Question 1

A company buys unsold television and radio media time and resells this time and space to advertisers and agencies.This company is an example of a(n):
A) entrepreneurial agency.
B) promotional facilitator.
C) creative boutique.
D) media-buying service.
E) promotional broker.

Accepted Answer

Media-buying agencies purchase and package radio and TV time.

Question 2

An ad agency's _____ coordinates all phases of production and makes sure everything is completed before the client and/or media deadlines.
A) media department
B) coordination specialist
C) traffic department
D) communications manager
E) art director

Accepted Answer

The agency traffic department coordinates all phases of production and makes sure everything is completed before client and/or media deadlines.

Question 3

An agency that uses the _____ method,charges a basic monthly fee for all of its services to the client and retains any media commissions earned.
A) retainer
B) salary-plus-commission
C) media markup
D) fee-commission combination
E) negotiation

Accepted Answer

With the fee-commission combination, the agency charges a basic monthly fee for all its services to the client and retains any media commissions earned.

Question 4

When an advertising agency purchases several hours of television time for its customers' commercials from a television station,the agency receives 15 percent of the gross amount charged by the station.The 15 percent is known as:
A) a spiff.
B) a cooperative allowance.
C) an advertiser incentive.
D) a slotting allowance.
E) a media commission.

Accepted Answer

Because the agency is saving the media much of the expense of sales and collections, the media allows the agency to retain a 15 percent media commission on the space or time they purchased on behalf of their clients.

Question 5

A golf company has developed a golf club that has a wider shaft and is 40 grams lighter than other clubs currently available in the market.It has hired an agency to develop an advertising campaign for this new club.The golf company has offered to pay the agency 3 percent of its profits if it sells more than 30,000 clubs during its first full year of production.This bonus is an example of a(n):
A) incentive system.
B) entrepreneurial allowance.
C) production-oriented plan.
D) retainer system.
E) market-oriented plan.

Accepted Answer

Accountability is a major issue in the client/agency relationships. With a new type of agency compensation, the incentive system, the agency earns more if the campaign attains specific, agreed upon goals.

Question 6

An ad agency in Atlanta,Georgia,buys a quarter-page ad in a golfing magazine for a travel agency that specializes in preparing all-inclusive,hassle-free golf travel packages,on a 15 percent commission basis.The cost of the ad is $300.How much money should the agency pay the publication?
A) $255
B) $285
C) $300
D) $315
E) $345

Accepted Answer

The magazine would receive only $255 even though the travel company paid the agency $300. The $45 is the agency's media commission. Cash discounts were ignored in the question as they are in the text discussion. The typical media commission is 15 percent.

Question 7

_____ must have the skill to condense all that can be said about a product into a few salient and pertinent points.
A) Account directors
B) Advertising supervisors
C) Copywriters
D) Communication specialists
E) Advertising planners

Accepted Answer

Most ads rely heavily on copy, the words that make up the headline and message. The people who create these words, called copywriters, must condense all that can be said about a product into a few pertinent, succinct points.

Question 8

Relationship marketing is defined in most marketing texts as the creation of customer loyalty through the establishment of a long-term win-win relationship between the buyer and seller.Which of the following terms most closely relates to relationship marketing for an advertising agency?
A) Horizontal cooperative advertising
B) Account planning
C) Vertical cooperative advertising
D) Integrated promotions
E) Decentralized advertising

Accepted Answer

Account planning changes the task performed by an advertising agency from one of simply creating an ad to one of nurturing a relationship between agency and client.

Question 9

In the creative process,the _____ determines how the ad's verbal and visual symbols will fit together.
A) account executive
B) advertising planner
C) media specialist
D) art director
E) copywriter

Accepted Answer

Ads use nonverbal communication. That is the purview of the art directors, graphic designers, and production artists, who determine how the verbal and visual symbols will fit together.

Question 10

Medium and large advertising agencies are usually structured according to:
A) production and traffic units.
B) group or departmental systems.
C) media availability.
D) designers and illustrators.
E) advertisement suppliers.

Accepted Answer

Medium and large agencies are usually structured in a departmental or group system.

Question 11

Which of the following statements is true about account planning?
A) It is a method used by advertisers to benchmark competitors.
B) It is a hybrid discipline that bridges the gap between the traditional agency research, account management, and creative departments.
C) It does not include any consumer research.
D) It is the reorganization of an advertiser for the purpose of improving its image.
E) It is a service provided by creative boutiques, which allows the advertiser to choose generic ads that can be customized.

Accepted Answer

Account planning is a hybrid discipline that uses research to bridge the gap between account management and creatives.

Question 12

In an ad,the words that make up the headline and message is known as the:
A) copy.
B) media.
C) layout.
D) code.
E) feedback.

Accepted Answer

Most ads rely heavily on copy, the words that make up the headline and message.

Question 13

In the _____ method of compensation,advertising agencies charge clients for all their services and credit any media commissions earned to the client.
A) variable budget
B) retainer
C) variable apportionment of overhead costs
D) slotting allowance
E) pushing allowance

Accepted Answer

In the straight-fee or retainer method, agencies charge for all their services, either by the hour or by the month, and credit any media commissions earned to the client.

Question 14

Under the _____ method of agency compensation,the media channel allows an ad agency to retain 15 percent of the bill amount on the time and space purchased for clients.
A) fee
B) media commission
C) markup
D) incentive
E) depreciation

Accepted Answer

Under the media commission method of agency compensation, the media channel may allow an ad agency to retain 15 percent of the bill amount on the time and space purchased for clients.

Question 15

What is the greatest disadvantage associated with in-house ad agencies?
A) Loss of revenues
B) Adherence to the organizational mission
C) Reluctant acknowledgement by the mass media
D) Loss of objectivity
E) Poor staff-line relationships

Accepted Answer

The biggest problem for in-house agencies is loss of objectivity.

Question 16

An ad agency may need to purchase photographs and illustrations from an outside supplier for its client.The agency pays the outside supplier a fee and adds a(n)_____,usually 17.65 percent,to the client's bill.
A) commission
B) markup
C) service charge
D) incentive
E) profit

Accepted Answer

In the process of creating an ad, the agency normally buys a variety of services or materials from outside suppliers-for example, photos and illustrations. The agency pays the supplier's charge and then adds a markup to the client's bill, typically 17.65 percent of the invoice (which becomes 15 percent of the new total).

Question 17

The _____ is in charge of the nonverbal communication portion of an ad.
A) account executive
B) advertising planner
C) media specialist
D) art director
E) communication specialist

Accepted Answer

Ads also use nonverbal communication. That is the purview of the art directors, graphic designers, and production artists, who determine how the verbal and visual symbols will fit together.

Question 18

If an agency were to buy an ad in a magazine for a company that sells customized fabric,the ad would cost $5,000.How much money would the agency send the publication after deducting its media commission?
A) $4,850
B) $4,250
C) $5,000
D) $5,150
E) $5,750

Accepted Answer

The magazine would receive only $4,250 even though the travel company paid the agency $5,000. The agency's media commission is $750, which it will deduct from the bill amount paid by the travel company.

Question 19

The primary reason some advertisers set up a wholly owned in-house ad agency is to:
A) increase their overhead.
B) tighten control over their advertising.
C) stimulate external creative efforts on the part of the marketing staff.
D) meet the challenge of ad agencies and mass media with respect to creative incentives.
E) increase the percentage of the markup they earn.

Accepted Answer

Companies set up a wholly owned in-house agency (or house agency) to save money and tighten control over their advertising.

Question 20

An agency has designed a full-page magazine ad for hot tubs for a cost of $600.The job required the services of a photographer to produce an illustration of people enjoying a soak in a hot tub.If the agency uses the traditional markup,what is the advertising agency's media commission?
A) $90
B) $104
C) $100
D) $106
E) $108

Accepted Answer

To get the traditional agency commission of 15 percent, the agency would markup the $600 bill by 17.65 percent, which amounts to $106. Now, the ad agency adds this amount to the original bill of $600 and sends it to the magazine. The total amount is now $706. The media commission for the ad agency is 15% of the new total amount, which is $106.

Quiz 4: The Scope of Advertising: From Local to Global

A company buys unsold television and radio media time and resells this time and space to advertisers and agencies.This company is an example of a(n) :

An ad agency's _____ coordinates all phases of production and makes sure everything is completed before the client and/or media deadlines.

An agency that uses the _____ method,charges a basic monthly fee for all of its services to the client and retains any media commissions earned.

When an advertising agency purchases several hours of television time for its customers' commercials from a television station,the agency receives 15 percent of the gross amount charged by the station.The 15 percent is known as:

An ad agency in Atlanta,Georgia,buys a quarter-page ad in a golfing magazine for a travel agency that specializes in preparing all-inclusive,hassle-free golf travel packages,on a 15 percent commission basis.The cost of the ad is $300.How much money should the agency pay the publication?

_____ must have the skill to condense all that can be said about a product into a few salient and pertinent points.

Relationship marketing is defined in most marketing texts as the creation of customer loyalty through the establishment of a long-term win-win relationship between the buyer and seller.Which of the following terms most closely relates to relationship marketing for an advertising agency?

In the creative process,the _____ determines how the ad's verbal and visual symbols will fit together.

Medium and large advertising agencies are usually structured according to:

Which of the following statements is true about account planning?

In an ad,the words that make up the headline and message is known as the:

In the _____ method of compensation,advertising agencies charge clients for all their services and credit any media commissions earned to the client.

Under the _____ method of agency compensation,the media channel allows an ad agency to retain 15 percent of the bill amount on the time and space purchased for clients.

What is the greatest disadvantage associated with in-house ad agencies?

An ad agency may need to purchase photographs and illustrations from an outside supplier for its client.The agency pays the outside supplier a fee and adds a(n) _____,usually 17.65 percent,to the client's bill.

The _____ is in charge of the nonverbal communication portion of an ad.

If an agency were to buy an ad in a magazine for a company that sells customized fabric,the ad would cost $5,000.How much money would the agency send the publication after deducting its media commission?

The primary reason some advertisers set up a wholly owned in-house ad agency is to:

An agency has designed a full-page magazine ad for hot tubs for a cost of $600.The job required the services of a photographer to produce an illustration of people enjoying a soak in a hot tub.If the agency uses the traditional markup,what is the advertising agency's media commission?