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![Page 1: Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communication Organizations 3 McGraw-Hill/Irwin Copyright © 2009.](https://reader035.fdocuments.net/reader035/viewer/2022062511/5516ccca550346f0208b5d57/html5/thumbnails/1.jpg)
Organizing for Advertising and Promotion:
The Role of Ad Agencies and Other Marketing Communication Organizations
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.
![Page 2: Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communication Organizations 3 McGraw-Hill/Irwin Copyright © 2009.](https://reader035.fdocuments.net/reader035/viewer/2022062511/5516ccca550346f0208b5d57/html5/thumbnails/2.jpg)
Participants in the IMC Process
Marketing communications specialist organizations
Marketing communications specialist organizations
Media organizationsMedia organizations
Advertiser (Client)Advertiser (Client)
Advertising agencyAdvertising agency
Collateral servicesCollateral services
Direct-response agencies
Direct-response agencies
Sales promotion agencies
Sales promotion agencies
Interactive agencies
Interactive agencies
Public relations
firms
Public relations
firms
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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
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Advertising Dept. Under Centralized System
PresidentPresident
ProductionProduction FinanceFinance MarketingMarketingResearch
and develop-
ment
Research and
develop-ment
Human resourcesHuman
resources
Marketing research
Marketing research AdvertisingAdvertising SalesSales Product
planningProduct planning
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Pros & Cons of a Centralized System
Fewerpersonnel
Fewerpersonnel
Bettercommunications
Bettercommunications
ContinuityContinuity
Longerresponse time
Longerresponse time
Less goalinvolvementLess goal
involvement
TheCentralized
System
TheCentralized
System
+ Positive+ Positive - Negative- Negative
Impractical formultiple brands,
products, divisions
Impractical formultiple brands,
products, divisionsMore top
management involvement
More top management involvement
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Decentralized Advertising System
Production Finance
Sales
Brand Manager
Ad agency
ProductManagement
Sales promotion
Package design
Marketingservices
Marketing R & D Human Resources
Corporate
Brand Manager
Ad agency
AdvertisingDept
Marketing Research
Merchandising
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Pros & Cons of Decentralization
Internal conflicts Internal conflicts
Ineffective decision making
Ineffective decision making
Rapid problemresponse
Rapid problemresponse
Concentratedattention
Concentratedattention
Increasedflexibility
Increasedflexibility
TheDecentralized
System
TheDecentralized
System
+ Positive+ Positive - Negative- Negative
Unequal distribution
of funds
Unequal distribution
of funds
Lack ofAuthorityLack of
Authority
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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
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In-House Agencies
Benetton’s in-house agency works with outside agencies to develop ads
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Pros & Cons of In-House Agencies
MorecontrolMore
control
CostsavingsCost
savings
Bettercoordination
Bettercoordination
Lessobjectivity
Lessobjectivity
Lessexperience
Lessexperience
TheIn-houseAgency
TheIn-houseAgency
+ Positive+ Positive - Negative- Negative
Lessflexibility
Lessflexibility
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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
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Ad Agencies Have Skilled Specialists
ArtistsArtists WritersWriters ResearchersResearchers
PhotographersPhotographers Media AnalystsMedia Analysts Other SkillsOther Skills
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Full-Service Agencies
Creating advertisingCreating
advertising
Planning advertisingPlanning
advertising
Producing advertisingProducing advertising
Performing research
Performing research
Selecting mediaSelecting media
Sales promotions
Sales promotions
Strategic market planning
Strategic market planning
Direct marketing
Direct marketing
Interactive capabilitiesInteractive capabilities
Package designPackage design
Full range of marketing
communication and promotion
services
Full range of marketing
communication and promotion
services
Nonadvertising services
Nonadvertising services
Public relations and publicity
Public relations and publicity
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Typical Full-Service Agency Organization
WritersArt directors
TVproduction
Traffic
Printproduction
AccountExecutive
Accountsupervision
VP accountservices
Media
Research
SalesPromotion
VP marketingservices
Personnel
Accounting
FinanceOffice
management
VP managementand finance
President
Board ofdirectors
VP creativeservices
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Services Provided by Agencies
Agency ServicesAgency 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
Marketing Services
Marketing Services
The link between agency and client
Managed by the account executive
The link between agency and client
Managed by the account executive
Account ServicesAccount Services
Creation, execution of ads
Copywriterartists, other specialists
Creation, execution of ads
Copywriterartists, other specialists
Creative ServicesCreative Services
Accounting
Finance
Human resources
New business generation
Accounting
Finance
Human resources
New business generation
Mgmt & FinanceMgmt & Finance
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The Role of Creative Boutiques
CreativeBoutiquesCreative
Boutiques Provide only creative servicesProvide only creative services
Full-service agencies may subcontract with creative
boutiques
Full-service agencies may subcontract with creative
boutiques
Ability to turn out inventive creative work quickly
Ability to turn out inventive creative work quickly
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Media Buying Can be Specialized
Specialize in buying media, especially broadcast time
Specialize in buying media, especially broadcast time
Agencies and clients develop media strategy
Agencies and clients develop media strategy
Media Specialist Companies
Media Specialist Companies
Media buying organizations implement the strategy and
buy time and space
Media buying organizations implement the strategy and
buy time and space
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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.
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Methods of Agency Compensation
Commissionsfrom media
Commissionsfrom media
Fee, cost, and incentive-based
systems
Fee, cost, and incentive-based
systems
Percentagecharges
Percentagecharges
CompensationMethods
CompensationMethods
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Evaluating Agencies
Financial Audit
Qualitative Audit
Verify costs, expenses
Personnel hours charged
Payments to media
Payments to suppliers
Planning
Program development
Implementation
Results achieved
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Top Agency Value-Add Activities
New media guidance, solutions
Integrated disciplines & functions
Creative ideas
Collaboration
Ideas/programs for multi comm.
programs
Talented people
Brand driver
evaluation
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Loyalty to a Single Agency
Young & Rubicam has handled the Dr Pepper
account for over 30 years
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Why Agencies Lose Clients
Poorperformance
Poorcommunications
UnrealisticClient demands
Personalityconflicts
Personnelchanges
Changesin size of client
or agency
Conflicts ofinterest
Change in client’s strategy
Decliningsales
Paymentconflicts
Policy Changes
Policy Changes
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How Agencies Gain Clients
ReferralsReferrals
SolicitationsSolicitations
PresentationsPresentations
Public RelationsPublic Relations Image, ReputationImage, Reputation
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The Hottest Agency in the Ad Business
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Direct-Marketing Agency Activities
Directmail
Directmail
Databasemanagement
Databasemanagement
ResearchResearch
CreativeCreative
Media servicesMedia services
Direct-MarketingAgencies
Direct-MarketingAgencies
ProductionProduction
Database development, management
Database development, management
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Direct-Marketing Agency
• Departments in a typical direct-marketing agency– Account management– Creative– Media– Database development and management
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Sales Promotion Agencies
Catalog productionCatalog production
Promotional planningPromotional planning
Creative researchCreative research
Tie-in coordinationTie-in coordination
FulfillmentFulfillment
Premium design and manufacturing
Premium design and manufacturing
Contest/sweepstakes management
Contest/sweepstakes management
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Functions Performed by Public Relations Firms
Strategydevelopment
Generatingpublicity
Lobbying
Publicaffairs
News releases,communication
Research
Managingcrises
Coordinationwith promotional
areas
Special events
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Functions Performed by Interactive Agencies
Webbanner ads
Webbanner ads
Search engine optimization
Search engine optimizationKiosksKiosks
Interactive Media Creation
Interactive Media Creation
CD-ROMsCD-ROMs
Web sitesWeb sites Text messagesText messages
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Website for the California Milk Advisory Board
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Marketing Research Companies
Quantitative studiesQuantitative studies
Qualitative researchQualitative research
Help clients under-stand target
audience
Help clients under-stand target
audience
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Pros and Cons of Integrated Services
ConvenienceConvenience
Greater synergyGreater synergy
Single image for product or serviceSingle image for
product or service
Poor communication
Poor communication
Budget politicsBudget politics
Integrated Services
Integrated Services
+ Positive+ Positive - Negative- Negative
No synergyNo synergy
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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
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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