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

Preview What are the two IMC organizational systems? What are the pluses, minus and characteristics each of each? What are the pluses and minuses of an in- house agency organization? Define the roles of the client and the agency Identify some considerations for effectively working with agencies

Participants in the IMC Process Marketing Communications Organizations Company Collateral services Direct- response agencies Sales promotion agencies Interactive agencies Public Relations firms Ad agencies Trade Show Exhibits Printers A/V Services

Organizing for Advertising and Promotion The way a company organizes depends on –Its size –The number of products it markets –The role of IMC in the marketing mix –The budget –Its marketing organization structure

IMC Under A Centralized System President Production Finance Marketing Research and develop- ment Human resources Marketing research Advertising Sales Product planning

Pros & Cons of a Centralized System Fewer personnel Fewer personnel Better communications Better communications Continuity Longer response time Longer response time Less goal involvement Less goal involvement The Centralized System The Centralized System + Positive - Negative Impractical for multiple brands, products, divisions Impractical for multiple brands, products, divisions More top management involvement

Decentralized IMC 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

Pros & Cons of Decentralization Internal conflicts Ineffective decision making Rapid problem response Rapid problem response Concentrated attention Concentrated attention Increased flexibility Increased flexibility The Decentralized System The Decentralized System + Positive - Negative Unequal distribution of funds Lack of Authority Lack of Authority

Pros & Cons of In-House Agencies More control More control Cost savings Cost savings Better coordination Better coordination Less objectivity Less objectivity Less experience Less experience The In-house Agency The In-house Agency + Positive - Negative Less flexibility Less flexibility

Services Provided by Agencies Agency Services Research department May include account planners Media/place- ment depts.obtains media space, time Research department May include account planners Media/place- ment depts.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 and execution Copywriter artists, SEO, other specialists Creation and execution Copywriter artists, SEO, other specialists Creative Services Accounting Finance Human Resources New business generation Accounting Finance Human Resources New business generation Mgmt & Finance

Weekly meetings necessary Insist on timely response to market speculation/rumor Agency – outward In-house – inward Don’t dictate what they do Look for creativity If you have to dictate100% of your time, get a new agency Where are we now? What do we want to achieve? What are the challenges? How do we achieve goals effectively and efficient? Foundation For Agency Relations Scrutinize Needs / Best Use of Resources Respect Different Perspectives Thorough/Timely Communications

Agencies’ Responsibilities Respect confidentiality Provide “Best of Class” counsel and services Assign an appropriate stable, multi-layer account team Proved special capabilities (i.e. web 2.0 consulting) beyond the day-to-day account team Meet all deadlines Communicate, communicate, communicate Develop expectations that are attainable and measurable Maintain frequent and scheduled contact Deliver innovative ideas …whether or not they are accepted Maintain budget controls Handle billing and reporting accurately and promptly NO SURPISES

Client Agency Relationship Client Set corporate strategies Align strategies & objectives Supervise and co- ordinate all program elements Define evaluation metrics & KPIs Establish budgets Agency Collaborate on Objectives Develop tactical programs Implement tactics Deliver measurable and measured results Meet budget expectations

Agency Business Basics How they charge -- ultimately –By hour – TIME is the commodity -- –Out-of-pocket expense – bill for approved items –17.5% service charge – large amount of advanced payment on behalf of a client What are they specialized in? –Communications know-how –Creativity –Planning skill –Solid execution experience –Media knowledge –Strong local know-how Conflict of Interest Agencies work with only one company in each category – several semiconductor companies but only one foundry

Working Effectively with Agencies Agencies submit a yearly budgets and quarterly programs to chart their activities and measure their effectiveness. –Activity costs are based on estimated time to execute a task –Although we can ask for extra effort, we should be respectful of the fact that time IS money Agencies are partners. Professional ethics require them to keep confidential information confidential. Always be honest and forthright about both the good and the bad –Legally, all TSMC agencies are under NDA. –Breaking confidentially will permanently “blackball” an agency Be specific and detailed in requests to the agency. Don’t make them guess. There’s no such thing as too much information

Maximizing Resources Focus and adding the most value and mitigating the most risk. Value, not activities. Asses strengths & weaknesses and assign specific roles … internally & externally Set expectations through service level agreements that set priorities Identify & respond to gaps by defining alternative self service, outsourcing, collaborative model Communicate, communicate, communicate the benefits, processes and reasons “5 Steps to Formalizing Roles and Defining Responsibilities”: Peter Schram, 2011

In Review What are the two IMC organizational systems? What are the pluses, minus and characteristics each of each? What are the pluses and minuses of an in- house agency organization? Define the roles of the client and the agency Identify some considerations for effectively working with agencies

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