Chapter Objectives

1. Chapter Objectives • To understand how companies organize advertising and other aspects of IMC. • Understand the role and functions of specialized marketing communications organizations. • Examine the use of advertisers, ad agencies, and integrated service providers.

2. Basic strategies • Full service Ad agency • Provide all the functions themselves • In-house • Client does it themselves (no agency) • Mixed model • Agency or client provides some function • Other services provided by “subs”

3. The process Here's the typical RFP process: • Existing contract expires • Client issues a brief (10-15 agencies) • Agency completes a questionnaire • [Conflict of interest issues] • Client use a "scorecard" for finalists (3-5) • Finalists given detailed brief and 1-2 weeks to plans • Client provides a Q&A session for all agencies • Agency “pitches” creative and media plans and fee proposal • Client selects winner

4. Advertising Salaries

5. Typical Ad Agencies Specialists Artists Writers Researchers Photographers Media Analysts Other Skills

6. Compensation strategies 1. Commission -- 15% [or less] • 8-10% on very large accounts 2. Fees • fixed prices on some items, • percentage on others 3. Cost-plus • actual costs [!] + percentage 4. Incentive-based • often performance [sales] based!

7. “Personalities” • Even full service agencies have their own personalities and specialties…. • McCann-Erickson • Fallon (McElligott) • TBWA/Chiat Day

8. McCann-Erickson “OLD RELIABLE” • CLIENTS: • Exxon • 90 years • GM (Buick, Cadillac, Pontiac…) • 70 years • Coca-Cola • 60 years • Nestles • 60 years

9. McCann-Erickson

10. McCann-Erickson

11. Fallon

12. Fallon

13. TBWA/Chiat Day A “Hip” agency • Based in Venice Beach CA and NY Clients: • Absolut vodka • Apple Computer • Nissan • Sony Playstation

14. TBWA/Chiat Day

15. TBWA/Chiat Day

16. Services Provided By Agencies Account Service Marketing Services Creative Services The link between agency and client Managed by the Account Executive Design and execution of research programs Media department analyzes, selects and contracts media resources Creation and execution of ads Copywriters, artists, other specialists Agency Services Account Service Marketing Services

17. The Role of Creative Boutiques Provide Only Creative Services Full-Service Agencies May Subcontract With Creative Boutiques Other Functions Provided by the Internal Client Departments CreativeBoutiques Provide Only Creative Services Full-Service Agencies May Subcontract With Creative Boutiques

18. Media Buying Can Be Specialized Specialize in Buying Media, Especially Broadcast Time Agencies and Clients Develop Media Strategy Media Buying Organizations Implement the Strategy and Buy Time and Space Media Buying Services Specialize in Buying Media, Especially Broadcast Time Agencies and Clients Develop Media Strategy

19. Integrated Marketing Communications Companies must decide whether to use a different organization for each marketing communications function or consolidate them with a large advertising agency that offers all of these services under one roof.

20. Specialized Services • Direct-response agencies • Sales promotion agencies • Public relations firms • “e-commerce” companies

21. Sales Promotion Agencies Promotion Planning Creative Work Research Coordination With Advertising Premium Design Contest/Sweepstakes Development Data Base Marketing Promotion Planning Creative Work Research Coordination With Advertising Premium Design Contest/Sweepstakes Development

22. Functions of Public Relations Firms Damage Control Generating Publicity Strategy Development Image Portrayal Lobbying Program Planning Public Affairs Damage Control Generating Publicity Strategy Development Image Portrayal Lobbying Public Affairs