MGMT 318, Session 2

1
MGMT 318, Session 2

• Managing Advertising and Promotion
• The Role of Ad Agencies and Other Marketing
  Communications Organisations

2
Agenda

• Managing Advertising
• Social Aspects of Advertising.

3
Participants in the IMC Process
Marketing Communications Specialists
Advertiser (client)
Advertising Agency
Media Organisations
Collateral services
4
IMC Players

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

5
The Advertising Responsability Under a
Centralised System
President
Human Resources
Finance
Production
Marketing
R D
Marketing Research
Product Planning
Advertising
Sales
6
The Centralized System

• Advantages
• Better Communications
• Fewer Personnel
• Continuity of Staff

• Disadvantages
• Longer Response Time
• Cant Do Multiple Lines

7
The Decentralized System

• Advantages
• Concentrated Attention
• Rapid Problem Response
• Increased Flexibility

• Disadvantages
• Ineffective Decisions
• Internal Conflicts
• Lack of Authority

8
In-House Agencies

• Advantages
• Cost savings
• More control
• Better coordination

• Disadvantages
• Less experience
• Less objectivity
• Less flexibility

9
Typical Agency Structure
10
Departments within a Full-Service Agency

• Account Services
• Marketing Services
• Creative Services
• Management and Finance

11
Typical Structure

• The Client is at the center of the structure

12
Why use an Agency?

• Provides required expertise not available
  in-house
• Brings outside perspective on strategy
• Cost advantage for
• media
• value of services

13
How Agencies Gain Clients

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

14
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

15
Other Agencies and ServicesCreative Boutiques

• Provide only creative services
• Other functions provided by the internal client
  departments
• Full-service agencies may subcontract with
  creative boutiques

16
Other Agencies and Services Media Buying Services

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

17
Direct Response Agencies

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

18
Sales Promotion Specialists

• Contests
• Sweepstakes
• Refunds and rebates
• Sampling programs
• Incentive programs

19
Public Relations Firms

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

20
Agency revenues

• A. Commission 15 of gross
• or 17.65 of net
• where Net Gross - 15gross
• Net 0.85 gross
• Net/0.85 gross

21
Agency revenues

• B- Mark-ups
• 17.65 of net for production and other activities

22
Agency revenues

• C- Fee system
• client pays monthly retainer fee to agency
• media is charged at net to client

23
Agency revenues

• D- Performance Fee
• client pays a commission or sum based on met
  objectives
• I.e. TOM from 15 to 25

24
Reasons for Using an 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

25
Full-Services Agencies

• Full Range of Marketing, Communication and
  Promotion services
• Planning, creating, producing advertising
• Performing research
• Selecting media

• Non-Advertising Services
• Strategic market planning
• Sales promotion and sales training
• Production of trade show materials
• Package design
• Public relations and publicity

26
Agency Services

• Account services
• The link between agency and client
• Managed by the Account Executive
• Marketing services
• Research department may design and execute
  research programs
• Media department may analyze, select and contract
  media resources
• Creative services
• Creation and execution of ads
• Copywriters, artists, other specialists

27
Interactive Agencies

• Interactive Media Creation
• Web sites
• Web banner ads
• CD-ROMs
• Kiosks
• Digitized Content
• Audio
• Video
• Animation

28
Marketing Research Companies

• Secondary data collection
• Primary data collection
• Analysis and interpretation
• Information application
• Program implementation

29
Traditional Response Hierarchy Models

• AIDA
• attention interest desire action
• Hierarchy of effects
• awareness knowledge liking preference
  conviction purchase

30
Traditional Response Hierarchy Models cont.

• Innovation adoption
• awareness interest evaluation trial
  adoption
• Information processing
• presentation attention comprehension
  yielding retention behavior

31
Alternative Response Hierarchies

• Standard learning
• Dissonance/ attribution
• Low-involvement

• learn feel do
• do feel learn
• learn do feel