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

Participants in the IMC Process

• Advertiser or Client
• Advertising Agency
• Media Organizations
• Marketing Communications Specialists
  • Direct Marketing Agencies
  • Sales Promotion Agencies
  • Interactive Agencies
  • Public Relations Firms
• Collateral Services

Organizational Options For Clients

• Centralized System

Advertising and promotion placed alongside other marketing functions such as sales, research and product planning

• Decentralized System

Separate marketing, sales, advertising and promotion departments for various product lines or businesses of the company. Often use product or brand management system

• In-House Agencies

Advertising agency set up within the company and is owned and operated internally

Procter & Gamble uses the brand management system

Functions of An Advertising Manager

• Planning and Budgeting
• Administration and Execution
• Coordination with other departments
• Coordination with outside agencies and services
• Planning and Budgeting

Client Organization For IMC The Centralized System

Client Organization for IMC The Decentralized System

In-House Agencies

No Fear uses an in-house agency

Reasons for Using an Outside Agency

Obtain services of highly skilled specialists

• Artists
• Writers
• Media analysts
• Researchers
• Others with specific skills

Obtain an objective point of view

• Free of internal policy constraints and biases
• Broad range of experience, having worked with:
  • Diverse marketing problems
  • Various types of clients

Advertising agencies often specialize in specific industries

Full-Services Agencies

• Full Range of Marketing, Communication and Promotion services
• Planning, creating, producing advertising
• Performing research
• Selecting and purchasing media
• Non-Advertising Services
• Strategic market planning
• Sales promotion
• Internet and interactive
• Public relations and publicity
• Production of trade show materials
• Package design

Typical Full-Service Agency Organization

Agency Services

Account services

• The link between agency and client
• Managed by the account executive

Marketing services

• Research department designs and executes research programs
• Media department analyzes, selects and contracts media time and space

Creative services

• Creation and execution of ads
• Copywriters, artists, other specialists

Creative Boutiques

• Provide only creative services
• Other functions provided by the internal client departments or outside agency such as media buying service
• Full-service agencies may subcontract with creative boutiques

Media Buying Services

• Specialize in analyzing and buying media, especially broadcast time
• Agencies and clients may develop media strategy
• Media buying organizations implement the strategy and buy time and space

Agency Compensation

• The Commission System
  • Agency usually receives 15 percent
  • Commissions are paid by the media
  • Commission system is controversial
  • System is becoming less common
• Fee Arrangements
  • Fixed fee method
  • Fee-commission method
• Cost-Plus Agreements
• Incentive-Based Compensation
• Percentage Charges

Example of the Commission System

Agency Evaluation Process

Why Agencies Lose Clients

• Poor performance
• Poor communication
• Unrealistic demands
• Personality conflicts
• Personnel changes
• Changes in size
• Conflict of interests
• Changes in strategy
• Declining sales
• Payment conflicts
• Policy changes

How Agencies Gain Clients

• Referrals
• Solicitations
• Presentations
• Public Relations
• Image and Reputation

Awards competitions are a way for agencies to build their reputation

Direct Response Agencies

Services include:

• Data Base Management
• Direct Mail Programs
• Research
• Media Services
• Creative
• Production

Sales Promotion Specialists

Services include

• Promotion Planning
• Creative
• Research
• Design and Production
  • Contests/sweepstakes
  • Refunds and rebates
  • Sampling and incentive programs

A promotional agency advertises its services

Public Relations Firms

• Strategy Development
• Program Planning
• Generating Publicity
• Lobbying
• Public Affairs
• Image portrayal
• Damage control

Interactive Agencies

Services include:

• Development of strategy for Internet and other interactive marketing tools
• Interactive Media Creation
  • Web sites
  • Web banner ads
  • Digitized content (audio, video, animation)
  • CD-ROMs
  • Kiosks

Collateral Services

• Marketing Research Firms
• Package Design Firms
• Video Production Companies
• Photographers
• Printers
• Event Marketing Companies