Organizing for Advertising and Promotion:
The Role of Ad Agencies
and Other Marketing Communication
Organizations
CHAPTER 3
Participants in the IMC Process
Advertiser/client
Advertising agency
Media organizations
Specialized marketing communication services
organization
Collateral services organizations
Advertisers/Clients
■ Key participants
■ Clients/advertisers may form following three types of system
based on the decision of the company:
Centralized
Decentralized
In-house Agency
Centralized System
■ Marketing activities are divided along with other activities.
■ Headed by “Advertising Manager”/ “Marketing
Communication Manager”
■ Usually when a company does not have many product lines or
has less divisions. Example: Southwest Airlines, Target,
Walmart
Centralized System
Basic functions of Marketing Communication Manager:
■ Administration and Execution
■ Coordination with Other Departments
■ Coordination with Outside Agencies and Services
Centralized System
Benefits:
■ Developing and coordinating advertising and marketing
programs from one central location facilitates communication
regarding the communication program.
■ Easier for top management to participate.
■ Efficiency in operation as fewer people are involved.
Centralized System
Drawbacks:
■ Department staff members might not understand overall
marketing strategy if they are not included in the planning
process.
■ Slow in responding to specific needs and problems of a
product/service or a brand
■ System may become impractical when the company
becomes larger
Decentralized System
■ Larger companies with multiple divisions.
■ Each brand is assigned to a brand manager.
■ Has one or more assistant brand managers working for the
manager.
■ Brand manager works with outside ad agencies.
■ Example: Unilever, Nestle
Decentralized System
Basic functions of Marketing Communication Manager:
■ Responsibilities and functions associated with advertising and
promotions are transferred to the Brand Manager.
■ Brand Manager works closely with the outside advertising
agency and other marketing communication specialists.
■ Sometimes an additional managerial layer “Category
Manager” oversees management of the entire product
category.
Decentralized System
Benefits:
■ Each brand receives concentrated managerial attention resulting
in faster response to problems opportunities.
■ Systems facilitates the brand manager to be flexible and makes
it easier to adjust various promotional programs
Decentralized System
Drawbacks:
■ Brand manager’s lack of training and experience may detriment
the brand.
■ Instead of focusing on the long-term development programs,
managers sometimes focus only in short-term planning.
■ Individual brand managers may end up competing for the
management attention.
■ Fails to provide brand managers authority over the functions
needed to implement and control the plans they develop.
In-house Agencies
■ In-house agencies are advertising agencies that are set up,
owned and operated by the advertiser. It performs almost
all functions of an outside ad agency and that’s why it’s
sometimes referred to as Full service advertising department
of the advertiser
– Hyundai
– Avon
– Revlon
– Coke
In-house Agencies
Benefits:
■ Reduces cost
■ Efficient workflow
■ Increased knowledge of the market
■ Stability
■ Access to top management
In-house Agencies
Drawbacks:
■ Less experience and objectivity compared to their outside
counterpart
■ Less flexibility as in-house agencies cannot be dismissed if the
result is not as expected
Advertising Agencies
■ A service organization that specializes in planning and
executing advertising programs for its clients.
■ In the early 90’s, large agencies merged with other agencies &
support organizations to form superagencies.
■ Now-a-days, advertising agencies have moved towards IMC
and revenue comes from other places than traditional ads.
■ Examples: Grey, Asiatic, Bitopi Leo Burnett
■ Superagencies: Large agencies that merged with or acquired
other agencies and support organizations
Reasons for Using an Ad Agency
Highly skilled specialists
Specialization in a particular industry
Objective viewpoint of the market
Broad range of experience
Full-Service Agencies
Planning Performing
Full range of advertising research
marketing
communication Creating
Selecting media
advertising
and promotion
services Producing
advertising
Strategic market Interactive
planning capabilities
Nonadvertising
services
Sales promotions Package design
Public relations
Direct marketing
and publicity
Agency Services
Account Marketing Creative Mgmt &
services Services Services Finance
• The link • Research • Creation and • Accounting
between department execution of • Finance
agency and • May include ads • Human
client account • Copywriter
Resources
• Managed by planners • Art • New
the account • Media dept. department business
executive obtains generation
media
space, time
Creative Boutiques
■ Small ad agencies that provide only creative services
■ Has creative personnel such as writers, artists
■ Benefits
– Turn out creative work quickly
– Provide more attention and better access to creative talent
■ Drawbacks
– Competing against larger agencies
– Clients may want a range of services
Media Specialist Companies
■ Specialize in the buying of media
■ Agencies and clients develop media strategy
■ Media buying organizations implement strategies, and buy time
and space
Agency Compensation Methods
Fee, cost, and
Commissions
incentive-based
from media
systems
Percentage
charges
Evaluating Agencies
Financial audit Qualitative audit
Costs, expenses Planning
Personnel hours billed Program development
Payments to media Implementation
Payments to suppliers Results achieved
How Agencies Gain Clients
■ Referrals
■ Solicitation
■ Presentations
■ Public relations
■ Image and reputation
Why Agencies Lose Clients
■ Poor performance or service
■ Poor communication
■ Unrealistic demands by client
■ Personality conflicts
■ Personnel changes
■ Changes in client size or agency
Why Agencies Lose Clients
Direct-Marketing Agencies
■ Provide a variety of services
– Database analytics and management
– Direct mail
– Research and media services
– Creative and production capabilities
■ Has following departments
– Account management
– Creative
– Media
– Database development/management
Sales Promotion Agency
■ Involved with the developing and managing of sales promotion
programs
■ Provide following services
– Promotional planning, creative research, and tie-in
coordination
– Fulfillment
– Premium design and manufacturing
– Catalog production
– Contest/sweepstakes management
Functions Performed by Public Relations Firms
Strategy Generating
Lobbying
development publicity
Public News releases,
Research
affairs communication
Coordination
Managing Special
w/promotional
crisis events
areas
Digital/Interactive Agencies
■ Specialize in the development and strategic use of various
digital marketing tools
– Websites for the Internet
– Banner ads
– Search engine optimization
– Mobile marketing
– Social media campaigns
– Digital media
Collateral Services
Marketing research
Package design
Consultants
Photographers
Printers
Video production
Event marketing
