why?
      • Is the iPod target customer the "typical" Apple customer?
    • What customer segment(s) did Apple go after for the launch of the iPod?
      • What marketing strategies did it use to this end?
      • Does its marketing campaign for iPod fit in the total marketing strategy for Apple?
      • Does the product fit in the total marketing strategy for Apple?
    • What other customer segments could the Apple go after?
      • If Apple went for these target audiences, would they have to change the perception of iPod?
    • What direction should Apple take now with the iPod?
      • What audiences should they focus on?
      • Are there any target audiences that iPod should avoid?
      • What types of inconsistencies could happen in Apple's messaging if it ignores one segment in favor of another?
      • How could these inconsistencies threaten the entire business of Apple?
    • What if Apple were to make the iPod compatible with PCs?
    • Lastly, do you have any hypotheses about the direction you think Apple is going as a computer company?
  • 38. Group Projects
    • In groups of 3-5 people, select a product or service
    • Develop an advertising plan.
      • Provide a brief but thorough analysis of the current situation
      • Analyze the current segmentation and targeting strategy and recommend a positioning strategy
      • Address issues pertaining to the media strategy and benchmarking success.
      • Elaborate in the creative strategy and present creative boards that communicate your strategy
    • The advertising plans should not exceed 15 pages double-spaced
    • Final presentations should last 20 minutes with 10 minutes Q/A
  • 39. Next Week: Advertising Planning
    • The cornerstones of a well-done communication strategy:
      • Segmentation of the market
      • Identifying and Targeting the appropriate customers
      • Positioning to the correct customer
    • Alternative segmentation and targeting strategies
    • Behavior driven strategies
    • Alternative positioning strategies
    • Cases
    • PowerPoint Lesson
    • Excel Lesson
    • Don’t forget to hand in your email addresses and groups!