Deck 3: Organizing for Advertising and Promotion: The Role of AD Agencies and Other Marketing Communication Organizations

Question 1

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.

Answer 1

True

Question 2

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.

Answer 2

True

Question 3

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.

Answer 3

False

Question 4

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 5

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.

Question 6

A typical direct-response agency does not include a creative department.
A typical direct-response 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 7

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 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

Account planners work with the client as well as other agency personnel including the account executives 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 10

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 11

While the advertising department develops the promotional budget, the final decision on allocating funds is usually made by the overall marketing department.
While the advertising department develops the promotional budget, the final decision on allocating funds is usually made by top management. Formal plans are submitted annually or when a program is being changed significantly, as when a new campaign is developed.

Question 12

Media buying services have been experiencing strong growth in recent years as clients seek alternatives to full-service agency relationships.
Media buying services have been experiencing strong growth in recent years as clients seek alternatives to full-service agency relationships. Many companies have been unbundling agency services and consolidating media buying to get more clout from their advertising budgets.

Question 13

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 14

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 15

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 16

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 17

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 18

From the perspective of the promotional planner, the purpose of media is to provide information or entertainment to their subscribers.
The primary function of most media 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 19

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 20

Superagencies were formed when large advertising organizations disintegrated to form separate, more specialized individual agencies.
During the late 1980s and into the 90s, 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 21

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 22

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 rather than strategic planning.

Question 23

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 24

In companies which 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 25

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 26

_____ 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 27

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 service agencies
E)Bait-and-switch marketing service agencies

Question 28

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 29

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 30

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 31

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)any 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.The advertisers, or clients, are the key participants in the integrated marketing communications process.They have the products, services, or causes to be marketed, and they provide the funds that pay for advertising and promotions.

Question 32

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.A centralized organizational system is often used when companies do not have many different divisions, product or service lines, or brands to advertise.Many companies prefer a centralized advertising department because developing and coordinating advertising programs from one central location facilitates communication regarding the promotions program, making it easier for top management to participate in decision making.

Question 33

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 34

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 structure is used in large companies with more than 1000 employees, whereas a decentralized organization system is used only in smaller companies which have not 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 decentralized organization, the efforts of all the brand managers are coordinated by the advertising managers.

Question 35

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 36

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 37

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 38

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 39

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 40

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 41

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 42

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 43

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 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 which is actively involved in day-today decision making.
E)it lacks the ability to handle multiple brands.

Question 45

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

A)Longer response time
B)Allows for very little top-management involvement
C)Involvement of a huge number of people in making program decisions
D)Prohibits communications
E)Discontinuity in staff

Question 46

Which of the following statements explain 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 47

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 48

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 49

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 50

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 51

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 52

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 non-management 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 53

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.The main reason why outside agencies are used is that they provide the client with the services of highly skilled individuals who are specialists in their chosen fields.An advertising agency staff may include artists, writers, media analysts, researchers, and others with specific skills, knowledge, and experience who can help market the client's products or services.

Question 54

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 55

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 56

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 57

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

A)Focus is external rather than internal
B)Lesser access to top level talent
C)Reduced cost savings
D)Lesser stability
E)Decreased coordination

Question 58

Which of the following statements is true about superagencies?

A)They were formed when large advertisement 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.

Question 59

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 60

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 61

Which of the following statements is true about account services?

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

Question 62

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.In the above scenario, Greg has been hired as an account planner.Account planners are individuals who gather information that is relevant to the client's product or service and can be used in the development of the creative strategy as well as other aspects of the integrated marketing communication (IMC) campaign.Account planners work with the client as well as other agency 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 63

_____ are drawings that show what the print ad will look like and from which the final artwork will be produced.

A)Creative briefs
B)Packshots
C)Layouts
D)Art infusions
E)Product sheets

Question 64

Within the creative services department of a full-service agency, once the copy, layout, illustrations, and mechanical specifications of the ad have been completed and approved, the ad is turned over to the _____ department.

A)traffic
B)account planning
C)production
D)research
E)art

Question 65

Which department within an advertising agency supervises the casting of people to appear in the ad and the setting for the scenes?

A)Account services department
B)Art department
C)Traffic department
D)Media department
E)Production department

Question 66

Which of the following departments in a full-service agency is responsible for the development and execution of advertisements?

A)Traffic department
B)Account services department
C)Media planning department
D)Creative services department
E)Production department

Question 67

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

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

Question 68

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 69

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 70

In the creative services department of an ad agency, the _____ department is responsible for creating the visual portion of an ad, such as layouts and commercial storyboards.

A)account services
B)service
C)product management
D)research
E)art

Question 71

With respect to the creative services department of a full-service agency, the layout for TV commercials is known as a(n):

A)storyboard.
B)logo.
C)art infusion.
D)packshot.
E)creative brief.

Question 72

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 73

Mars Inc., a San Diego based advertising agency, offers various services, such as sales promotion, marketing research, package design, direct marketing, 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 74

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 75

The _____ department coordinates all phases of production to see that the ads are completed on time and that all deadlines for submitting the ads to the media are met.

A)research
B)production
C)art
D)traffic
E)personnel

Question 76

_____ 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 77

A sequence of frames or panels that depict a TV commercial in still form is called a(n) _____.

A)screenplay
B)creative brief
C)storyboard
D)placard
E)art infusion

Question 78

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 79

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 80

Which of the following is true of the traffic department in a full-service agency?

A)It is headed either by an art director or a graphic designer who produce the final artwork for the ad.
B)It can be located only within the research department and is used to gather information through primary or secondary sources.
C)It gathers, analyzes, and interprets information that will be useful in developing advertising for the agency's clients.
D)It may be located in the creative services area of the agency or be a part of media or account management.
E)It is headed either by a copywriter or a media planner who selects and contracts for space and time in media.