Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communications Organizations © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Participants in the IMC Process © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing Communications Specialist Organization Media Organizations Advertiser (Client) Advertising Agency Collateral Services Direct Response Agencies Sales Promotion Agencies Interactive Agencies Public Relations Firms

Advertising Department Under Centralized System © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin President Production Finance Marketing Research and Develop- ment Human Resources Advertising Marketing Research Sales Product Planning

Fewer Personnel Fewer Personnel Better Communications Better Communications Continuity Of Staff Continuity Of Staff Longer Response Time Longer Response Time Less Goal Involvement Less Goal Involvement Better Communications Better Communications Fewer Personnel Fewer Personnel Continuity Of Staff Continuity Of Staff Less Goal Involvement Less Goal Involvement Longer Response Time Longer Response Time Pros & Cons of Centralization © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Centralized System The Centralized System + Positive - Negative Cant Do Multiple Product Lines Cant Do Multiple Product Lines

Decentralized Brand Management System © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin ProductionFinance Sales Brand Manager Ad agency Brand Manager Ad agency Product Management Sales Promotion Package Design Merchandising Advertising Department Marketing Research Marketing Services MarketingResearch and Development Human Resources Corporate

Competition for Resources Lack of Experience in IMC Rapid Problem Response Rapid Problem Response Concentrated Attention Concentrated Attention Increased Flexibility Increased Flexibility Increased Flexibility Increased Flexibility Rapid Problem Response Rapid Problem Response Concentrated Attention Concentrated Attention Pros & Cons of Decentralization © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Decentralized System The Decentralized System + Positive - Negative Lack of Authority Lack of Authority

More Control More Control Cost Savings Cost Savings Better Coordination Better Coordination Less Objectivity Less Objectivity Less Experience Less Experience Less Objectivity Less Objectivity Less Experience Less Experience Better Coordination Better Coordination More Control More Control Cost Savings Cost Savings Pros & Cons of In-House Agencies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The In-house Agency The In-house Agency + Positive - Negative Less Flexibility Less Flexibility

Most No Fear advertising is done by their in-house agency © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin +

Artists Ad Agencies Have Skilled Specialists © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Writers Researchers Photographers Media Analysts Other Skills

Creating advertising Planning advertising Producing advertising Performing research Selecting media Sales promotion and training Strategic market planning Trade show materials Package design Planning advertising Creating advertising Producing advertising Performing research Selecting media Strategic market planning Sales promotion and training Trade show materials Package design Full-Services Agencies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Full Range of Marketing Communication and Promotion Services Non-Advertising Services Public relations and publicity

Typical Full-Service Agency Organization © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Writers Art Directors Traffic TV Produciton Traffic Print Production VP Creative Services Account Executive Account Supervision VP Account Services MediaResearch Sales Promotion VP Marketing Services PersonnelAccountingFinance Office Management VP Management and Finance President Board of Directors

Services Provided by Agencies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Agency Services The link between agency and client Managed by the Account Executive The link between agency and client Managed by the Account Executive Research department may design and execute research programs Media department may analyze, select and contract media resources Research department may design and execute research programs Media department may analyze, select and contract 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 © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 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

Coca Colas in-house boutique created this popular spot © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin +

Specialize in Buying Media, Especially Broadcast Time Agencies and Clients Develop Media Strategy Specialize in Buying Media, Especially Broadcast Time Media Buying Can Be Specialized © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Media Buying Services Media Buying Organizations Implement the Strategy and Buy Time and Space

Commissions Method Commissions Method Cost-Plus Agreements Cost-Plus Agreements Percentage Charges Percentage Charges Fee Arrangements Fee Arrangements Incentive-Based Payment Incentive-Based Payment Commissions Method Commissions Method Cost-Plus Agreements Cost-Plus Agreements Percentage Charges Percentage Charges Fee Arrangements Fee Arrangements Methods of Agency Compensation © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Compensation Methods Compensation Methods

Young & Rubicam has handled Dr. Pepper for over 30 years © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin +

Foote, Cone & Belding was the agency for Levis for 68 years © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin *Click outside of the video screen to advance to the next slide

Poor performance Poor communications Unrealistic demands Personality conflicts Personnel changes Changes in size Conflict of interests Changes in strategy Declining sales Payment conflicts Policy changes Poor performance Poor communications Unrealistic demands Personality conflicts Personnel changes Changes in size Conflict of interests Changes in strategy Declining sales Payment conflicts Why Agencies Lose Clients © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Referrals How Agencies Gain Clients © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Solicitations Presentations Public Relations Image, Reputation

Gateway Changed Its Advertising After Changing Agencies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin *Click outside of the video screen to advance to the next slide

A Change in Strategy Led to a Change in Gateways Advertising © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin *Click outside of the video screen to advance to the next slide

Direct Mail Direct Mail Data Base Management Data Base Management Research Creative Media Services Creative Media Services Research Direct Mail Direct Mail Data Base Management Data Base Management Direct Response Agency Activities © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Direct Response Agencies Direct Response Agencies Production

Contest/Sweepstakes Development Promotion Planning Creative Work Research Coordination With Advertising Premium Design Coordination With Advertising Research Creative Work Promotion Planning Data Base Marketing Activities performed by Sales Promotion Agencies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Strategy Development Generating Publicity Lobbying Public Affairs Damage Control Image Portrayal Strategy Development Generating Publicity Lobbying Public Affairs Damage Control Image Portrayal Functions performed by Public Relations Firms © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Program Planning

Audio Special Effects Video Web Banner Ads Web Banner Ads Kiosks Web Sites CD-ROMs Special Effects Video Audio Kiosks CD-ROMs Web Sites Web Banner Ads Web Banner Ads Functions performed by Interactive Agencies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Interactive Media Creation Digital Content Digital Content Animation

Planning and Implementing Research Information Application Analysis and Interpretation Primary Data Collection Qualitative & Quantitative Primary Data Collection Qualitative & Quantitative Secondary Data Collection Primary Data Collection Qualitative & Quantitative Primary Data Collection Qualitative & Quantitative Analysis and Interpretation Information Application Marketing Research Companies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin