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Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communication Organizations
McGraw-Hill/Irwin
2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
Participants in the IMC Process
Advertiser or Client Advertising Agency Media Organizations Marketing Communications Specialists
Direct Marketing Agencies Sales Promotion Agencies Interactive Agencies Public Relations Firms
Collateral Services
Organizational Options For Clients
Centralized System
Advertising and promotion placed alongside other marketing functions such as sales, research and product planning
Decentralized System
Separate marketing, sales, advertising and promotion departments for various product lines or businesses of the company. Often use product or brand management system
In-House Agencies
Advertising agency set up within the company and is owned and operated internally
Procter & Gamble uses the brand management system
Functions of An Advertising Manager
Planning and Budgeting Administration and Execution Coordination with other departments Coordination with outside agencies and services Planning and Budgeting
Client Organization For IMC The Centralized System
Advantages Better Communications Fewer Personnel Continuity of Staff More top management input
Disadvantages Less Goal Involvement Longer Response Time Problems with multiple product lines
Client Organization for IMC The Decentralized System
Advantages
Concentrated Managerial Attention Rapid Problem Response Increased Flexibility
Disadvantages
Ineffective Decision Making Internal Conflicts Problems with fund allocation Lack of Authority
In-House Agencies
Advantages
Cost savings More control Better coordination
Disadvantages
Less experience Less objectivity Less flexibility
No Fear uses an in-house agency
Source: Courtesy No Fear.
Reasons for Using an Outside Agency
Obtain services of highly skilled specialists
Artists Writers Media analysts Researchers Others with specific skills
Obtain an objective point of view
Free of internal policy constraints and biases Broad range of experience, having worked with:
Diverse marketing problems Various types of clients
Advertising agencies often specialize in specific industries
Full-Services Agencies
Full Range of Marketing, Communication and Promotion services
Planning, creating, producing advertising Performing research Selecting and purchasing media
Non-Advertising Services
Strategic market planning Sales promotion Internet and interactive Public relations and publicity Production of trade show materials Package design
Typical Full-Service Agency Organization
Board of Directors President VP Creative Services Writers Art Directors TV Produciton Print Production VP Account Services Account Supervision Account Executive Media VP Marketing Services Research Sales Promotion Personnel VP Management and Finance Office Management Accounting Finance
Traffic
Traffic
Agency Services
Account services
The link between agency and client Managed by the account executive
Marketing services
Research department designs and executes research programs Media department analyzes, selects and contracts media time and space
Creative services
Creation and execution of ads Copywriters, artists, other specialists
Creative Boutiques
Agencies that specialize in the creative process of advertising
Provide only creative services Other functions provided by the internal client departments or outside agency such as media buying service Full-service agencies may subcontract with creative boutiques
Media Buying Services
Independent companies that specialize in the planning and purchasing of media Specialize in analyzing and buying media, especially broadcast time Agencies and clients may develop media strategy Media buying organizations implement the
strategy and buy time and space
Agency Compensation
The Commission System
Agency usually receives 15 percent Commissions are paid by the media Commission system is controversial System is becoming less common
Fee Arrangements
Fixed fee method Fee-commission method
Cost-Plus Agreements Incentive-Based Compensation Percentage Charges
Example of the Commission System
Agency Evaluation Process
Financial Audit focuses on how the agency conducts its business and includes verification of costs, expenses, number of personnel hours charged to an account and payments to suppliers and media
Qualitative audit focuses on the agencys efforts in planning, developing, and implementing the clients advertising and promotion program and the results achieved
Why Agencies Lose Clients
Poor performance Poor communication Unrealistic demands Personality conflicts Personnel changes Changes in size Conflict of interests Changes in strategy Declining sales Payment conflicts Policy changes
How Agencies Gain Clients
Referrals
Solicitations Presentations Public Relations Image and Reputation
Awards competitions are a way for agencies to build their reputation
Direct Response Agencies
Agencies that specialize in providing direct marketing services to their clients Services include: Data Base Management Direct Mail Programs Research Media Services
Creative
Production
Sales Promotion Specialists
Agencies that specialize in developing and administering sales promotion programs
Services include
Promotion Planning Creative Research Design and Production
Contests/sweepstakes Refunds and rebates Sampling and incentive programs
A promotional agency advertises its services
Public Relations Firms
Firms that develop and implement programs to manage an organizations publicity, image and affairs with consumers and publics
Strategy Development Program Planning Generating Publicity Lobbying Public Affairs Image portrayal Damage control
Interactive Agencies
Agencies that specialize in the development and strategic use of various interactive marketing tools
Services include:
Development of strategy for Internet and other interactive marketing tools Interactive Media Creation
Web sites Web banner ads Digitized content (audio, video, animation) CD-ROMs Kiosks
Collateral Services
Marketing Research Firms
Package Design Firms Video Production Companies
Photographers
Printers Event Marketing Companies
