Organizing for Advertising and Promotion:

The Role of Ad Agencies and Other Marketing Communications Organizations

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

Participants in the IMC Process

Advertiser (Client) Advertiser (Client) Advertising Agency Advertising Agency Media Organizations Media Organizations Marketing Marketing Communications Communications Specialist Specialist Organization Organization Collateral Services Collateral Services Direct Direct Response Response Agencies Agencies Public Public Relations Relations Firms Firms Sales Sales Promotion Promotion Agencies Agencies

Interactive Interactive Agencies Agencies

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

Advertising Department Under Centralized System

President President

Production Production

Finance Finance

Marketing Marketing

Research Research and and DevelopDevelopment ment

Human Human Resources Resources

Advertising Advertising

Marketing Marketing Research Research

Sales Sales

Product Product Planning Planning

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

Pros & Cons of Centralization

+ Positive
Better Better Communications Communications

- Negative
Less Goal Less Goal Involvement Involvement

Fewer Fewer Personnel Personnel

The The Centralized Centralized System System

Longer Longer Response Time Response Time Cant Do Cant Do Multiple Product Multiple Product Lines Lines

Continuity Continuity Of Staff Of Staff

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

Decentralized Brand Management System

Corporate Production Finance Marketing Research and Development Human Resources

Sales

Product Management Brand Manager Brand Manager Ad agency Sales Promotion Merchandising
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Marketing Services Advertising Department Marketing Research

Ad agency

Package Design

Pros & Cons of Decentralization

+ Positive
Concentrated Concentrated Attention Attention The The Decentralized Decentralized System System

- Negative
Lack of Lack of Experience Experience in IMC in IMC Competition for Competition for Resources Resources

Rapid Problem Rapid Problem Response Response

Increased Increased Flexibility Flexibility

Lack of Lack of Authority Authority

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

Pros & Cons of In-House Agencies

+ Positive
Cost Cost Savings Savings

- Negative
Less Less Experience Experience

More More Control Control

The The In-house In-house Agency Agency

Less Less Objectivity Objectivity

Better Better Coordination Coordination

Less Less 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 Analysts Media Analysts

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

Other Skills Other Skills

Full-Services Agencies
Planning Planning advertising advertising Creating Creating advertising advertising Producing Producing advertising advertising Strategic market Strategic market planning planning Sales promotion Sales promotion and training and training Trade show Trade show materials materials
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Full Range of Full Range of Marketing Marketing Communication Communication and Promotion and Promotion Services Services

Performing Performing research research Selecting media Selecting media

Package design Package design

Non-Advertising Non-Advertising Services Services

Public relations Public relations and publicity and publicity

Typical Full-Service Agency Organization

Board of Directors President VP Creative Services Writers VP Account Services Media VP Marketing Services Research VP Management and Finance

TV Print Account Art Directors ProducitonProductionSupervision Traffic Traffic Account Executive

Sales Office Promotion Management Personnel ccounting Finance A

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

Services Provided by Agencies

Agency Services Agency Services
Account Account Service Service
The link between The link between agency and client agency and client Managed by the Managed by the Account Executive Account Executive

Marketing Marketing Services Services

Research Research department may department may design and execute design and execute research programs research programs Media department Media department may analyze, select may analyze, select and contract media and contract media resources resources
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Creative Creative Services Services

Creation and Creation and execution of ads execution of ads Copywriters, Copywriters, artists, other artists, other specialists specialists

The Role of Creative Boutiques

Creative Creative Boutiques Boutiques

Provide Only Creative Services Provide Only Creative Services

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

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

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

Coca Colas in-house boutique created this popular spot

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

Media Buying Can Be Specialized

Media Media Buying Buying Services Services

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

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

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

Percentage Percentage 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 Levis for 68 years

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

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

Why Agencies Lose Clients

Personnel changes

Poor performance Unrealistic demands

Changes in strategy Declining sales Payment conflicts Policy changes

Poor communications Changes in size

Personality conflicts

Conflict of interests

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

How Agencies Gain Clients

Referrals Referrals

Presentations Presentations

Solicitations Solicitations

Public Relations Public Relations

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

Image, Reputation Image, Reputation

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 Gateways Advertising

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

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

Direct Response Agency Activities

Data Base Data Base Management Management Direct Direct Mail Mail Direct Direct Response Response Agencies Agencies

Media Services Media Services

Creative Creative

Research Research

Production Production

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

Activities performed by Sales Promotion Agencies

Promotion Planning Promotion Planning Creative Work Creative Work Research Research Research Coordination With Coordination With Advertising Advertising Premium Design Premium Design Contest/Sweepstakes Contest/Sweepstakes Development Development Data Base Marketing Data Base Marketing
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Functions performed by Public Relations Firms

Strategy Development

Damage Control

Generating Publicity

Program Planning Lobbying Public Affairs Image Portrayal

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

Functions performed by Interactive Agencies

Web Web Banner Ads Banner Ads Web Sites Web Sites

Interactive Interactive Media Creation Media Creation CD-ROMs CD-ROMs Kiosks Kiosks Audio Audio Digital Digital Content Content Animation Animation
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Video Video

Special Effects Special Effects

Marketing Research Companies

Planning and Planning and Implementing Implementing Research Research Information Information Application Application Analysis and Analysis and Interpretation Interpretation Primary Data Primary Data Collection Collection

Qualitative & Quantitative Qualitative & Quantitative

Secondary Data Secondary Data Collection Collection

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