Organizing for Advertising and Promotion: The Role of Ad Agencies

1. 3 Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communication Organizations

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. Participants in the IMC Process

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

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

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

7. Decentralized Advertising System Corporate Human Resources Production Finance Marketing R & D ProductManagement Marketingservices Sales Brand Manager Brand Manager AdvertisingDept Marketing Research Ad agency Ad agency Sales promotion Package design Merchandising Skim this material

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

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

10. Under Armour Uses an In-House Agency

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

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

13. Full-Service Agency Organization Chart Skim this material

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

15. Creative Boutiques Provide onlycreative services May subcontract from full-service agencies Strength is turning out creative work quickly CreativeBoutiques

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

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

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

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

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

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

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

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

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

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

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

27. Don Jagoda Associates

28. Functions Performed by Public Relations Firms Specialevents Strategy development Public affairs Managingcrisis Generating publicity News releases,communication Coordinationw/promotionalareas Lobbying Research

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

30. Campaigns Utilizing Social Media

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

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

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