MKTG 403: Chapter 3

Identify the reasons for agencies losing clients. (Check all that apply.)

-Changes in personnel or size of the client or the agency -Conflicts of interest and personality between the agency and the client -Changes in the client's corporate and/or marketing strategies or other policies -Conflicts in compensation policies and/or creative strategies -Poor performance and poor communication -Unrealistic demands by the client

Why is the practice of media rebates an issue? (Check all that apply.)

-It is often uncertain whether the savings should be transferred to the clients. -It is unclear what constitutes a media rebate.

Which of the following are advantages of using in-house agencies over outside agencies for advertising? (Check all that apply.)

-Lower turnover -Easier coordination of promotions with overall marketing program -Closer ties to top management

Identify the operating and administrative functions of an advertising agency. (Check all that apply.)

-Maintaining financial records -Recruiting personnel

Which of the following collateral services helps companies gather information for designing and evaluating their advertising and promotions programs?

Marketing research

Name the companies that specialize in the buying of radio and television time.

Media specialist companies

Identify a public relations activity that an advertising agency can use to gain clients.

Participating in civic and social groups

What must an advertising department do if an external agency is used to develop the promotions program of an organization?

Review and approve the agency's plans.

Which specialized service agencies are used to develop and administer programs such as contests and sampling programs?

Sales promotion agencies

Identify a characteristic of the fee-commission combination method through which a client pays an advertising agency.

The client makes up the difference if the commissions are less than the agreed-on fee.

A(n) ______ is a service organization that specializes in planning and executing advertising programs for its clients.

advertising agency

An external firm that specializes in the creation, production, and/or placement of a marketing communications message is known as a(n) ______.

advertising agency

In a centralized organization, the responsibility for all promotions activities except sales is placed on a(n) ______.

advertising manager

A qualitative audit of an advertising agency focuses on the ______.

agency's efforts in developing an advertising program

A centralized advertising system results in a more efficient operation because it ______.

allows fewer people to be involved in the program decisions

A public relations firm specializes in ______.

analyzing the relationships between the client and various publics

A feature of brand managers under a decentralized system is that they _____.

are responsible for planning, budgeting, sales, and profit performance

A(n) ______ is responsible for interpreting an advertiser's marketing and promotions needs to the personnel of the advertising agency

account executive

A(n) ______ is responsible for interpreting an advertiser's marketing and promotions needs to the personnel of the advertising agency.

account executive

Employees of an advertising agency who gather information that is relevant to a client's product or service and can be used in the development of an integrated marketing communications campaign are called ______.

account planners

______ refer to the amount of client money that agencies spend on media purchases.

billings

Under the ______________ system, companies have an additional layer of management above the brand managers to coordinate their efforts in handling a related group of products.

category management

In an integrated marketing communications process, ______ have the goods, services, or causes to be marketed.

clients

A client pays an advertising agency a fee based on the costs of its work in addition to some agreed-on profit margin. This is known as the ______ method of compensation.

cost-plus

The document that an advertising agency's creative department uses to guide the development of advertising ideas and concepts is known as the

creative brief

Companies with separate manufacturing, research and development, sales, and marketing departments for various divisions, product lines, or businesses have a(n) _____ system

decentralized

Brandon Communications, an advertising agency, provides only database analytics and management services. Brandon Communications is a ______.

direct-marketing agency

A(n) _______ -service agency is an advertising agency that offers its clients a complete range of marketing, communications, and promotions services.

full

Speculative presentations made by advertising agencies to clients do not ______.

guarantee the gain of the client account

An advertising agency that is established, owned, and operated by an advertiser is known as a(n) ________ agency.

in-house

One significant trend that has occurred in agency compensation is the increased ______.

involvement of senior management in negotiation

An advantage of using a centralized organizational system in companies is that ______.

it allows for more top management involvement in decision-making

An advantage of using decentralized systems in organizations is that _____.

it facilitates rapid response to problems faced by brands

The drawings that show what an advertisement will look like and from which the final artwork will be produced are known as

layouts

When advertising agencies try to gain new clients through direct solicitations, they ______.

make cold calls to prospective clients

The advertising department of an organization must communicate with the ______ department to determine which product features are needed by customers.

marketing research

In an advertising agency, the ______ department analyzes, selects, and contracts for space or time in the media that will be used to deliver a client's advertising message.

media

In the promotion of products and services, ______ provide an environment for a firm's marketing communications messages.

media organizations

In an advertising agency, knowing what audiences the media reach, their rates, and how well they match a client's target market is the responsibility of ______.

media specialists

In contrast to the traditional 15% commission that companies used to pay advertisers, most advertisers today work under a(n) ______ commission system in which commissions are based on a sliding scale.

negotiated

In a(n) ______ system, advertising agencies are paid on the basis of a sliding scale that becomes lower as clients' media expenditures increase.

negotiated commission

A financial audit of an advertising agency focuses on the ______.

number of personnel hours charged to an account

Brooms Advertising purchases photography services from an external provider. When billing clients, Brooms adds a markup of 18 percent of costs to its initial costs. This is an example of the ______ method of compensation.

percentage charges

Centralized organizations that develop their advertising programs in-house commonly employ media buying services to ______.

place their advertisements

A characteristic of superagencies is that they _____.

provide clients with integrated marketing communications services worldwide

The role of clients in a promotional process is to ______.

provide the monetary resources for advertising

Notions Ads, an advertising agency, works with a few charitable organizations pro bono to earn respect in the community. In this case, Notions Ads is trying to gain clients through ______.

public relations efforts

Advertising agencies often obtain new clients when existing clients recommend the agency to them. This method of gaining clients is known as ______.

referrals

In full-service advertising agencies, ______ departments collect, analyze, and interpret information that is useful in developing advertising for clients.

research

Zane Communications, an advertising agency, develops and manages sweepstakes, refunds, and rebates. However, it does not offer any other services. Zane Communications is an example of a(n) ______.

sales promotion agency

Digital agencies specialize in the development of ______.

social media campaigns

Advertising agencies establish contact with new clients, write letters to them, and follow up on leads. This method of gaining clients refers to ______.

solicitations

A sequence of frames or panels that depicts a television commercial in still form is known as a

storyboard

Large advertising agencies merge with or acquire other agencies and support systems to form large advertising organizations called

superagencies

An advertising manager is responsible for ______.

supervising the activities of the advertising department

Media specialist companies are primarily involved in the buying of media for ______ advertising.

television and digital

Clients may change their advertising agencies when ______.

there is a conflict in their compensation philosophies

In an advertising agency, the department that coordinates all phases of production in order to ensure that advertisements are completed on time is called the ______ department.

traffic

Which of the following sources can be used by advertising agencies to obtain referrals for new clients? (Check all that apply.)

-Other advertising agencies -Existing clients -Media representatives

Identify the activities in which a public relations firm specializes. (Check all that apply.)

-Preparing news releases for clients -Conducting lobbying and public affairs efforts -Generating publicity for a client

Identify the materials that an advertising department develops for the sales force to use when calling on customers. (Check all that apply.)

-Sales promotion tools -Point-of-purchase displays -Advertising materials

Which of the following are statements about outside advertising agencies are true? (Check all that apply.)

-They have experience with marketing problems while the client may not. -They can often provide insight into the client's industry and competitors.

Under a cost-plus method of compensation, which of the following determine the amount an agency bills a client? (Check all that apply.)

-a markup for profits -personnel time -an allocation for overhead

Identify an organization that offers a collateral service to an advertising agency.

A package design firm

Identify a primary research source used by the research department of an advertising agency.

A questionnaire filled out by a customer

Identify a true statement about category managers.

They supervise the management of an entire product category.

______ are the links between advertising agencies and their clients.

Account services

Which of the following statements are true about the application of integrated marketing communications?

Advertisers believe that IMC is important to the present success of their organizations.

According to clients, what are the obstacles to implementing an integrated marketing communications process? (Check all that apply.)

Agency egos Fear of budget reductions Internal turf battles

What is the arrangement between advertising agencies and their clients under the fixed-fee method?

Clients and agencies agree on the amount the agencies will be paid for a specific amount of work.

Identify an advantage of using decentralized systems in organizations.

Concentrated managerial attention on brands

Which of the following specializes in the development and strategic use of various digital marketing tools such as website design?

Digital agencies

True or false: Advertisers cannot use more than one agency of record to create advertisements for their products. True false question. True

False

True or false: Advertising agencies cannot be compensated by adding a markup of percentage charges to various services they purchase from external providers.

False

In which method of compensation are the media commissions received by an agency credited against their fee?

Fee-commission combination method

What is an advantage of using integrated marketing communications services?

It allows clients to easily coordinate all their marketing efforts.

Identify an advantage of using integrated marketing communications services.

It creates a single image for the product and addresses everyone with one voice.

Identify a true statement about in-house agencies.

They help companies control advertising activities.

Why do companies have in-house agencies for their advertising needs?

They help reduce the expenditure on advertising.

In the context of presentations, how do advertising agencies gain clients?

They propose tentative communications campaigns for the clients.

Why do companies use external advertising agencies?

They provide clients with the services of highly skilled individuals.

Identify a characteristic of direct-marketing agencies.

They provide direct mail, research, and media services.

A factor that helps media organizations attract clients and their advertising agencies is ______.

editorial or program content that appeals to consumers

True or false: An organization cannot use an external advertising agency if it has an advertising department.

false

True or false: The administrative functions of an advertising agency exclude generating new business.

false

True or false: The production department of an advertising agency always produces finished advertisements

false

An advertising agency that charges a basic monthly compensation for all of its services is using the ______ method.

fixed-fee