Advertising & Promotions Chapter 2

Organizing For Advertising and Promotion in the Firm

these types of companies = PR firms

Most companies use sales promotion agencies to develop and administer complex programs such as contests, sweepstakes, refunds and rebates, premium and incentive offers, and sampling programs. Sales promotion agencies specialize in creating and implementing promotional campaigns that aim to increase sales and generate customer engagement. These agencies have expertise in designing and executing sales promotion strategies that effectively target and attract consumers. They work closely with companies to develop innovative and impactful promotional initiatives that drive customer participation and ultimately lead to increased sales and brand loyalty.

See pages 51-52

A financial audit is a type of examination that focuses on how an agency conducts its business. It is designed to verify costs and expenses, the number of personnel hours charged to an account, and payments to media and outside suppliers. This type of audit ensures that the agency's financial statements are accurate and reliable, providing assurance to clients and stakeholders. It helps identify any financial irregularities, errors, or fraud, and ensures compliance with accounting standards and regulations. Conducting a financial audit helps maintain transparency and accountability in the agency's financial operations.

The correct answer is a centralized system. In a centralized system, the advertising manager has complete control over the promotion operation, including budgeting, coordinating ad creation and production, planning media schedules, and administering sales promotions programs. They also work closely with staff, other departments, and outside agencies. This system allows for streamlined decision-making and coordination, as all aspects of advertising are managed by a single entity.

expense = cost
Also called cost-plus system

A full-service advertising agency is the correct answer because it offers a comprehensive range of marketing, communications, and promotions services to its clients. This includes planning, creating, and producing advertising, performing research, selecting media, and also offering nonadvertising services such as strategic market planning, sales promotions, direct marketing, package design, and public relations. The main characteristics of a full-service advertising agency include account services, marketing services, creative services, management and finance, and structure.

Creative boutiques are agencies that specialize in providing creative services. They are often subcontracted by full-service agencies when they are overwhelmed with work or do not want to hire additional employees. Creative boutiques focus solely on creative tasks such as graphic design, copywriting, and branding. They offer a specialized and focused approach to creative work, which can be beneficial for clients looking for specific creative expertise.

purchasing = buying
things = media

Organizing For Advertising and Promotion in the Firm

The correct answer is commission systems. In commission systems, agencies receive a specified percentage from the media on any advertising time or space they purchase for their clients. This method of compensation has been traditionally used by agencies to earn a commission on the media spend made on behalf of their clients. It incentivizes agencies to negotiate better rates with media vendors and ensures that they are compensated based on the amount of advertising they purchase.

cost = fee

A decentralized system is the correct answer because it refers to a company that separates its departments and assigns responsibility for each product or brand to a brand manager. This allows for more autonomy and decision-making at the department level, as each manager is responsible for their own planning, budgeting, sales, and profit performance. This structure is often used when a company has multiple divisions, product lines, or businesses, as it allows for more specialized management and flexibility.

Advertising managers are responsible for all promotions and activities including marketing, research, and product planning. However, they are not responsible for sales. This means that they oversee the advertising and promotional strategies of a company or organization but do not directly handle sales-related tasks. Therefore, advertising managers are the most suitable option among the given choices.

A qualitative audit refers to an evaluation of the agency's efforts in planning, developing, and implementing the client's advertising programs, with a focus on the results achieved. It involves analyzing the quality of the agency's work, such as the creativity, effectiveness, and impact of the advertising campaigns. This type of audit helps assess the agency's ability to meet the client's objectives and deliver successful advertising strategies. It provides insights into the agency's strengths and weaknesses, allowing for improvements in future campaigns.

Organizing For Advertising and Promotion in the Firm

An in-house agency refers to an advertising agency that is established and operated by the advertiser itself. The main purpose of setting up an in-house agency is to reduce advertising and promotion costs while maintaining tighter control over the advertising process. However, opponents argue that in-house agencies may lack highly skilled specialists and may not attract the best creative talent compared to external firms. Additionally, using an external agency can provide a company with a more varied perspective on its advertising problems and potentially yield greater results.

Also called incentive-based compensation

Interactive agencies would be the correct answer because they specialize in the development and strategic use of various marketing tools such as websites, banner ads, CD-ROMS, text messages, search engines, and kiosks. They require expertise in technology as well as areas such as creative website design, database marketing, digital media, and customer relationship management. Interactive agencies focus on creating interactive and engaging experiences for users, utilizing different digital platforms and technologies.

Advertising Agency Option

The given description suggests that the agency provides a variety of services, including database management and direct mail, which are typically associated with direct-response agencies. Additionally, the mention of expanding their services to include infomercial production further supports the idea that they are direct-response agencies, as infomercials are often used as a direct response advertising method. Therefore, the correct answer is direct-response agencies.

The given text mentions the presence of domestic and international companies and organizations in the advertising agency industry. It also states that there has been a trend of major agencies merging with or acquiring other agencies and support organizations. Therefore, the correct answer "advertising agency industry" aligns with the information provided in the text.

Organizing For Advertising and Promotion in the Firm

The given passage suggests that marketers and agency executives have different opinions on who should be in charge of the integrated marketing communications process. It also mentions that internal turf battles, agency egos, and fear of budget reductions are barriers to successful integrated marketing campaigns. Therefore, the correct answer "agency-client responsibility" implies that both the agency and the client share the responsibility for the integrated marketing communications process and should work together to overcome these barriers and achieve success.

The correct answer, integrated IMC services, is supported by the statement that companies must decide whether to use specialized organizations for each marketing communications function or consolidate them with a large agency that offers all of these services. This implies that integrated IMC services refer to the consolidation of various marketing communications functions within one agency. The opponents' concerns about political wrangling, lack of communication, lack of synergy, and insufficient staffing suggest that these issues may arise when using specialized organizations instead of integrated IMC services.