Deck 2: The Structure of the Advertising and Promotion Industry: Advertisers, Agencies, Media, and Support Organizations

Question 1

Once considered amateurish and unsophisticated, blogs have begun to gain respect, now numbering about 133 million, with almost 350 million people around the world visiting them.

Answer 1

True

Question 2

Given the backlash against advertising that clutter can cause, advertisers and their agencies are integrating more tools within the overall promotional effort to try and reach more consumers in different ways.

Answer 2

True

Question 3

Creative boutiques are often referred to as "idea factories."

Answer 3

True

Question 4

The majority of service firms, governments, social organizations, and agencies cannot afford to participate in today's advertising process.

Question 5

Overall, media fragmentation is a big plus for consumers but a big headache for advertisers and agencies.

Question 6

The industry's media and agencies seem to be consolidating into fewer and fewer large firms, thus, there are fewer media options.

Question 7

Scott and Mark hear a local radio spot for McDonald's as they begin driving on an interstate highway one morning.Later they see a billboard for McDonald's, so they pull over at the next exit and have lunch there.In these ways, McDonald's acts as a large local reseller that uses various promotion efforts to communicate with customers on a local basis.

Question 8

Spending on all forms of integrated brand promotion, including advertising, now exceeds a trillion dollars a year.

Question 9

Even in the face of new communication formats such as online, branded¸ and sponsorship options, today's companies are putting more faith and energy back into traditional advertising formats placed in mainstream media.

Question 10

While many full-service agencies have depended on giant accounts, some have managed to build a stable base of international clients by acquiring and grooming one smaller or midsize account at a time.

Question 11

One or more of the major business and societal forces-technological advances, economic conditions, cultures, lifestyles, business philosophies, etc.-are always affecting advertising and promotion efforts.

Question 12

Social media come in highly accessible forms, allowing individuals and groups to share almost unlimited textual and visual information.

Question 13

In 2009, spending on integrated brand promotion tools other than advertising totaled nearly $100 billion annually across all forms of promotion.

Question 14

Now more than ever, advertisers are in greater control of the information they disseminate, and the way it is delivered, regarding product categories and the brands within those categories.

Question 15

Just about all types of organizations, regardless of industry, product, service, or message, tend to use advertising and promotion in the same ways.

Question 16

The reason prominent advertisers like Benetton, Calvin Klein, and Revlon do most of their work in-house is to maintain control over marketing activities such as product development and distribution tactics.

Question 17

Among the twenty largest advertisers in the United States in 2008, eleven actually showed a decrease in overall advertising spending.

Question 18

It is common for social organizations to advertise at the national, state, and local levels.

Question 19

Despite the explosion of new media in recent years-cable television stations, direct marketing technologies, Web options, digital and mobile alternatives-today's media options are actually reduced from those of past decades.

Question 20

Digital/interactive agencies are those that have expertise in preparing communications for new media, such as the Internet, mobile marketing, and interactive television.

Question 21

Research shows that compared to traditional marketing efforts, ___ communication between consumers is more meaningful and results in longer lasting impressions that affect buying behavior.

A)word-of-mouth
B)social network
C)online
D)mobile

Question 22

Collectively, millions of individuals are continually creating and sharing content through blogs, social media, wikis, and video sites.What is the term for this phenomenon?

A)Internet facilitation
B)crowdsourcing
C)Web 2.0
D)digital/interactive production

Question 23

Firms that maintain and manage large databases of mailing lists as one of their services are alternatively referred to as direct marketing agencies, database agencies, or direct response agencies.

Question 24

Websites frequented by individuals with common interests where they can post facts, opinions, and personal experiences have emerged as sophisticated sources of product and brand information.This definition refers to

A)spam.
B)blogs.
C)phishing.
D)chat rooms.

Question 25

Media specialists can typically acquire media time and space at lower costs than an agency can.

Question 26

Today's media planners and buyers often examine an enormous number of options to put together an effective media plan within a client's budget.

Question 27

Procter and Gamble's global marketing officer identified the basis for compensation change when he declared that the media-based model dependent on the 30-second TV spot was "broken."

Question 28

Which company has become a media conglomerate on the Web, amassing its own digital empire of diverse Internet sites?

A)ABC Broadcasting Network
B)Facebook
C)Dell
D)InterActiveCorp

Question 29

A fee system is much like that used by consultants or attorneys, whereby the advertiser and the agency agree on an hourly rate for different services provided.

Question 30

What type of digital media has emerged as the most significant form of consumer control over information creation and communication?

A)Web advertising
B)social media
C)interactive television
D)mobile marketing

Question 31

Yearly spending on all forms of integrated brand promotion, including advertising, now exceeds

A)$25 billion.
B)$50 billion.
C)$200 billion.
D)$1 trillion.

Question 32

Changes in consumer media use over the past two decades, and particularly in the past five years, have made both advertisers and agencies question the wisdom of using the commission system.

Question 33

With media clutter and fragmentation, there are

A)many more options and players in the industry.
B)more receptive consumers than ever before.
C)less and less media choices available to advertisers.
D)opportunities for accreditation of advertising agency principals.

Question 34

Advertising is a major business in the United States.One indication of this is the fact that

A)the United States spends more than $300 billion a year on advertising.
B)advertising in the United States is subject to the fewest government restrictions of any country in the world.
C)advertising agencies do not have to actively compete to get business.
D)only agencies in the United States are financially capable of offering a complete range of advertising services.

Question 35

Most large agencies, such as Omnicom, Chiat/Day, and Fallon McElligott, set up digital/interactive media groups only recently in response to the sudden surge of client demands that Internet and mobile media options be included in nearly every IBP plan.

Question 36

The four most prevalent agency compensation methods are commission, consultant, external facilitator, and production facilitator plans.

Question 37

A graphic mark that identifies a company, and often a brand, is called a logo.

Question 38

A marketer for a large corporation often turns to a media specialist, especially when time is short.This is because media specialists often have time and space in inventory and can offer last-minute placement to advertisers.

Question 39

The most popular form of agency compensation used today is the markup charge.

Question 40

What contemporary technique is used by organizations specifically to get consumers involved with and committed to brands, much more than passive advertising every could?

A)Web 2.0
B)trade reselling
C)crowdsourcing
D)event planning

Question 41

What is the world's largest list management and list brokerage firm?

A)Starcom MediaVest Group
B)Direct Media, Inc.
C)Leo Burnett
D)TheFutureBuzz.com

Question 42

Which person in a marketing research group coordinates the research effort, and is on par with an account executive?

A)graphics designer
B)event planner
C)account planner
D)media buyer

Question 43

There are many types of external facilitators in the advertising community.____ help advertisers prepare communications for new media such as the Internet, mobile marketing and interactive television.

A)Digital/interactive agencies
B)Production facilitators
C)Advertising research firms
D)Communication organizations

Question 44

Which entity acts as support for direct marketing agencies and follow-up for the delivery of their direct mail?

A)creative boutiques
B)in-house agencies
C)pay-for-results systems
D)fulfillment centers

Question 45

In order to meet all the promotional needs of its clients, the owners of Barlow & Baley advertising agency have decided to add public relations and media buying to the creative services it offers clients.What kind of agency will it become?

A)full-service
B)large
C)creative boutique
D)promotion

Question 46

Why has TBWA of the Omnicom Group created a new position called Chief Compensation Officer?

A)because so many of its clients are facing bankruptcy
B)because its traditional commission is not being paid
C)because financial talks between clients and agency aren't working
D)because TBWA is facing bankruptcy

Question 47

The ____ services department of an advertising agency typically houses its art directors, illustrators, and copywriters.

A)creative
B)account
C)marketing
D)production

Question 48

What type of firm or group takes creative ideas and turns them into actual ads?

A)marketing research services
B)creative services
C)account services
D)production services

Question 49

The United States federal government spends more than $2 billion annually on advertising and promotion.Most of that money is spent in what two areas?

A)lottery advertising and armed forces recruitment
B)campaign advertising and armed forces recruitment
C)armed forces recruiting and social issues
D)social issue advertising and political campaign advertising

Question 50

Which company is involved with listing and cataloguing producers of infomercials from around the world?

A)InterActiveCorp
B)Omnicom
C)BBDO Worldwide
D)AdProducers.com

Question 51

According to the text, which marketing professionals don't get enough credit for their part in today's advertising and promotion process?

A)agency owners and consultants
B)media planners and account services executives
C)designers and graphics specialists
D)e-commerce experts and Web masters

Question 52

What is often called the advertising department within the firm?

A)the creative boutique
B)the digital/interactive firm
C)the media-buying department
D)the in-house agency

Question 53

Who are today's most visible reseller advertisers and promoters?

A)wholesalers that deal with household goods
B)retailers that sell in national or global markets
C)transportation companies that work internationally
D)industrial organizations that supply the construction industry

Question 54

The owners of Bud's Greenery, a small local chain of five garden and floral supply stores, handle most of their own marketing and promotion services.All they want from an outside agency is a lot of ideas to choose from, not a lot of services that they can handle themselves.Therefore, they are in need of a

A)consultation firm.
B)creative boutique.
C)digital/interactive agency.
D)full-service agency.

Question 55

The largest manufacturers of consumer products and services in the United States have one thing in common.They all

A)use advertising better than small manufacturers.
B)are resellers of products.
C)engage in global advertising.
D)are the most prominent users of advertising and promotion.

Question 56

What kind of groups are responsible for coming up with the concepts that express the benefits of a brand?

A)creative and production services
B)direct-marketing departments
C)account services
D)marketing research departments

Question 57

There are many types of advertisers in the marketplace today.But which of the following would not be classified as an advertiser?

A)the U.S.Army
B)the city of Las Vegas
C)the American Cancer Society
D)the IRS Audit Department

Question 58

What kind of firm acts as an expert in finding locations, securing dates, scheduling activities, and pulling together teams of facilities managers, caterers, security people, entertainers, and celebrities?

A)an event-planning agency
B)a sales promotion agency
C)a direct marketing agency
D)a design firm

Question 59

One advertiser needs to get its message out to a number of diverse communities within the U.S.Another advertiser wants to reach populations in diverse nations across the three continents where its product is sold.Which person in the advertising agency will work with both of these clients to translate cultural and consumer values into advertising messages?

A)media services director
B)director of production
C)account services manager
D)administrative executive

Question 60

Agencies that specialize in ____ are experts in designing incentive programs, trade shows, sale forces contests, and in-store merchandising.

A)direct marketing
B)trade-market sales promotions
C)direct response advertising
D)consumer sales promotions

Question 61

An advertising agency hires Starch INRA Hooper to act as an external facilitator.Most likely, Starch INRA Hooper will be asked to

A)run recognition tests on print advertising.
B)aid the agency in the production process.
C)examine the agency's billing structure for inefficiencies.
D)oversee the agency's IBP efforts.

Question 62

Harper, Kane, and Charles advertising agency sets an hourly rate for its services, based on the average salary of all the members of a particular department.Harper, Kane, and Charles uses the ____ system.

A)commission
B)fixed-fee
C)markup charge
D)fee

Question 63

Kowalski and Associates has been a successful mid-sized, full-service advertising agency for more than two decades.In an attempt to serve its clients more efficiently in a competitive marketplace, the agency has changed its compensation package to include payment based on results.If the client agrees, Kowalski and Associates will likely be evaluated on increases in

A)sales as well as brand awareness and identification.
B)market share.
C)positive consumer attitudes toward brand.
D)fees following market performance measures.

Question 64

McMann and Young advertising agency has been hired by Broadway Bicycles, Inc.to assist with advertising and promotions for a chain of bicycle stores in Vermont.The agency has agreed that a certain level of awareness and interest in Broadway Bicycles will be generated in order to gain the sales results the company desires, and they have agreed to be paid accordingly.This is called

A)amortization.
B)a retainer.
C)cost plus.
D)pay-for-results compensation.

Question 65

Which type of compensation system became popular in the advertising industry due to all the outside facilitators that were being used?

A)markup
B)fee
C)pay-for-results
D)commission

Question 66

Often referred to as out-of-home media, support media organizations do not include

A)bus and taxi boards.
B)databases.
C)performance arenas for sponsorships.
D)specialized directory companies.

Question 67

A regional fast food chain called Platters is interested in opening a new type of casual dining facility in a new market, called Diners.What type of firm might collect the data needed to expand into the new market?

A)a marketing or advertising research firm because it acts as a facilitator
B)an advertising agency because it is imaginative
C)the advertiser because they know the product best
D)media organizations because they have large datasets available

Question 68

What corporation is one of the world's largest media conglomerates, one that offers broadcasting, film, music, cable, print, publishing, and a large Internet presence?

A)News Corp
B)Fox
C)Sony
D)Time Warner

Question 69

A Los Angeles agency uses a compensation system much like that used by consultants or attorneys to bill clients.This agency is using a ____ system.

A)fee
B)commission
C)markup charge
D)media commission

Question 70

Though many agencies no longer use the traditional commission system for compensation, Starr Agency does.Using the standard percentage rate, how much would Starr Agency receive from billing $500,000 of television airtime?

A)$150,00
B)$125,000
C)$100,000
D)$75,000

Question 71

For what type of tasks do today's advertisers and agencies rely on external facilitators the most?

A)production
B)research
C)management
D)accounting

Question 72

In which area do both advertisers and their agencies rely the most on external facilitators?

A)consumer research
B)media buying
C)software incorporation
D)production processes

Question 73

Ocean Waves Resorts wants to purchase land and construct a resort hotel on the shorefront in San Clemente next to the Nixon retreat.Ocean Waves would also like to construct a golf course on the property and needs help with understanding local regulations, zoning restrictions, and especially political relationships.What kind of company should Ocean Waves hire to assist with the project?

A)a consulting firm
B)a creative boutique
C)a sports marketing company
D)a wholesale company

Question 74

Ad agencies have recently developed compensation programs that are based upon achievement of specific objectives for the client.These programs are known as ____ compensation.

A)pay-for-results
B)markup
C)commission
D)fee-based

Question 75

The high-speed technology that allows consumers to customize programming from various providers over the Internet and target very specific audiences

A)is an example of scattering.
B)is an example of the halo effort.
C)is known as broadband.
D)forbids localization of a master network.

Question 76

A small Midwest agency agrees to a fixed fee, or contract, with a new client.What is the downside for an agency like this when it uses the fixed-fee system?

A)Most clients do not want to pay a flat 15 percent rate for all ads placed.
B)Standard percentage rates to be charged keep dropping.
C)Client and agency rarely agree on a fee without hard feelings or conflicts.
D)More work may be needed than is originally predicted.

Question 77

Which of the following is an interactive broadband television news network that allows Web users to customize their news broadcasts to their personal preference?

A)BurkeandSimmons
B)BusinessObjects
C)The FeedRoom
D)SRI

Question 78

A large agency in Minneapolis hires a number of external facilitators to complete specific aspects of its projects.Which of the following is not an external facilitator in the structure of the advertising industry?

A)television network
B)advertising research firm
C)production facilitator
D)software firm

Question 79

What is a new type of consultant who gathers and analyzes information, cross-references and merges it, working with both advertisers and agencies to develop effective communications?

A)database consultant
B)financial consultant
C)brand consultant
D)Web developer and consultant

Question 80

One method of agency compensation has been accused of encouraging advertising agencies to recommend only the most costly media vehicles available.This method is the _____ system.

A)commission
B)fee
C)retainer
D)markup charge