Chapter03_Advertising and promotions.ppt

Advertising and promotion are both important aspects of marketing, but they serve different purposes1234:
Advertising is a one-way communication that informs potential customers about products and services.
Promotion involves disseminating information about a product, brand, or company to increase awareness and persuade customers to buy.

1. Organizing for Advertising
and Promotion:
The Role of Ad Agencies and Other Marketing
Communication Organizations
3
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Participants in the IMC Process
Marketing
communications
specialist
organizations
Media organizations
Advertiser (Client)
Advertising agency
Collateral services
Direct-
response
agencies
Sales
promotion
agencies
Interactive
agencies
Public
relations
firms

3. Organizing for Advertising and Promotion
•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

4. Advertising Dept. Under Centralized System
President
Production Finance Marketing
Research
and
develop-
ment
Human
resources
Marketing
research
Advertising Sales
Product
planning

5. Pros & Cons of a Centralized System
Fewer
personnel
Better
communications
Continuity
Longer
response time
Less goal
involvement
The
Centralized
System
+ Positive+ Positive - Negative- Negative
Impractical for
multiple brands,
products,
divisions
More top
management
involvement

6. Decentralized Advertising System
Production Finance
Sales
Brand
Manager
Ad agency
Product
Management
Sales promotion
Package design
Marketing
services
Marketing R & D
Human
Resources
Corporate
Brand
Manager
Ad agency
Advertising
Dept
Marketing
Research
Merchandising

7. Pros & Cons of Decentralization
Internal conflicts
Ineffective
decision making
Rapid problem
response
Concentrated
attention
Increased
flexibility
The
Decentralized
System
+ Positive+ Positive - Negative- Negative
Unequal
distribution
of funds
Lack of
Authority

8. Test Your Knowledge
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

9. In-House Agencies
Benetton’s in-house agency works with
outside agencies to develop ads

10. Pros & Cons of In-House Agencies
More
control
Cost
savings
Better
coordination
Less
objectivity
Less
experience
The
In-house
Agency
+ Positive+ Positive - Negative- Negative
Less
flexibility

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. Ad Agencies Have Skilled Specialists
Artists Writers Researchers
Photographers Media Analysts Other Skills

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

15. Typical Full-Service Agency Organization
Writers
Art directors
TV
production
Traffic
Print
production
Account
Executive
Account
supervision
VP account
services
Media
Research
Sales
Promotion
VP marketing
services
Personnel
Accounting
Finance
Office
management
VP management
and finance
President
Board of
directors
VP creative
services

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

17. 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

18. Media Buying Can be Specialized
Specialize in buying media,
especially broadcast time
Agencies and clients develop
media strategy
Media
Specialist
Companies
Media buying organizations
implement the strategy and
buy time and space

19. Test Your Knowledge
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 fee- or
incentive-based systems.
B)From the viewpoints of both the client and the agency,
the traditional commission system is superior to
negotiated commissions.
C)Most clients want their agencies to be in total charge
of the integrated marketing communications process,
so they prefer to compensate them based on media
commissions.
D)Statements A, B, and C are all true.

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

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

22. Top Agency Value-Add Activities
New media
guidance,
solutions
Integrated
disciplines
& functions
Creative
ideas
Collaboration
Ideas/programs
for multi comm.
programs
Talented
people
Brand
driver
evaluation

23. Loyalty to a Single Agency
Young &
Rubicam has
handled the
Dr Pepper
account for
over 30 years

24. Why Agencies Lose Clients
Poor
performance
Poor
communications
Unrealistic
Client demands
Personality
conflicts
Personnel
changes
Changes
in size of client
or agency
Conflicts of
interest
Change in
client’s strategy
Declining
sales
Payment
conflicts
Policy Changes
Policy Changes

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

26. The Hottest Agency in the Ad Business

27. Direct-Marketing Agency Activities
Direct
mail
Database
management
Research
Creative
Media services
Direct-
Marketing
Agencies
Production
Database
development,
management

28. Direct-Marketing Agency
•Departments in a typical direct-
marketing agency
–Account management
–Creative
–Media
–Database development and management

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

30. Functions Performed by Public Relations Firms
Strategy
development
Generating
publicity
Lobbying
Public
affairs
News releases,
communication
Research
Managing
crises
Coordination
with promotional
areas
Special events

31. Functions Performed by Interactive Agencies
Web
banner ads
Search engine
optimization
Kiosks
Interactive
Media Creation
CD-ROMs
Web sites Text messages

32. Website for the California Milk Advisory Board

33. Marketing Research Companies
Quantitative studies
Qualitative research
Help clients under-
stand target
audience

34. Pros and Cons of Integrated Services
Convenience
Greater synergy
Single image for
product or service
Poor
communication
Budget politics
Integrated
Services
+ Positive+ Positive - Negative- Negative
No synergy

35. Test Your Knowledge
Marketing executives say the biggest obstacle to
implementing IMC is:
A) Lack of management support
B) Insufficient budgets
C) Lack of people with the right perspective
and skills
D) Inexperienced ad agencies

36. Obstacles to Implementing IMC
•Key obstacles
–Lack of people with the broad perspective
and skills to make it work
–Internal turf battles
–Agency egos
–Fear of budget reductions
–Ensuring consistent execution
–Measuring success
–Compensation