Organizing for Advertising an

d Promotion:
The Role of Ad Agencies and Other Mar
keting Communications Organizations

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

 Participants in the IMC Process

Advertiser (Client)

Advertising Agency

Media Organizations Direct Res Sales Pro

ponse Age motion Ag
ncies encies
Marketing Communi
cations Specialist Or
ganization Public Rel
Interactive
ations Fir
Agencies
Collateral Services ms

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

 Advertising Department Under
Centralized System

President

Research a
Human Res
Production Finance Marketing nd Develop
ources
-ment

Marketing Product Pla

Advertising Sales
Research nning

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

 Pros & Cons of Centralization

+ Positive - Negative

Better Less Goal

Communications Involvement

The
Fewer Longer
Personnel Centralized Response Time
System

Can’t Do
Continuity
Multiple Product L
Of Staff
ines

© 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 of Experienc
Concentrated
e
Attention
in IMC

Rapid Problem The Competition for R

Response Decentralized esources
System

Increased Lack of
Flexibility Authority

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

 Pros & Cons of In-House Agencies

+ Positive - Negative

Cost Less
Savings Experience

The
More Less
Control In-house Objectivity
Agency

Better Less
Coordination Flexibility

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

 Ad Agencies
• Ad Agency - service organization
that specializes in planning and ex
ecutive advertising programs for it
s clients
• Reason for using an Ad Agency
1. Highly skilled specialists
2. Specialization in a particular indus
try
3. Objective viewpoint of the market
4. Broad range of experience
 Full-Services Agencies

Planning adverti
sing Performing rese
Full Range of Ma arch
Creating adverti rketing Commun
sing ication and Pro
motion Services Selecting media
Producing adver
tising

Strategic market
planning
Package design
Sales promotion Non-Advertising
and training Services Public relations
Trade show mat and publicity
erials
© 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 Services

Account Servi Marketing Ser Creative Servi

ce vices ces

The link between a Research departme Creation and execu

gency and client nt may design and e tion of ads
xecute research pro
Managed by the A grams Copywriters, artist
ccount Executive s, other specialists
Media department
may analyze, select
and contract media
resources

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

The Role of Creative Boutiques

Creative
Provide Only Creative Services
Boutiques

Full-Service Agencies May Subc

ontract With Creative Boutiques

Other Functions Provided by th

e Internal Client Departments

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

 Media Buying Can Be Specialized

Media Buyin Specialize in Buying Media, Esp

g Services ecially Broadcast Time

Agencies and Clients Develop M

edia Strategy

Media Buying Organizations Im

plement the Strategy and Buy
Time and Space

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

Methods of Agency Compensation

Commissions
Method

Cost-Plus
Agreements

Compensation Percentage
Methods Charges

Fee
Arrangements

Incentive-Based
Payment
© 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 Presentations

Solicitations

Public Relations Image, Reputation

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

 Evaluating Agencies
Financial Audit Qualitative Audit
- cost and expens - planning
es - program develop
- personnel hours ment
billed - implementation
- payment to me - results achieved
dia
- payment to sup
pliers
Activities performed by Sales Promoti
on Agencies

Promotion Planning

Creative Work

Research

Coordination With Advertisi

ng

Premium Design

Contest/Sweepstakes Devel
opment

Data Base Marketing

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

 Public Relations Firms
Develops and implements programs
to manage organization's:
• Publicity
• Image
• Affairs with consumers and other
relevant publics : employees, supp
liers, stockholders, government, la
bor groups, citizen action group an
d general public
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