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Managing the IMC Function

Managing the IMC Function. MKT 3850 Dr. Don Roy. Options for Managing the IMC Function. Do-It-Yourself Approach: Use of an in-house ad agency Outsourcing IMC: Hire an outside agency to create communication Combination of In-House and Outside Agency. Outside Marcom Agencies.

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Managing the IMC Function

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  1. Managing the IMC Function MKT 3850 Dr. Don Roy

  2. Options for Managing the IMC Function • Do-It-Yourself Approach: Use of an in-house ad agency • Outsourcing IMC: Hire an outside agency to create communication • Combination of In-House and Outside Agency

  3. Outside Marcom Agencies Approaches agencies use for offering marcom services: • Full-Service Agencies • Specialized Agencies

  4. Full-Service Agencies • One-stop shopping service for a brand’s marcom needs; it’s a “Wal-Mart Supercenter” approach to buying marcom services • Full-service agency typically consists of functional areas that all work to serve the client

  5. Full-Service Agency Departments • Account management • Creative services • Media planning and buying • Research • Account planning • Traffic

  6. Specialized Marcom Agencies • Many firms do not have a need for entire range of services offered by full-service agencies or find them overpriced • Specialized marcom agencies offer a “Starbucks” approach to marcom services, providing expertise in a single or limited area

  7. Specialized Agencies Examples • Brand Strategy Agencies • Media Buying Agencies • Public Relations Agencies • Direct Marketing Agencies • Sales Promotion Agencies • Interactive Agencies • Social Media Agencies • Event Marketing Agencies • B2B Marketing Agencies • Ethnic Marketing Agencies

  8. Agency Compensation Methods • Fee or Retainer- Pay based on amount of time worked for client or a fixed monthly rate • Markups- Profit added on to costs of providing marcom services for client (e.g., adding % to cost of producing a direct mail piece • Performance-based compensation- Pay tied to results achieved by campaign • Commissions- Agency keeps 15% of total billings, with remainder going to media billings

  9. Ad Agency Compensation Trends • Pressure on agencies to lower rates and commissions in tough economic climate • Increasing client interest in performance-based compensation to agencies

  10. The Future of Ad Agency Compensation? “Agencies can create brands and product categories where we have an idea: We can name it, we can label it, we can research it. We can say, ‘If the product has these characteristics, it looks like an X million-dollar business’ and then we can go and sell that brand to somebody who has the expertise in manufacturing and distribution.” - Keith Reinhard, 40-year ad veteran, Chairman, DDB Worldwide, and creator of the pay-for-performance concept

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