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Organizing for Advertising 
and Promotion: 
The Role of Ad Agencies and Other Marketing 
Communication Organizations 
3 
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Participants in the IMC Process 
AAddvveerrttiisseerr ((CClliieenntt)) 
AAddvveerrttiissiinngg aaggeennccyy 
MMeeddiiaa oorrggaanniizzaattiioonnss 
Marketing 
communications 
specialist 
organizations 
Marketing 
communications 
specialist 
organizations 
CCoollllaatteerraall sseerrvviicceess 
Direct-response 
agencies 
Sales 
promotion 
agencies 
Interactive 
agencies 
Public 
relations 
firms
Organizing for Advertising and Promotion 
• The way a company (the client) 
organizes depends on 
– Its size 
– The number of products it markets 
– The role of advertising and promotion in 
the marketing mix 
– The budget 
– Its marketing organization structure
Advertising Dept. Under Centralized System 
PPrreessiiddeenntt 
PPrroodduuccttiioonn FFiinnaannccee MMaarrkkeettiinngg 
Research 
Research 
and 
and 
develop-ment 
develop-ment 
Human 
resources 
Human 
resources 
Marketing 
research AAddvveerrttiissiinngg SSaalleess Product 
Marketing 
research 
Product 
planning 
planning
Pros & Cons of a Centralized System 
++ PPoossiittiivvee -- NNeeggaattiivvee 
Better 
Better 
communications 
communications 
Fewer 
personnel 
Fewer 
personnel 
CCoonnttiinnuuiittyy 
Less goal 
involvement 
Less goal 
involvement 
Longer 
Longer 
response time 
response time 
The 
The 
Centralized 
System 
Centralized 
System 
Impractical for 
multiple brands, 
Impractical for 
multiple brands, 
products, 
products, 
divisions 
More top 
management 
involvement 
More top divisions 
management 
involvement
Decentralized Advertising System 
Production Finance 
Sales 
Marketing R & D Human 
Product 
Management 
Brand 
Manager 
Ad agency 
Resources 
Marketing 
services 
Sales promotion 
Package design 
Corporate 
Brand 
Manager 
Ad agency 
Advertising 
Dept 
Marketing 
Research 
Merchandising
Pros & Cons of Decentralization 
++ PPoossiittiivvee -- NNeeggaattiivvee 
Ineffective 
Ineffective 
decision making 
decision making 
IInntteerrnnaall ccoonnfflliiccttss 
Concentrated 
attention 
Concentrated 
attention 
Rapid problem 
Rapid problem 
response 
response 
Increased 
flexibility 
Increased 
flexibility 
The 
The 
Decentralized 
Decentralized 
System 
System 
Unequal 
distribution 
of funds 
Unequal 
distribution 
of funds 
Lack of 
Authority 
Lack of 
Authority
Test Your Knowledge 
A major reason why some companies choose to use an 
in-house agency is to: 
A) Maintain creative freshness 
B) Reduce advertising and promotions costs 
C) Better understand how advertising works 
D) Win advertising awards that will enhance 
the image of their brands 
E) Do all of the above
In-House Agencies 
Benetton’s in-house agency works with 
outside agencies to develop ads
Pros & Cons of In-House Agencies 
++ PPoossiittiivvee -- NNeeggaattiivvee 
Cost 
savings 
Cost 
savings 
More 
control 
More 
control 
Better 
Better 
coordination 
coordination 
Less 
Less 
experience 
experience 
Less 
Less 
objectivity 
objectivity 
The 
The 
In-house 
Agency 
In-house 
Agency 
Less 
flexibility 
Less 
flexibility
The Ad Agency’s Role 
• Reasons for using an ad agency 
–Highly skilled specialists 
–Specialization in a particular industry 
–Objective viewpoint of the market 
– Broad range of experience
Ad Agencies Have Skilled Specialists 
AArrttiissttss WWrriitteerrss RReesseeaarrcchheerrss 
PPhhoottooggrraapphheerrss MMeeddiiaa AAnnaallyyssttss OOtthheerr SSkkiillllss
Full-Service Agencies 
Planning 
advertising 
Planning 
advertising 
Creating 
advertising 
Creating 
advertising 
Producing 
advertising 
Producing 
advertising 
Performing 
research 
Performing 
research 
SSeelleeccttiinngg mmeeddiiaa 
Strategic market 
Strategic market 
planning 
planning 
Sales 
Sales 
promotions 
promotions 
Direct 
marketing 
Direct 
marketing 
Interactive 
capabilities 
Interactive 
capabilities 
PPaacckkaaggee ddeessiiggnn 
Full range of 
marketing 
communication 
and promotion 
Full range of 
marketing 
communication 
and promotion 
services 
services 
Nonadvertising 
Nonadvertising 
services 
services 
Public relations 
and publicity 
Public relations 
and publicity
Typical Full-Service Agency Organization 
Writers 
Art directors 
TV 
production 
Print 
production 
Traffic 
VP account 
services 
Account 
supervision 
Account 
Executive 
Board of 
directors 
Media 
VP marketing 
services 
Sales 
Promotion 
Research 
VP management 
and finance 
Office Finance 
management 
Personnel 
Accounting 
President 
VP creative 
services
Services Provided by Agencies 
AAggeennccyy SSeerrvviicceess 
Marketing 
Services 
Marketing 
Services 
Research 
department 
May include 
account 
planners 
Media dept. 
obtains 
media 
space, time 
Research 
department 
May include 
account 
planners 
Media dept. 
obtains 
media 
space, time 
Account 
Services 
Account 
Services 
The link 
between 
agency and 
client 
Managed by 
the account 
executive 
The link 
between 
agency and 
client 
Managed by 
the account 
executive 
Creative 
Services 
Creative 
Services 
Creation, 
execution of 
ads 
Copywriter 
artists, other 
specialists 
Creation, 
execution of 
ads 
Copywriter 
artists, other 
specialists 
Mgmt & 
Finance 
Mgmt & 
Finance 
Accounting 
Finance 
Human 
resources 
New 
business 
generation 
Accounting 
Finance 
Human 
resources 
New 
business 
generation
The Role of Creative Boutiques 
Creative 
Boutiques PPrroovviiddee oonnllyy ccrreeaattiivvee sseerrvviicceess 
Creative 
Boutiques 
Full-service agencies may 
subcontract with creative 
Full-service agencies may 
subcontract with creative 
boutiques 
boutiques 
Ability to turn out inventive 
Ability to turn out inventive 
creative work quickly 
creative work quickly
Media Buying Can be Specialized 
Specialize in buying media, 
especially broadcast time 
Specialize in buying media, 
especially broadcast time 
Agencies and clients develop 
Agencies and clients develop 
media strategy 
media strategy 
Media 
Media 
Specialist 
Companies 
Specialist 
Companies 
Media buying organizations 
implement the strategy and 
Media buying organizations 
implement the strategy and 
buy time and space 
buy time and space
Test Your Knowledge 
Which of the following statements about changes in the way 
advertising agencies are being compensated is true? 
A) Most clients do not pay full commissions to 
their agencies because they prefer fee- or 
incentive-based systems. 
B) From the viewpoints of both the client and the agency, 
the traditional commission system is superior to 
negotiated commissions. 
C)Most clients want their agencies to be in total charge 
of the integrated marketing communications process, 
so they prefer to compensate them based on media 
commissions. 
D)Statements A, B, and C are all true.
Methods of Agency Compensation 
Commissions 
from media 
Commissions 
from media 
Fee, cost, and 
incentive-based 
Fee, cost, and 
incentive-based 
systems 
systems 
Percentage 
charges 
Percentage 
charges 
Compensation 
Compensation 
Methods 
Methods
Evaluating Agencies 
Financial 
Audit 
Qualitative 
Audit 
Verify costs, expenses 
Personnel hours charged 
Payments to media 
Payments to suppliers 
Planning 
Program development 
Implementation 
Results achieved
Top Agency Value-Add Activities 
New media 
guidance, 
solutions 
Integrated 
disciplines 
& functions 
Creative 
ideas 
Collaboration 
Ideas/programs 
for multi comm. 
programs 
Brand 
driver 
evaluation 
Talented 
people
Loyalty to a Single Agency 
Young & 
Rubicam has 
handled the 
Dr Pepper 
account for 
over 30 years
Why Agencies Lose Clients 
Poor 
performance 
Poor 
communications 
Unrealistic 
Client demands 
Personality 
conflicts 
Personnel 
changes 
Changes 
in size of client 
or agency 
Conflicts of 
interest 
Change in 
client’s strategy 
Declining 
sales 
Payment 
conflicts 
Policy Changes 
Policy Changes
How Agencies Gain Clients 
RReeffeerrrraallss 
SSoolliicciittaattiioonnss 
PPrreesseennttaattiioonnss 
PPuubblliicc RReellaattiioonnss IImmaaggee,, RReeppuuttaattiioonn
The Hottest Agency in the Ad Business
Direct-Marketing Agency Activities 
Database 
management 
Database 
management 
Direct 
mail 
Direct 
mail 
RReesseeaarrcchh 
MMeeddiiaa sseerrvviicceess 
CCrreeaattiivvee 
Direct- 
Marketing 
Agencies 
Direct- 
Marketing 
Agencies 
PPrroodduuccttiioonn 
Database 
development, 
management 
Database 
development, 
management
Direct-Marketing Agency 
• Departments in a typical direct-marketing 
agency 
–Account management 
–Creative 
–Media 
– Database development and management
Sales Promotion Agencies 
PPrroommoottiioonnaall ppllaannnniinngg 
CCrreeaattiivvee rreesseeaarrcchh 
TTiiee--iinn ccoooorrddiinnaattiioonn 
FFuullffiillllmmeenntt 
Premium design and 
Premium design and 
manufacturing 
manufacturing 
CCaattaalloogg pprroodduuccttiioonn 
Contest/sweepstakes 
Contest/sweepstakes 
management 
management
Functions Performed by Public Relations Firms 
Strategy 
development 
Generating 
publicity 
Lobbying 
Public 
affairs 
News releases, 
communication 
Research 
Special events 
Managing 
crises 
Coordination 
with promotional 
areas
Functions Performed by Interactive Agencies 
Web 
Web 
banner ads 
banner ads 
Interactive 
Media Creation 
Interactive 
Media Creation 
CCDD--RROOMMss 
WWeebb ssiitteess TTeexxtt mmeessssaaggeess 
Search engine 
Search engine 
optimization 
KKiioosskkss optimization
Website for the California Milk Advisory Board
Marketing Research Companies 
Help clients under-stand 
Help clients under-stand 
target 
target 
audience 
audience 
QQuuaalliittaattiivvee rreesseeaarrcchh 
QQuuaannttiittaattiivvee ssttuuddiieess
Pros and Cons of Integrated Services 
++ PPoossiittiivvee -- NNeeggaattiivvee 
GGrreeaatteerr ssyynneerrggyy 
CCoonnvveenniieennccee 
Single image for 
product or service 
Single image for 
product or service 
BBuuddggeett ppoolliittiiccss 
Poor 
Poor 
communication 
communication 
Integrated 
Services 
Integrated 
Services 
NNoo ssyynneerrggyy
Test Your Knowledge 
Marketing executives say the biggest obstacle to 
implementing IMC is: 
A) Lack of management support 
B) Insufficient budgets 
C) Lack of people with the right perspective 
and skills 
D) Inexperienced ad agencies
Obstacles to Implementing IMC 
• Key obstacles 
– Lack of people with the broad perspective 
and skills to make it work 
– Internal turf battles 
–Agency egos 
– Fear of budget reductions 
– Ensuring consistent execution 
–Measuring success 
–Compensation

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Chapter03

  • 1. Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communication Organizations 3 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 2. Participants in the IMC Process AAddvveerrttiisseerr ((CClliieenntt)) AAddvveerrttiissiinngg aaggeennccyy MMeeddiiaa oorrggaanniizzaattiioonnss Marketing communications specialist organizations Marketing communications specialist organizations CCoollllaatteerraall sseerrvviicceess Direct-response agencies Sales promotion agencies Interactive agencies Public relations firms
  • 3. Organizing for Advertising and Promotion • The way a company (the client) organizes depends on – Its size – The number of products it markets – The role of advertising and promotion in the marketing mix – The budget – Its marketing organization structure
  • 4. Advertising Dept. Under Centralized System PPrreessiiddeenntt PPrroodduuccttiioonn FFiinnaannccee MMaarrkkeettiinngg Research Research and and develop-ment develop-ment Human resources Human resources Marketing research AAddvveerrttiissiinngg SSaalleess Product Marketing research Product planning planning
  • 5. Pros & Cons of a Centralized System ++ PPoossiittiivvee -- NNeeggaattiivvee Better Better communications communications Fewer personnel Fewer personnel CCoonnttiinnuuiittyy Less goal involvement Less goal involvement Longer Longer response time response time The The Centralized System Centralized System Impractical for multiple brands, Impractical for multiple brands, products, products, divisions More top management involvement More top divisions management involvement
  • 6. Decentralized Advertising System Production Finance Sales Marketing R & D Human Product Management Brand Manager Ad agency Resources Marketing services Sales promotion Package design Corporate Brand Manager Ad agency Advertising Dept Marketing Research Merchandising
  • 7. Pros & Cons of Decentralization ++ PPoossiittiivvee -- NNeeggaattiivvee Ineffective Ineffective decision making decision making IInntteerrnnaall ccoonnfflliiccttss Concentrated attention Concentrated attention Rapid problem Rapid problem response response Increased flexibility Increased flexibility The The Decentralized Decentralized System System Unequal distribution of funds Unequal distribution of funds Lack of Authority Lack of Authority
  • 8. Test Your Knowledge A major reason why some companies choose to use an in-house agency is to: A) Maintain creative freshness B) Reduce advertising and promotions costs C) Better understand how advertising works D) Win advertising awards that will enhance the image of their brands E) Do all of the above
  • 9. In-House Agencies Benetton’s in-house agency works with outside agencies to develop ads
  • 10. Pros & Cons of In-House Agencies ++ PPoossiittiivvee -- NNeeggaattiivvee Cost savings Cost savings More control More control Better Better coordination coordination Less Less experience experience Less Less objectivity objectivity The The In-house Agency In-house Agency Less flexibility Less flexibility
  • 11. The Ad Agency’s Role • Reasons for using an ad agency –Highly skilled specialists –Specialization in a particular industry –Objective viewpoint of the market – Broad range of experience
  • 12. Ad Agencies Have Skilled Specialists AArrttiissttss WWrriitteerrss RReesseeaarrcchheerrss PPhhoottooggrraapphheerrss MMeeddiiaa AAnnaallyyssttss OOtthheerr SSkkiillllss
  • 13.
  • 14. Full-Service Agencies Planning advertising Planning advertising Creating advertising Creating advertising Producing advertising Producing advertising Performing research Performing research SSeelleeccttiinngg mmeeddiiaa Strategic market Strategic market planning planning Sales Sales promotions promotions Direct marketing Direct marketing Interactive capabilities Interactive capabilities PPaacckkaaggee ddeessiiggnn Full range of marketing communication and promotion Full range of marketing communication and promotion services services Nonadvertising Nonadvertising services services Public relations and publicity Public relations and publicity
  • 15. Typical Full-Service Agency Organization Writers Art directors TV production Print production Traffic VP account services Account supervision Account Executive Board of directors Media VP marketing services Sales Promotion Research VP management and finance Office Finance management Personnel Accounting President VP creative services
  • 16. Services Provided by Agencies AAggeennccyy SSeerrvviicceess Marketing Services Marketing Services Research department May include account planners Media dept. obtains media space, time Research department May include account planners Media dept. obtains media space, time Account Services Account Services The link between agency and client Managed by the account executive The link between agency and client Managed by the account executive Creative Services Creative Services Creation, execution of ads Copywriter artists, other specialists Creation, execution of ads Copywriter artists, other specialists Mgmt & Finance Mgmt & Finance Accounting Finance Human resources New business generation Accounting Finance Human resources New business generation
  • 17. The Role of Creative Boutiques Creative Boutiques PPrroovviiddee oonnllyy ccrreeaattiivvee sseerrvviicceess Creative Boutiques Full-service agencies may subcontract with creative Full-service agencies may subcontract with creative boutiques boutiques Ability to turn out inventive Ability to turn out inventive creative work quickly creative work quickly
  • 18. Media Buying Can be Specialized Specialize in buying media, especially broadcast time Specialize in buying media, especially broadcast time Agencies and clients develop Agencies and clients develop media strategy media strategy Media Media Specialist Companies Specialist Companies Media buying organizations implement the strategy and Media buying organizations implement the strategy and buy time and space buy time and space
  • 19. Test Your Knowledge Which of the following statements about changes in the way advertising agencies are being compensated is true? A) Most clients do not pay full commissions to their agencies because they prefer fee- or incentive-based systems. B) From the viewpoints of both the client and the agency, the traditional commission system is superior to negotiated commissions. C)Most clients want their agencies to be in total charge of the integrated marketing communications process, so they prefer to compensate them based on media commissions. D)Statements A, B, and C are all true.
  • 20. Methods of Agency Compensation Commissions from media Commissions from media Fee, cost, and incentive-based Fee, cost, and incentive-based systems systems Percentage charges Percentage charges Compensation Compensation Methods Methods
  • 21. Evaluating Agencies Financial Audit Qualitative Audit Verify costs, expenses Personnel hours charged Payments to media Payments to suppliers Planning Program development Implementation Results achieved
  • 22. Top Agency Value-Add Activities New media guidance, solutions Integrated disciplines & functions Creative ideas Collaboration Ideas/programs for multi comm. programs Brand driver evaluation Talented people
  • 23. Loyalty to a Single Agency Young & Rubicam has handled the Dr Pepper account for over 30 years
  • 24. Why Agencies Lose Clients Poor performance Poor communications Unrealistic Client demands Personality conflicts Personnel changes Changes in size of client or agency Conflicts of interest Change in client’s strategy Declining sales Payment conflicts Policy Changes Policy Changes
  • 25. How Agencies Gain Clients RReeffeerrrraallss SSoolliicciittaattiioonnss PPrreesseennttaattiioonnss PPuubblliicc RReellaattiioonnss IImmaaggee,, RReeppuuttaattiioonn
  • 26. The Hottest Agency in the Ad Business
  • 27. Direct-Marketing Agency Activities Database management Database management Direct mail Direct mail RReesseeaarrcchh MMeeddiiaa sseerrvviicceess CCrreeaattiivvee Direct- Marketing Agencies Direct- Marketing Agencies PPrroodduuccttiioonn Database development, management Database development, management
  • 28. Direct-Marketing Agency • Departments in a typical direct-marketing agency –Account management –Creative –Media – Database development and management
  • 29. Sales Promotion Agencies PPrroommoottiioonnaall ppllaannnniinngg CCrreeaattiivvee rreesseeaarrcchh TTiiee--iinn ccoooorrddiinnaattiioonn FFuullffiillllmmeenntt Premium design and Premium design and manufacturing manufacturing CCaattaalloogg pprroodduuccttiioonn Contest/sweepstakes Contest/sweepstakes management management
  • 30. Functions Performed by Public Relations Firms Strategy development Generating publicity Lobbying Public affairs News releases, communication Research Special events Managing crises Coordination with promotional areas
  • 31. Functions Performed by Interactive Agencies Web Web banner ads banner ads Interactive Media Creation Interactive Media Creation CCDD--RROOMMss WWeebb ssiitteess TTeexxtt mmeessssaaggeess Search engine Search engine optimization KKiioosskkss optimization
  • 32. Website for the California Milk Advisory Board
  • 33. Marketing Research Companies Help clients under-stand Help clients under-stand target target audience audience QQuuaalliittaattiivvee rreesseeaarrcchh QQuuaannttiittaattiivvee ssttuuddiieess
  • 34. Pros and Cons of Integrated Services ++ PPoossiittiivvee -- NNeeggaattiivvee GGrreeaatteerr ssyynneerrggyy CCoonnvveenniieennccee Single image for product or service Single image for product or service BBuuddggeett ppoolliittiiccss Poor Poor communication communication Integrated Services Integrated Services NNoo ssyynneerrggyy
  • 35. Test Your Knowledge Marketing executives say the biggest obstacle to implementing IMC is: A) Lack of management support B) Insufficient budgets C) Lack of people with the right perspective and skills D) Inexperienced ad agencies
  • 36. Obstacles to Implementing IMC • Key obstacles – Lack of people with the broad perspective and skills to make it work – Internal turf battles –Agency egos – Fear of budget reductions – Ensuring consistent execution –Measuring success –Compensation

Editor's Notes

  1. Relation to textThis slide relates to material on pp. 73-74 of the text and Figure 3-1. Summary OverviewThe various participants in the IMC process are shown on this slide. Advertiser (client) – the company or organization that has the product, service or cause to be marketed and provides the funds to pay for the IMC program Advertising Agency – a firm that specializes in the creation, production, and often the placement of the communications messages and may provide other services to facilitate the IMC process Media Organizations – companies that provide information and entertainment to subscribers, viewers, listeners and/or readers and in which marketers can purchase time or space to deliver their advertising and promotion messages Marketing Communication Specialist Organizations – companies that provide specialized marketing communication services that are used as part of the IMC process. These include Direct response agencies Sales promotion agencies Public Relations Firms Interactive Agencies Collateral Services – companies that provide a wide array of support functions used by advertisers, agencies, media organizations, and specialist organizations such as marketing research, package design, photography, video production and other services Use of this slideThis slide can be used to introduce the various participants in the IMC process and provide a brief overview of their roles. More detailed discussion of the role and responsibilities of each participant will follow.
  2. Relation to textThis slide relates to page 74 of the text, which discusses The Client’s Role. Summary OverviewThis slide shows the factors that affect how a company organizes for its marketing communications efforts. It is important to point out that many individuals throughout the organization can be involved in the advertising and promotion decision-making process, including marketing personnel and top management. Use of this slideThis slide can be used to introduce the factors that affect how a company organizes for it’s marketing communications efforts.
  3. Relation to textThis slide relates to the material on pp. 75-76 of the text and Figure 3-2. Summary OverviewCompanies have several options as to how they organize for advertising, including the centralized, decentralized and in-house systems. This slide shows how companies organize for advertising under a centralized system. Under this system, various organizational activities are divided along functional lines, with marketing being a key area, along with production, finance, research and development, and human resources. Within marketing, activities are also divided along functional lines, with advertising placed alongside other areas, such as marketing research, sales, and product planning. Use of this slideThis slide can be used to show how companies organize under a centralized system, whereby an advertising or marketing communications manager supervises all promotion activities. The various activities of an advertising or marketing communications manager that should be discussed include: Planning and budgeting Administration and Execution Coordination with other departments Coordination with outside agencies and services
  4. Relation to textThis slide relates to page 76 of the text. Summary OverviewThis slide presents the pros and cons of having a centralized organizational system. Large companies with a single product or service, such as Continental Airlines, often have a centralized advertising department. Having a central location facilitates communication regarding the promotions program, making it easier for top management to participate in decision making. It is also a more efficient operation, because fewer people are involved in decision making, and as their experience in making these decisions increases, the process becomes easier. From a negative standpoint, it is difficult for the advertising department to understand the overall marketing strategy for the brand, and response to specific needs or problems may be slow. As companies become larger and develop or acquire new products, brands, or divisions, a centralized system may become impractical. Use of this slideUse this slide to facilitate a discussion about the pros and cons of having a centralized advertising department.
  5. Relation to textThis slide relates to the material on pp. 76-79 of the text and Figure 3-3. Summary OverviewThis slide shows how companies organize advertising and promotion under a decentralized brand management system, which is often used by large companies with multiple divisions, products, and brands. Under this system, responsibility for the various IMC functions are assigned to a product or brand manager, who works closely with the outside advertising agency, as well as other marketing communication specialists. The brand manager may also work with other areas of marketing within the firm, such as sales, marketing research, and the advertising/promotion department. Use of this slideUse this slide to show how responsibilities are divided in a company that has a decentralized advertising system.
  6. Relation to textThis slide relates to the material on pp. 76-79 of the text. Summary OverviewThis slide presents the pros and cons of using a decentralized marketing system to handle advertising and promotion. The positive aspects of this system include: Concentrated managerial attention for a product or brand Rapid response to problems and opportunities facing a brand Increased flexibility, allowing for adjustments to various aspects of the advertising and promotional program The negative aspects of decentralization include: Ineffective decisions, since brand managers often lack training and experience in advertising and promotion Internal conflict as brand managers compete for top management attention and marketing resources Lack of authority by brand managers over the functions needed to implement and control the plans they develop Use of this slideUse this slide to present the pros and cons of a decentralized brand management system, which is common among large companies with multiple products, brands, or divisions.
  7. Ans: B
  8. Relation to textThis slide relates to pages 79-80 of the text, which discusses in-house agencies. Summary OverviewThis slide shows a Benetton’s ad, which was developed by its in-house advertising agency in conjunction with an outside agency. Other companies that use an in-house agency include Calvin Klein, Avon, and Revlon. Use of this slideUse this slide to introduce the topic of in-house agencies, which some companies use to reduce costs while maintaining greater control over agency activities. Using an in-house agency can also save time, and it is easier to coordinate promotions with the firm’s overall marketing program.
  9. Relation to textThis slide relates to the material on pp. 75-78 and Figure 3-5 Summary OverviewThis slide presents the pros and cons of using an in-house agency to handle advertising and promotion. Advantages of this system include: Cost savings, because media commissions that normally go to an outside agency remain in house More control over the advertising function, because it is handled within the company rather than by an outside agency Better coordination of advertising and promotion with the firm’s other marketing activities Negative aspects of this system include: Less advertising experience than is available from an outside agency, which has a variety of specialists in various areas of advertising Less objectivity, because those working for an in-house agency are part of the company Less flexibility, as outside agencies can be changed more easily. Changes among in-house agency personnel are slower and more disruptive Use of this slideUse this slide to present the pros and cons of using in-house agencies. Examples of companies that use in-house agencies include Calvin Klein and Radio Shack.
  10. Relation to textThis slide relates to page 83-84 of the text, which discusses the reasons for using an outside ad agency. Summary OverviewThis slide presents the primary reasons for using an outside ad agency. For instance, Mentus, Inc. is an agency that specializes in integrated marketing communications for the high-technology, e-commerce, and bioscience industries. Use of this slideThis slide can be used to discuss the reasons behind a company choosing to use an outside advertising agency.
  11. Relation to textThis slide relates to material on page 83 of the text. Summary OverviewOne of the main reasons outside advertising agencies are used is that they provide the client with the services of highly skilled individuals who are specialists in their fields. These specialists include: Artists Writers Researchers Photographers Media Analysts Specialists with other skills Use of this slideThis slide can be used to introduce the various services and specialists of an advertising agency. The expertise and skill of an outside advertising agency is only one reason for choosing to use them. Other reasons can include their more objective viewpoint and broad range of experience with a variety of products, companies, and industries.
  12. Relation to textThis slide relates to material on p. 84 of the text. Summary OverviewThis slide defines and summarizes the activities of a full-service advertising agency, which offers a full range of marketing, communications, and promotions services. These advertising services include: Planning, creating, and producing advertising campaigns Performing marketing and advertising research Selecting media The non-advertising services performed by a full service agency are: Strategic market planning Sales promotion Direct marketing Interactive capabilities Package design Public relations and publicity Use of this slideThis slide can be used to introduce the wide array of activities performed by a full service advertising agency.
  13. Relation to textThis slide relates to page 85 of the text. Summary OverviewThis slide shows the organization of a full-service advertising agency. Use of this slideThis slide can be used as part of a discussion of X
  14. Relation to textThis slide relates to material on pp. 84-89 of the text Summary OverviewThe slide shows the various services of a full service advertising agency. These agency services consist of: Account services – this is the link between the agency and its clients. The account executive is the liaison and focal point of the agency-client relationship. They are responsible for understanding the advertiser’s marketing and promotions needs and interpreting them to agency personnel. Marketing services – includes marketing research and media planning. Account planners gather information that is relevant to the client’s product or service to be used in the IMC campaign. Media departments analyze, select, and contract media sources. Creative services – is responsible for the creation and execution of advertisements. Copywriters and artists are specialists in this department. Additionally there is a production department that coordinates all phases of production of advertising and other creative work. Management and finance services – includes such things as performing basic operating and administrative functions, such as accounting, finance, and human resources. It must also try to generate new business. Use of slideThis slide can be used to discuss the roles of the various departments in a full-service ad agency. There are many activities and personnel involved in the planning, creating, and production of ads. The coordination of their effort is critical to the success of an IMC program.
  15. Relation to textThis slide relates to material on page 90 of the text. Summary OverviewCreative boutiques developed in response to some clients’ desire to use only the creative talent of an outside agency while maintaining other functions internally. Clients seek the help of creative boutiques when an extra creative effort is required, or because its own employees do not have sufficient skills. They can be used in these ways: By client companies for creative services only Full service agencies may subcontract for their creative services when busy or when not wanting to add permanent employees Other functions such as advertising planning, research and media buying may be done internally within the company or contracted out Use of slideThis slide can be used to explain the role of creative boutiques in planning an IMC program. They usually are hired for their creative talent and are paid on a fee basis. They can be hired directly by a company for their specialized services, or by a full service agency when they are very busy or do not want to hire full-time employees.
  16. Relation to textThis slide relates to material on pp. 90-91 of the text. Summary OverviewThe task of purchasing advertising media has grown more complex as specialized media proliferate. Media buying services have found a niche by specializing in the analysis and purchase of advertising time and space. Agencies and clients usually develop their own media strategies and hire independent buying services to execute them. Some of the characteristics of media specialist companies include: They specialize in buying media time, particularly radio and television time Because they purchase large amounts of time and space, they usually receive large discounts and can save the agency/company money on media purchases They are paid a fee or commission for their work The agency or client may often develop the media strategy Media buying organizations may be used to implement the media strategy and buy broadcast time and/or space in print publications Use of slideThis slide can be used to show the role of media buying services. Their use is growing as more companies look for ways to get more clout from their advertising budgets.
  17. Ans: A
  18. Relation to textThis slide relates to pages 91-94 of the text. Summary Overview Because the type and amount of service an agency performs can vary from one client to another, a variety of methods are used to compensate them for their services. Various ways for compensating agencies are shown in this slide and include: Commission method – traditional method, whereby the agency receives a specified commission (usually 15%) from the media on any advertising time or space it purchases for a client. Fee, cost, and incentive-based systems: Fee arrangement – the agency charges a basic monthly fee for all of its services. Agency and client agree on work to be done and the amount to be paid. This is the primary method accounting for 68 percent of the compensation plans. Cost-Plus arrangement – the client pays a fee based on the costs of its work plus some agreed-on profit margin (a percentage of total costs). This method requires careful accounting and detailed records of agency costs. Incentive-based – fee is based on how well the agency meets its performance goals such as sales or market share. There is a general movement toward the use of this method by many companies. Percentage Charges – adding a markup to the various services the agency purchases from outside providers. These may include market research, artwork, printing, photography, etc., and range from 17.65 to 20 percent. Use of slideThis slide can be used to discuss how advertising agencies are compensated for their work. Changes in the compensation systems have occurred as a result of many companies moving away from traditional mass media in favor of a wider array of marketing tools and an effort to make agencies more accountable for their work.
  19. Relation to textThis slide relates to page 94 of the text. Summary OverviewThis slide shows two types of assessments that can be used to evaluate an agency’s performance. The financial audit focuses on how the agency conducts its business. The qualitative audit focuses on the agency’s efforts in planning, developing, and implementing the client’s advertising programs and the results achieved. Use of this slideThis slide can be used to introduce agency evaluation, which is often done on a subjective, informal basis, particularly in smaller companies where ad budgets are low or advertising is not seen as a critical factors in the firm’s marketing performance.
  20. Relation to textThis slide relates to page Summary OverviewThis slide shows X Use of this slideThis slide can be used as part of a discussion of X
  21. Relation to textThis slide relates to pp. 94-97 and Exhibit 3-8 of the text. Summary OverviewThis slide shows an ad run by Dr Pepper/Seven Up Inc., celebrating its long-term relationship with the Young and Rubicam agency. Although successful agency-client relationships go on for years, loyalty to a single agency is becoming less common as marketers seek new ways of connecting with consumers. Use of this slideThis slide can be used as an introduction to the topic of Gaining and Losing Clients.
  22. Relation to textThis slide relates to material on pp. 97-98 of the text, which discusses reasons why agencies lose clients. Summary OverviewThe various reasons why an agency might lose clients are shown on this slide. Some of these are avoidable, while others may be beyond the agency’s control. Recognizing these warning signs promptly can give an agency the time it needs to adapt its programs and policies, with the objective of trying to keep the client satisfied. Use of this slideThis slide can be used to during a discussion of why/how an agency loses clients.
  23. Relation to textThis slide relates to pp. 98- of the text, which discusses X. Summary OverviewCompetition for accounts in the agency business is intense. For most large agencies, most new business comes from clients who already have an agency but decide to change their relationships. Thus, agencies must constantly search and compete for new clients. Some of the ways they do this are shown on this slide. Use of this slideGaining new business is very important to advertising agencies. This slide can be used to show the various ways an agency can gain new business.
  24. Relation to textThis slide relates to IMC Perspective 3-4, found on page 100 of the text. Summary OverviewThis slide shows just one of the advertisements that made Cripsin Porter & Bogusky the hottest agency in the ad business. They first grabbed ad industry headlines with the “Truth” anti-smoking campaign that they did for the state of Florida. They maintain their number 1 position by reviving iconic brands and by being the most forward-thinking shop in the business. CP+B’s non-traditional approach to advertising includes guerilla tactics, unconventional uses of media, and holistic marketing strategies that integrate everything from product design to packaging to event marketing. The agency’s chief creative officer challenges those working on the account to answer this question: “What if there were not TV and no magazines—how would we make this brand famous?” Use of this slideThis slide can be used as part of a discussion about how agencies can use ingenuity to win awards, and how winning award brings clients. Point out that this company is a true example of “thinking outside the box.”
  25. Relation to textThis slide relates to material on p. 101 of the text, which discusses direct-marketing agencies. Summary OverviewOne of the fastest growing areas of IMC is direct marketing, where companies communicate with consumers through telemarketing, direct mail, television, the Internet, and other forms of direct-response advertising. As this industry has grown, many agencies have evolved to offer companies their specialized skills in both consumer and business markets. This slide shows the various services and departments of a direct response agency. Use of slideThis slide can be used to discuss the role of direct response agencies, the types of services they provide and their role in the development of an IMC program. Point our that database development and management is becoming on the most important services provided by direct-response agencies.
  26. Relation to textThis slide relates to pp. 101-102 of the text. Summary OverviewThis slide shows the departments into which a typical direct-response ad agency is divided. Account managers work with clients to plan direct-marketing programs and determine the agency’s role in the overall IMC process. The creative department consists of copywriters, artists, and producers. Creative develops the direct-response message, while the media department is concerned with its placement. If the agency has a database department, its function is to develop and manage databases for clients. These databases pinpoint new customers and build relationships and loyalty among existing customers. Use of this slideUse this slide while discussing the types of departments found in most ad agencies and the responsibilities of each.
  27. Relation to textThis slide relates to material on page 102 of the text. Summary OverviewDeveloping and managing sales promotion programs, such as contests, sweepstakes, refunds and rebates, premium and incentive offers, and sampling programs, is a very complex task. Most companies use a sales promotion agency to develop and administer these programs. Use of this slideThis slide can be used to discuss the role of sales promotion agencies.
  28. Relation to textThis slide relates to material on p. 102 of the text. Summary OverviewMany large companies use both an advertising agency and a public relations firm. The public relations firm develops and implements programs to manage the organization’s publicity, image, and affairs with consumers and other relevant publics, including employees, suppliers, stockholders, government, labor groups, citizen action groups, and the general public. This slide shows the typical activities of the PR firm. Use of this slideThis slide can be used to show the services provided by public relations firms.
  29. Relation to textThis slide relates to material on pp. 103-104 of the text. Summary OverviewWith the rapid growth of the Internet and other forms of interactive media, a new type of specialized marketing communications organizations has evolved—the interactive agency. Interactive agencies specialize in the development and strategic use of various interactive tools, web sites, banner ads, CD-ROMs, text messages, search engine optimization, and kiosks. They also have expertise in digital technology elements, such as audio, video, special effects, and animation, as well as database marketing. Use of slideThis slide can be used as part of a discussion of the role of interactive agencies.
  30. Relation to textThis slide relates to page 103 and Exhibit 3-12 of the text. Summary OverviewThis slide shows the Web site that iDeutsch developed for the California Milk Advisory Board. They also developed various online promotions. Use of this slideUse this slide as an example of the type of website that would be developed by an interactive ad agency.
  31. Relation to textThis slide relates to material on p. 104 of the text. Summary OverviewThe final participants in the promotional process are those that provide various collateral services. These services include marketing research firms, package design firms, photographers, printers, video production houses, and event marketing services companies. Marketing research companies are widely used to help companies understand their target audiences and gather information that will be of value when designing and evaluating their advertising and promotions programs. Qualitative research includes such things as in-depth interview and focus groups. Quantitative studies include market surveys. Use of slideThis slide can be used to introduce the marketing research agency as a collateral service in the promotional process. The marketing research agency continues to be a valuable resource as companies try to better understand their targeted consumer and how best to meet their needs.
  32. Relation to textThis slide relates to pages 104-105 of the text. Summary OverviewThis slide shows the positive and negative aspects of having integrated promotional services. Use of this slideThis slide can be used as part of a discussion of X
  33. Answer: C
  34. Relation to textThis slide relates to page. X-X of the text, which discusses X. Summary OverviewThis slide shows X Use of this slideThis slide can be used as part of a discussion of X