1. Chapter Objectives • To understand how companies organize advertising and other aspects of IMC. • Understand the role and functions of specialized marketing communications organizations. • Examine the use of advertisers, ad agencies, and integrated service providers.

2. Basic strategies • Full service Ad agency • Provide all the functions themselves • In-house • Client does it themselves (no agency) • Mixed model • Agency or client provides some function • Other services provided by “subs”

4. Advertising Salaries

5. Compensation strategies 1. Commission -- 15% [or less] • 8-10% on very large accounts 2. Fees • fixed prices on some items, • percentage on others 3. Cost-plus • actual costs [!] + percentage 4. Incentive-based • often performance [sales] based!

6. Advertising Under Centralized System President Production Finance Marketing Research and Develop-ment Human Resources Marketing Research Advertising Sales Product Planning

7. Decentralized Brand Management System Corporate Production Finance Marketing Research Human and Resources Development Sales Product Marketing Management Services Brand Brand Advertising Marketing Manager Manager Department Research Ad agency Ad agency Sales Package Promotion Design Merchandising

8. Category Management System

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

10. “Personalities” • Even full service agencies have their own personalities and specialties…. • McCann-Erickson • Fallon (McElligott) • TBWA/Chiat Day

11. McCann-Erickson “OLD RELIABLE” • CLIENTS: • Exxon • 90 years • GM (Buick, Cadillac, Pontiac…) • 70 years • Coca-Cola • 60 years • Nestles • 60 years

12. McCann-Erickson

13. McCann-Erickson

14. Fallon

15. Fallon

16. TBWA/Chiat Day A “Hip” agency • Based in Venice Beach CA and NY Clients: • Absolut vodka • Apple Computer • Nissan • Sony Playstation

17. TBWA/Chiat Day

18. TBWA/Chiat Day

19. Services Provided By Agencies 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 Agency Services Account Service Marketing Services

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

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

22. Integrated Marketing Communications Companies must decide whether to use a different organization for each marketing communications function or consolidate them with a large advertising agency that offers all of these services under one roof.

23. Specialized Services • Direct-response agencies • Sales promotion agencies • Public relations firms

24. Sales Promotion Agencies Promotion Planning Creative Work Research Coordination With Advertising Premium Design Contest/Sweepstakes Development Data Base Marketing Promotion Planning Creative Work Research Coordination With Advertising Premium Design Contest/Sweepstakes Development

25. Functions of Public Relations Firms Damage Control Generating Publicity Strategy Development Image Portrayal Lobbying Program Planning Public Affairs Damage Control Generating Publicity Strategy Development Image Portrayal Lobbying Public Affairs