betch and bell Integrate communication marketing

7/31/2019 betch and bell Integrate communication marketing

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Chapter 16

Organizing for Integrated MarketingCommunication


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Chapter 16 : Organizing for IMC

Chapter Objectives

To explain the role and functions of specializedmarketing communications organizations

To examine various perspectives on the use ofintegrated services and responsibilities ofadvertising versus agencies


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Participants in the IMC Process

Figure 16-1


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Advertiser (Client) Key participants in the process

Have the products, services, or causes to be marketed

Provide funds to pay for advertising/promotions

Advertising Agency An outside firm that that specializes in the creation,

production, and/or placement of the communications

message


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Media Organizations Provide an environment for the firms marketing

communications message

Specialized Marketing Communications Services Include direct marketing agencies, sales promotion

agencies, interactive agencies, and public relationsfirms

These organizations provides services in their areas ofexpertise


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The Centralized System

Figure 16-2


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The Centralized System

Planning and budgeting

Administration and execution

Coordination with other departments

Coordination with outside agencies and services


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The Decentralized System

Figure 16-3


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Generally occur in large corporations with multipledivisions and many different products

Separate manufacturing, research anddevelopment, sales, and marketing departmentsfor various divisions, product lines or businesses


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Responsibilities and functions associated withadvertising and promotions are transferred to thebrand manger, who works closely with the outside

advertising agency and other marketingcommunications specialists as they develop thepromotional program


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Management Issues of AdvertisingAgencies

Advertising Agency Decision

In-House Agency Option

Advertising Agency Option


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Reduces advertising and promotion costs

Can provide related work (such as sales

presentations and public relations) at a lower costthan outside agencies

Increases time savings and eliminates potentialproblems with outside agencies


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Increases knowledge and understanding of themarket that come from working on advertising andpromotion

Companies have tighter control over theprocesses and can coordinate promotions withthe firms overall marketing program


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Advertising Agency Option

Provide clients with service of highly skilledindividuals who are specialists in their chosenfields

Provide objective viewpoint of the market and itsbusiness that is not subject to internal biases orlimitations

Provide insight into the industry, and often thecompetition


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Canadas Top 20 Marketing

Communications Companies

Figure 16-5


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Full Service Advertising Agencies

Account Services

Marketing Services

Creative Services

Management and Finance

Structure


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Full Service Agency

Figure 16-13


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Account Services

Account services is the link between the adagency and the client

The account executive is responsible forinterpreting the advertisers needs to the agency


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Marketing Services

Research Department

Gather, analyze, and interpret information important indeveloping advertisements

Media Department

Analyzes, selects, and contracts for space or time inthe media selected for the client


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Account Services

Coordinates agency efforts in planning, creating,and producing ads

Presents agency recommendations and obtainsclient approval


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Creative Services

Copywriters are responsible for the creation andexecution of advertisements

May be involved in determining the basic appealor theme of the campaign

The art department is responsible for how the adlooks


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Creative Services

Coordinating the creative and productionprocesses can often be a major problem

A traffic department coordinates all phases ofproduction to ensure all deadlines are met


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Management and Finance

Advertising agencies must be managed andperform operating functions such as accounting,human resources, etc.

Must generate new business

Bulk of an agencys income goes to salary andbenefits for employees


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Structure

Advertising agencies develop an organizationstructure to meet their clients needs

Most medium-size and large agencies arestructured under either a departmental system ora group system


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Department System

Each agency function is set up as a separatedepartment

Each department is called on as needed toperform its specialty

Some agencies prefer this system because itgives employees the opportunity to developexpertise in servicing a variety of accounts


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Group System

Individuals from each department work in groupsto service particular accounts

Each group is headed by an account executive or

supervisor Many agencies prefer this system because

employees become knowledgeable about theclients business

Provides continuity in servicing the account

Oth T Of A i d


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Other Types Of Agencies andServices

Creative Boutiques

Media Buying Services


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Creative Boutiques

Creative boutiques have developed in response todesires to utilize outside creative talent only

Clients may believe extra creative effort isrequired or its employees do not have sufficientskills

Boutiques usually perform creative functions on afee basis


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Media Buying Services

Independent companies that specialize in thebuying of media, particularly radio and television

Agencies and clients usually develop their ownmedia strategies and hire a buying service toexecute them

Media buying services have grown in recent yearsas clients seek alternatives to full-service agencyrelationships

Paid a fee or commission for their work


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Agency Compensation

Commissions from Media

Other Compensation Systems

Fee Arrangement Cost-Plus Agreement

Incentive-Based Compensation

Percentage Charges


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Commissions from Media

Traditional method is a commission system,where the agency receives a specifiedcommission from the media on any advertisingtime or space it purchases for its clients

Many advertisers have gone to a negotiatedcommission system: can be reduced percentagerates, variable commission rates, andcommissions with minimum and maximum profitrates

Example of Commission System


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Example of Commission SystemPayment

Figure 16-14


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Fee Arrangement

Fixed-Fee Method

Agency charges a monthly fee for services and creditsto the client any media commissions earned

Fee-Commission Combination

Media commissions received by the agency arecredited against the fee


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Cost-Plus Agreement

The client agrees to pay the agency a fee basedon the costs of its work plus some agreed-onprofit margin, often a percentage of total costs

Direct costs plus an allocation for overhead and amarkup for profits determine the amount theagency bills the client


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Percentage Charges

Adding a mark up of percentage charges tovarious services the agency purchases fromoutside providers

These charges may include market research,artwork, printing, and other services

Markups range from 17.65 to 20 percent and areadded to the clients overall bill


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Evaluation of Agencies

Financial Audit Focuses on how the agency conducts its business

Designed to verify costs and expenses, personnelhours charged to an account, etc.

Qualitative Audit Focuses on the agencys efforts in planning,

developing, and implementing the clients advertising

programs and considers the results achieved


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Gaining and Losing Clients

Poor performance or service

Poor communication

Unrealistic demands by the client

Personality conflicts Personnel changes


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Gaining and Losing Clients

Changes in the size of the client or agency

Conflicts of interest

Changes in the clients corporate and/or marketing

strategy Declining sales

Conflicting compensation philosophies

Changes in policies


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Sales Promotion Agencies

Independent companies that specialize inproviding services needed to plan, develop, andexecute a variety of sales promotion programs

Services provided by large sales promotionagencies include promotional planning, creative,research, tie-in coordination, etc.


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Public Relations Firms

Develop and implement programs to manage theorganizations publicity, image, and affairs with

consumers and other relevant publics

Activities include planning the PR strategy andprogram, generating publicity, preparing newsreleases, managing crises, etc


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Direct-Response Agencies

Provide a variety of services Database management

Direct Mail

Divided into three main departments Account Management, Creative and Media

Direct-response agencies must solicit newbusiness and be reviewed by existing clients


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Pros of Integrated Service

Advocates of the one-stop shop contend thatvarious individuals in the agencies andsubsidiaries are learning to work together

More convenient for the client to coordinate all itsmarketing efforts through one agency

An agency with integrated marketing abilities cancreate a single image for the product or service

and address everyone with one voice


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Cons of Integrated Service

Providers become involved in political wranglingover budgets and do not communicate with eachother as they should

Agencies efforts to control all aspects of thepromotional program are nothing more than anattempt to hold onto business

Synergy and economies of scale have been

difficult to achieve


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Agency versus Client

Marketers and agency executives have differentopinions regarding who should be in charge of theIMC process

Marketing executives say the biggest obstacle toimplementing IMC is the lack of people with theperspective and skills to make it work


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Agency versus Client

Many ad agencies are adding more resources tooffer their clients a full line of services

As companies shift their promotional dollars awayfrom media advertising to other IMC tools,agencies will explore ways to keep these moniesunder their roofs

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betch and bell Integrate communication marketing