1. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 3 Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communication Organizations

2. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Participants in the Integrated Marketing Communications Process Advertisers or clients Advertising agency 2 Media organizations Specialized marketing communication services organizations Collateral services organizations

3. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 3.2 - The Advertising Department under a Centralized System 3

4. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 3.3 - Decentralized Brand Management System 4

5. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 3.4 - Comparison of Advertising Organizational Systems 5

6. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Advertising Agencies  Service organizations that specialize in planning and executing advertising programs for its clients  Superagencies: Large agencies that merged with or acquired other agencies and support organizations  Have now evolved into 4 major agency holding companies? 6

7. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Reasons for Using an Ad Agency Highly skilled specialistsSpecialization in a particular industryObjective viewpoint of the marketBroad range of experience 7

8. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 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 8

9. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 3.6 - Full-Service Agency Organization Chart 9

10. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Agency Services Account services The link between agency and client Managed by the account executive Marketing Services Research department May include account planners Media dept. obtains media space, time Creative Services Creation execution of ads Copywriter artists, other specialists Mgmt & Finance Accounting Finance Human Resources New business generation 10

11. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Creative Boutiques  Small ad agencies that provide only creative services  Advantages  Turn out inventive creative work quickly  Provide more attention and better access to creative talent 11

12. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Media Specialist Companies  Specialize in the buying of media  Agencies and clients develop media strategy  Media buying organizations implement strategies, and buy time and space 12

13. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Agency Compensation Methods Commissions from media Fee, cost, and incentive-based systems Percentage charges 13

14. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Evaluating Agencies Financial audit Costs, expensesPersonnel hours billedPayments to mediaPayments to suppliers Qualitative audit Planning Program development Implementation Results achieved 14

15. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 3.9 - How Agencies Add Value to Client’s Business Source: “Report on the Agency–Advertiser Value Survey,” American Association of Advertising Agencies and Association of National Advertisers, August 2007 15

16. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Direct-Marketing Agencies  Provide a variety of services  Database analytics and management  Direct mail  Research and media services  Creative and production capabilities  Has following departments  Account management  Creative  Media  Database development/management 16

17. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Sales Promotion Agency  Involved with the developing and managing of sales promotion programs  Provide following services  Promotional planning, creative research, and tie-in coordination  Fulfillment  Premium design and manufacturing  Catalog production  Contest/sweepstakes management 17

18. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Functions Performed by Public Relations Firms Strategy development Generating publicity Lobbying Public affairs News releases, communication Research Managing crisis Special events Coordination w/promotional areas 18

19. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Digital/Interactive Agencies  Specialize in the development and strategic use of various digital marketing tools  Websites for the Internet  Banner ads  Search engine optimization  Mobile marketing  Social media campaigns 19

20. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Collateral Services Marketing researchPackage designConsultants Photographers PrintersVideo productionEvent marketing 20