Advertising & Promotions Chapter 2

1. The advertising department is responsible for developing advertising and promotions plans that will be approved by management and recommending a promotions program based on the overall marketing plan, objectives, and budget.

Planning and budgeting

Coordination with other departments

Administration and execution

Coordination with outside agencies and services

Creative boutiques

Organizing For Advertising and Promotion in the Firm

Explanation

Organizing For Advertising and Promotion in the Firm

2. Many large companies use both an advertising agency and these types of companies. This type of agency develops and implements programs to manage the organization's publicity, image, and affairs with consumers and other relevant publics, including employees, suppliers, shareholders, government, labour groups, citizen action groups, and the general public.

Interactive agencies

Public relations firms

Sales promotion agencies

Creative boutiques

Direct-response agencies

these types of companies = PR firms

Explanation

these types of companies = PR firms

3. Most companies use this type of agency to develop and administer complex programs such as contests, sweepstakes, refunds and rebates, premium and incentive offers, and sampling programs.

Sales promotion agency

Media buying services

Public relations firms

Direct-response agencies

Interactive agencies

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.

Explanation

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.

4. The client becomes dissatisfied with poor performance or service, poor communication, there are unrealistic demands by the client, personality conflicts, personnel changes, changes in the size of the client or agency, conflicts of interest, changes in the client's corportate and/or marketing strategy, declining sales, conflicting compensation philosophies, and changes in policies.

Commission systems

Qualitative audit

Intergrated IMC services

Direct-response agencies

Reasons for agencies losing clients

See pages 51-52

Explanation

See pages 51-52

5. Focuses on how the agency conducts its business. Designed to verify costs and expenses, the number of personnel hours charged to an account, and payments to media and outside suppliers.

Incentive-based systems

Financial audit

Qualitative audit

Incentive-based system

Reasons for agencies losing clients

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.

Explanation

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.

6. The advertising manager controls the entire promotion operation, including budgeting, coordinating the creation and production of ads, planning media schedules, and monitoring and administering the sales promotions programs for all the company's products or servies. Performs along with staff: planning and budgeting, administration and execution, coordination with other departments, and coodination with outside agencies and services.

Centralized system

Decentralized system

Interactive agencies

Advertising agencies

In-house agency option

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.

Explanation

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.

7. The client agrees to pay the agency a fee based on the expense of its work plus some agreed-on profit margin, often a percentage of total expenses. Requires that the agency keep detailed records of the expenses it incurs in working on the client's account.

Cost-plus system

Reasons for agencies losing clients

Qualitative audit

Incentive-based systems

Fee arrangement

expense = cost
Also called cost-plus system

Explanation

expense = cost
Also called cost-plus system

8. Offers its clients a full range of marketing, communications, and promotions services including planning, creating, and producing the advertising, performing research, and selecting media. May also offer nonadvertising services such as strategic market planning; sales promotions, direct marketing, and interactive capabilities, package design, and public relations and publicity. Main characteristics are account services, marketing services, creative services, management and finance, and structure.

Creative boutiques

Advertising agency industry

Media buying services

In-house agency

Full-service advertising agency

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.

Explanation

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.

9. An agency that provides only creative services. Full-service agencies often subcontract work to these types of agencies when they are very busy or want to avoid adding full-time employees to their payrolls.

Interactive agencies

Advertising arrangements

Commission system

Media buying services

Creative boutiques

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.

Explanation

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.

10. Companies that specialize in the purchasing things like radio and television time. Has found a nice niche by specializing in the analysis and purchase of advertising time and space.

Commission system

Public relations firm

Interactive media

Media buying services

Sales promotion agencies

purchasing = buying
things = media

Explanation

purchasing = buying
things = media

11. Many companies have an adivertising department but still use many outside services. For example, companies may develop their advetising program in-house while employing media buying services to place their ads and/or use collateral services agencies to develop brochures, point-of-purchase materials, and so on. A centralized organizational system is often used when companies do not have many diferent divisions, product or service lines, or brands to advertise.

Coordination with outside agencies and services

Advertising agencies

Administration and execution

Coordination with other departments

Planning and budgeting

Organizing For Advertising and Promotion in the Firm

Explanation

Organizing For Advertising and Promotion in the Firm

12. The traditional method of compensating agencies, where the agency receives a specified percentage from the media on any advertising time or space it purchases for its clients.

Integrated IMC services

Cost-plus agreement

Commission systems

Interactive media

Centralized system

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.

Explanation

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.

13. There are two basic types of these systems. In the straight or fixed-fee method, the agency charges a basic monthly fee for all of the services on the specific cost to be done and the amount the agency will be paid for it. The second type is a fee-commission combination, in which the media commissions received by the agency are credited against the cost. If the commissions are are less than the agreed-on cost, the client must make up the difference.

Commission systems

Incentive-based systems

Fee arrangement

Fiancial audit

Cost-plus agreement

cost = fee

Explanation

cost = fee

14. A company that separates manufacturing, research and development, sales, and marketing departments for various divisions, product lines, or businesses. Assigns each product or brand to a brand manager who is responsible for the management of the brand, including planning, budgeting, sales, and profit performance.

Advertising agencies

Creative boutiques

Media buying services

Decentralized system

Centralized system

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.

Explanation

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.

15. Responsible for all promotions and activities including marketing, research, product planning, but not sales.

Media buying services

Advertising managers

In-house agency

Advertising agencies

Sales promotion agencies

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.

Explanation

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.

16. Focuses on the agency's efforts in planning, developing, and implementing the client's advertising programs and considers the results achieved.

Integrated IMC services

Reasons for losing clients

Cost-plus agreement

Financial audit

Qualitative audit

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.

Explanation

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.

17. The manager must run the advertising section's activities with those of other areas, particularly those involving other marketing functions.

Advertising agency industry

Coordination with other departments

Coordination with outside agencies and services

Planning and budgeting

Administration and execution

Organizing For Advertising and Promotion in the Firm

Explanation

Organizing For Advertising and Promotion in the Firm

18. An advertising agency that is set up, owned, and operated by the advertiser. A major reason for them is to reduce advertising and promotion costs. Companies maintain tigher control. Opponents say that they do not have as highly skilled specialists and attract the best creative talent that using an external firm gives a company a more varied perspective on its advertising problems and greater.

Interactive agencies

Creative boutiques

Advertising agency industry

In-house agency

Media buying services

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.

Explanation

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.

19. Through this system, clients expect accountability from their agencies and link agency compensation to performance. The basic idea is that the agency's ultimate compensation level will depend on how well it meets predetermined performance goals. The goals often include objective measures such as sales or market share.

Public relations firms

Cost-plus agreement

Fee arrangement

Incentive-based systems

Integrated IMC services

Also called incentive-based compensation

Explanation

Also called incentive-based compensation

20. Specializes in the development and strategic use of various marketing tools such as websites for the Internet, banner ads, CD-ROMS, text messages, search engines, and kiosks. Requires expertise in technology as well as areas such as creative website design, database marketing, digital media, and customer relationship management.

Media buying services

Interactive agencies

Direct-response agencies

Integrated IMC services

Public relations firms

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.

Explanation

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.

21. Highly skilled individuals who are specialists in their chosen fields. The use of this type of company is unique for each advertiser. An outside agency can provide an objective viewpoint. Can draw on the broad range of experience it has gained.

Advertising managers

Media buying services

In-house agencies

Advertising agencies

Advertising agency industry

Advertising Agency Option

Explanation

Advertising Agency Option

22. Provides a variety of services, including database, management, direct mail, research, media services, and creative and production capabilties. Expanding their services to include such areas as infomercial production and database management.

Agency-client responsibility

Media buying services

Direct-response agencies

Interactive agencies

Integrated IMC services

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.

Explanation

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.

23. A combination of domestic fimsand international and organizations. The strong presence of these types of companies reflects a global trend. Underwent major large as large agencies, called superagencies, merged with or acquired other agencies and support organiztions during the past twenty years.

Direct-response agency

Sales promotion agency

Full-service agency

Advertising agency industry

Interactive 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.

Explanation

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.

24. The manger must organize the advertising department and supervise and control its activities. The manager also organizes running the plan by subordinates and/or the advertising agency. This requires working with such departments as production, media, art, copy, and sales promotion.

Coordination with outside agencies and services

Decentralized system

Planning and budgeting

Administraion and execution

Coordination with their departments

Organizing For Advertising and Promotion in the Firm

Explanation

Organizing For Advertising and Promotion in the Firm

25. Marketers and agency executives have very different opinions regarding who should be in charge of the integrated marketing communications process. Internal turf battles, agency egos, and fear of budget reductions are cited as major barriers to success integrated marketing compaigns. Expanding agencies' capabilities in interactive and multimedia advertising, database, direct marketing, public relations, and sales promotion.

Advertising agency industry

Direct-response agencies

Reasons for agencies losing clients

Agency-client responsibility

Integrated IMC services

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.

Explanation

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.

26. Companies must decide whether to use specialized organizations for reach marketing communications function or consolidate them with a large agency that offers all of thse services. Opponents say the providers become involved in political wrangling over budgets, do not communicate with each other as well and as often as they should, do not achieve synergy, and advertising agencies are niether sufficiently staffed to ensure success.

Agency-client responsibility

Integrated IMC services

Reasons for agencies losing clients

Commission systems

Advertising agency industry

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.

Explanation

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.