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

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Question 21

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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.

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Question 22

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Scenario 2-1 As one of the world's largest computer and technology developers, Dell, Inc.has never been a stranger to advertising. However, due to a consistent decline in market share, the Texas-based company is looking to overhaul its advertising efforts for the first time in years. In the past, Dell found success promoting its products as some of the top "inexpensive" computer products on the market. However, the company's new ad campaign, which will be targeted towards more high-end users, will make no mention of product price. The company is looking to reinvent its image, and believes the first step in doing so is to revamp its outdated advertising campaign. -(Scenario 2-1) In recent years, Dell has struggled to compete with companies such as HP and Apple. To generate interest in its new line of computers, Dell hires a company to design a number of contests and incentive programs that will help build excitement for the new line. This company is likely an example of a(n)

A) direct marketing agency.
B) e-commerce agency.
C) sales promotion agency.
D) marketing research firm.

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Question 23

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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.

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.

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?

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

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

What is often called the advertising department within the firm?

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?

Scenario 2-5 In 2008, Chicago native Andrew Mason launched Groupon, a website that offered Chicago consumers various "deals of the day." At the time, Groupon had a unique business model-each day, one "groupon" would be offered in a particular city. If a certain number of people signed up for the offer, then the deal became available to all.Now, only two years later, the business continues to grow, and the service is being offered in several more U.S.cities. Google made a multi-billion dollar offer for the company that Mason turned down in December of 2010.Continuing the company's rapid rise to success will be a challenging task for CEO Andrew Mason and his team because they will be the first to attempt to advertise the unique services. Groupon needs to find ways to attract new users, and looking into new forms of advertising will be essential to the company's success. -(Scenario 2-5) Because Groupon does not do an extensive amount of advertising, it decides to look outside the company for help in guiding its efforts. The company called upon to aid Groupon would be referred to as a(n)

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.

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.

Scenario 2-3 After it drew a record-low 9.8 million viewers in 2004, ABC dropped the rights to air the Miss America pageant. Six years later, in 2010, ABC once again agreed to air the event after cable network TLC declined to pick up the pageant for a fourth year. Although ABC decided to pick up the pageant for a second time in the last twelve years, the terms of the agreement are far more favorable for the large cable network. Similar to its first stint with the network, the pageant will be shown on Saturday nights (television's lowest viewing night of the week) . The difference this time comes in the price ABC had to pay to acquire rights to the event-because of the recent decline in the event's popularity, the network had to pay very little, and ultimately deemed the deal to be a "no-lose" situation. -(Scenario 2-3) The pageant's board of directors realizes that holding the event on a Saturday night is detrimental to its success. To supplement the television broadcast, the board contemplates setting up a pageant website and simulcasting the event live over the Internet. What kind of organization or expert might be helpful in planning the webcast?

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

Scenario 2-6 SC Johnson & Son produces a wide variety of very popular consumer products such as Shout®, Windex®, Mr.Muscle®, Ziploc®, Edge®, Glade®, Vanish®, Raid®, OFF!®, Pledge®, and Scrubbing Bubbles® Bathroom Cleaner.These products are in highly competitive markets and require substantial investments in consumer promotion to maintain market share. -(Scenario 2-6) SC Johnson has decided that additional data are necessary to determine specific messages that should be directed towards consumers.Which of the following departments in their ad agency will most likely be responsible for conducting this work?

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

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

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

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.

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