Deck 3: Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing

Question 1

Media buying services have found a niche by specializing in the analysis and purchase of advertising time and space.
Media buying services have found a niche by specializing in the analysis and purchase of advertising time and space. The task of purchasing advertising media has grown more complex due to the fragmentation of media audiences and the growth of digital media.

Answer 1

True

Question 2

The agency evaluation is often done on a subjective, informal basis, particularly in smaller companies where ad budgets are low.
The agency evaluation is often done on a subjective, informal basis, particularly in smaller companies where ad budgets are low or advertising is not seen as the most critical factor in the firm's marketing performance.

Answer 2

True

Question 3

In the most common example of a centralized system, the advertising or marcom manager controls the entire promotions operation.
In the most common example of a centralized system, the advertising or marcom manager controls the entire promotions operation, including budgeting, coordinating creation and production of ads, planning media schedules, and monitoring and administering the sales promotions programs for all the company's products or services.

Answer 3

True

Question 4

An advantage of the centralized system is that each brand receives concentrated managerial attention, resulting in faster response to both problems and opportunities.
An advantage of the decentralized system is that each brand receives concentrated managerial attention. The brand manager system is also more flexible.

Question 5

While many people both inside and outside the organization have some input into the advertising and promotion process, direct responsibility for administering the program must be assumed by someone within the firm.
While many people both inside and outside the organization have some input into the advertising and promotion process, direct responsibility for administering the program must be assumed by someone within the firm.

Question 6

The creative services department of an agency analyzes, selects, and contracts for space or time in the media that will be used to deliver the client's advertising message.
The media department of an agency analyzes, selects, and contracts for space or time in the media that will be used to deliver the client's advertising message.

Question 7

A disadvantage of the decentralized system is that each brand does not receive concentrated managerial attention, resulting in slower response to both problems and opportunities.
An advantage of the decentralized system is that each brand receives concentrated managerial attention, resulting in faster response to both problems and opportunities.The brand managers have full responsibility for the marketing program, including the identification of target markets as well as the development of integrated marketing communications programs that will differentiate the brand.

Question 8

Digital/interactive agencies and public relations firms are examples of organizations that provide specialized marketing communication services.
Organizations that provide specialized marketing communication services include direct-marketing agencies, sales promotion agencies, digital/interactive agencies, and public relations firms.These organizations provide services in their areas of expertise.

Question 9

Nearly two-thirds of the domestic billings are handled by 900 of the smallest agencies in the United States.
Nearly two-thirds of the domestic billings are handled by the top 500 agencies. Just 10 U.S.agencies handle nearly 30 percent of the total volume done by the top 900 agencies in the United States.

Question 10

Account planners work with the client as well as other agency personnel, including the account executives, creative team members, research department personnel, and media specialists.
Account planners work with the client as well as other agency personnel including the account executives, creative team members, media specialists, and research department personnel to collect information that can be helpful in gaining a better understanding of the client's target audience and the best ways to communicate with them.

Question 11

The layout of a print ad is known as a storyboard.
For print ads, the art director and graphic designers prepare layouts, which are drawings that show what the ad will look like and from which the final artwork will be produced.For TV commercials, the layout is known as a storyboard, a sequence of frames or panels that depict the commercial in still form.

Question 12

In-house agencies are preferred by some companies because they keep the marketing communications function more closely tied to top management.
In-house agencies are preferred by some companies because they keep the marketing communications function more closely tied to top management.Another reason is the stability an in-house agency provides because external agencies have much higher turnover levels, which can take a toll on the client-agency relationship.

Question 13

The primary function of promotional planners is to provide information or entertainment to their subscribers, viewers, or readers.
The primary function of media organizations is to provide information or entertainment to their subscribers, viewers, or readers.But from the perspective of the promotional planner, the purpose of media is to provide an environment for the firm's marketing communications message.

Question 14

Retail giant Target has an internal creative department that handles the design of its weekly circulars, direct-mail pieces, in-store displays, promotions, and other marketing materials. This is an example of an in-house agency.
An in-house agency is an advertising agency that is set up, owned, and operated by the advertiser.

Question 15

Proponents of the commission system argue that the system is more flexible than it appears as agencies often perform other services for large clients at no extra charge.
Proponents of the commission system argue that the system is more flexible than it appears as agencies often perform other services for large clients at no extra charge as a way of justifying the large commission they receive. Critics suggest it encourages agencies to recommend high-priced media to their clients to increase commission levels.

Question 16

A cost-plus system requires that the agency keep detailed records of the costs it incurs in working on a client's account.
The cost-plus system requires that the agency keep detailed records of the costs it incurs in working on the client's account.Direct costs (personnel time and out-of-pocket expenses) plus an allocation for overhead and a markup for profits determine the amount the agency bills the client.

Question 17

The role of account representatives is likely to disappear as agencies and their clients are beginning to liaise directly with each other.
Account representatives will continue to serve an important role in managing the relationships between agencies and their clients.The account executive is responsible for understanding the advertiser's marketing and promotions needs and interpreting them to agency personnel.

Question 18

Superagencies were formed when large advertising organizations disintegrated to form separate, more specialized individual agencies.
During the late 1980s and into the 1990s, the advertising industry underwent major changes as large agencies merged with or acquired other agencies and support organizations to form large advertising organizations, or superagencies.These superagencies were formed so that agencies could provide clients with integrated marketing communications services worldwide.

Question 19

A decentralized organizational system is often used when companies do not have many different divisions, product or service lines, or brands to advertise.
A centralized organizational system is often used when companies do not have many different divisions, product or service lines, or brands to advertise.

Question 20

Programmatic buying has declined in recent years.
Programmatic buying has grown, in part because of the wide range of technologies that are automating the buying, placement, and optimization of advertising media.

Question 21

Under a centralized organizational system, the responsibility for planning and controlling the advertising and promotional functions lies with the

A)brand manager.
B)marketing communications manager.
C)product manager.
D)art director.
E)account planning supervisor.

Question 22

Which of the following is true of the role of an advertising manager, under a centralized management system?

A)It includes budgeting and planning media schedule.
B)It primarily involves checking the accuracy of financial reports and records.
C)It includes employee compensation management.
D)It involves administering the firm's sales and sales promotion programs.
E)It ensures that day-to-day sales targets are met.

Question 23

From the perspective of a promotional planner, the primary purpose of media is to

A)represent the company's senior management in negotiations with an ad agency.
B)provide the company with strategic recommendations and analysis.
C)provide an environment for the firm's marketing communications message.
D)help conduct a SWOT analysis.
E)provide appropriate funding for all marketing activities.

Question 24

Loyalty to a single agency is becoming more common as marketers seek new ways of connecting with consumers.
While many successful agency-client relationships go on for years, loyalty to a single agency is becoming less common as marketers seek new ways of connecting with consumers.In recent years, a number of long-standing client relationships have been terminated.

Question 25

Which of the following statements is true about the role of top management in the advertising and promotion decision-making process?

A)The top management's day-to-day responsibilities usually include decision making and operations of advertising and promotion.
B)The top management does not provide input in the advertising and promotion process.
C)The top management is usually interested in how the advertising program represents the organization.
D)The top management is only interested in the amount of money that must be allocated to advertising and promotion.
E)The top management is more interested in tactical planning than strategic planning.

Question 26

A typical direct-marketing agency does not include a creative department.
A typical direct-marketing agency is divided into three main departments: account management, creative, and media.Some agencies also have a department whose function is to develop and manage databases for their clients.

Question 27

Basic functions of the manager and staff in advertising and marketing communications include all of the following

A)administration and execution.
B)coordination with other departments.
C)preparing materials for the sales force.
D)managing the sales force.
E)coordination with outside agencies and services.

Question 28

One of the more widely used collateral service organizations is the marketing research firm.
One of the more widely used collateral service organizations is the marketing research firm.Companies are increasingly turning to marketing research to help them understand their target audiences and to gather information that will be of value in designing and evaluating their advertising and promotions programs.

Question 29

Momentum Automobiles, an automobile manufacturer, hires Dreams Inc.to cater to its advertising needs.Momentum is only required to provide the necessary finances and does not take part in any decision making.In the given scenario, Momentum Automobiles would be classified as a(n)

A)client.
B)illustrator.
C)full-service agency.
D)advertising agency.
E)media organization.

Question 30

An agency with integrated marketing capabilities can create a single image for the product or service and address everyone, from wholesalers to consumers, with one voice.
An agency with integrated marketing capabilities can create a single image for the product or service and address everyone, from wholesalers to consumers, with one voice.It is convenient for the client to coordinate all of its marketing efforts-media advertising, direct mail, special events, sales promotions, and public relations-through one agency.

Question 31

The primary function of most media is to

A)assist the market research organization by conducting market surveys.
B)coordinate their activities with direct-marketing agencies.
C)provide information and entertainment to their audience.
D)prepare the budget for the advertising and promotion process.
E)compensate ad agencies through a commission system.

Question 32

Which of the following is true about the functions of the advertising manager in a centralized system?

A)The advertising manager is responsible for all sales and sales management activities.
B)The advertising manager has the final say in determining the sales forecasts.
C)The role of an advertising manager is similar to the role of an art director in a decentralized organization.
D)The advertising manager controls the entire promotions operation.
E)The advertising manager does not deal with planning and budgeting.

Question 33

Creative Networks is a major participant in the advertising and promotion process.It attracts various companies to buy space and time with them by providing the same at discounted rates.Creative Networks helps these companies reach their target market effectively by communicating their message.In this scenario, Creative Networks is a(n)

A)advertiser.
B)collateral service provider.
C)media organization.
D)creative boutique.
E)sales promotion agency.

Question 34

In companies that follow a centralized organizational system, who among the following is likely to be given the title "marketing communications manager"?

A)art director
B)brand manager
C)advertising manager
D)product manager
E)copywriter

Question 35

According to marketing executives, the biggest obstacle to implementing integrated marketing communications (IMC) is the lack of people with the broad perspective and skills to make it work.
Marketing executives say the biggest obstacle to implementing IMC is the lack of people with the broad perspective and skills to make it work.Internal turf battles, agency egos, and fear of budget reductions are also cited as major barriers to successful integrated marketing campaigns.

Question 36

The qualitative audit focuses on how the 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.
The qualitative audit focuses on the agency's efforts in planning, developing, and implementing the client's advertising programs and considers the results achieved.

Question 37

With respect to the major participants in the advertising and promotions process, which of the following participants include sales promotion agencies, digital/interactive agencies, and public relations firms?

A)advertising agencies
B)media organizations
C)collateral service agencies
D)specialized marketing communications services agencies
E)bait-and-switch marketing service agencies

Question 38

_____ are the major participants in the integrated marketing communications process who pay for advertising campaigns and promotions.

A)Collateral service providers
B)Clients
C)Advertising agencies
D)Media organizations
E)Special service organizations

Question 39

In the ad agency industry, clients refer to

A)an advertiser or organization that has the product, service, or cause that needs to be marketed.
B)the media, which plays a crucial role in the process of marketing communication.
C)a purchaser of the consumer product advertised.
D)a market for business or consumer products.
E)an advertising agency that specializes in the creation of the communications message.

Question 40

A(n) _____ is an outside firm that specializes in the creation, production, and/or placement of the communications message and that may provide other marketing and promotions-related services.

A)media organization
B)sales promotion firm
C)research organization
D)advertising agency
E)creative boutique

Question 41

Diva Boutique, located in Manhattan, relies on external advertising agencies for its advertising needs, but due to its growing global presence, it is now worried that using external agencies may lead to inconsistency in delivery of its brand image.It also wants to maintain tighter control over its advertising and promotional activities.Which of the following advertising agencies should it adopt?

A)collateral service agency
B)buzz marketing agency
C)in-house agency
D)Centralized agency
E)creative boutique

Question 42

In a centralized organizational structure, the _____ department is responsible for developing promotional plans that will be approved by management and recommending a promotions program based on the overall marketing plan, objectives, and budget.

A)production
B)finance
C)auditing
D)advertising
E)product planning

Question 43

A company often uses a centralized organizational system when

A)it has many different divisions within the company.
B)it does not want to involve the top management in the decision-making process.
C)it does not have many product lines or brands to advertise.
D)it wants to involve a large number of people in making program decisions.
E)it wants to have a category management system in place.

Question 44

A company often uses a decentralized organizational system when

A)it has multiple divisions and many different products.
B)it does not facilitate a manufacturing or industrial operation.
C)it wants one advertising manager to handle the promotional activities of all the products.
D)it has a top management that is actively involved in day-to-day decision making.
E)it lacks the ability to handle multiple brands.

Question 45

Under a decentralized system, the advertising department is generally a part of

A)finance.
B)sales.
C)product development.
D)marketing services.
E)research and development.

Question 46

Which of the following is a disadvantage of using a centralized organizational system?

A)longer response time
B)very little top-management involvement
C)involvement of many people in making program decisions
D)lack of communication
E)discontinuity in staff

Question 47

In a decentralized system, a(n) _____ is responsible for the total management of the brand, including planning, budgeting, sales, and profit performance.

A)brand manager
B)media manager
C)collateral services provider
D)account executive
E)sales manager

Question 48

Which of the following is a disadvantage of a decentralized organizational system?

A)inability to handle multiple product lines
B)ineffective decision making
C)longer response time
D)lack of flexibility
E)lack of managerial attention

Question 49

Which of the following is a potential benefit of an in-house advertising agency?

A)greater control
B)access to more highly skilled specialists
C)potential to obtain varied perspective on advertising problems
D)greater flexibility
E)greater objectivity

Question 50

In a decentralized system, individuals who oversee management of the entire product category and focus on the strategic role of the various brands in order to build profits and market share are known as

A)category managers.
B)art directors.
C)account executives.
D)account supervisors.
E)media planners.

Question 51

Which of the following differentiates a centralized organization from a decentralized organization?

A)In a centralized organization, the advertising manager is responsible for all promotions activities including sales, whereas in a decentralized organization, the advertising manager is responsible for all promotions activities except sales.
B)A centralized organizational system is used in large companies with more than 1,000 employees, whereas a decentralized organizational system is used only in smaller companies with no more than 500 employees.
C)In a centralized organization, an advertising manager controls the entire promotions operation for all the products of a company, whereas in a decentralized organization, each product is assigned to a different brand manager.
D)A centralized organizational structure includes a category management system, whereas a decentralized organizational structure does not include one.
E)In a centralized organization, the efforts of all the brand managers are coordinated by the category managers, whereas in a

Question 52

Jim, an employee of CL Inc., is responsible for planning, marketing, budgeting, sales, and profit performance of a specific brand.He has two assistants who help in planning, implementing, and controlling the marketing program.In this scenario, Jim is an example of a(n)

A)product manager.
B)art director.
C)account executive.
D)copywriter.
E)account director.

Question 53

Which of the following is true of the problems associated with the centralized organizational structure?

A)It does not enable a transfer of functions and responsibilities associated with advertising and promotions to the brand manager.
B)It does not facilitate coordination with external advertising agencies.
C)It makes it difficult for the advertising department to understand the overall marketing strategy of the brand.
D)It makes it difficult for the brand manager to coordinate with the various departments within the organization.
E)It facilitates disassociation of advertising managers from the category management system.

Question 54

Which of the following is true of an in-house advertising agency?

A)It avoids top management involvement with the marketing communications function.
B)It increases advertising and promotion costs.
C)It provides greater stability.
D)It provides more objectivity and range of services in comparison to outside agencies.
E)It offers more access to top creative talent.

Question 55

A company that uses an in-house agency might turn its advertising and promotion tasks over to an outside agency in order to

A)obtain greater control over the advertising process.
B)reduce costs.
C)obtain greater objectivity.
D)make coordination of the advertising and promotional process easier.
E)save media commissions.

Question 56

Which of the following describes a limitation associated with the decentralized organizational structure for advertising?

A)Brand managers are often overqualified and tend to feel superior to product managers.
B)Brand managers are typically from nonmanagement backgrounds.
C)Brand managers do not devote enough attention to short-term planning and administrative tasks.
D)Brand managers often end up competing for management attention, marketing budgets, and other resources.
E)Brand managers typically rely on intuition and often jeopardize the creative activities of the advertising agency.

Question 57

Lack of long-term objectivity, flexibility, and creativity are a few of the reasons why a company might move away from

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

Question 58

When Procter & Gamble, Unilever, PepsiCo, Google, and Nestle assign each product/service or brand to a brand manager who is responsible for the total management of the brand, including planning, budgeting, sales, and profit performance, these companies are using a _____________________________ system.

A)finance
B)sales
C)decentralized
D)centralized
E)product

Question 59

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

A)maintain creative freshness.
B)reduce advertising and promotions costs.
C)reduce the threat of potential lawsuits.
D)make use of top creative talent.
E)dissimilate brand management and advertising from under one roof.

Question 60

Which of the following is an advantage of a decentralized organizational system?

A)effective decision making
B)Rapid response to problems and opportunities
C)lack of internal conflicts
D)enhanced authority
E)external rather than internal focus

Question 61

Which of the following is a disadvantage of using an in-house advertising agency?

A)external focus rather than internal
B)limited access to top-level talent
C)reduced cost savings
D)less stability
E)decreased coordination

Question 62

Which type of ad agency is most likely to offer its clients an extensive range of marketing, communications, and promotions services, including planning, creating, and producing the advertising; performing research; and selecting media?

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

Question 63

Which of the following is true of the role of an account executive?

A)It is primarily considered a research function.
B)It is used only by centralized organizations.
C)It is generally considered a subsidiary function.
D)It includes an extensive creative aspect.
E)It is the focal point of agency-client relationships.

Question 64

The _____ is a document that the agency's creative department uses to guide the development of advertising ideas and concepts.

A)tagline brief
B)product data sheet
C)creative brief
D)copywriter collateral
E)marketing plan

Question 65

Account planning has become a very important and demanding function in many agencies because

A)it facilitates organizations in reducing the number of effective communication channels.
B)it enables organizations with a centralized management to reduce costs.
C)it provides greater value to the final consumer.
D)it provides the creative team with more insight into consumers.
E)it has replaced brand management as the primary marketing function.

Question 66

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

A)It reduces advertising and promotional costs for the client.
B)It enables the client to gain more control of the promotional activities.
C)It allows more access to the top management of the client firm.
D)It helps provide a consistent and integrated global brand image.
E)It provides the client with the services of highly skilled individuals.

Question 67

Which of the following departments of a full-service agency analyzes, selects, and contracts for space or time to publish or broadcast the client's advertising message?

A)research department
B)media department
C)account management department
D)creative services department
E)art department

Question 68

Gerald is responsible for keeping track of his agency's ________________, or the amount of client money his agency spends on media purchases and other equivalent activities.

A)billings
B)publicity
C)promotions
D)media buying
E)direct marketing

Question 69

Which of the following statements is true of media departments?

A)Their brief is primarily creative.
B)They lack the ability or the authority to negotiate prices.
C)They review information on demographics and radio listenership.
D)They are in charge of creating the clients' advertising message.
E)They are generally headed by an account planner.

Question 70

Greg is hired into the marketing services department of a full-service advertising agency.His job profile includes gathering information relating to the client's product and service that can be used in the development of the creative strategy.He has to collect information from various other departments in the firm to gain a better understanding of the client's target audience.In this scenario, Greg has been hired as a(n)

A)art director.
B)account planner.
C)illustrator.
D)media specialist.
E)account executive.

Question 71

Superagencies were formed

A)because advertisers were disenchanted with large agencies.
B)because advertisers wanted agencies to be more flexible and responsive than traditional agencies.
C)to save money for clients.
D)so that agencies could provide their clients with integrated marketing communications services worldwide.
E)to lessen the need for competitive pricing.

Question 72

A(n) _____ is responsible for understanding the advertiser's marketing and promotional needs and interpreting them to agency personnel.

A)account executive
B)database manager
C)media specialist
D)copywriter
E)art director

Question 73

Which of the following refers to the amount of client money that agencies spend on media purchases and other equivalent activities?

A)billings
B)media commissions
C)retainers
D)activity fees
E)ad traffic compensation

Question 74

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

A)creative boutique.
B)media buying service.
C)account service agency.
D)full-service agency.
E)buzz marketing agency.

Question 75

_____ are the individuals in the creative services department of an ad agency who conceive the ideas for the ads and compose the advertising message.

A)Copywriters
B)Art directors
C)Account planners
D)Account executives
E)Media planners

Question 76

In a full-service agency, the function of gathering, analyzing, and interpreting information that is useful in developing advertising is the responsibility of the _____ department.

A)audit
B)personnel
C)media
D)account management
E)research

Question 77

Which of the following statements is true about outside advertising agencies?

A)Typically, external ad agencies do not use media analysts and researchers.
B)External agencies are often preferred for their greater skill and expertise levels.
C)Generally, most external ad agencies do not offer creative services.
D)External ad agencies are generally cheaper than in-house agencies.
E)Unlike in-house agencies, outside agencies can be used to portray a singular global image.

Question 78

Mars Inc., a San Diego-based advertising agency, offers various services, such as sales promotion, marketing research, package design, direct marketing, and publicity as well as planning, creation, and advertising production.In this scenario, Mars is an example of a(n)

A)creative boutique.
B)full-service agency.
C)media buying organization.
D)account service organization.
E)media specialist company.

Question 79

Which of the following statements is true about account services?

A)It is an in-house service for the advertisement agency that is independent of its clients' obligations.
B)It is an advertising agency that solely provides media space and time.
C)It provides the creative team with in-depth storyboards.
D)It is a research department in the advertising agency that assists in creating the advertising message for the client.
E)It is the link between the advertising agency and its clients.

Question 80

Which of the following statements is true about superagencies?

A)They were formed when large advertising agencies were broken down into smaller, more specialized agencies.
B)Advertisers who became disenchanted with the superagencies moved to smaller agencies that were flexible and more responsive.
C)They were formed so that agencies could provide clients with effective supply chain management.
D)Advertisers who generally worked with superagencies converted them into in-house agencies to gain greater flexibility and objectivity.
E)They were formed so that agencies could provide clients with just-in-time inventory management systems.