McGraw-Hill/Irwin Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed 3 Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communication Organizations

3-2 Under Armour Protects Its House Successful strategies Niche markets Expanded product line Strong branding, product positioning, quality, dynamic advertising Unique brand identity, “Protect This House” Expansion into athletic shoes In-house brand team

3-3 Participants in the IMC Process

3-4 Organizing for Advertising & Promotions The way a company (the client) organizes depends on Its size The number of products it markets The role of advertising and promotion in the marketing mix The budget Its marketing organization structure

3-5 Advertising Dept. Under a Centralized System President Production Finance Marketing Research and develop- ment Human resources Marketing research Advertising Sales Product planning Skim this material

3-6 Pros & Cons of a Centralized System Longer response time Longer response time Hard to understand the overall marketing strategy Cons Impractical for multiple brands, products, divisions Impractical for multiple brands, products, divisions Fewer personnel Fewer personnel Better communications Better communications Staff continuity Pros More top management involvement

3-7 Decentralized Advertising System ProductionFinance Sales Brand Manager Ad agency Product Management Sales promotion Package design Marketing services MarketingR & D Human Resources Corporate Brand Manager Ad agency Advertising Dept Marketing Research Merchandising Skim this material

3-8 Pros & Cons of Decentralization Rapid problem and opportunity response Concentrated managerial attention Increased flexibility Pros Internal conflicts Ineffective decision making Cons Misallocation of funds Lack of authority Internal focus Skim this material

3-9 Pros & Cons of In-house Agencies Less experience Cons Less objectivity Less flexibility Less access to top creative talent More control Cost savings Increased coordination Pros Stability Access to top management

3-10 Under Armour Uses an In-House Agency

3-11 The Ad Agency’s Role Reasons for using an ad agency Highly skilled specialists Specialization in a particular industry Objective viewpoint of the market Broad range of experience

3-12 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

3-13 Full-Service Agency Organization Chart Skim this material

3-14 Agency Services Research department May include account planners Media dept. obtains media space, time Research department May include account planners Media dept. obtains media space, time Marketing Services The link between agency and client Managed by the account executive The link between agency and client Managed by the account executive Account Services Creation, execution of ads Copywriter artists, other specialists Creation, execution of ads Copywriter artists, other specialists Creative Services Accounting Finance Human resources New business generation Accounting Finance Human resources New business generation Mgmt & Finance

3-15 Creative Boutiques Provide only creative services May subcontract from f ull-service agencies Strength is turning out creative work quickly

3-16 Media Buying Specialize in buying media, especially broadcast time Agencies and clients develop media strategy Media Specialist Companies Media buying organizations implement strategies, and buy time and space

3-17 Agency Compensation Methods Commissions from media Fee, cost, and incentive-based systems Percentage charges

3-18 Example of the Commission System I found this explanation confusing...

3-19 Basically, the Ad. Agency gets a volume discounts from the Media Owner (Magazine, Network, etc.)

3-20 Evaluating Agencies Financial Audit Verify costs, expenses Personnel hours billed Payments to media Payments to suppliers Qualitative Audit Planning Program development Implementation Results achieved

3-21 Gaining and Losing Clients Long-term agency relationships GE/BBDO Worldwide… 80 years Marlboro/Leo Burnett… 56 years McDonald’s/DDB Worldwide… 43 years Kellog’s/Leo Burnett… 68 years Loyalty to a single agency is becoming less common

3-22 Why Agencies Lose Clients Poor communication Unrealistic client demands Poor performance/service Personality conflicts Personnel changes Strategy change Declining sales Conflicts of interest Compensation conflict Policy changes Lack of integrated marketing capabilities Client/ agency size change Marketing/strategy conflict

3-23 How Agencies Gain Clients Referrals Solicitations Presentations Public Relations Image, Reputation

3-24 Direct Marketing Agency Activities Direct mail Database management Research Creative capabilities Media services Direct-Marketing Agency Services Production

3-25 Direct Marketing Agency Structure Departments in a typical direct- marketing agency Account management Creative Media Database development/management

3-26 Sales Promotion Agencies Catalog production Promotional planning Creative research Tie-in coordination Fulfillment Premium design and manufacturing Contest/sweepstakes management

3-27 Don Jagoda Associates

3-28 Functions Performed by Public Relations Firms Strategy development Generating publicity Lobbying Public affairs News releases, communication Research Managing crisis Coordination w/promotional areas Special events

3-29 Functions Performed by Interactive Agencies Interactive Media Creation Websites Banner ads Search engine optimization Mobile marketing Social media campaigns Digital media

3-30 Campaigns Utilizing Social Media

3-31 Collateral Services Typical collateral services Marketing research Package design Consultants Photographers Printers Video production Event marketing

3-32 Pros and Cons of Integrated Services Budget politics Cons Poor communication No synergy Convenience Greater synergy Single image for product or service Pros

3-33 Responsibility for IMC: Agency vs. Client Key Obstacles Lack of people with a broad perspective and the skills to make it work Internal turf battles Agency egos Fear of budget reductions Ensuring consistent execution Measuring success Compensation