Deck 2: Organizing for IMC: Role of Agencies

Question 1

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

A) get more control over the advertising process
B) save money
C) get an objective, experienced outside look at its advertising situation
D) make coordination of the advertising and promotional process easier

Answer 1

C

Question 2

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

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

Answer 2

C

Question 3

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

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

Answer 3

B

Question 4

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) better understand how advertising works
D) win advertising awards that will enhance the image of their brands

Question 5

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

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

Question 6

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

Question 7

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) traffic
C) research
D) account management

Question 8

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) Agencies are often used because of the skill, expertise, and experience they can offer in the advertising area.
C) Most large, national advertisers use in-house agencies.
D) Most large agencies offer only creative services to their clients.

Question 9

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

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

Question 10

International agencies formed by mergers and acquisitions of mid-sized agencies in order to provide integrated marketing communications services worldwide are called:

A) superagencies
B) multinational agencies
C) integrated agencies
D) full-service global firms

Question 11

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

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

Question 12

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

A) An outside advertising agency saves money for the client.
B) An outside advertising agency helps the client gain more prestige and a better image.
C) An outside advertising agency has more knowledge of the brand's identity and its previous promotional activities.
D) 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.

Question 13

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

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

Question 14

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

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

Question 15

Superagencies were formed:

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

Question 16

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

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

Question 17

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) an in-house agency
C) the use of full-service advertising agencies
D) the use of creative boutiques

Question 18

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

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

Question 19

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

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

Question 20

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

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

Question 21

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

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

Question 22

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

Question 23

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) account services
C) marketing research
D) media

Question 24

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

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

Question 25

The standard agency commission is:

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

Question 26

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

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

Question 27

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

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

Question 28

The Creative 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 a ________ organizational structure.

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

Question 29

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

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

Question 30

Agency compensation under the commission system is based on:

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

Question 31

Which of the following is NOT a reason why an advertising agency might 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) ensure continuity in servicing a particular account
C) provide better pricing to a key client
D) to provide superior service for its accounts

Question 32

The traditional method of compensating ad agencies is with:

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

Question 33

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

Question 34

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

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

Question 35

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) focuses on purchasing commercial time on the most popular shows
C) develops a plan that communicates to the right audience in a cost-efficient manner
D) creates a plan that utilizes the least expensive media vehicles

Question 36

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

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

Question 37

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

Question 38

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

A) Many agencies and their clients have developed some type of fee arrangement or cost-plus agreement for agency compensation.
B) With the move toward integrated marketing services, it is likely that there will be a return to the commission system of compensation.
C) From the viewpoints of both the client and the agency, the traditional commission system is much superior to negotiated commissions.
D) 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.

Question 39

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

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

Question 40

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

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

Question 41

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

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

Question 42

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) marketing communication effectiveness
C) overall business performance
D) agency process evaluation

Question 43

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 share of the profits
B) a negotiated fee
C) a rebate from the media
D) a 17.65 percent mark up on costs

Question 44

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

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

Question 45

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

Question 46

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

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

Question 47

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

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

Question 48

Why are negotiated commission structures becoming more common?

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

Question 49

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

Question 50

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) brand awareness
D) intent to purchase

Question 51

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

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

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 earning more of their income from fixed commissions as clients expand their IMC programs to include other forms of promotion.
D) Most agencies are unwilling to negotiate their commission rates.

Question 53

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

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

Question 54

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

Question 55

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

Question 56

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

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

Question 57

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

Question 58

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

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

Question 59

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) negotiated commission
C) cost-plus agreement
D) fee-commission combination

Question 60

Negotiated commission rates for advertising agencies:

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

Question 61

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

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

Question 62

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

Question 63

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) financial/creative
D) qualitative/quantitative

Question 64

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

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

Question 65

Marketers willing to increase message credibility and save media costs are more likely to use the services of a(n):

A) public relations agency
B) direct-response agency
C) advertising agency
D) sales promotion agency

Question 66

Which of the following statements about the development of interactive media is NOT true?

A) Traditional advertising agencies tend not to develop interactive media capabilities.
B) Many marketers are using specialized interactive agencies to develop their interactive media.
C) Interactive agencies range from smaller companies that specialize in website design and creation to full-service interactive agencies.
D) Full-service interactive agencies provide various services including strategic consulting regarding the use of the Internet and online branding, technical knowledge, systems integration, and the development of e-commerce capabilities.

Question 67

The brand manager for Carnation Evaporated Milk wishes to run a holiday cookie contest to find consumers' best recipes.The creator of the best recipe will win a trip to Paris,France.Most likely,Carnation will hire a(n)________ to plan and execute the campaign.

A) public relations firm
B) advertising agency
C) sales promotion agency
D) contest house

Question 68

A(n)________ is the type of firm an organization would hire to develop and implement programs to manage the organization's publicity,image,and affairs with consumers and other relevant publics.

A) public relations firm
B) advertising agency
C) media mix organization
D) direct-response agency

Question 69

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

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

Question 70

Creative boutiques are agencies that:

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

Question 71

A typical direct-response agency is divided into three main departments:

A) creative, media, and research
B) account management, media, and research
C) account management, creative, and media
D) creative, media, and production

Question 72

One area where Canadian agencies have worked with creative boutiques is the development of messages targeted to _______.

A) affluent markets
B) innovators
C) ethnic markets
D) difficult customers

Question 73

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

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

Question 74

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

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

Question 75

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

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

Question 76

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

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

Question 77

Many agencies are moving toward offering more integrated marketing communication (IMC)services:

A) because they want to maintain control of the entire promotional process because it leads to more synergy among the various communication elements
B) even though it is less convenient for a client to coordinate all of its promotional efforts with one agency
C) because an agency with integrated marketing communication capabilities can create a number of different images of the product to appeal to all relevant publics
D) although effecting economies of scale and synergy is difficult, especially on large budget campaigns

Question 78

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

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

Question 79

Which of the following results were found in a series of interviews on agency-client relationships with executives from major Canadian marketers?

A) The agency and client should maintain an arm's length separation so as not to influence the creative process.
B) Marketers believe they can help agencies in the relationship by being better clients through clear decision-making and solid marketing research.
C) Clients should not share sensitive and confidential information with the agency in case the relationship sours.
D) Stronger results were more often delivered by full-service agencies than by smaller boutique firms.

Question 80

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

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