Chapter 3
Organizing for Advertising and
Promotion:
The Role of Ad Agencies and Other
Marketing Communications Organizations
Last Class
 Role of IMC in marketing
 Segmentation
 Positioning
 Competitive Advantage
 Pull vs push strategies
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
The Worldwide Advertising Industry
Global expenditures $425 billion
In the UK £19 billion in 2006
Participants in the IMC
Process
Advertiser (Client)
Advertising Agency
Media Organizations
Marketing
Communications
Specialist
Organization
Collateral Services
Direct
Response
Agencies
Sales
Promotion
Agencies
Public
Relations
Firms
Interactive
Agencies
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
Top 10 Advertisers in U.S.
Rank
1
2
3
4
5
6
7
8
9
10
Company
General Motors
Proctor & Gamble
Phillip Morris
Pfizer
AT&T
DaimlerChrysler
Ford Motor Company
Sears Roebuck
PepsiCo
Verizon Communications
Ad Spending
$ 4,040,000,000
$ 2,611,700,000
$ 2,201,600,000
$ 2,142,400,000
$ 1,950,900,000
$ 1,804,100,000
$ 1,639,800,000
$ 1,505,200,000
$ 1,315,700,000
$ 1,312,700,000
2002 Top 10 Multinational Advertisers
(Ad Age Global Marketing Report Nov
10, 2003)
1. Procter & Gamble Co.
US$4,479 million
2. Unilever.
US$3,315 million
3. General Motors Corp.
US$ 3,218 million
4. Toyota Motor Corp.
US$2,405 million
5. Ford Motor Co.
US$2,387 million
6. Time Warner.
US$2349 million
7. Daimler Chrysler.
US$1,800 million
8. L'Oreal.
US$1,683 million
9. Nestle SA.
US$1,547 million
10. Sony Corp.
US$1,513 million
Global Advertising

Standardized





Global brands
Efficiency / Recognition
Localized
Based on differences in each country or culture
Relevance / Understanding
Most companies blend strategies to fit their unique
situations
Local Advertising…
 Businesses in a particular city or county
targeting customers in that geographic area

(50% of all advertising $ are local)
Local vs. National Advertisers
National
Local
Focus
Building the Brand
Market Share
Strategy
Markets
Place of Business
Sales
Tactics
Customers
Time
Long-term
Short-term
Resources
$$$$
Many Specialists
$
Few Generalists
 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
Top Ten World Advertising Agencies
Agency
McCann-Erickson Worldwide
DDB Worldwide
Grey Advertising
Ogilvy & Mather Worldwide
EURO RSCG Worldwide
J.Walter Thompson Co.
BBDO Worldwide
Y & R Advertising
Publicis Communication
D’Arcy Masius Benton & Bowles
Markets Clients
58
40
45
33
29
27
32
27
23
21
1348
721
700
672
651
627
597
517
512
452
Source: http://www.adage.com/international/world_brands, February 12, 2002.
What Do Advertising Agencies Provide?
 Account services
 Marketing services
 Creative services
 Media Planning and Buying
 Traffic Management
Pros & Cons of Centralization
+ Positive
- Negative
Better
Communications
Less Goal
Involvement
Fewer
Personnel
Continuity
Of Staff
The
Centralized
System
Longer
Response Time
Can’t Do
Multiple Product
Lines
Pros & Cons of Decentralization
+ Positive
- Negative
Concentrated
Attention
Lack of
Experience
in IMC
Rapid Problem
Response
Increased
Flexibility
The
Decentralized
System
Competition for
Resources
Lack of
Authority
Pros & Cons of In-House
Agencies
+ Positive
- Negative
Cost
Savings
Less
Experience
More
Control
Better
Coordination
The
In-house
Agency
Less
Objectivity
Less
Flexibility
Most No Fear advertising is
done by their in-house agency
+
Cannes Lions Live Advertising
Awards
 Type Of Advertisement: Newspaper
Category: Entertainment & Leisure
Title: PERISCOPE
Advertiser: LEGO
Product or Service: LEGO CONSTRUCTION BLOCKS
Entrant Company: FCB JOHANNESBURG
Country: SOUTH AFRICA
Advertising 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
“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 . . .
Ad Agencies Have Skilled Specialists
Artists
Writers
Researchers
Photographers
Media Analysts
Other Skills
Full-Services Agencies
Planning
advertising
Creating
advertising
Producing
advertising
Full Range of
Marketing
Communication
and Promotion
Services
Strategic market
planning
Sales promotion
and training
Trade show
materials
Performing
research
Selecting media
Package design
Non-Advertising
Services
Public relations
and publicity
Typical Full-Service Agency
Organization
Board of
Directors
President
VP Creative
Services
Writers
Art Directors
TV
Produciton
Traffic
Print
Production
Traffic
VP Account
Services
Account
Supervision
Account
Executive
VP Management
and Finance
VP Marketing
Services
Media
Research
Sales
Promotion
Personnel
Office
Management
Accounting
Finance
Services Provided by Agencies
Agency Services
Account
Service
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
The Role of Creative Boutiques
Creative
Boutiques
Provide Only Creative Services
Full-Service Agencies May
Subcontract With Creative
Boutiques
Other Functions Provided by
the Internal Client Departments
Coca Cola’s in-house boutique
created this popular spot
+
Media Buying Can Be Specialized
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
Foote, Cone & Belding was the
agency for Levi’s for 68 years
Why Agencies Lose Clients
Poor
performance
Unrealistic
demands
Personality
conflicts
Personnel
changes
Poor
communications
Changes
in size
Conflict of
interests
Changes
in strategy
Declining
sales
Payment
conflicts
Policy changes
How Agencies Gain Clients
Referrals
Presentations
Solicitations
Public Relations
Image, Reputation
Gateway Changed Its
Advertising
After Changing Agencies
A Change in Strategy Led to a
Change in Gateway’s
Advertising
Direct Response Agency
Activities
Data Base
Management
Direct
Mail
Research
Media Services
Direct
Response
Agencies
Creative
Production
Functions performed by Public
Relations Firms
Strategy
Development
Damage
Control
Generating
Publicity
Program
Planning
Image
Portrayal
Lobbying
Public
Affairs
Functions performed by Interactive Agencies
Web
Banner Ads
Web Sites
Interactive
Media Creation
CD-ROMs
Kiosks
Audio
Video
Digital
Content
Animation
Special Effects
Marketing Research
Planning and
Companies
Implementing
Research
Information
Application
Analysis and
Interpretation
Primary Data
Collection
Qualitative & Quantitative
Secondary Data
Collection
Sum Up
 Ad Agency structure
 Ad Agency Organization
 Evaluation of Ad Agencies
Next Class
 Perspectives on Consumer Behaviour
 Read Chapter 4