Organizing for Advertising and Promotion · Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communications Organizations
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Organizing for Advertising and Promotion:The Role of Ad Agencies and Other Marketing Communications Organizations
Participants in the IMC Process
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Marketing communications specialist organizations
Media organizations
Advertiser (Client)
Advertising agency
Collateral services
Direct-
response
agencies
Sales
promotion
agencies
Interactive
agencies
Public
relations
firms
Advertising Department UnderCentralized System
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
President
Production Finance Marketing
Research and
develop-ment
Human resources
AdvertisingMarketing research
SalesProduct planning
President
Production Finance Marketing
Research and
develop-ment
Human resources
AdvertisingMarketing research
SalesProduct planning
Fewerpersonnel
Bettercommunications
Continuityof staff
Longerresponse time
Less goalinvolvement
Less goalinvolvement
Longerresponse time
Pros & Cons of Centralization
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
TheCentralized
System
+ Positive - Negative
Can’t domultiple product
linesMore top management involvement
Better communications
Fewer personnel
Continuityof staff
More top management involvement
Decentralized Brand Management System
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Production Finance
Sales
Brand
manager
Ad agency
Brand
manager
Ad agency
Product
management
Sales
promotion
Package
design
Merchandising
Advertising
departmentMarketing
research
Marketing
services
MarketingResearch
and
development
Human
resources
Corporate
Internal conflictsInternal conflicts
Ineffective decision making
Ineffective decision making
Rapid problemresponse
Concentratedattention
IncreasedflexibilityIncreasedflexibility
Rapid problemresponse
Concentratedattention
Pros & Cons of Decentralization
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
TheDecentralized
System
+ Positive - Negative
Misallocation of funds
Lack ofAuthority
Misallocation of funds
Test Your Knowledge
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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
Morecontrol
Costsavings
Bettercoordination
Lessobjectivity
Lessexperience
Lessobjectivity
Lessexperience
Bettercoordination
Morecontrol
Costsavings
Pros & Cons of In-House Agencies
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
TheIn-houseAgency
+ Positive - Negative
Lessflexibility
Artists
Ad Agencies Have Skilled Specialists
© 2007 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 promotions
Strategic market planning
Direct marketing
Interactive capabilities
Planning advertising
Creating advertising
Producing advertising
Performing research
Selecting media
Strategic market planning
Sales promotions
Direct marketing
Package designPackage design
Full-Services Agencies
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Full range of marketing
communication and promotion
services
Nonadvertising services
Public relations and publicity
Interactive capabilities
Typical Full-Service Agency Organization
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
WritersArt directors
TV
production
Traffic
production
VP creative
services
Account
executive
Account
supervision
VP account
services
Media Research Sales
promotion
VP marketing
services
Personnel
Accounting
FinanceOfficemanagement
VP management
and finance
President
Board of
directors
Services Provided by Agencies
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Agency 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
Marketing Services
Account Service
Creative Services
Marketing Services
Account Service
The Role of Creative Boutiques
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CreativeBoutiques
Provide only creative services
Full-service agencies may subcontract with creative
boutiques
Provide only creative services
Full-service agencies may subcontract with creative
boutiques
Ability to turn out inventive creative work quickly
Specialize in buying media, especially broadcast time
Agencies and clients develop media strategy
Agencies and clients develop media strategy
Specialize in buying media, especially broadcast time
Media Buying Can Be Specialized
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Media Specialist
Companies
Media buying organizations implement the strategy and
buy time and space
Test Your Knowledge
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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.
Commissionsfrom media
Fee, cost, and incentive-based
systems
Percentagecharges
Commissionsfrom media
Fee, cost, and incentive-based
systems
Methods of Agency Compensation
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CompensationMethods
Poorperformance
Poorcommunications
Unrealisticdemands
Personnelchanges
Conflict ofinterests
Changesin strategy
Decliningsales
Policychanges
Poorperformance
Poorcommunications
Unrealisticdemands
Personalityconflicts
Personnelchanges
Changesin size
Changesin strategy
Decliningsales
Paymentconflicts
Why Agencies Lose Clients
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Referrals
How Agencies Gain Clients
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Solicitations
Presentations
Public Relations Image, Reputation
Directmail
Databasemanagement
Research
Creative
Media services
Creative
Media services
Research
Directmail
Databasemanagement
Direct-Marketing Agency Activities
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Direct-MarketingAgencies
Production
Catalog productionsCatalog production
Promotional planning
Creative work and research
Tie-in coordination
Fulfillment
Premium design and manufacturing
Premium design and manufacturing
Fulfillment
Tie-in coordination
Creative work and research
Promotional planning
Contest/sweepstakes management
Activities Performed by Sales Promotion Agencies
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Strategydevelopment
Generatingpublicity
Lobbying
Publicaffairs
Damagecontrol
Imageportrayal
Functions Performed by Public Relations Firms
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Programplanning
Webbanner ads
Search engine optimizationKiosks
Search engine optimization
Functions Performed by Interactive Agencies
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Interactive Media Creation
CD-ROMsCD-ROMs
Web sites Text messagesWeb sites Text messages
Planning and implementing
research
Planning and implementing
research
Information application
Analysis and interpretation
Primary data collection
qualitative & quantitative
Secondary data collection
Primary data collection
qualitative & quantitative
Analysis and interpretation
Information application
Marketing Research Companies
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Convenience
Greater synergy
Single image for product or service
Poor communication
Budget politics
Poor communication
Budget politics
Single image for product or service
Convenience
Greater synergy
Pros & Cons of Integrated Services
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Integrated Services
+ Positive - Negative
No synergy
Test Your Knowledge
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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
Many elements to handle
Internalturf battles
Agency egos
Fear of budget reductions
Consistentexecution
Measuring campaign success
Obstacles to Implementing IMC
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Compensation
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