The Role of Ad Agencies and Other

Marketing Communications
Organizations

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Participants in the IMC Process

Advertiser
Advertiser (Client)
(Client)

Advertising
Advertising Agency
Agency

Media
Media Organizations
Organizations Direct
Direct Sales
Sales
Response
Response Promotion
Promotion
Marketing
Marketing Agencies
Agencies Agencies
Agencies
Communications
Communications
Specialist
Specialist
Organization
Organization Public
Public Interactive
Interactive
Relations
Relations Agencies
Agencies
Collateral
Collateral Services
Services Firms
Firms

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Advertising Department Under
Centralized System

President
President

Research
Research
and
and Human
Human
Production
Production Finance
Finance Marketing
Marketing Develop-
Develop- Resources
Resources
ment
ment

Marketing
Marketing Product
Product
Advertising
Advertising Sales
Sales
Research
Research Planning
Planning

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Pros & Cons of Centralization

+ Positive - Negative

Better
Better Less
Less Goal
Goal
Communications
Communications Involvement
Involvement

The
The
Fewer
Fewer Longer
Longer
Personnel
Personnel
Centralized
Centralized Response
Response Time
Time
System
System

Can’t
Can’t Do
Do
Continuity
Continuity Multiple
Multiple Product
Product
Of
Of Staff
Staff Lines
Lines

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Decentralized Brand Management System
Corporate

Production Finance Marketing Research Human

and Resources
Development

Sales Product Marketing

Management Services

Brand Brand
Advertising Marketing
Manager Manager
Department Research
Ad agency Ad agency

Sales Package
Promotion Design

Merchandising

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Pros & Cons of Decentralization

+ Positive - Negative

Lack
Lack of
of
Concentrated
Concentrated Experience
Experience
Attention
Attention in
in IMC
IMC

Rapid The
The
Rapid Problem
Problem Competition
Competition for
for
Response Decentralized
Decentralized Resources
Response Resources
System
System

Increased
Increased Lack
Lack of
of
Flexibility
Flexibility Authority
Authority

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Pros & Cons of In-House Agencies

+ Positive - Negative

Cost
Cost Less
Less
Savings
Savings Experience
Experience

The
The
More
More Less
Less
Control
Control
In-house
In-house Objectivity
Objectivity
Agency
Agency

Better
Better Less
Less
Coordination
Coordination Flexibility
Flexibility

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Most No Fear advertising is done by their
in-house agency

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

+
 Ad Agencies Have Skilled Specialists

Artists
Artists Writers
Writers Researchers
Researchers

Photographers
Photographers Media
Media Analysts
Analysts Other
Other Skills
Skills
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
 Full-Services Agencies

Planning
Planning
advertising
advertising Full
Full Range
Range of
of Performing
Performing
Marketing
Marketing research
research
Creating
Creating Communication
Communication
advertising
advertising and
and Promotion
Promotion
Services Selecting
Selecting media
media
Producing
Producing Services
advertising
advertising

Strategic
Strategic market
market
planning
planning Package
Package design
design
Sales
Sales promotion
promotion Non-Advertising
Non-Advertising
and
and training
training Services
Services Public
Public relations
relations
Trade
Trade show
show and
and publicity
publicity
materials
materials
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
 Typical Full-Service Agency Organization

Board of
Directors

President

VP Creative VP Account VP Marketing VP Management

Services Services Services and Finance

Writers TV Print Account Media Research Sales Office

Art Directors Produciton Production Supervision Promotion Management

Traffic Traffic Account Personnel Accounting Finance

Executive

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Services Provided by Agencies

Agency
Agency Services
Services

Account
Account Marketing
Marketing Creative
Creative
Service
Service Services
Services Services
Services

The
The link
link between
between Research
Research Creation
Creation and
and
agency
agency and
and client
client department
department may
may execution
execution ofof ads
ads
design
design and
and execute
execute
Managed
Managed by by the
the research Copywriters,
Copywriters,
Account research programs
programs
Account Executive
Executive artists,
artists, other
other
Media
Media department
department specialists
specialists
may
may analyze,
analyze, select
select
and
and contract
contract media
media
resources
resources

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

The Role of Creative Boutiques

Creative
Creative Provide
Provide Only
Only Creative
Creative Services
Services
Boutiques
Boutiques

Full-Service
Full-Service Agencies
Agencies May
May
Subcontract
Subcontract With
With Creative
Creative
Boutiques
Boutiques

Other
Other Functions
Functions Provided
Provided by
by
the
the Internal
Internal Client
Client Departments
Departments

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Coca Cola’s in-house boutique
created this popular spot

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

+
Media Buying Can Be Specialized

Media
Media Specialize
Specialize in
in Buying
Buying Media,
Media,
Buying
Buying Especially
Especially Broadcast
Broadcast Time
Time
Services
Services

Agencies
Agencies and
and Clients
Clients Develop
Develop
Media
Media Strategy
Strategy

Media
Media Buying
Buying Organizations
Organizations
Implement
Implement the
the Strategy
Strategy and
and
Buy
Buy Time
Time and
and Space
Space

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Methods of Agency Compensation

Commissions
Commissions
Method
Method

Cost-Plus
Cost-Plus
Agreements
Agreements

Compensation
Compensation Percentage
Percentage
Methods
Methods Charges
Charges

Fee
Fee
Arrangements
Arrangements

Incentive-Based
Incentive-Based
Payment
Payment
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Young & Rubicam has handled
Dr. Pepper for over 30 years

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

+
Foote, Cone & Belding was the agency
for Levi’s for 68 years

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© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Why Agencies Lose Clients

Personnel
changes Changes
Poor in strategy
performance
Poor Declining
communications sales
Unrealistic
demands
Changes
in size Payment
conflicts
Personality
conflicts Policy
Conflict of
interests changes

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 How Agencies Gain Clients

Referrals
Referrals Presentations
Presentations

Solicitations
Solicitations

Public
Public Relations
Relations Image,
Image, Reputation
Reputation

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Gateway Changed Its Advertising
After Changing Agencies

*Click outside of the video screen to advance to the next slide

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

A Change in Strategy Led to a Change
in Gateway’s Advertising

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© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Direct Response Agency Activities

Data
Data Base
Base Media
Media Services
Services
Management
Management

Direct Direct
Direct
Direct Creative
Mail Response
Response Creative
Mail
Agencies
Agencies

Research
Research Production
Production

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Activities performed by Sales
Promotion Agencies

Promotion
Promotion Planning
Planning

Creative
Creative Work
Work

Research
Research
Research

Coordination
Coordination With
With
Advertising
Advertising

Premium
Premium Design
Design

Contest/Sweepstakes
Contest/Sweepstakes
Development
Development

Data
Data Base
Base Marketing
Marketing
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Functions performed by Public Relations Firms

Damage
Control Generating
Strategy Publicity
Development

Program
Planning
Image
Portrayal
Lobbying
Public
Affairs

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Functions performed by Interactive Agencies

Web
Web Web
Web Sites
Sites
Banner
Banner Ads
Ads

Interactive
Interactive
Media
Media Creation
Creation

CD-ROMs
CD-ROMs Kiosks
Kiosks

Audio
Audio Video
Video

Digital
Digital
Content
Content

Animation
Animation Special
Special Effects
Effects

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Marketing Research Companies

Planning
Planning and
and
Implementing
Implementing
Research
Research

Information
Information
Application
Application

Analysis
Analysis and
and
Interpretation
Interpretation

Primary
Primary Data
Data
Collection
Collection
Qualitative
Qualitative && Quantitative
Quantitative

Secondary
Secondary Data
Data
Collection
Collection
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin