Chapter 3 Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communication Organizations

Participants in the Integrated Marketing Communications Process Advertisers or clients Have the products, services, or causes to be marketed Provide the funds that pay for advertising and promotions Responsible for developing marketing program Advertising agency Specializes in the creation, production, and/or placement of the communications message Facilitates the integrated marketing communications proess? Relation to text: This slide relates to content found on page 69 of the text. Summary Overview: This slide presents some of the participants in the integrated marketing communications process—advertisers or clients and advertising agency. Use of this slide: This slide can be used to introduce some of the 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 program Advertising agency - Specializes in the creation, production, and placement of communications messages. They may provide other services to facilitate the IMC process.

Participants in the Integrated Marketing Communications Process Media organizations Provide information, entertainment, or an environment for a firm’s marketing communications message Specialized marketing communication services organizations Direct-marketing agencies Sales promotion agencies Digital/Interactive agencies Public relations firms Relation to text: This slide relates to content found on page 70 of the text. Summary Overview: This slide presents some of the participants in the integrated marketing communications process—media organizations, specialized marketing communication services organizations, and collateral services organization. Use of this slide: This slide can be used to introduce some of the participants in the IMC process and provide a brief overview of their roles. Media organizations provide information and entertainment to subscribers, viewers, listeners, and/or readers. Marketers can purchase time or space to deliver their advertising and promotion messages Marketing communication specialist organizations provide specialized marketing communication services, including: Direct response agencies Sales promotion agencies Public relations firms Interactive agencies Collateral services are 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. Collateral services organizations Collateral services: Support functions used by advertisers, agencies, media organizations, and specialized marketing communication firms

Factors Affecting How Companies Organize for IMC Size of the organization Number of products it markets Role of advertising and promotion in the marketing mix Allocated budget Marketing organization structure Relation to text: This slide relates to content found on pages 70-71 of the text. Summary Overview: This slide presents the factors affecting advertising and promotions: size of the organization, number of products it markets, role of advertising and promotion in the marketing mix, allocated budget, and marketing organization structure. Use of this slide: This slide can be used to present the factors affecting advertising and promotions.

Figure 3.2 - The Advertising Department under a Centralized System Relation to text: This slide relates to Figure 3-2 on page 71 of the text. Summary Overview: This slide shows how a company would organize a marketing department under a centralized system. Use of this slide: This slide can be used 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.

Centralized System Marketing activities are divided along functional lines Advertising manager: Responsible for: Planning and budgeting Administration and execution Coordination with other departments Coordination with outside agencies and services Relation to text: This slide relates to content found on pages 71-72 of the text. Summary Overview: This slide presents the meaning of a centralized system and gives the responsibilities of an advertising manager. Use of this slide: This slide can be used to explain centralized system and the responsibilities of an advertising manager. An advertising manager is responsible for planning and budgeting, administration and execution, coordination with other departments, and coordination with outside agencies and services.

Figure 3.3 - Decentralized Brand Management System Relation to text: This slide relates to Figure 3-3 on page 74 of the text. Summary Overview: This slide shows how responsibilities are divided in a company that has a decentralized advertising system. Use of this slide: This slide can be used to show 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.

Decentralized System Used by firms with multiple divisions and many different products Each product or brand is assigned to a brand manager Brand manager: Responsible for the total management of the brand, including planning, budgeting, sales, and profit performance Category management system: Additional layer of management above the brand managers Relation to text: This slide relates to content found on page 73 of the text. Summary Overview: This slide presents the meaning of a decentralized system and category management system and discusses the responsibilities of a brand manager. Use of this slide: This slide can be used to explain decentralized system, category management system, and the responsibilities of brand manager. A brand manager is responsible for the total management of the brand, including planning, budgeting, sales, and profit performance. Category management system is the additional layer of management above the brand managers.

In-House Agencies Advertising agency that is set up, owned, and operated by the advertiser Relation to text: This slide relates to content found on pages 75-79 of the text. Summary Overview: This slide presents the definition of in-house agencies. Use of this slide: This slide can be used to define in-house agencies.

Figure 3.4 - Comparison of Advertising Organizational Systems Relation to text: This slide relates to Figure 3-4 on page 79 of the text. Summary Overview: This slide presents the advantages and disadvantages of centralized organizational system, decentralized organizational systems, and in-house agencies. Use of this slide: This slide can be used to discuss the advantages and disadvantages of centralized organizational system, decentralized organizational systems, and in-house agencies.

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? Relation to text: This slide relates to content found on pages 79-81 of the text. Summary Overview: This slide presents the meaning of advertising agencies and superagencies. Advertising agencies are service organizations that specialize in planning and executing advertising programs for is clients. Superagencies are large agencies that merged with or acquired other agencies and support organizations. Use of this slide: This slide can be used to present the meaning of advertising agencies and superagencies.

Reasons for Using an Ad Agency Highly skilled specialists Specialization in a particular industry Objective viewpoint of the market Relation to text: This slide relates to content found on page 81 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. Broad range of experience

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 Relation to text: This slide relates to content found on page 82 of the text. Summary Overview: This slide introduces the wide array of activities performed by a full-service advertising agency. Use of this slide: This slide can be used to discuss the various types of activities a full-service advertising agency can offer. These advertising services include: Planning, creating, and producing advertising campaigns Performing marketing and advertising research Selecting media Types of non-advertising services offered by full-service agencies: Strategic market planning Sales promotion Direct marketing Interactive capabilities Package design Public relations and publicity

Agency Organization and Structure All agency functions are set up as a separate department Departmental system Individuals from each department work together in groups to service particular accounts Group system Relation to text: This slide relates to the content on page 86 of the text. Summary Overview: This slide presents that most medium-size and large agencies are structured under either a departmental or a group system. Use of this slide: This slide can be used to introduce the concept of agency organization and structure. Under the departmental system, each of the agency functions is set up as a separate department. Many large agencies use the group system, in which individuals from each department work together in groups to service particular accounts.

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 Relation to text: This slide relates to the content on pages 86-87 of the text. Summary Overview: This slide presents the meaning and advantages of creative boutiques in an IMC program. Use of this slide: This slide can be used to introduce the concept of creative boutiques and discuss the advantages.

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 Relation to text: This slide relates to the content on page 87 of the text. Summary Overview: This slide shows the role of media specialist companies. Use of this slide: This slide can be used to present the role of companies that specialize in the buying of media, particularly radio and television time. Agencies and clients 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 time Because they purchase large amounts of time and space, they usually receive large discounts and can save the agency/company money on media purchases They are paid a fee or commission for their work The agency or client may often develop the media strategy Media buying organizations may be used to implement the media strategy and buy broadcast time and/or space in print publications

Figure 3.9 - How Agencies Add Value to Client’s Business Relation to text: This slide relates to Figure 3-9 on page 93 of the text. Summary Overview: This slide presents the ways for agencies to add value to their client’s business. Use of this slide: This slide can be used to present and discuss the ways for agencies to add value to their client’s business. Source: “Report on the Agency–Advertiser Value Survey,” American Association of Advertising Agencies and Association of National Advertisers, August 2007

Why Agencies Lose Clients Poor performance or service Poor communication Unrealistic demands by the client Personality conflicts Personnel changes Changes in size of the client or agency Changes in the client’s corporate and/or marketing strategy Conflicts of interest Declining sales Conflicting compensation philosophies Changes in policies Disagreements over marketing and/or creative strategy Lack of integrated marketing capabilities Relation to text: This slide relates to the content on pages 96-97 of the text. Summary Overview: This slide presents some of the common reasons why agencies lose their clients. Use of this slide: This slide can be used 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.

How Agencies Gain Clients Solicitations Referrals Presentations Relation to text: This slide relates to the content on pages 97-98 of the text. Summary Overview: This slide shows the various ways an agency can gain new business. Use of this slide: This slide can be used 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: Referral - 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 Presentation - 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 relations Image and reputation

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 Relation to text: This slide relates to the content on pages 99-100 of the text. Summary Overview: This slide presents some of the services offered by direct marketing agencies and the types of departments found in most ad agencies. Use of this slide: This slide can be used 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. This slide can also be used to show 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.

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 Relation to text: This slide relates to the content on page 100 of the text. Summary Overview: This slide presents the role and types of services provided by large sales promotion agencies. Use of this slide: This slide can be used to present and discuss the role and various types of sales promotion offered by agencies. It can be pointed out that many of these agencies are also developing direct/database marketing and telemarketing to expand their integrated marketing capabilities.

Public Relations Firm Develops and implements programs to manage organization’s: Publicity Image Affairs with consumers and other relevant publics Employees, suppliers, stockholders, government, labor groups, citizen action groups, and the general public Relation to text: This slide relates to the content on pages 100-101 of the text. Summary Overview: This slide discusses the role of 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. Use of this slide: This slide can be used to discuss the role of public relations firm.

Functions Performed by Public Relations Firms Strategy development Generating publicity Lobbying Public affairs News releases, communication Research Relation to text: This slide relates to the content on page 101 of the text. Summary Overview: This slide presents some of the functions commonly performed by a public relations firm. Use of this slide: This slide can be used to show the services provided by most public relations firms. Many large companies use both an advertising agency and a public relations firm. Managing crisis Special events Coordination w/promotional areas

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 Relation to text: This slide relates to the content on page 101 of the text. Summary Overview: This slide presents the role of digital/interactive agencies and lists some of the tasks and products handled by them. Use of this slide: This slide can be used to show how with 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. This slide can also be used 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.