Presentation on theme: "3 Organizing for Advertising and Promotion: The Role of Ad Agencies"— Presentation transcript:
1 3 Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communication Organizations
2 Successful strategies Red BullSuccessful strategiesAdvertising for awarenessExperiential marketingEvent sponsorshipParticipation marketingTarget marketingRelation to TextThis slide relates to pages of the text.Summary OverviewThis slide presents some of the strategies that have made Under Armour such a successful brand.Use of this SlideUse this slide to present the strategies that Under Armour has employed to achieve initial success and then secure its place in the market.Initial success was achieved by focusing on overlooked niche markets.The initial product line, tight-fitting T-shirts, was expanded from professional athletes and fitness buff to other sports and activities.Success was bolstered by strong branding, product positioning, quality, and dynamic advertising.The “Protect this House” tagline has become a symbol of what Under Armour stands for as a brand.To enter the highly competitive shoe market, Under Armour developed the “Click-Clack” campaign.Although the company outsources production work, the in-house brand team handles all creative work and media buying.Note: This is a good point at which to show a “Protect This House” or “Click Clack” video from the supplemental CD.
3 Participants in the IMC Process Relation to TextThis slide relates to pages of the text and Figure 3-1.Summary OverviewThis slide presents the participants in the Integrated Marketing Communication process.Use of this SlideUse this slide to introduce the various participants in the IMC process and provide a brief overview of their roles.Advertiser (client) – the company or organization that has the product, service, or cause to be marketed and pays for the IMC programAdvertising Agency – specializes in the creation, production, and placement of communications messages. May provide other services to facilitate the IMC processMedia Organizations – provide information and entertainment to subscribers, viewers, listeners, and/or readers. Marketers can purchase time or space to deliver their advertising and promotion messagesMarketing Communication Specialist Organizations – provide specialized marketing communication services, including:Direct response agenciesSales promotion agenciesPublic Relations FirmsInteractive AgenciesCollateral Services – companies that provide a wide array of support functions used by advertisers, agencies, media organizations, and specialist organizations such as marketing research, package design, photography, video production and so on
4 Organizing for Advertising & Promotions The way a company (the client) organizes depends onIts sizeThe number of products it marketsThe role of advertising and promotion in the marketing mixThe budgetIts marketing organization structureRelation to TextThis slide relates to pages of the text.Summary OverviewThis slide can be used to introduce the factors that affect how a company organizes for its marketing communications efforts.Use of this SlideUse this slide to discuss the factors that affect how a company organizes for its IMC efforts. Be sure to point out that this structure determines how many individuals throughout the organization may be involved in advertising and promotion decisions.
5 Advertising Dept. Under a Centralized System PresidentProductionFinanceMarketingResearch and develop-mentHuman resourcesRelation to TextThis slide relates to the material on pages of the text and Figure 3-2.Summary OverviewThis slide shows how a company would organize a marketing department under a centralized system.Use of this SlideUse this slide to explain how the marketing department would fit into a centralized organization. Under this system, various organizational activities are divided along functional lines. Within the marketing department itself, specialized activities are also divided along functional lines.Marketing researchAdvertisingSalesProduct planning
6 Pros & Cons of a Centralized System FewerpersonnelBettercommunicationsStaff continuityProsMore top management involvementLongerresponse timeHard to understand the overall marketing strategyConsImpractical formultiple brands, products, divisionsRelation to TextThis slide relates to page 72 of the text and Figure 3-4.Summary OverviewThis slide presents the pros and cons of a centralized organizational system.Use of this SlideUse this slide to present the pros and cons of a centralized organizational system. Large companies with a single product or service, such as Walmart and Jet Blue, often have a centralized advertising department.Having a central location facilitates communication regarding the promotions program, making it easier for top management to participate in decision making. It is also a more efficient operation, because fewer people are involved in decision making, and as their experience in making these decisions increases, the process becomes easier.However, it is difficult for the advertising department to understand the overall marketing strategy for the brand, and response to specific needs or problems may be slow. As companies become larger and develop or acquire new products, brands, or divisions, a centralized system may become impractical.
7 Decentralized Advertising System ProductionFinanceSalesBrand ManagerAd agencyProduct ManagementSales promotionPackage designMarketing servicesMarketingR & DHuman ResourcesCorporateAdvertising DeptMarketing ResearchMerchandisingRelation to TextThis slide relates to the material on pages of the text and Figure 3-3.Summary OverviewUse this slide to show how responsibilities are divided in a company that has a decentralized advertising system.Use of this SlideThis slide shows how a company would organize advertising and promotion under a decentralized brand management system, which is often used by large companies with multiple divisions, products, and brands.Under this system, responsibility for the various IMC functions are assigned to a product or brand manager, who works closely with the outside advertising agency, as well as other marketing communication specialists.The brand manager may also work with other areas of marketing within the firm, such as sales, marketing research, and the advertising/promotion department.
8 Pros & Cons of Decentralization Rapid problem and opportunity responseConcentrated managerial attentionIncreased flexibilityProsInternal conflictsIneffective decision makingConsMisallocation of fundsLack of authorityInternal focusRelation to TextThis slide relates to pages of the text and Figure 3-4.Summary OverviewThis slide presents the pros and cons of a decentralized brand management system, which is common among large companies with multiple products, brands, or divisions.Use of this SlideUse this slide to present the pros and cons of using a decentralized marketing system to handle advertising and promotion.The positive aspects of this system include:Concentrated managerial attention for a product or brandRapid response to problems and opportunitiesIncreased flexibility, allowing for adjustments to various aspects of the advertising and promotional programThe negative aspects of decentralization include:Ineffective decisions, because brand managers often lack training and experience in advertising and promotionInternal conflict as brand managers compete for top management attention and marketing resourcesLack of authority by brand managers over the functions needed to implement and control the plans they develop
9 Test Your KnowledgeCompanies choose to use an in-house agency for all of the following reasons except:A) More closely tie the marketing function to top managementB) Reduce advertising and promotions costsC) In-house agencies are more stableD) Tighter control over agency processesE) To diversify the brand imageAns: E
10 Pros & Cons of In-house Agencies More controlCost savingsIncreased coordinationProsStabilityAccess to top managementLess experienceConsLess objectivityLess flexibilityLess access to top creative talentRelation to TextThis slide relates to the material on pp and Figure 3-4.Summary OverviewThis slide presents the pros and cons of using in-house agencies.Use of this SlideUse this slide when discussing the pros and cons of using an in-house agency to handle advertising and promotion. Examples of companies that use in-house agencies include Dell, Avon, and Revlon.Advantages of this system include:Cost savings, because media commissions that normally go to an outside agency remain in houseMore control over the advertising function, because it is handled within the company rather than by an outside agencyBetter coordination of advertising and promotion with the firm’s other marketing activitiesNegative aspects of this system include:Less advertising experience than is available from an outside agency, which has a variety of specialists in various areas of advertisingLess objectivity, because those working for an in-house agency are part of the companyLess flexibility, as outside agencies can be changed more easily. Changes among in-house agency personnel are slower and more disruptive
11 Under Armour Uses an In-House Agency Relation to TextThis slide relates to pages of the text.Summary Overview This slide presents an ad created by Under Armour’s in-house advertising agency.Use of this slide This slide can be used to discuss how successful in-house advertising agencies can be.
12 Reasons for using an ad agency The Ad Agency’s RoleReasons for using an ad agencyHighly skilled specialistsSpecialization in a particular industryObjective viewpoint of the marketBroad range of experienceRelation to TextThis slide relates to pages of the text.Summary Overview This slide presents the primary reasons for using an outside ad agency.Use of this slide This slide can be used to discuss why a company may choose to use an outside advertising agency.Highly skilled specialists may include artists, writers, media analysts, researchers and so on.Specialized markets can include travel, high-tech, e-commerce, bioscience, and so forth.Because the outside agency is not subject to internal company policies, biases, or limitations, it has a more objective viewpoint of the market.Ad agencies typically have multiple clients with a variety of products and services, so they have a broader range of experience.
13 Full-Service Agencies Performing researchSelecting mediaFull range of marketing communication and promotion servicesCreating advertisingPlanning advertisingProducing advertisingRelation to TextThis slide relates to page 82 of the text.Summary OverviewThis slide introduces the wide array of activities performed by a full-service advertising agency.Use of this SlideUse this slide to discuss the various types of activities a full-service advertising agency can offer. These advertising services include:Planning, creating, and producing advertising campaignsPerforming marketing and advertising researchSelecting mediaTypes of non-advertising services offered by full-service agencies:Strategic market planningSales promotionDirect marketingInteractive capabilitiesPackage designPublic relations and publicityInteractive capabilitiesPackage designNonadvertising servicesPublic relations and publicitySales promotionsStrategic market planningDirect marketing
14 Full-Service Agency Organization Chart Relation to TextThis slide relates to Figure 3-6 on page 82 of the text.Summary OverviewThis slide presents the typical organization chart for a full-service advertising agency.Use of this SlideUse this slide to introduce the various departments and specialties within a full-service agency.
15 Agency Services The link between agency and client Managed by the account executiveAccount ServicesResearch departmentMay include account plannersMedia dept. obtains media space, timeMarketing ServicesCreation, execution of adsCopywriter artists, other specialistsCreative ServicesAccountingFinanceHuman resourcesNew business generationMgmt & FinanceRelation to TextThis slide relates to pages of the text.Summary OverviewThe slide shows the various services of a full-service advertising agency.Use of Slide Use this slide to discuss the roles of the various departments in a full-service ad agency, the coordination of which is critical to the success of an IMC program.Account services – this is the link between the agency and its clients. The account executive is the liaison and focal point of the agency-client relationship. They are responsible for understanding the advertiser’s marketing and promotions needs and interpreting them to agency personnel.Marketing services – includes marketing research and media planning. Account planners gather information that is relevant to the client’s product or service to be used in the IMC campaign. Media departments analyze, select, and contract media sources.Creative services – responsible for the creation and execution of advertisements. Copywriters and artists are specialists in this department. Additionally, a production department coordinates all phases of production of advertising and other creative work.Management and finance services – includes basic operating and administrative functions, such as accounting, finance, and human resources. It must also try to generate new business.
16 Creative Boutiques Creative Boutiques Provide only creative services May subcontract from full-service agenciesRelation to TextThis slide relates to page 87 of the text.Summary OverviewThis slide presents the role of creative boutiques in an IMC program.Use of this SlideCreative boutiques developed in response to some clients’ desire to use only the creative talent of an outside agency while maintaining other functions internally. Clients seek the help of creative boutiques when an extra creative effort is required, or because its own employees do not have sufficient skills. They can be used in these ways:By client companies for creative services onlyFull-service agencies may subcontract for their creative services when busy or when not wanting to add permanent employeesOther functions, such as advertising planning, research, and media buying, may be done internally within the company or contracted outStrength is turning out creative work quickly
17 Media Specialist Companies Media BuyingMedia Specialist CompaniesSpecialize in buying media, especially broadcast timeAgencies and clients develop media strategyRelation to Text This slide relates to pages of the text.Summary Overview This slide shows the role of media specialist companies.Use of SlideUse this slide to present the role of companies that specialize in the buying of media, particularly radio and television time.Agencies and clients usually develop their own media strategies, but purchasing advertising media has grown more complex as specialized media proliferate. This created a niche market for media specialist companies that specialize in the analysis and purchase of advertising time and space.Some of the characteristics of media specialist companies:They specialize in buying media time, particularly radio and television timeBecause they purchase large amounts of time and space, they usually receive large discounts and can save the agency/company money on media purchasesThey are paid a fee or commission for their workThe agency or client may often develop the media strategyMedia buying organizations may be used to implement the media strategy and buy broadcast time and/or space in print publicationsMedia buying organizations implement strategies, and buy time and space
18 Test Your KnowledgeWhich 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 agencies because they prefer fee- or incentive-based systems.B) For 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.Ans: A
19 Agency Compensation Methods Commissions from mediaFee, cost, and incentive-based systemsRelation to TextThis slide relates to pages of the text.Summary Overview This slide presents various ways in which an agency can be compensated for its work.Use of Slide Because the type and amount of service an agency performs can vary from one client to another, a variety of methods are used to compensate them for their services.Commission method – traditional method, whereby the agency receives a specified commission (usually 15%) from the media on any advertising time or space it purchases for a client.Fee, cost, and incentive-based systems:Fee arrangement – the agency charges a basic monthly fee for all of its services, or is compensated through a fee-commission combination, in which any media commissions received by the agency are credited against the fee.Cost-Plus arrangement – the client pays a fee based on the costs of its work plus some agreed-on profit margin. This method requires careful accounting and detailed records of agency costs.Incentive-based – fee is based on how well the agency meets its performance goals such as sales or market share. Value-based compensation is a new variation of this system whereby agencies are compensated above their basic costs if they achieve or exceed agreed-upon, measurable results.Percentage Charges – adding a markup to the services the agency purchases from outside providers, such as market research, artwork, and printing.Percentage charges
20 Personnel hours billed Evaluating AgenciesFinancial AuditVerify costs, expensesPersonnel hours billedPayments to mediaPayments to suppliersQualitative AuditPlanningProgram developmentImplementationResults achievedRelation to TextThis slide relates to pages of the text.Summary OverviewThis slide presents two types of assessments that can be used to evaluate an agency’s performance.Use of this SlideUse this slide to introduce agency evaluation, which is often done on a subjective, informal basis, particularly in smaller companies where ad budgets are low or advertising is not seen as a critical factors in the firm’s marketing performance.A financial audit focuses on how the agency conducts its business.A qualitative audit focuses on the agency’s efforts in planning, developing, and implementing the client’s advertising programs and the results achieved.
21 Gaining and Losing Clients Long-term agency relationshipsGE/BBDO Worldwide… 80 yearsMarlboro/Leo Burnett… 56 yearsMcDonald’s/DDB Worldwide… 43 yearsKellog’s/Leo Burnett… 68 yearsLoyalty to a single agency is becoming less commonRelation to TextThis slide relates to pages of the text.Summary OverviewThis is an introduction to the topic of Gaining and Losing Clients.Use of this SlideUse this slide to point out of the long, successful relationships between major companies and their advertising agencies.Mention that such loyalty is becoming less common as marketers seek new ways of connecting with consumers.
22 Why Agencies Lose Clients Poor performance/serviceConflicts of interestPoor communicationStrategy changeUnrealistic client demandsDeclining salesRelation to TextThis slide relates to pages of the text.Summary OverviewThis slide presents some of the common reasons why agencies lose their clients.Use of this Slide Use this slide to present the various reasons why an agency might lose a client. Some of these are avoidable, while others may be beyond the agency’s control. Recognizing these warning signs promptly can give an agency the time it needs to adapt its programs and policies, with the objective of trying to keep the client satisfied.Personality conflictsCompensation conflictPersonnel changesPolicy changesClient/ agency size changeMarketing/strategy conflictLack of integrated marketing capabilities
23 How Agencies Gain Clients ReferralsPresentationsSolicitationsRelation to Text This slide relates to pages of the text.Summary Overview This slide shows the various ways an agency can gain new business.Use of this Slide Use this slide to explain that gaining new business is very important to advertising agencies, and competition for accounts intense. Here are some key ways in which an agency can gain new clients:Referrals… new clients come from the referrals of existing clients, media reps, and even other agencies.Solicitations… direct solicitation through letters, cold calls, and following-up on leads.Presentations… an invitation to make a presentation is an opportunity to describe the agencies experience, personnel, capabilities, operating procedures, and previous work.Public relations… participation in civic and social groups, and pro bono work with charitable organizations.Image and reputation… word-of-mouth recommendations from satisfied clients, as well as industry awards.Public RelationsImage, Reputation
24 Direct Marketing Agency Activities Direct-Marketing Agency ServicesDatabasemanagementMedia servicesRelation to text This slide relates to page 100 of the text.Summary OverviewThis slide presents some of the services offered by direct marketing agencies.Use of Slide Use this slide to discuss the role of direct response agencies, the types of services they provide, and their role in the development of an IMC program. While direct mail is the primary weapon, many agencies are expanding into infomercial production and database management.Database management is key to identifying new customers, and building relationships and loyalty among existing customers.Direct mailCreative capabilitiesResearchProduction
25 Direct Marketing Agency Structure Departments in a typical direct-marketing agencyAccount managementCreativeMediaDatabase development/managementRelation to text This slide relates to page 100 of the text.Summary OverviewThis slide presents the types of departments found in most ad agencies.Use of slide This slide shows the departments into which a typical direct-response ad agency is divided.Account managers work with clients to plan direct-marketing programs and determine the agency’s role in the overall IMC process.The creative department consists of copywriters, artists, and producers. They develop the direct-response message.The media department is concerned with message placement.If the agency has a database department, its function is to develop and manage databases for clients.
26 Sales Promotion Agencies Promotional planningCreative researchTie-in coordinationRelation to TextThis slide relates to pages of the text.Summary OverviewThis slide presents the types of services provided by large sales promotion agencies.Use of this SlideUse this slide to present and discuss various types of sales promotion offered by agencies. Point out that many of these agencies are also developing direct/database marketing and telemarketing to expand their integrated marketing capabilities.FulfillmentPremium design and manufacturingCatalog productionContest/sweepstakes management
27 Don Jagoda Associates Relation to Text This slide relates to page 101 of the text, and Exhibit 3-12.Summary OverviewThis slide shows the website of Don Jagoda Associates, one of the leading promotional agencies.Use of this SlideUse this slide to point out how promotional agencies highlight the services they offer.
28 Functions Performed by Public Relations Firms StrategydevelopmentPublicaffairsSpecial eventsGeneratingpublicityNews releases, communicationManaging crisisRelation to TextThis slide relates to page 101 of the text.Summary OverviewThis slide presents some of the functions commonly performed by a public relations firm.Use of this SlideUse this slide to show the services provided by most public relations firms. Many large companies use both an advertising agency and a public relations firm.The public relations firm develops and implements programs to manage the organization’s publicity, image, and affairs with consumers and other relevant publics, including employees, suppliers, stockholders, government, labor groups, citizen action groups, and the general public.LobbyingResearchCoordination w/promotional areas
29 Functions Performed by Interactive Agencies Interactive Media CreationWebsitesBanner adsRelation to TextThis slide relates to pages of the text.Summary OverviewThis slide lists some of the tasks and products handled by Interactive Agencies.Use of this SlideWith the rapid growth of the Internet and other forms of interactive media, a new type of specialized marketing communications organizations has evolved—the interactive agency. Use this slide to illustrate that interactive agencies specialize in the development and strategic use of various interactive tools, such as web sites, banner ads, CD-ROMs, text messages, search engine optimization, and kiosks. They also have expertise in digital technology elements, such as audio, video, special effects, animation, and database marketing.Search engine optimizationMobile marketingSocial media campaignsDigital media
30 Campaigns Utilizing Social Media Relation to TextThis slide relates to page 102 of the text and Exhibit 3-14.Summary OverviewThis slide presents the website of AvenueSocial.Use of this SlideUse this slide to discuss both the services offered by AvenueSocial, as well as the brands and companies they’ve done work for:ToyotaPringlesApartment FinderSnickersUniversal PicturesNaked JuiceThis is an impressive list for an agency that is only 4 years old.
31 Typical collateral services Marketing researchPackage designConsultantsPhotographersPrintersVideo productionEvent marketingRelation to TextThis slide relates to pages of the text.Summary OverviewThis slide presents some of the more widely used collateral services.Use of this SlideUse this slide when discussing the types of collateral services available to bolster the promotional process.One of the more widely used collateral service organizations is the marketing research firm, which can help companies understand their target audiences and gather information that will help with the design and evaluation of advertising and promotions programs.Qualitative research… in-depth interviews and focus groupsQuantitative studies… market surveys
32 Pros and Cons of Integrated Services ConvenienceGreater synergySingle image for product or serviceProsBudget politicsConsPoor communicationNo synergyRelation to TextThis slide relates to page of the text.Summary OverviewThis slide presents the pros and cons of using integrated services.Use of this SlideUse this slide to discuss the pros and cons of using integrated marketing services. Proponents of integrated services contend that agencies and subsidiaries have learned to work together to deliver a consistent marketing message. They like having control of the entire promotional process, which achieves greater synergy, and the convenience of working with just one agency.Opponents say the providers fight over budgets, do not communicate well with each other, and do not achieve synergy. They also claim that agencies’ efforts to control all aspects of the promotional program are just an attempt to hold onto business that might otherwise be lost to independent providers.
33 Test Your KnowledgeMarketing executives say the biggest obstacle to implementing IMC is:A) Lack of management supportB) Insufficient budgetsC) Lack of people with the right perspective and skillsD) Inexperienced ad agenciesAnswer: C
34 Responsibility for IMC: Agency vs. Client Key ObstaclesLack of people with a broad perspective and the skills to make it workInternal turf battlesAgency egosFear of budget reductionsEnsuring consistent executionMeasuring successCompensationRelation to text This slide relates to page of the text.Summary Overview This slide shows the various obstacles to implementing IMC, and whether responsibility for IMC should be with the agency or the client.Use of slide Use this slide to discuss how marketers and agency executives have very different opinions regarding who should be in charge of the integrated IMC process.