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Chapter 3
Organizing for
Advertising and
Promotion: The Role
of Ad Agencies
and Other Marketing
Communication
Organizations
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Participants in the Integrated Marketing
Communications Process
Advertisers or clients
Advertising agency
Media organizations
Specialized marketing communication services
organizations
Collateral services organizations
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
2
Education.
Figure 3.2 - The Advertising
Department under a Centralized System
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
3
Education.
Figure 3.3 - Decentralized Brand
Management System
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
4
Education.
Figure 3.4 - Comparison of Advertising
Organizational Systems
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
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Education.
Advertising Agencies
 Service organizations that specialize in planning
and executing advertising programs for its clients
 Superagencies: Large agencies that merged with or
acquired other agencies and support organizations
 Have now evolved into 4 major agency holding
companies?
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
6
Education.
Reasons for Using an Ad Agency
Highly skilled specialists
Specialization in a particular industry
Objective viewpoint of the market
Broad range of experience
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
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Education.
Full-Service Agencies
Full range of
marketing
communication
and promotion
services
Nonadvertising
services
Planning
advertising
Performing
research
Creating
advertising
Selecting media
Producing
advertising
Strategic market
planning
Interactive
capabilities
Sales
promotions
Package design
Direct
marketing
Public relations
and publicity
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
8
Education.
Figure 3.6 - Full-Service Agency
Organization Chart
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
9
Education.
Agency Services
Account
services
Marketing
Services
Creative
Services
• The link
between
agency and
client
• Managed by
the account
executive
• Research
department
• May include
account
planners
• Media dept.
obtains
media space,
time
• Creation
execution of
ads
• Copywriter
artists, other
specialists
Mgmt &
Finance
• Accounting
• Finance
• Human
Resources
• New
business
generation
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
10
Education.
Creative Boutiques
 Small ad agencies that provide only creative
services
 Advantages
 Turn out inventive creative work quickly
 Provide more attention and better access to creative
talent
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
11
Education.
Media Specialist Companies
 Specialize in the buying of media
 Agencies and clients develop media strategy
 Media buying organizations implement strategies,
and buy time and space
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
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Education.
Agency Compensation Methods
Commissions
from media
Fee, cost, and
incentive-based
systems
Percentage
charges
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
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Education.
Evaluating Agencies
Financial audit
Qualitative audit
Costs, expenses
Planning
Personnel hours billed
Program development
Payments to media
Implementation
Payments to suppliers
Results achieved
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
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Education.
Figure 3.9 - How Agencies Add Value
to Client’s Business
Source: “Report on the Agency–Advertiser Value Survey,” American Association of Advertising Agencies and Association of National Advertisers, August
2007
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
15
Education.
Direct-Marketing Agencies
 Provide a variety of services




Database analytics and management
Direct mail
Research and media services
Creative and production capabilities
 Has following departments




Account management
Creative
Media
Database development/management
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
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Education.
Sales Promotion Agency
 Involved with the developing and managing of
sales promotion programs
 Provide following services
 Promotional planning, creative research, and tie-in
coordination
 Fulfillment
 Premium design and manufacturing
 Catalog production
 Contest/sweepstakes management
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
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Education.
Functions Performed by Public
Relations Firms
Strategy
development
Generating
publicity
Lobbying
Public
affairs
News releases,
communication
Research
Managing
crisis
Special
events
Coordination
w/promotional
areas
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
18
Education.
Digital/Interactive Agencies
 Specialize in the development and strategic use of
various digital marketing tools
 Websites for the Internet
 Banner ads
 Search engine optimization
 Mobile marketing
 Social media campaigns
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
19
Education.
Collateral Services
Marketing research
Package design
Consultants
Photographers
Printers
Video production
Event marketing
Copyright В© 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
20
Education.
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