Chapter Three Organizing for Advertising and Promotion:

The Role of Ad Agencies and Other Marketing Communication Organizations

Participants in the IMC Process

Advertiser (Client) Advertising agency Media organizations Marketing communications specialist organizations Collateral services Directmarketing agencies Sales promotion agencies

Public relations firms

Interactive agencies

Advertising Department Under Centralized System

President

Production

Finance

Marketing

Research and development

Human resources

Advertising

Marketing research

Sales

Product planning

Pros & Cons of Centralization

+ Positive
Better communications Fewer personnel Continuity of staff More top management involvement

- Negative
Less goal involvement

The Centralized System

Longer response time

Cant do multiple product lines

Decentralized Brand Management System

Corporate Research and development Human resources

Production

Finance

Marketing

Sales

Product management Brand manager Brand manager

Marketing services

Ad agency

Ad agency

Advertising department

Marketing research

Sales promotion Merchandising

Package design

Pros & Cons of Decentralization

+ Positive
Concentrated attention

- Negative
Ineffective decision making

Rapid problem response

The Decentralized System

Internal conflicts

Increased flexibility

Misallocation of funds Lack of Authority

Pros & Cons of In-House Agencies

+ Positive
Cost savings

- Negative
Less experience

More control

The In-house Agency

Less objectivity

Better coordination

Less flexibility

Ad Agencies Have Skilled Specialists

Artists

Writers

Researchers

Photographers

Media Analysts

Other Skills

Full-Services Agencies
Planning advertising

Creating advertising
Producing advertising Strategic market planning

Full range of marketing communication and promotion services

Performing research Selecting media

Interactive capabilities

Sales promotions
Direct marketing

Nonadvertising services

Package design Public relations and publicity

Typical Full-Service Agency Organization

Board of directors President VP creative services Writers

Art directors

VP account services Account supervision Account executive Media

VP marketing services Research Sales promotion

VP management and finance

TV production

Print production

Traffic

Office management Accounting Personnel

Finance

Services Provided by Agencies

Agency Services
Account Service
The link between agency and client Managed by the account executive

Marketing Services
Research department May include account planners Media department to obtain media space and time

Creative Services
Creation and execution of ads Copywriters, artists, other specialists

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

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

Young & Rubicam has handled Dr Pepper for over 30 years

Why Agencies Lose Clients

Personnel changes

Poor Poor Performance or performance Service

Unrealistic demands

Changes in strategy
Declining sales Payment conflicts Policy changes

Poor communications communication Changes Changes in size in size Conflict of interests

Personality Personality conflicts conflicts

How Agencies Gain Clients

Referrals

Presentations

Solicitations

Public Relations

Image, Reputation

Direct-Marketing Agency Activities

Database management Direct mail

DirectMarketing Agencies

Media services

Creative

Research

Production

Activities Performed by Sales Promotion Agencies

Promotional planning
Creative work and research Tie-in coordination Fulfillment Premium design and manufacturing Catalog Catalogproductions production Contest/sweepstakes management

Functions Performed by Public Relations Firms

Strategy development

Damage control

Generating publicity

Program planning
Lobbying Public affairs Image portrayal

Functions Performed by Interactive Agencies

Web banner ads

CD-ROMs

Web sites

Interactive Media Creation Kiosks

Text messages

Search engine optimization

Marketing Research Companies

Planning and implementing research Information application

Analysis and interpretation

Primary data collection

qualitative & quantitative

Secondary data collection

Pros & Cons of Integrated Services

+ Positive
Greater synergy

- Negative
Budget politics

Convenience

Integrated Services

Poor communication

Single image for product or service

No synergy

Obstacles to Implementing IMC

Consistent Consistent execution execution

Many Many elements elements to to handle handle

Internal Internal turf turf battles battles

Compensation Measuring Measuring campaign campaign success success Fear Fear of of budget budget reductions reductions

Agency Agency egos egos