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Chapter 3

Chapter 3. Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communications Organizations. Objectives. To understand how firms organize advertising and IMC To examine methods for selecting, compensating and evaluating Ad Agencies

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Chapter 3

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  1. Chapter 3 Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communications Organizations

  2. Objectives • To understand how firms organize advertising and IMC • To examine methods for selecting, compensating and evaluating Ad Agencies • To explain the role of specialized marketing communications organizations

  3. The Worldwide Advertising Industry Global expenditures $425 billion

  4. Participants in the IMC Process Advertiser (Client) Advertising Agency Direct Response Agencies Sales Promotion Agencies Media Organizations Marketing Communications Specialist Organization Public Relations Firms Interactive Agencies Collateral Services

  5. The Advertising Industry... • Advertisers (clients) • advertise themselves & their products • Advertising agencies • plan, create, prepare client’s ad campaigns • Suppliers • photographers, illustrators, printers, video production houses, color film separators, etc. • Media • companies selling electronic & print media

  6. Rank Company Ad Spending Top 10 Advertisers in U.S. General Motors $ 4,040,000,000 Proctor & Gamble $ 2,611,700,000 Phillip Morris $ 2,201,600,000 Pfizer $ 2,142,400,000 AT&T $ 1,950,900,000 1 2 3 4 5 6 7 8 9 10 DaimlerChrysler $ 1,804,100,000 Ford Motor Company $ 1,639,800,000 Sears Roebuck $ 1,505,200,000 PepsiCo $ 1,315,700,000 Verizon Communications $ 1,312,700,000

  7. 2002 Top 10 Multinational Advertisers (Ad Age Global Marketing Report Nov 10, 2003)

  8. Global Advertising • Standardized • Localized • Global brands • Efficiency / Recognition • Based on differences in each country or culture • Relevance / Understanding Most companies blend strategies to fit their unique situations

  9. Local Advertising… • Businesses in a particular city or county targeting customers in that geographic area • (50% of all advertising $ are local)

  10. National Local Local vs. National Advertisers Focus Time Resources Building the Brand Place of Business Market Share Sales Strategy Tactics Markets Customers Long-term Short-term $$$$ $ Many Specialists Few Generalists

  11. The _____ is an outside firm that specializes in the creation, production, and/or placement of the communications message and that may provide other marketing and promotions related services

  12. Top Ten World Advertising Agencies Agency Markets Clients McCann-Erickson Worldwide 58 1348 DDB Worldwide 40 721 Grey Advertising 45 700 Ogilvy & Mather Worldwide 33 672 EURO RSCG Worldwide 29 651 J.Walter Thompson Co. 27 627 BBDO Worldwide 32 597 Y & R Advertising 27 517 Publicis Communication 23 512 D’Arcy Masius Benton & Bowles 21 452 Source: http://www.adage.com/international/world_brands, February 12, 2002.

  13. What Do Advertising Agencies Provide? • Account services • Marketing services • Creative services • Media Planning and Buying • Traffic Management

  14. Cost Savings Less Experience More Control Less Objectivity Better Coordination Less Flexibility Pros & Cons of In-House Agencies + Positive - Negative Cost Savings Less Experience The In-house Agency More Control Less Objectivity Better Coordination

  15. Most No Fear advertising is done by their in-house agency +

  16. Cannes Lions Live Advertising Awards • Type Of Advertisement: NewspaperCategory: Entertainment & LeisureTitle: PERISCOPEAdvertiser: LEGO Product or Service: LEGO CONSTRUCTION BLOCKS Entrant Company: FCB JOHANNESBURGCountry: SOUTH AFRICAAdvertising Agency: FCB JOHANNESBURG Country: SOUTH AFRICA Creative Director: Brett Morris Copywriter: Lance Vining Art Director: Lance Vining/Charles Foley Photographer: Gerard Turnely Typographer: Lance Vining Account Supervisor: Joanne Donald Advertiser's Supervisor: Gavin Mansour

  17. “1984” • More than a good TV commercial • A new way of thinking about advertising • Total Marketing! • Marketing Public Relations: Computer Magazine Reviews, Major Media Coverage • Sales Promotion: In-store materials • New Media Products: MacWorld, MacWeek • And more . . .

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

  19. Planning advertising Performing research Creating advertising Selecting media Producing advertising Strategic market planning Package design Sales promotion and training Public relations and publicity Trade show materials Full-Services Agencies Planning advertising Full Range of Marketing Communication and Promotion Services Performing research Creating advertising Selecting media Producing advertising Strategic market planning Package design Non-Advertising Services Sales promotion and training Trade show materials

  20. Account Service Marketing Services Creative Services The link between agency and client Managed by the Account Executive Research department may design and execute research programs Media department may analyze, select and contract media resources Creation and execution of ads Copywriters, artists, other specialists Services Provided by Agencies Agency Services Account Service Marketing Services

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

  22. Coca Cola’s in-house boutique created this popular spot +

  23. 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 Can Be Specialized Media Buying Services Specialize in Buying Media, Especially Broadcast Time Agencies and Clients Develop Media Strategy

  24. Foote, Cone & Belding was the agency for Levi’s for 68 years

  25. Personnel changes Changes in strategy Poor performance Poor communications Declining sales Unrealistic demands Changes in size Payment conflicts Personality conflicts Policy changes Conflict of interests Why Agencies Lose Clients Personnel changes Changes in strategy Poor performance Poor communications Declining sales Unrealistic demands Changes in size Payment conflicts Personality conflicts Conflict of interests

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

  27. Gateway Changed Its Advertising After Changing Agencies

  28. A Change in Strategy Led to a Change in Gateway’s Advertising

  29. Data Base Management Media Services Direct Mail Creative Research Production Direct Response Agency Activities Data Base Management Media Services DirectResponse Agencies Direct Mail Creative Research

  30. Damage Control Generating Publicity Strategy Development Image Portrayal Lobbying Program Planning Public Affairs Functions performed by Public Relations Firms Damage Control Generating Publicity Strategy Development Image Portrayal Lobbying Public Affairs

  31. Audio Web Banner Ads Video Web Sites CD-ROMs Animation Special Effects Kiosks Functions performed by Interactive Agencies Web Banner Ads Web Sites Interactive Media Creation CD-ROMs Kiosks Audio Video Digital Content Special Effects

  32. Planning and Implementing Research Information Application Analysis and Interpretation Primary Data Collection Qualitative & Quantitative Secondary Data Collection Marketing Research Companies Planning and Implementing Research Information Application Analysis and Interpretation Primary Data Collection Qualitative & Quantitative

  33. Sum Up • Ad Agency structure • Ad Agency Organization • Evaluation of Ad Agencies

  34. Next Class • Perspectives on Consumer Behaviour • Read Chapter 4 - 6

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