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

Transcription

1 Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communications Organizations

2 Participants in the IMC Process Advertiser (Client) Advertising agency Media organizations Marketing communications specialist organizations Collateral services Directresponse agencies Public relations firms Sales promotion agencies Interactive agencies

3 Advertising Department Under Centralized System President Production Finance Marketing Research and development Human resources Advertising Marketing research Sales Product planning

4 Pros & Cons of Centralization + Positive - Negative Better communications Less goal involvement Fewer personnel Continuity of staff More top management involvement The Centralized System Longer response time Can t do multiple product lines

5 Decentralized Brand Management System Corporate Production Finance Marketing Research and development Human resources Sales Product management Marketing services Brand manager Ad agency Brand manager Ad agency Advertising department Marketing research Sales promotion Package design Merchandising

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

7 Test Your Knowledge A major reason why some companies choose to use an in-house agency is to: A) maintain creative freshness B) reduce advertising and promotions costs C) better understand how advertising works D) win advertising awards that will enhance the image of their brands E) do all of the above

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

9 Ad Agencies Have Skilled Specialists Artists Writers Researchers Photographers Media Analysts Other Skills

10 Full-Services Agencies Planning advertising Creating advertising Producing advertising Full range of marketing communication and promotion services Performing research Selecting media Strategic market planning Sales promotions Direct marketing Nonadvertising services Interactive capabilities Package design Public relations and publicity

11 Typical Full-Service Agency Organization Board of directors President VP creative services VP account services VP marketing services VP management and finance Writers Art directors TV production Print production Account supervision Media Research Sales promotion Traffic Account executive Office management Finance Accounting Personnel

12 Services Provided by Agencies Agency Services Account Service Marketing Services Creative Services The link between agency and client Managed by the account executive Research department May include account planners Media department to obtain media space and time Creation and execution of ads Copywriters, artists, other specialists

13 The Role of Creative Boutiques Creative Boutiques Provide only creative services Full-service agencies may subcontract with creative boutiques Ability to turn out inventive creative work quickly

14 Media Buying Can Be Specialized Media Specialist Companies Specialize in buying media, especially broadcast time Agencies and clients develop media strategy Media buying organizations implement the strategy and buy time and space

15 Test Your Knowledge Which of the following statements about changes in the way advertising agencies are being compensated is true? A) Most clients do not pay full commissions to their agencies because they prefer to use some type of fee or incentive-based system. B) From the viewpoints of both the client and the agency, the traditional commission system is much superior to negotiated commissions. C) Since most clients want their agencies to be in total charge of the integrated marketing communications process, they are willing to compensate them based on media commissions. D) All of the above statements about changes in the way ad agencies are being compensated are true.

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

17 Why Agencies Lose Clients Poor performance Unrealistic demands Personality conflicts Personnel changes Poor communications Changes in size Conflict of interests Changes in Changes strategy in strategy Payment conflicts Declining sales Policy changes

18 How Agencies Gain Clients Referrals Presentations Solicitations Public Relations Image, Reputation

19 Direct-Marketing Agency Activities Database management Media services Direct mail Direct- Marketing Agencies Creative Research Production

20 Activities Performed by Sales Promotion Agencies Promotional planning Creative work and research Tie-in coordination Fulfillment Premium design and manufacturing Catalog productions Contest/sweepstakes management

21 Functions Performed by Public Relations Firms Strategy development Damage control Generating publicity Lobbying Program planning Public affairs Image portrayal

22 Functions Performed by Interactive Agencies Web sites Web banner ads Interactive Media Creation CD-ROMs Text messages Kiosks Search engine optimization

23 Marketing Research Companies Planning and implementing research Information application Analysis and interpretation Primary data collection qualitative & quantitative Secondary data collection

24 Pros & Cons of Integrated Services + Positive - Negative Greater synergy Budget politics Convenience Integrated Services Poor communication Single image for product or service No synergy

25 Test Your Knowledge Surveys of marketing and ad agency executives about integrated marketing communications (IMC) have shown: A) agency executives do not support the idea of integrated marketing B) marketers and agency executives have similar opinions regarding who should be in charge of the IMC program C) internal turf battles, agency egos, and fear of budget reductions are seen as major barriers to successful IMC campaigns D) marketing executives feel a lack of people with IMC skills is a major obstacle to implementing integrated marketing

26 Obstacles to Implementing IMC Many elements to handle Consistent execution Internal turf battles Agency egos Compensation Fear of budget reductions Measuring campaign success