Deck 2: Organizing for Imc: Role of Agencies

Question 1

Which of the following statements explains why an organization would want to use an outside advertising agency?

A) An outside advertising agency has more knowledge of the brand's identity and its previous promotional activities.
B) An outside advertising agency provides the client with the services of highly skilled individuals who are experts in a number of areas including creative, media, and research.
C) An outside advertising agency saves money for the client.
D) An outside advertising agency helps the client gain more prestige and a better image.

Answer 1

B

Question 2

Major agencies that offer an ever-broadening range of IMC services would be more appropriately called:

A) full-service partners
B) advertising agencies
C) multinational creative boutiques
D) marketing communication agencies

Answer 2

D

Question 3

A major reason for a client using a(n) costs. is to reduce advertising and promotion

A) in-house agency
B) self-sufficient agency
C) client management system
D) full-service system

Answer 3

A

Question 4

When a client works for many years with a primary agency whose focus is on building the client's brand, it is known as a(n):

A) full-service relationship
B) agency-of-record (AOR)
C) principle agency
D) primary service provider

Question 5

The communications link between the ad agency and its clients is:

A) creative services
B) media
C) account services
D) marketing services

Question 6

The is responsible for understanding the advertiser's marketing and promotional needs and interpreting them to agency personnel.

A) marketing specialist
B) account executive
C) media specialist
D) copywriter

Question 7

An ad agency that offers its clients a complete range of marketing, communication, and promotion services is known as a(n):

A) comprehensive marketing organization
B) media buying service
C) full-service agency
D) in-house agency

Question 8

A full-service agency offers its clients all of the following EXCEPT:

A) full range of marketing, communication, and promotion services
B) human resources management
C) public relations expertise
D) research and creative development

Question 9

Which type of ad agency is most likely to assist the client in areas such as marketing strategy and research, campaign planning and execution, and media planning and buying?

A) a collateral agency
B) a creative boutique
C) a media buying service
D) a full-service agency

Question 10

Which of the following is assigned to Target's outside agencies?

A) direct-mail pieces
B) promotions
C) weekly circulars and in-store displays
D) branding and image-oriented communication

Question 11

An advertising agency that is set up, owned, and operated by the advertiser is called a(n):

A) full-service agency
B) in-house agency
C) centralized system
D) client management firm

Question 12

Companies who use a combination of in-house and outside agencies tend to use the external firms mostly for:

A) sales presentations
B) creative and media services
C) weekly circulars
D) direct mail pieces

Question 13

Which of the following best describes an Agency-of-Record (AOR)?

A) the previous agency who did work for a particular client
B) the primary agency whose foremost interest is in building the client's brand
C) an agency that performs work on a project-by-project basis
D) an agency that is subcontracted by the client directly for a particular assignment

Question 14

A major reason why some companies choose to use an in-house agency is to:

A) reduce advertising and promotions costs
B) better understand how advertising works
C) maintain creative freshness
D) win advertising awards that will enhance the image of their brands

Question 15

Lack of sufficient internal expertise and personnel growing stale while working on the same product might be reasons why a company might move away from:

A) a brand marketing system
B) the use of creative boutiques
C) the use of full-service advertising agencies
D) an in-house agency

Question 16

Target's internal creative department handles the design of each of these elements EXCEPT:

A) branding initiatives
B) direct-mail pieces
C) in-store displays
D) weekly circulars

Question 17

Which of the following statements about advertising agencies is true?

A) Agencies must be used since companies do not have the capabilities of developing their own advertising.
B) Most large, national advertisers use in-house agencies.
C) Most large agencies offer only creative services to their clients.
D) Agencies are often used because of the skill, expertise, and experience they can offer in the advertising area.

Question 18

International multiservice agencies were formed by mergers and acquisitions of mid-sized agencies in order to:

A) forge stronger alliances between agencies and their clients
B) eliminate the need for domestic agencies
C) market their services more broadly
D) provide integrated marketing communications services worldwide

Question 19

The agency person who is the focal point of the agency-client relationship is the:

A) product manager
B) media buyer
C) brand manager
D) account executive

Question 20

Joe Fresh moved its creativity in-house from an agency in order to:

A) provide full service at a lower cost
B) better understand how advertising works
C) employ creatives from Target, who might have expertise in the U.S. market
D) encourage its staff to think about the brand

Question 21

Since most of the client's ad budget is spent on media time and/or space, it is important that the media department:

A) coordinates with the creative department to ensure that concepts are not too complex
B) develops a plan that communicates to the right audience in a cost-efficient manner
C) focuses on purchasing commercial time on the most popular shows
D) creates a plan that utilizes the least expensive media vehicles

Question 22

Setting the creative philosophy of the agency and overseeing the work of the writers and artists are the responsibilities of the:

A) creative director
B) agency president
C) master artist
D) director of account service

Question 23

The function of gathering, analyzing, and interpreting information that will be useful in developing advertising is the responsibility of the agency's department.

A) production
B) account management
C) traffic
D) research

Question 24

Advertising ideas and concepts are derived from the creative brief, which includes information about consumers, competitors, and the market. This is the responsibility of the:

A) account planner
B) creative director
C) media director
D) account executive

Question 25

The department coordinates all phases of production to see that the ads are completed on time.

A) production
B) art
C) media
D) traffic

Question 26

The Bright Ideas advertising agency handles each of its clients by assigning individuals from various departments to work together as a team on their accounts. The agency is using which organizational structure?

A) group system
B) dedicated system
C) departmental system
D) matrix system

Question 27

A ______ shows what a print ad will look like, while a depicts the sequence of frames for a commercial or video format.

A) storyboard; layout
B) concept; trailer
C) sketch; video reel
D) layout; storyboard

Question 28

Which of the following functions is NOT performed by the agency's research department?

A) planning the creative and media strategies for the advertising campaign
B) interpreting information to assist in advertising decision-making
C) designing, executing, and interpreting primary research studies
D) disseminating information to agency account planners

Question 29

The in an agency interacts with personnel from all disciplines and provides insights into consumers and how to communicate with them.

A) account planner
B) account executive
C) traffic manager
D) media director

Question 30

A is an agency organizational structure in which each functional area is set up as a separate department. This structure is called on as needed to perform its specialty and serve all of the agency's clients.

A) group system
B) departmental system
C) matrix system
D) creative boutique

Question 31

The department is becoming an increasingly important part of the agency business as many large advertisers consolidate their media buying with one or a few agencies to save money and improve media efficiency.

A) production
B) traffic
C) media
D) product management

Question 32

Which of the following might NOT be a reason why an advertising agency would use a group system organizational structure? It would:

A) allow agency personnel to become very knowledgeable about a particular client's market and business
B) provide superior service for its accounts
C) provide better pricing to a key client
D) ensure continuity in servicing a particular account

Question 33

The department in an advertising agency that is responsible for analyzing, selecting, and contracting for ad space or time that will be used to deliver its client's advertising message is the department.

A) public relations
B) media
C) marketing research
D) account services

Question 34

The is responsible for creating the visual portion of an ad such as layouts and the commercial storyboards.

A) product management department
B) account executive
C) copywriter
D) art director, graphic designer, or studio artist

Question 35

Which department within an advertising agency would assume the responsibility for hiring outside persons such as printers, engravers, photographers, or other vendors to turn a layout into a finished product?

A) traffic department
B) production department
C) media department
D) art department

Question 36

An advertising agency that wants its employees to develop expertise in servicing a variety of accounts should use a(n) structure.

A) in-house agency
B) creative boutique
C) group system
D) departmental system

Question 37

take(s) the creative work done in mass media and add(s) interactive functionality to be used in Internet and mobile media executions.

A) The production manager
B) Computerized adaptation programmers
C) A digital creative services department
D) Small, boutique firms

Question 38

The growth of the Internet as a media vehicle has led to the need for all of the following, EXCEPT:

A) the coordination of digital and mass media advertising components
B) a renewed focus on traditional media
C) the purchase of interactive firms by full-service agencies
D) a digital creative services department

Question 39

The are the individuals who conceive the ideas for the ads and write the advertising message.

A) copywriters
B) traffic coordinators
C) account executives
D) art directors

Question 40

After the creative brief is reviewed and the overall concept has been developed, the ________ is responsible for developing how the ad will look.

A) account director
B) art director or the art department
C) copywriter
D) product management department

Question 41

Which of the following is NOT a valid criticism of the commission compensation system for an ad agency?

A) There is an incentive to avoid non-commissionable media.
B) Media costs do not relate directly to effort or expertise expended by agencies.
C) In periods of media cost inflation, the agency is disproportionately rewarded.
D) It is difficult to administer.

Question 42

Under which type of compensation system might an agency be more inclined to recommend expensive media such as network television and national magazines to its clients?

A) commission system
B) cost-plus system
C) incentive-based compensation system
D) fee arrangement system

Question 43

Which of the following compensation methods should an advertiser adopt if its primary goal is to achieve efficiency and accountability?

A) incentive-based compensation agreement
B) fixed-fee arrangement
C) commission-based arrangement
D) fee-combination arrangement

Question 44

The traditional method of compensating ad agencies is with:

A) the straight salary method
B) the hourly billings
C) the commission system
D) the fee system

Question 45

Agency compensation under the commission system is based on:

A) a specified percentage of any advertising time or space the agency purchases for its client
B) a percentage of a client's marketing budget
C) a percentage of advertising production costs
D) the total number of hours worked

Question 46

Opponents of the agency commission system would argue that this system is NOT effective because a commission:

A) encourages agencies to recommend high media expenditures to increase their commission level.
B) keeps the emphasis on creative skills not the bottom-line.
C) does not tie agency compensation to media costs.
D) encourages agencies to limit their client's advertising expenditures.

Question 47

An agency books television media space at a cost of $1,000,000. The standard agency commission on this buy is:

A) dependent upon the time of day the commercials run
B) dependent upon the actual shows in which the commercials run
C) $15,000
D) $150,000

Question 48

Critics argue that the use of ties agency compensation to media costs.

A) the objective-and-task compensation system
B) the commission system
C) the fixed fee arrangement
D) the cost-plus agreement

Question 49

A _ is a type of compensation arrangement where an agency charges a client a fixed monthly amount of money for all of its services and credits media commissions against this monthly rate.

A) fixed fee agreement
B) fee-commission combination
C) negotiated commission
D) cost-plus agreement

Question 50

An agency books television media space at a cost of $1,000,000. If cash discounts do not apply, what price does the agency pay to the media company?

A) $1,150,000
B) $985,000
C) $850,000
D) $1,000,000 and the client pays the agency commission

Question 51

Negotiated commission rates for advertising agencies:

A) are rarely used by consumer-products advertisers
B) are becoming less common
C) are designed primarily to benefit agencies
D) are becoming more commonplace

Question 52

Which of the following statements about agency commissions is true?

A) Some leading agencies now receive average commissions of 8 to 10 percent.
B) Nearly all of the leading agencies still earn a 15 percent commission.
C) Most agencies are unwilling to negotiate their commission rates.
D) Most agencies are earning more of their income from fixed commissions as clients expand their IMC programs to include other forms of promotion.

Question 53

Under the cost-plus compensation method, all of the following costs might be included in the calculation, EXCEPT:

A) out-of-pocket expenses
B) media costs
C) agency self-promotion costs
D) profit margin

Question 54

Under the , the client agrees to pay the agency a fee based on the cost of its work plus some agreed-on profit margin.

A) incentive-based system
B) fee-combination arrangement
C) media commission system
D) cost-plus arrangement

Question 55

Agencies that are reluctant to let clients see their internal cost figures are less likely to accept a(n):

A) cost-plus agreement
B) fixed-fee arrangement
C) commission-based arrangement
D) incentive-based compensation agreement

Question 56

The standard agency commission is:

A) added on to the agency's media costs and personnel time
B) 15% of media time and space costs
C) 15% added on to media time and space costs
D) a complex formula based on the type of media purchased

Question 57

Which of the following statements about changes in the way advertising agencies are being compensated is true?

A) Since most clients want their agencies to be in total charge of the integrated marketing communications process, they are willing to compensate them based on media commissions.
B) From the viewpoints of both the client and the agency, the traditional commission system is much superior to negotiated commissions.
C) With the move toward integrated marketing services, it is likely that there will be a return to the commission system of compensation.
D) Many agencies and their clients have developed some type of fee arrangement or cost-plus agreement for agency compensation.

Question 58

Why are negotiated commission structures becoming more common?

A) to encourage agencies to cut back on buying network TV advertising for their clients
B) to ensure that agencies do not make too much money
C) to support the creation of a transactional relationship between agency and client
D) to consider the needs of clients as well as the amount of time and effort the agency spends on an account

Question 59

A major argument put forth by defenders of the commission system is that a commission:

A) keeps emphasis when choosing agencies on non-price factors like advertising quality
B) encourages agencies to use non-commissionable media such as direct mail
C) ties agency compensation to the inflation in media costs
D) keeps the agencies from placing advertising in expensive media

Question 60

What form of compensation is used to pay the advertising agency when the client's advertising program does not involve a large amount of media billings?

A) a 17.65 percent markup on costs
B) a negotiated commission
C) a rebate from the media
D) a share of the profits

Question 61

Jenna sees a commercial for a new brand of toothpaste. She decides to consider it the next time she goes to the drug store. This is an example of which behavioural objective?

A) retrial
B) sampling
C) intent to purchase
D) brand awareness

Question 62

The four behavioural objectives that are measures of marketing communication effectiveness are intent to purchase, trial, repeat purchase, and _.

A) viral media
B) brand loyalty
C) brand understanding
D) positioning

Question 63

specialize in the development and management of sweepstakes, refund and rebate offers, and incentive programs.

A) Sales promotion agencies
B) Interactive agencies
C) Direct response agencies
D) Creative boutiques

Question 64

Independent media buying services evolved for each of the following reasons EXCEPT:

A) media strategy development and planning needs to be separate from the buying function
B) advertisers attempt to consolidate their media spending in order to achieve volume efficiencies
C) media buying services concentrate on the analysis and purchase of advertising time and space
D) the proliferation of specialized media has increased the complexity of purchasing advertising media

Question 65

Independent companies that specialize in the purchase of radio and television time are known as:

A) full-service agencies
B) media measurement bureaus
C) mid-sized agencies
D) media buying services

Question 66

Many full-service agencies include sales promotion, merchandising, direct marketing, PR and/or other _.

A) consumer needs
B) niche opportunities
C) organizational structures
D) specialized services

Question 67

Which of the following is NOT true about creative boutiques?

A) Creative boutiques work directly with clients.
B) Members of creative departments of larger firms sometimes leave to create smaller creative boutiques.
C) Creative boutiques are subcontracted by full-service agencies.
D) Clients do not directly hire creative boutiques, but work with them through their Agency-of-Record.

Question 68

Which of the following is NOT a measure of marketing communication effectiveness?

A) brand awareness
B) brand image ratings
C) retail sales results
D) advertising likeability

Question 69

The advertising remuneration process which rewards the agency based on the achievement of mutually agreed upon objectives is called:

A) the Performance by Results system
B) the advertising reward method
C) the cost-based system
D) the fee-combination method

Question 70

Because purchase such large amounts of time and space, they receive large discounts.

A) full-service agencies
B) in-house agencies
C) creative boutiques
D) media buying services

Question 71

Which of the following would NOT be a valid reason for switching advertising agencies?

A) a stagnation or decline in sales of the product
B) conflicts over compensation policies
C) dissatisfaction over the quality of the advertising produced by the agency
D) a change in research methodology

Question 72

A audit of an agency focuses on factors such as costs, expenses, and payments to outside suppliers while a audit focuses on factors such as the agency's
Efforts in planning, development, and implementing the advertising program.

A) financial/qualitative
B) results/process
C) qualitative/quantitative
D) financial/creative

Question 73

Which of the following should a client's evaluation of its advertising agency's performance NOT take into account?

A) performance of account representatives
B) financial status of the agency
C) qualitative considerations, such as the quality of the agency's efforts in creative, media, etc.
D) market performance measures, such as sales and market share

Question 74

The Red River Valley advertising agency receives compensation from its clients based on how well it meets predetermined performance goals. Indicate the compensation method that best corresponds to this situation.

A) incentive-based
B) fee-commission
C) fixed-fee
D) cost-plus system

Question 75

Creative boutiques are agencies that:

A) can perform the same functions as full-service agencies for their clients
B) are used only when research is not important to marketing success
C) have resulted from advertisers wanting to save money in buying media space
D) limit their client service to creative planning and execution

Question 76

Personality conflicts, unrealistic demands by clients, and personnel changes are all reasons why:

A) planning and budgeting communication initiatives is difficult
B) it is difficult to measure the effectiveness of advertising campaigns
C) ad agencies lose clients
D) clients need to use more than one agency

Question 77

specialize in offering services, such as database management, direct mail and creative and production capabilities.

A) Public relations firms
B) Direct-response agencies
C) Creative boutiques
D) Sales promotion agencies

Question 78

Why would General Motors switch to an incentive-based compensation system with several of its agencies?

A) to encourage their agencies to use more mass media advertising
B) to save money on advertising and divert it to other business departments
C) to encourage its agencies to look beyond traditional mass media advertising and develop other ways of reaching consumers
D) to encourage their agencies to stop using network TV advertising

Question 79

The Performance by Results system reflects three groups of performance measures. Which of the following is NOT one of those measures?

A) comparison to previous year's communication budget
B) overall business performance
C) agency process evaluation
D) marketing communication effectiveness

Question 80

Which of the following is a business measure under the Performance by Results system?

A) productivity
B) brand awareness
C) intent to purchase
D) market share