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McGraw-Hill/Irwin Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed 3 Organizing for Advertising and Promotion: The Role of Ad Agencies.

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Presentation on theme: "McGraw-Hill/Irwin Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed 3 Organizing for Advertising and Promotion: The Role of Ad Agencies."— Presentation transcript:

1 McGraw-Hill/Irwin Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed 3 Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communication Organizations

2 3-2 Red Bull Successful strategies Advertising for awareness Experiential marketing Event sponsorship Participation marketing Target marketing

3 3-3 Participants in the IMC Process

4 3-4 Organizing for Advertising & Promotions The way a company (the client) organizes depends on Its size The number of products it markets The role of advertising and promotion in the marketing mix The budget Its marketing organization structure

5 3-5 Advertising Dept. Under a Centralized System President Production Finance Marketing Research and develop- ment Human resources Marketing research Advertising Sales Product planning

6 3-6 Pros & Cons of a Centralized System Longer response time Longer response time Hard to understand the overall marketing strategy Cons Impractical for multiple brands, products, divisions Impractical for multiple brands, products, divisions Fewer personnel Fewer personnel Better communications Better communications Staff continuity Pros More top management involvement

7 3-7 Decentralized Advertising System ProductionFinance Sales Brand Manager Ad agency Product Management Sales promotion Package design Marketing services MarketingR & D Human Resources Corporate Brand Manager Ad agency Advertising Dept Marketing Research Merchandising

8 3-8 Pros & Cons of Decentralization Rapid problem and opportunity response Concentrated managerial attention Increased flexibility Pros Internal conflicts Ineffective decision making Cons Misallocation of funds Lack of authority Internal focus

9 3-9 Test Your Knowledge Companies choose to use an in-house agency for all of the following reasons except: A) More closely tie the marketing function to top management B) Reduce advertising and promotions costs C) In-house agencies are more stable D) Tighter control over agency processes E) To diversify the brand image

10 3-10 Pros & Cons of In-house Agencies Less experience Cons Less objectivity Less flexibility Less access to top creative talent More control Cost savings Increased coordination Pros Stability Access to top management

11 3-11 Under Armour Uses an In-House Agency

12 3-12 The Ad Agency’s Role Reasons for using an ad agency Highly skilled specialists Specialization in a particular industry Objective viewpoint of the market Broad range of experience

13 3-13 Full-Service Agencies Performing research Selecting media Full range of marketing communication and promotion services Creating advertising Planning advertising Producing advertising Interactive capabilities Package design Nonadvertising services Public relations and publicity Sales promotions Strategic market planning Direct marketing

14 3-14 Full-Service Agency Organization Chart

15 3-15 Agency Services Research department May include account planners Media dept. obtains media space, time Research department May include account planners Media dept. obtains media space, time Marketing Services The link between agency and client Managed by the account executive The link between agency and client Managed by the account executive Account Services Creation, execution of ads Copywriter artists, other specialists Creation, execution of ads Copywriter artists, other specialists Creative Services Accounting Finance Human resources New business generation Accounting Finance Human resources New business generation Mgmt & Finance

16 3-16 Creative Boutiques Provide only creative services May subcontract from f ull-service agencies Strength is turning out creative work quickly

17 3-17 Media Buying Specialize in buying media, especially broadcast time Agencies and clients develop media strategy Media Specialist Companies Media buying organizations implement strategies, and buy time and space

18 3-18 Test Your Knowledge Which 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.

19 3-19 Agency Compensation Methods Commissions from media Fee, cost, and incentive-based systems Percentage charges

20 3-20 Evaluating Agencies Financial Audit Verify costs, expenses Personnel hours billed Payments to media Payments to suppliers Qualitative Audit Planning Program development Implementation Results achieved

21 3-21 Gaining and Losing Clients Long-term agency relationships GE/BBDO Worldwide… 80 years Marlboro/Leo Burnett… 56 years McDonald’s/DDB Worldwide… 43 years Kellog’s/Leo Burnett… 68 years Loyalty to a single agency is becoming less common

22 3-22 Why Agencies Lose Clients Poor communication Unrealistic client demands Poor performance/service Personality conflicts Personnel changes Strategy change Declining sales Conflicts of interest Compensation conflict Policy changes Lack of integrated marketing capabilities Client/ agency size change Marketing/strategy conflict

23 3-23 How Agencies Gain Clients Referrals Solicitations Presentations Public Relations Image, Reputation

24 3-24 Direct Marketing Agency Activities Direct mail Database management Research Creative capabilities Media services Direct-Marketing Agency Services Production

25 3-25 Direct Marketing Agency Structure Departments in a typical direct- marketing agency Account management Creative Media Database development/management

26 3-26 Sales Promotion Agencies Catalog production Promotional planning Creative research Tie-in coordination Fulfillment Premium design and manufacturing Contest/sweepstakes management

27 3-27 Don Jagoda Associates

28 3-28 Functions Performed by Public Relations Firms Strategy development Generating publicity Lobbying Public affairs News releases, communication Research Managing crisis Coordination w/promotional areas Special events

29 3-29 Functions Performed by Interactive Agencies Interactive Media Creation Websites Banner ads Search engine optimization Mobile marketing Social media campaigns Digital media

30 3-30 Campaigns Utilizing Social Media

31 3-31 Collateral Services Typical collateral services Marketing research Package design Consultants Photographers Printers Video production Event marketing

32 3-32 Pros and Cons of Integrated Services Budget politics Cons Poor communication No synergy Convenience Greater synergy Single image for product or service Pros

33 3-33 Test Your Knowledge Marketing executives say the biggest obstacle to implementing IMC is: A) Lack of management support B) Insufficient budgets C) Lack of people with the right perspective and skills D) Inexperienced ad agencies

34 3-34 Responsibility for IMC: Agency vs. Client Key Obstacles Lack of people with a broad perspective and the skills to make it work Internal turf battles Agency egos Fear of budget reductions Ensuring consistent execution Measuring success Compensation


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