Chapter Objectives To understand how companies organize advertising and other aspects of IMC. Understand the role and functions of specialized marketing communications organizations. Examine the use of advertisers, ad agencies, and integrated service providers.

Basic strategies Full service Ad agency –Provide all the functions themselves In-house –Client does it themselves (no agency) Mixed model –Agency or client provides some function –Other services provided by “subs”

The process Here's the typical RFP process: Existing contract expires Client issues a brief (10-15 agencies) Agency completes a questionnaire [Conflict of interest issues] Client use a "scorecard" for finalists (3-5) Finalists given detailed brief and 1-2 weeks to plans Client provides a Q&A session for all agencies Agency “pitches” creative and media plans and fee proposal Client selects winner

TITLE AVERAGE SALARY CEO$250,000 Creative director150,000 Chief financial officer100,000 Art director50,000 Copywriter40,000 Account executive30,000 Media buyer27,500 Assistant (starting)25,000 Advertising Salaries

Typical Ad Agencies Specialists Artists Writers Researchers Photographers Media Analysts Other Skills

Compensation strategies 1. Commission -- 15% [or less] –8-10% on very large accounts 2. Fees –fixed prices on some items, –percentage on others 3. Cost-plus –actual costs [!] + percentage 4. Incentive-based –often performance [sales] based!

“Personalities” Even full service agencies have their own personalities and specialties…. McCann-Erickson Fallon (McElligott) TBWA/Chiat Day

McCann-Erickson “OLD RELIABLE” CLIENTS: –Exxon 90 years –GM (Buick, Cadillac, Pontiac…) 70 years –Coca-Cola 60 years –Nestles 60 years

McCann-Erickson

Fallon

TBWA/Chiat Day A “Hip” agency –Based in Venice Beach CA and NY Clients: –Absolut vodka –Apple Computer –Nissan –Sony Playstation

TBWA/Chiat Day

Services Provided By Agencies Agency Services The link between agency and client Managed by the Account Executive The link between agency and client Managed by the Account Executive Design and execution of research programs Media department analyzes, selects and contracts media resources Design and execution of research programs Media department analyzes, selects and contracts media resources Creation and execution of ads Copywriters, artists, other specialists Creation and execution of ads Copywriters, artists, other specialists Marketing Services Account Service Creative Services Marketing Services Account Service

The Role of Creative Boutiques Creative Boutiques Provide Only Creative Services Full-Service Agencies May Subcontract With Creative Boutiques Provide Only Creative Services Full-Service Agencies May Subcontract With Creative Boutiques Other Functions Provided by the Internal Client Departments

Media Buying Can Be Specialized Specialize in Buying Media, Especially Broadcast Time Agencies and Clients Develop Media Strategy Specialize in Buying Media, Especially Broadcast Time Media Buying Services Media Buying Organizations Implement the Strategy and Buy Time and Space

Integrated Marketing Communications Companies must decide whether to use a different organization for each marketing communications function or consolidate them with a large advertising agency that offers all of these services under one roof.

Specialized Services Direct-response agencies Sales promotion agencies Public relations firms “e-commerce” companies

Sales Promotion Agencies Contest/Sweepstakes Development Promotion Planning Creative Work Research Coordination With Advertising Premium Design Coordination With Advertising Research Creative Work Promotion Planning Data Base Marketing

Functions of Public Relations Firms Strategy Development Generating Publicity Lobbying Public Affairs Damage Control Image Portrayal Strategy Development Generating Publicity Lobbying Public Affairs Damage Control Image Portrayal Program Planning