Industry Structure and overview

• Changes in the industry framework

 Participants in the IMC Process

Advertiser (Client)

Advertising Agency

Media Organizations Direct Sales

Response Promotion
Marketing Agencies Agencies
Communications
Specialist
Organization Public
Interactive
Relations
Agencies
Firms
Why should the Government
Advertise ?
The Role of the Client

• Describe the value that the firm’s brand provides

• Describe the brand’s position in the market
• Describe the firm’s objectives for the brand in the near-term and long-
term
• Identify the target market(s) that are most likely to respond favorable
to the brand
• Identify and manage the supply chain/distribution system that will
most effectively reach the targets
• Be committed to using advertising and other promotional tools to grow
the brand
 1. Advertising Department Under
Centralized System

President

Research
and Human
Production Finance Marketing
Develop- Resources
ment

Marketing Product
Advertising Sales
Research Planning
Role of Adv Department in Centralized format

• Planning and Budgeting

• Administrative & Execution
• Coordination with other departments
• Coordination with outside agencies & services ( collateral services )
• Suites which type of organization ?

• Pros
• Better Communications
• Fewer Personnel
• Continuity
• Cons
• Longer Response Time due to Multiple Product Lines
 2. Decentralized Brand Management System
Corporate

Production Finance Marketing Research Human

and Resources
Development

Sales Product Marketing

Management Services

Brand Brand
Advertising Marketing
Manager Manager
Department Research
Ad agency Ad agency

Sales Package
Promotion Design

Merchandising
• Companies with multiple brands ?
• Category management system
• Brand manager : media buying to ad development
• Pros
• Concentrated Attention
• Rapid Problem Response
• Increased Flexibility
• Cons
• Lack of Experience in IMC
• Competition for Resources
• Lack of Authority
3. In house Adv agencies

• Revlov, Avon, Benetton,. No fear

• Why
• Cost control
• Administrative control
• But lack of expertise

• In house Ad agencies have a narrow perspective

1. Skill sets required
2. Objective view
3. Experience in dealing with diverse problems : vacuum
4. Easy to get and industry orientation for the client
Adv Agencies

• Evolved in 80s & 90s

• Acquiring firms in specialist areas
• Interactive media partners
• Designing sales promotion
• Why?
• Access to skill of specialists
• Agencies that specialize in product categories
• Wider perspective of the industry
• Away from company limitations
Agencies

• Advertising Agencies: • Promotion

• Full-Service Agencies:
• Creative Boutique • Direct Marketing/ Database
• Interactive • E-commerce
• In-House • Sales Promotion
• Media Specialists • Event Planning
• Promotion Agencies • Design Firms
• Direct Marketing • Public Relations Firms
1.Full-Services Agencies
• Full Range of Marketing Communication and Promotion Services

• Non-Advertising Services
 Typical Full-Service Agency Organization

Board of
Directors

President

VP Creative VP Account VP Marketing VP Management

Services Services Services and Finance

Writers TV Print Account Media Research Sales Office

Art Directors Produciton Production Supervision Promotion Management

Account Personnel Accounting Finance

Executive

• India : Media2win
2. The Role of Creative Boutiques

• Provide Only Creative Services

• Full-Service Agencies May Subcontract With Creative
Boutiques
• Other Functions Provided by the Internal Client
Departments

• India : Ideasonic
Coca Cola’s in-house boutique
created this popular spot

+
3. Media Buying Can Be Specialized

Media
Specialize in Buying Media,
Buying Especially Broadcast Time
Services

Agencies and Clients Develop

Media Strategy

Media Buying Organizations

Implement the Strategy and
Buy Time and Space
• Marketing Research Companies
• Work Profile ?
• India:
• ACNielsen
• Ameya
• Delphi India

• On Ground Promotion Companies

Agency compensation

Commission Method
• 15 % of media spend & 16 2/3% for outdoor adv
• Appraisal
• Is 15% equitable for the efforts
• Agency comp. depends on clients expenditure
• Possibility to inflate adv budget
• Ignore cost accounting stds: ignores the objective expenditure
• Possibility to suggest mass media when direct medium could work
• Compensation Methods
• Commissions Method (15%)
• Cost-Plus Agreements
• Percentage Charges on Services outsourced: 17.65 to 20 per cent.
• Fixed Fee-Arrangements
• Fee – Commission combi
• Incentive-Based