Chapter 3 Slides—Advertising & MKT

CH 3 Organizing for Advertising and Promotion: The Role of Ad Agencies

Instructor: Yeonjae Choi, Ph.D.

Learning Objectives

• Describe:

  • How companies organize for advertising and integrated marketing communications functions.

• Compare:

  • The advantages and disadvantages of different ways to organize for advertising and promotion.

• Identify:

  • The types of advertising agencies and the roles they play.

• Explain:

  • How to select, compensate, and evaluate advertising agencies.

• Identify:

  • The role and functions of specialized marketing communication organizations.

• Compare:

  • The pros and cons of using an integrated marketing services agency.

Advertising Examples from Leo Burnett Company

• Marlboro Man: Iconic character created to advertise Marlboro cigarettes.

• Jolly Green Giant: A character used in promoting Green Giant vegetables to emphasize tenderness and quality during holiday meals.

• Sugar Frosted Flakes: Advertised with the phrase, "You bet your life they're Gr-r-reat!" emphasizing taste and customer attraction.

Leo Burnett's Creativity and Evolution

• Timeline of Impact (1928-2014):

  • 1935: Leo Burnett Company founded.

  • Created memorable characters which left a lasting effect on advertising strategies.

  • Inducted into the Creative Hall of Fame (1961).

Ogilvy as a Leading Ad Agency

• Reputation: Described as the creative force of modern advertising.

• Partnership with Clients: Highlighted in a recent partnership expansion with Verizon, focusing on creative growth.

Verizon's Advertising Agency Changes

• Transitioning from McCann to Ogilvy as their lead agency for consumer business in a deal worth over $3 billion.

• Impact on Agencies:

  • McCann had managed Verizon's account since 2015.

  • Ogilvy is taking over in 2024.

• Strategic Shift: This transition occurs amidst internal changes within Verizon’s marketing leadership, specifically the departure of CMO Diego Scotti.

Integrated Marketing Communications (IMC) Process Participants

• Key Participants:

  • Advertisers (clients): Organizations marketing products, services, or causes, providing funding for IMC programs, and developing marketing plans.

  • Advertising Agencies: Specialize in the creation, production, or placement of communication messages, sometimes facilitating the IMC process.

  • Media Organizations: Provide environments for marketing messages.

  • Specialized Marketing Communication Services: Include direct marketing, sales promotion, digital/interactive agencies, and public relations.

  • Collateral Services: Support structures used across advertising and communication platforms.

Factors Affecting Company Organization for IMC

• Key Factors:

  • Size of organization.

  • Number of products marketed.

  • The role of advertising and promotion in overall marketing strategy.

  • allocated budget.

  • Organizational structure.

Centralized vs. Decentralized Marketing Systems

Centralized System:

• Characteristics:

  • Marketing activities organized by function.

  • Advertising manager oversees administration, execution, and coordination with departments and agencies.

• Figure 3-2: Organizational Model:

  • Positions separated by functions—President, Research, Finance, Marketing, Advertising.

• Advantages:

  • Streamlined communication and fewer personnel.

  • Continuity in staff and top-management involvement.

• Disadvantages:

  • Less understanding of overall marketing goals; longer response times.

Decentralized System:

• Characteristics:

  • Used by larger firms with varied products; brand managers for each product.

  • Brand manager roles include total management: planning, budgeting, sales, and profit performance.

• Category Management:

  • Coordinated efforts among brand managers with related products, e.g., Procter & Gamble’s laundry products.

• Advantages:

  • Focused managerial attention, rapid response, and flexibility.

• Disadvantages:

  • Potential for ineffective decision-making and internal conflicts.

In-House Agencies:

• Definition:

  • Advertiser-owned and operated agencies aimed at reducing costs

  • Provide tighter control over marketing communications.

• Advantages:

  • Cost savings, increased coordination, stability, faster turnaround times for digital content.

• Disadvantages:

  • Potentially less experience and objectivity, limited flexibility, and restricted access to creative talent.

Summary Comparison of Advertising Organizational Systems

• Describe how companies organize for advertising and integrated marketing communications functions: This involves understanding the structure and framework that companies establish to manage their advertising efforts and integrated marketing communications (IMC). It encompasses the roles and relationships between advertising agencies, media organizations, and other marketing communication services in executing marketing strategies effectively.

• Compare the advantages and disadvantages of different ways to organize for advertising and promotion: This includes evaluating the various organizational systems (centralized vs. decentralized) and structures (in-house vs. external agencies) that companies can adopt, weighing their strengths (e.g., streamlined communication, focused management) against their weaknesses (e.g., longer response times, potential internal conflicts).

• Identify the types of advertising agencies and the roles they play: This objective focuses on recognizing the different categories of advertising agencies (e.g., full-service agencies, digital agencies, creative boutiques) and their specific roles in the advertising ecosystem, including the creation, production, and placement of communication messages.

• Explain how to select, compensate, and evaluate advertising agencies: This involves the criteria and processes for choosing an advertising agency that aligns with a company's goals, including the methods for contracting (compensation structures) and performance assessment (evaluating the agency’s effectiveness in delivering desired outcomes).

• Identify the role and functions of specialized marketing communication organizations: This objective covers the distinct roles that specialized marketing firms (like PR agencies, digital marketing firms, and direct marketing entities) play in the integrated marketing communications process, including how they complement the work of traditional advertising agencies.

• Compare the pros and cons of using an integrated marketing services agency: This involves analyzing the benefits (e.g., unified messaging, cross-channel synergy) and potential drawbacks (e.g., over-reliance on a single agency, loss of diverse perspectives) of utilizing an agency that provides a comprehensive range of marketing communication services, thus integrating multiple channels and approaches.