1. Managing the IMC Function MKT 3850 Dr. Don Roy

3. Options for Managing the IMC Function Do-It-Yourself Approach: Use of an in- house ad agency Outsourcing IMC: Hire an outside agency to create communication Combination of In-House and Outside Agency

4. Outside Marcom Agencies Approaches agencies use for offering marcom services: Full-Service Agencies Specialized Agencies

5. Full-Service Agencies One-stop shopping service for a brand’s marcom needs; it’s a “Wal-Mart Supercenter” approach to buying marcom services Full-service agency typically consists of functional areas that all work to serve the client

6. Full-Service Agency Departments Account management Creative services Media planning and buying Research Account planning Traffic

7. Specialized Marcom Agencies Many firms do not have a need for entire range of services offered by full-service agencies or find them overpriced Specialized marcom agencies offer a “Starbucks” approach to marcom services, providing expertise in a single or limited area

8. Specialized Agencies Examples Brand Strategy Agencies Media Buying Agencies Public Relations Agencies Direct Marketing Agencies Sales Promotion Agencies Interactive Agencies Social Media Agencies Event Marketing Agencies B2B Marketing Agencies Ethnic Marketing Agencies

9. Expertise Objectivity Resources Efficiency Why Hire an Outside Agency?

10. Agency-Client Relationships: A Revolving Door?

11. Agency Compensation Methods 1. Fee or Retainer- Pay based on amount of time worked for client or a fixed monthly rate 2. Markups- Profit added on to costs of providing marcom services for client (e.g., adding % to cost of producing a direct mail piece 3. Performance-based compensation- Pay tied to results achieved by campaign 4. Commissions- Agency keeps 15% of total billings, with remainder going to media billings

12. Ad Agency Compensation Trends Pressure on agencies to lower rates and commissions in tough economic climate Increasing client interest in performance- based compensation to agencies

13. The Future of Ad Agency Compensation? “Agencies can create brands and product categories where we have an idea: We can name it, we can label it, we can research it. We can say, ‘If the product has these characteristics, it looks like an X million-dollar business’ and then we can go and sell that brand to somebody who has the expertise in manufacturing and distribution.” - Keith Reinhard, 40-year ad veteran, Chairman, DDB Worldwide, and creator of the pay-for-performance concept