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Chap003 - M/C with answers
Advertising and Sales Promotion (College of the North Atlantic)
Studocu is not sponsored or endorsed by any college or university
Chap003 - M/C with answers
Advertising and Sales Promotion (College of the North Atlantic)
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
Chapter 03
Organizing for Advertising and Promotion: The Role of Ad Agencies and
Other Marketing Communication Organizations
Multiple Choice Questions
1. _____ are the major participants in the integrated marketing communications process.
A. Advertising agencies and new product development firms
B. Advertisers and media organizations
C. Media organizations and marketing information systems
D. Travel agencies and public relations firms
E. New-product development firms and public relation firms
2. Company A has hired company B to take care of its advertising needs. All company A has
to do is provide its products and funds to company B to execute its advertising requirements.
Company A is known as a(n):
A. client.
B. creative boutique.
C. full service agency.
D. advertising agency.
E. media organization.
3. The term client, in the ad agency industry, refers to the:
A. advertiser or organization that has the product, service or cause that needs to be marketed.
B. media, which plays a crucial role in the process of marketing communication.
C. purchaser of the consumer product advertised.
D. market for business or consumer products.
E. advertising agency that specializes in the creation, production, and/or placement of the
communications message.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
4. 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
5. From the perspective of a promotional planner, the primary purpose of most media is to:
A. provide information or entertainment to their subscribers, viewers, or readers.
B. assume major responsibility for developing the marketing program.
C. provide an environment for the firm's marketing communications message.
D. help the company understand the marketplace.
E. provide the funds that pay for advertising and promotions.
6. A(n) ______ primary function is to provide information or entertainment to its audience.
A. client's
B. advertising agency's
C. media's
D. customer's
E. advertiser's
7. Company A is a major participant in the advertising and promotion process. It attracts
various others companies who buy space and time with them which they can provide at
discounted rates. Company A helps these companies reach the target market effectively with
the message. Company A is a(n):
A. advertiser.
B. advertising agency.
C. media organization.
D. full service agency.
E. consultancy.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
8. Direct-marketing agencies, sales promotion agencies and public relations firms are
examples of:
A. different types of advertising agencies.
B. media organizations.
C. collateral services.
D. specialized marketing communication services.
E. in-house agencies.
9. _____ perform specialized functions that the various participants in integrated marketing
communication process use in planning and executing advertising and other promotional
functions.
A. Media services
B. Compensation services
C. Collateral services
D. Traffic services
E. In-house agencies
10. Which of the following statements is true about the role of top management in the
advertising and promotion decision making process?
A. Top management is usually involved in the day-to-day decision-making and operations of
advertising and promotion.
B. Top management does not provide input in the advertising and promotion process.
C. Top management is usually interested in how the advertising program represents the
organization.
D. Top management is only interested in the amount of money that must be allocated to
advertising and promotion.
E. Top management is more interested in tactical planning than strategic planning.
11. Under a centralized organizational system, the responsibility for planning and controlling
the advertising and promotional function lies with the:
A. brand manager.
B. advertising manager.
C. product manager.
D. in-house agency.
E. vice president of marketing.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
12. Under a centralized organizational arrangement, which of the following is the advertising
manager responsible for?
A. Budgeting and planning media schedule
B. Coordinating the creation and production of ads and sales
C. Compensation management
D. Administering the firm's sales and sales promotion programs
E. Sales and sales management
13. Which of the following is true about the functions of the advertising manager in a
centralized system?
A. Advertising manager is responsible for all sales and sales management activities.
B. Advertising manager, usually, takes the final decision about allocating funds towards the
promotional budget.
C. The advertising manager may not review and approve the promotional plans which are
made by the agency.
D. The specific role of the advertising manager depends on the size of the firm.
E. Advertising manager deals only with the advertising department in the organization.
14. In a centralized organizational arrangement, 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. marketing
C. sales
D. advertising
E. product planning
15. When a _____ is used, most of a company's advertising and promotional activities will be
the responsibility of the advertising manager.
A. brand manager system
B. decentralized marketing system
C. centralized system
D. media buying service
E. creative boutique
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
16. Problems associated with a(n) _____ include difficulty of the advertising department to
understand the overall marketing strategy for the brand.
A. decentralized marketing system
B. in-house agency
C. centralized marketing system
D. brand management system
E. creative boutique
17. Which of the following can be stated a responsibility of a brand manager in a
decentralized marketing system?
A. Planning of the marketing program
B. Manufacturing the products
C. Compensating all the employees
D. Distributing products
E. Developing departments in the organization
18. Under a decentralized system, the advertising department is generally a part of _____
department.
A. production
B. sales
C. product management
D. marketing
E. research and development
19. The role of the advertising department in a company using a decentralized product
management system is to:
A. plan and coordinate the advertising campaign.
B. provide advertising and promotion related support to the brand managers.
C. conduct marketing research based on the problems identified during segmentation.
D. develop sales programs that would be effective against the target market.
E. check manufacturing of the products according to the demand in the market.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
20. In a decentralized system of advertising organization, the responsibility of planning,
implementing, and controlling the marketing program for an individual brand belongs to the:
A. product manager.
B. creative director.
C. account executive.
D. layout editor.
E. communications team.
21. Individuals who have the responsibility of coordinating efforts of various product or brand
managers for a particular product class are known as:
A. category managers.
B. superordinate managers.
C. account executives.
D. account supervisors.
E. media planners.
22. A _____ advertising organizational system has the advantages of concentrated managerial
attention, rapid response to problems, and increased flexibility.
A. centralized
B. decentralized
C. democratic
D. collateral system
E. functionally-incorporated
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
23. PrimeTime is a multi-product firm that follows an advertising organizational system
where the manager has the 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 brands and ensures that each brand
receives concentrated managerial attention. However, each brand may compete against other
brands in the same company. Which advertising organizational system is PrimeTime
following?
A. Centralized system
B. Decentralized system
C. Creative boutique
D. Collateral system
E. Democratic system
24. Which of the following describes a limitation associated with the decentralized
organizational structure for advertising?
A. Brand managers are often overqualified and want too much input into advertising.
B. Brand managers are typically highly experienced in advertising and understand exactly
what advertising can do for a brand.
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. With their reliance on intuition, brand managers often jeopardize the creative activities of
the advertising agency.
25. A(n) _____ is an advertising agency that is set up, owned, and operated by the advertiser.
A. creative boutique
B. full service agency
C. in-house agency
D. self sufficient agency
E. collateral agency
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
26. When the client assumes the entire promotional function, it is said to operate:
A. on a client management basis.
B. on a creative and functional basis.
C. as an in-house agency.
D. as a collateral service provider.
E. as a self-sufficient agency.
27. Which of the following is an advantage associated with an in-house advertising agency?
A. Lower advertising costs
B. More highly skilled specialists
C. More varied perspective on advertising problems
D. Greater flexibility
E. Disseminate control to outside agencies.
28. 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. compete with external advertising agencies.
D. win advertising awards that will enhance the image of their brands.
E. disseminate control to outside agencies.
29. Which of the following is an advantage of an in-house agency?
A. Increased coordination and cost savings
B. Different brand images and large number of marketing partners
C. Increased coordination and greater cost savings
D. More overall control and freshness in ideas and work
E. Greater flexibility and more objectivity
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
30. Company A used to rely on outside advertising agencies for its advertising needs but since
it is a global company, it is now worried that using external agencies may lead to non-
consistency of its brand image. The years on experience with outside agencies has made it
realize that it results in wastage of both time and money. It also wants to maintain tighter
control over its advertising and promotion activities. Which of the following advertising
agencies should it adopt?
A. Collateral service agency
B. Full service agency
C. In-house agency
D. Democratic agency
E. Creative boutique
31. 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.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
32. A company that uses an in-house agency might turn its advertising and promotion tasks
over to an outside agency to:
A. get more control over the advertising process.
B. save money.
C. get an objective.
D. make coordination of the advertising and promotional process easier.
E. save media commissions.
33. Which of the following statements about the U.S. advertising agency business is true?
A. Most U.S. ad agencies are large businesses with billings exceeding $100 million per year.
B. Most U.S. ad agencies are individually owned small businesses employing fewer than five
people.
C. Nearly all of the U.S. domestic billings are handled by the top 100 agencies.
D. Most of the top U.S. ad agencies are headquartered in Chicago.
E. There are approximately 1,000 agencies listed in the
Standard Directory of Advertising
Agencies
.
34. Which of the following is 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. Traffic compensation
35. 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 agencies could provide their clients with integrated marketing communications services
worldwide.
E. to lessen the need for competitive pricing.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
36. 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 form 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 became disenchanted with the superagencies moved to form larger
agencies that were inflexible and less responsive.
E. They were formed so that agencies could provide clients with just-in-time inventory
management system.
37. Which of the following statements explain why an organization would want to use an
external advertising agency?
A. It saves money for the client.
B. It helps the client 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 brand image worldwide and reduces the number of marketing
partners for the client firm.
E. It provides the client with the services of highly skilled individuals.
38. Which of the following statements is true about advertising agencies?
A. Most large, national advertisers use in-house agencies.
B. Agencies are often used because of the skill, expertise, and experience they can offer in the
advertising area.
C. Most large agencies offer only creative services to their clients.
D. Agencies must be used since companies do not have the capabilities of developing their
own advertising.
E. Most large advertisers are totally content with the current commission system of
compensation.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
39. Which type of ad agency is most likely to assist the client in areas such as marketing
strategy and research, campaign planning and execution, and media planning and buying?
A. A creative boutique
B. A full-service agency
C. A media buying service
D. A collateral agency
E. A full time agency
40. 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. in-house agency.
D. full-service agency.
E. integrated marketing organization.
41. AdonDemand, a new advertising agency in San Diego, is offering its clients various
services such as marketing, sales promotion, research, promotion, package designing, direct
marketing, publicity along with planning, creating, and producing the advertising. Company
A is a(n):
A. creative boutique.
B. full-service agency.
C. media buying organization.
D. in-house agency.
E. media specialist company.
42. Which of the following statements is true about account services?
A. It is an in-house service for the agency which is independent of its clients' obligations.
B. It provides the creative team with more insight on how to use advertising and other IMC
tools to communicate with customers.
C. It provides the creative team with more insight into consumers.
D. It is an advertisement agency service which is not link to its client.
E. It is the link between the ad agency and its clients.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
43. The _____ 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. account planner
44. The agency person who is the focal point of the agency-client relationship is the:
A. media buyer.
B. account planner.
C. copywriter.
D. brand manager.
E. account executive.
45. The function of gathering, analyzing and interpreting information that is useful in
developing advertising is the responsibility of the agency's _____ department.
A. production
B. traffic
C. media
D. account management
E. research
46. 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. Which position has Greg been hired for?
A. Research department personnel
B. Account planner
C. Creative team member
D. Media specialist
E. Account executive
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
47. The _____ is a document that the agency's creative department uses to guide the
development of advertising ideas and concepts.
A. tagline brief
B. creative boutique
C. creative brief
D. copywriter article
E. marketing plan
48. Account planning has become a very important and demanding function in many agencies
because:
A. public relations has replaced advertising to achieve global integrated marketing
communications.
B. budgeting services have reduced the redundancy associated with on-task account planning.
C. marketing research has expanded the creative capacity of ad agencies.
D. of the increase in the number of marketing communication channels and ways of
contacting consumers.
E. of the reducing roles of account executives.
49. Which of the following departments of the full-service agency, analyzes, selects, and
contracts for space or time in the media that will be used to deliver the client's advertising
message?
A. Research department
B. Media department
C. Account management department
D. Creative services department
E. Art department
50. Which of the following statements about the role of ad agency media departments is true?
A. Large advertisers do not use media departments to purchase media time and space.
B. Media departments do not have the ability or the authority to negotiate prices.
C. It reviews information on demographics, and consumers' television viewing habits.
D. Consolidating media buying is not cost effective and may reduce media efficiency.
E. The media buyer implements the media plan by selling the actual time and space.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
51. _____ are the individuals who conceive the ideas for the ads and write the advertising
message.
A. Copywriters
B. Art directors
C. Account planners
D. Account executives
E. Media planners
52. The _____ is responsible for creating the visual portion of an ad such as layouts and the
commercial storyboards.
A. account executive
B. copywriter
C. product management department
D. research department
E. art department
53. _____ are drawings that show what the print ad will look like and from which the final
artwork will be produced.
A. Creative briefs
B. Copywriters
C. Layouts
D. Designs
E. Logos
54. Which department within an advertising agency supervises the casting of people to appear
in the ad and the setting for the scenes?
A. Media department
B. Art department
C. Copywriters
D. Traffic department
E. Production department
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
55. The _____ department coordinates all phases of production to ensure the proper
progression of the advertisement.
A. research
B. production
C. art
D. traffic
E. media
56. Most of an advertising agency's expenses are in the area of:
A. media costs.
B. salaries and benefits for employees.
C. personal selling.
D. production facilities.
E. commissions.
57. A _____ is an agency organizational structure in which each functional area is set up as a
separate department. The parts of this structure are called on as needed to perform their
particular specialty and serve all of the agency's clients.
A. departmental system
B. group system
C. creative boutique
D. matrix system
E. media buying service system
58. Jackson & Morris is an advertising agency that handles each of its clients by assigning
individuals from various departments to work together as a team on their accounts. The
agency is using a _____ organizational system.
A. departmental
B. group
C. matrix
D. boutique
E. dedicated
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
59. An advertising agency that wants its employees to develop expertise in servicing a variety
of accounts should use a(n) _____ structure.
A. group system
B. departmental system
C. creative boutique
D. in-house
E. decentralized
60. A(n) _____ is an agency that specializes in and provides only creative services.
A. creative boutique
B. full-service agency
C. in-house advertising agency
D. decentralized organizational system
E. media boutique
61. Creative boutiques are agencies that:
A. limit their client service to creative planning and execution.
B. have resulted from advertisers wanting to save money in buying media space.
C. perform the same functions as full-service agencies for their clients, but charge more.
D. are used only when advertising is not important to the marketing success of the company
that hired them.
E. that wants its employees to develop expertise in servicing a variety of accounts.
62. Which of the following statements is true about creative boutiques?
A. They generally have media, research and account planning capabilities.
B. They are large ad agencies that provide all types of advertising and promotion services.
C. They often subcontract work to full service agencies.
D. They tend to provide quicker creative services due to less bureaucracy.
E. Large companies visit them when they are looking for a huge range of services and there
are cutbacks in the advertising spending.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
63. Independent companies that specialize in the purchase of radio and television time are
known as:
A. creative boutiques.
B. mid-sized agencies.
C. full-service agencies.
D. media specialist companies.
E. media boutiques.
64. Clients and creative boutiques that have developed their own media strategies may
employ _____ to execute them.
A. media specialist companies
B. full-service agencies
C. in-house agencies
D. media departments
E. product managers
65. Which of the following statements about creative boutiques is true?
A. Creative boutiques are more successful today than ever before.
B. The demand for IMC services has had little influence on how creative boutiques do
business.
C. Creative boutiques use an aggregated business model instead of niche marketing.
D. Creative boutiques today are having trouble because clients often want a range of services.
E. Consolidation has led to the demise of creative boutiques.
66. The traditional method of compensating ad agencies is through:
A. a commission system.
B. hourly billings.
C. a fee system.
D. a straight salary method.
E. an objective-and-task compensation system.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
67. Agency compensation under the commission system is based on:
A. total number of hours worked.
B. a percentage of a client's marketing budget.
C. a specified percentage of the cost of any advertising time or space the agency purchases for
its client.
D. a percentage of advertising production costs.
E. the client's position in the distribution channel.
68. An advertising agency works with its clients under a traditional commission system
compensation arrangement. The agency places a 30-second spot for one of its clients on an
episode of
Friends
, which costs $500,000. A reasonable estimate of the agency's commission
on this space buy is:
A. $15,000.
B. $30,000.
C. $45,000.
D. $75,000.
E. $80,000.
69. Opponents of the agency commission system argue this system is not effective because:
A. a commission keeps the emphasis on creative skills not the bottom-line.
B. a commission is simple to administer.
C. the agency time spent on an account may not be proportional to the compensation received
for it.
D. a commission encourages agencies to limit their client's advertising expenditures.
E. a commission does not tie agency compensation to media costs.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
70. Which of the following statements about changes in the way advertising agencies are
being compensated is true?
A. Most clients do not pay full commissions to their agencies because they prefer to use some
type of fee or incentive-based system as they seem more equitable than the commission
system.
B. With the move toward integrated marketing services, it is likely that there will be a return
to the commission system of compensation.
C. From the viewpoints of both the client and the agency, the traditional commission system
is much superior to negotiated commissions.
D. Since most clients want their agencies to be in total charge of the integrated marketing
communications process, they are willing to compensate them based on media commissions.
E. In a negotiated commission system, commission is usually greater than 15 percent.
71. A major argument put forth by defenders of the commission system is that a commission:
A. keeps the agencies from placing advertising in expensive media.
B. ties agency compensation to the inflation in media costs.
C. is very complex to administer.
D. is simple and keeps the emphasis in agency compensation on non-price factors.
E. encourages agencies to use noncommissionable media such as direct mail.
72. Critics argue the use of _____ can encourage agencies to ignore cost accounting systems
and avoid media such as direct mail and sales promotions.
A. percentage charges
B. fixed fee arrangements
C. cost-plus agreements
D. the commission system
E. the objective-and-task compensation system
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
73. Under which type of compensation system might an agency be more inclined to
recommend expensive media such as network television and national magazines to its
clients?
A. Commission system
B. Fee arrangement system
C. Cost-plus system
D. Incentive-based compensation system
E. Objective-and-task compensation system
74. Which of the following statements is true about agency commissions?
A. Some leading agencies now receive average commissions of 8 to 10 percent.
B. Nearly all of the leading agencies still earn a 15 percent commission.
C. Most agencies are earning more of their income from fixed commissions as clients expand
their IMC programs to include other forms of promotion.
D. Most agencies are unwilling to negotiate their commission rates.
E. Leading agencies often get 20 percent commissions.
75. Negotiated commission rates for advertising agencies:
A. are becoming more commonplace.
B. are becoming less common.
C. set a 15 percent minimum commission rate for all agency work.
D. are rarely used by consumer-products advertisers.
E. are designed primarily to benefit agencies.
76. A(n) ______ is a type of compensation arrangement where an agency charges a client a
fixed monthly amount of money for all of its services and credits to the client any media
commissions earned.
A. fixed fee
B. negotiated commission
C. cost-plus agreement
D. incentive-based compensation
E. fee-commission combination
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
77. Under the _____ system of compensation, the client agrees to pay the agency a fee based
on the costs of its work plus some agreed-on profit margin.
A. fixed fee
B. negotiated commission
C. fee-commission combination
D. incentive based
E. cost plus
78. If an advertiser wants a very detailed accounting of how its advertising and promotional
monies are being spent and what it is being charged by its ad agency, it is likely to use a(n)
_____ compensation system.
A. fee arrangement
B. media commission
C. incentive-based
D. fee-combination
E. cost-plus
79. Under which of the following compensation arrangement is the agency compensation tied
to their performance?
A. Fixed-fee system
B. Incentive based system
C. Cost plus system
D. Negotiated commission system
E. Fee-commission combination system
80. The DDB Needham advertising agency receives compensation from its clients based on
their sales and market share performance. This is an example of a(n) _____ compensation
system.
A. fixed-fee
B. mediated
C. value based
D. cost-plus system
E. fee-commission
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
81. Why would General Motors switch to an incentive-based compensation system with
several of its agencies?
A. To encourage its agencies to use more mass media advertising.
B. To encourage its agencies to stop using network TV advertising.
C. To reduce control.
D. To demand more accountability and pay the agencies based on their performance.
E. To accomplish all of the above objectives.
82. As more companies adopt the integrated marketing communications approach to their
advertising and promotions,
A. they are increasing their reliance on mass media advertising and paying full commissions
to agencies.
B. they are reducing their reliance on mass media advertising and changing their agency
compensation system.
C. they are likely to move totally to cost-plus compensation systems.
D. incentive systems are becoming less important in compensating agencies.
E. none of the above is occurring.
83. A _____ audit of an agency focuses on factors such as costs, expenses and payments to
outside suppliers while a _____ audit focuses on factors such as the agency's efforts in
planning, development and implementing the advertising program.
A. financial; qualitative
B. qualitative; financial
C. financial; creative
D. qualitative; quantitative
E. fixed costs; variable costs
84. During a merger or acquisition of the agency by some other larger agency, the main
reason for the discontinuation of the agency-client relationship is:
A. conflict of interest.
B. poor performance.
C. poor communication.
D. changes in client's corporate strategy.
E. declining sales.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
85. Which of the following statements is true about speculative presentations?
A. Speculative presentations require little time and effort on the part of agencies.
B. Many agencies do not like to participate in speculative presentations because there is no
guarantee they will win the account, and they require time and money.
C. Speculative presentations are rarely used in the advertising industry.
D. Most agencies do not participate in speculative presentations to acquire new business.
E. They are also known as storyboards.
86. A(n) _____ is an individual who specializes in helping clients choose their advertising
agencies.
A. media specialist
B. ad agency review consultant
C. account representative
D. brand manager
E. compensation specialist
87. Probably the most effective way for an agency to acquire new business is through:
A. its image and reputation.
B. its public relations effort.
C. solicitations.
D. referrals.
E. its pricing strategy.
88. _____ are agencies that specialize in offering services, such as database management, and
the ability to create, produce, and disseminate direct mail and other types of communications
that go straight to target customers.
A. Full function ad agencies
B. Sales promotion agencies
C. Direct-response agencies
D. Public relations firms
E. Creative boutiques
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
89. Direct-response agencies:
A. manage premium and incentive offers.
B. specialize in the development of Web sites.
C. engage in crisis management.
D. manage clients' databases.
E. respond directly to the client's customers.
90. A typical direct-response agency is divided into three main departments. They are:
A. customer relations, production, and traffic.
B. media, customer relations, and sales.
C. sales, account management, and production.
D. account management, creative, and media.
E. creative, traffic, and financial.
91. _____ specialize in the development and management of sweepstakes, refund and rebate
offers and incentive programs.
A. Sales promotion agencies
B. Direct response agencies
C. Creative boutiques
D. Interactive agencies
E. Public relations firms
92. Which type of specialized service would have most likely coordinated a program to allow
consumers to mail in UPC codes from three Reynolds products to receive a free Blockbuster
movie rental?
A. Sales promotion agency
B. Public relations firm
C. Creative boutique
D. Interactive agency
E. Direct-response agency
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
93. A(n) _____ is the type of firm an organization would hire to develop and implement
programs to manage the organization's publicity and affairs with consumers and other relevant
publics.
A. public relations agency
B. advertising agency
C. media mix organization
D. creative boutique
E. direct-response agency
94. Which specialized service would be responsible for promoting and managing the concert a
client wants to hold to benefit Habit for Humanity?
A. The traffic department
B. A marketing research firm
C. An interactive agency
D. A public relations firm
E. A sales promotion agency
95. Organizations that specialize in the creation of interactive media such as CD-ROMs,
kiosks, and web sites are known as:
A. sales promotion agencies.
B. public relations firms.
C. creative boutiques.
D. interactive agencies.
E. direct-response agencies.
96. To implement BMW's new branding campaign, the decision was made to use short digital
films and to create a Web site where consumers could view the films. Which specialized
service would have most likely been involved in this campaign?
A. Sales promotion agencies
B. Public relations firms
C. Creative boutiques
D. Interactive agencies
E. Direct-response agencies
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
97. Package design firms, market research companies, photographers, and printers are
examples of:
A. sales promotion agencies.
B. interactive agencies.
C. companies that provide collateral services.
D. marketing support agencies.
E. support agencies.
98. National Fruit Company makes "WhiteHouse" apple juice. Market research determined
that the company needed to mold its bottle so as to make it easier to grasp. Its market research
would have been conducted by a(n) _____, and its packaging changes would have been done
by a(n) _____.
A. specialized service; interactive agency
B. interactive agency; collateral service
C. collateral service; specialized service
D. interactive service; creative boutique
E. collateral service; collateral service
99. Which of the following is likely to conduct in depth interviews, market surveys, and focus
groups etc. in order to gather objective information that is valuable to the advertiser's
promotional programs?
A. Market research companies
B. Media specialist organizations
C. Media buying organizations
D. Creative boutiques
E. Interactive agencies
100. Marketing research firms:
A. seldom conduct qualitative research for ad agencies.
B. are one of the most widely used types of collateral service organizations.
C. are actually classified as data warehouses because of their relations with ad agencies.
D. are not typically used by ad agencies.
E. can gather only subjective information.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
101. Which of the following is true about integrated services?
A. Companies prefer separate agencies for sales promotion, direct marketing, interactive
marketing etc. as they are easier to coordinate.
B. An agency with integrated marketing capabilities can create a single image for the product
or service.
C. Not many advertisers and agencies feel that integrated marketing is important to their
organizations' success.
D. Most advertisers want their ad agencies to set strategy for and coordinate the integrated
marketing communications program for them.
E. Most of the large marketers feel that the agency executives are capable of handling the
various elements of an integrated campaign.
102. A study by the Corporate Executive Board's Advertising and Marketing Roundtable
found:
A. consumers are more interested in integrated marketing communications.
B. clients prefer full service agencies over brokered advertising services.
C. situational factors are creating a promotional overlay effectively synthesizing.
D. integrated marketing communications in most organizations.
E. marketers are using numerous partners to access the special talents and expertise as needed.
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
Chapter 03 Organizing for Advertising and Promotion: The Role of Ad
Agencies and Other Marketing Communication Organizations
Answer Key
Multiple Choice Questions
1.
(p. 69)
_____ are the major participants in the integrated marketing communications process.
A.
Advertising agencies and new product development firms
B.
Advertisers and media organizations
C.
Media organizations and marketing information systems
D.
Travel agencies and public relations firms
E.
New-product development firms and public relation firms
Participants in the integrated marketing communications process can be divided into five
major groups: the advertiser (or client), advertising agencies, media organizations, specialized
communication services, and collateral services. Each group has specific roles in the
promotional process (Refer to Figure 3-1).
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-01 To understand how companies organize for advertising and other aspects of integrated marketing
communications.
Topic: Participants In The Integrated Marketing Communications Process: An Overview
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
2.
(p. 69)
Company A has hired company B to take care of its advertising needs. All company A
has to do is provide its products and funds to company B to execute its advertising
requirements.
Company A is known as a(n):
A.
client.
B.
creative boutique.
C.
full service agency.
D.
advertising agency.
E.
media organization.
The advertisers, or clients, are the key participants in the process. They have the products,
services, or causes to be marketed, and they provide the funds that pay for advertising and
promotions.
AACSB: Reflective Thinking
Bloom's: Apply
Difficulty: Hard
Learning Objective: 03-01 To understand how companies organize for advertising and other aspects of integrated marketing
communications.
Topic: Participants In The Integrated Marketing Communications Process: An Overview
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
3.
(p. 69)
The term client, in the ad agency industry, refers to the:
A.
advertiser or organization that has the product, service or cause that needs to be marketed.
B.
media, which plays a crucial role in the process of marketing communication.
C.
purchaser of the consumer product advertised.
D.
market for business or consumer products.
E.
advertising agency that specializes in the creation, production, and/or placement of the
communications message.
The advertisers, or clients, are the key participants in the process. They have the products,
services, or causes to be marketed, and they provide the funds that pay for advertising and
promotions.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-01 To understand how companies organize for advertising and other aspects of integrated marketing
communications.
Topic: Participants In The Integrated Marketing Communications Process: An Overview
4.
(p. 69)
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
Many organizations use an advertising agency, an outside firm that specializes in the creation,
production, and/or placement of the communications message and that may provide other
services to facilitate the marketing and promotions process.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-01 To understand how companies organize for advertising and other aspects of integrated marketing
communications.
Topic: Participants In The Integrated Marketing Communications Process: An Overview
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
5.
(p. 70)
From the perspective of a promotional planner, the primary purpose of most media is
to:
A.
provide information or entertainment to their subscribers, viewers, or readers.
B.
assume major responsibility for developing the marketing program.
C.
provide an environment for the firm's marketing communications message.
D.
help the company understand the marketplace.
E.
provide the funds that pay for advertising and promotions.
Media organizations are another major participant in the advertising and promotions process.
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.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-01 To understand how companies organize for advertising and other aspects of integrated marketing
communications.
Topic: Participants In The Integrated Marketing Communications Process: An Overview
6.
(p. 70)
A(n) ______ primary function is to provide information or entertainment to its
audience.
A.
client's
B.
advertising agency's
C.
media's
D.
customer's
E.
advertiser's
Media organizations are another major participant in the advertising and promotions process.
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.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-01 To understand how companies organize for advertising and other aspects of integrated marketing
communications.
Topic: Participants In The Integrated Marketing Communications Process: An Overview
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
7.
(p. 70)
Company A is a major participant in the advertising and promotion process. It attracts
various others companies who buy space and time with them which they can provide at
discounted rates. Company A helps these companies reach the target market effectively with
the message. Company A is a(n):
A.
advertiser.
B.
advertising agency.
C.
media organization.
D.
full service agency.
E.
consultancy.
Media organizations are a major participant in the advertising and promotions process. The
media must have editorial or program content that attracts consumers so that advertisers and
their agencies will want to buy time or space with them. While the media perform many other
functions that help advertisers understand their markets and their customers, a medium's
primary objective is to sell itself as a way for companies to reach their target markets with
their messages effectively.
AACSB: Reflective Thinking
Bloom's: Apply
Difficulty: Hard
Learning Objective: 03-01 To understand how companies organize for advertising and other aspects of integrated marketing
communications.
Topic: Participants In The Integrated Marketing Communications Process: An Overview
8.
(p. 70)
Direct-marketing agencies, sales promotion agencies and public relations firms are
examples of:
A.
different types of advertising agencies.
B.
media organizations.
C.
collateral services.
D.
specialized marketing communication services.
E.
in-house agencies.
Specialized marketing communications services include direct-marketing agencies, sales
promotion agencies, interactive agencies, and public relations firms.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-01 To understand how companies organize for advertising and other aspects of integrated marketing
communications.
Topic: Participants In The Integrated Marketing Communications Process: An Overview
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
9.
(p. 70)
_____ perform specialized functions that the various participants in integrated
marketing communication process use in planning and executing advertising and other
promotional functions.
A.
Media services
B.
Compensation services
C.
Collateral services
D.
Traffic services
E.
In-house agencies
The final participants shown in the promotions process are those that provide collateral
services. These individuals and companies perform specialized functions the other
participants use in planning and executing advertising and other promotional functions.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-01 To understand how companies organize for advertising and other aspects of integrated marketing
communications.
Topic: Participants In The Integrated Marketing Communications Process: An Overview
10.
(p. 71)
Which of the following statements is true about the role of top management in the
advertising and promotion decision making process?
A.
Top management is usually involved in the day-to-day decision-making and operations of
advertising and promotion.
B.
Top management does not provide input in the advertising and promotion process.
C.
Top management is usually interested in how the advertising program represents the
organization.
D.
Top management is only interested in the amount of money that must be allocated to
advertising and promotion.
E.
Top management is more interested in tactical planning than strategic planning.
Top management is usually interested in how the advertising program represents the firm, and
this may also mean being involved in advertising decisions even when the decisions are not
part of its day-to-day responsibilities.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-01 To understand how companies organize for advertising and other aspects of integrated marketing
communications.
Topic: Organizing for Advertising and Promotion in the Firm: The Client's Role
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
11.
(p. 71)
Under a centralized organizational system, the responsibility for planning and
controlling the advertising and promotional function lies with the:
A.
brand manager.
B.
advertising manager.
C.
product manager.
D.
in-house agency.
E.
vice president of marketing.
In a centralized system, the advertising manager controls the entire promotions operation,
including budgeting, coordinating creation and production of ads, planning media schedules,
and monitoring and administering the sales promotions programs for all the company's
products or services.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Centralized System
12.
(p. 71)
Under a centralized organizational arrangement, which of the following is the
advertising manager responsible for?
A.
Budgeting and planning media schedule
B.
Coordinating the creation and production of ads and sales
C.
Compensation management
D.
Administering the firm's sales and sales promotion programs
E.
Sales and sales management
In a centralized system, the advertising manager controls the entire promotions operation,
including budgeting, coordinating creation and production of ads, planning media schedules,
and monitoring and administering the sales promotions programs for all the company's
products or services.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Centralized System
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
13.
(p. 71)
Which of the following is true about the functions of the advertising manager in a
centralized system?
A.
Advertising manager is responsible for all sales and sales management activities.
B.
Advertising manager, usually, takes the final decision about allocating funds towards the
promotional budget.
C.
The advertising manager may not review and approve the promotional plans which are
made by the agency.
D.
The specific role of the advertising manager depends on the size of the firm.
E.
Advertising manager deals only with the advertising department in the organization.
The advertising manager is responsible for all promotions activities except sales. The specific
duties of the advertising or marketing communications manager depend on the size of the firm
and the importance it places on promotional programs.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Centralized System
14.
(p. 71)
In a centralized organizational arrangement, 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.
marketing
C.
sales
D.
advertising
E.
product planning
The advertising department is responsible for developing advertising and promotions plans
that will be approved by management and recommending a promotions program based on the
overall marketing plan, objectives, and budget.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Centralized System
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
15.
(p. 71)
When a _____ is used, most of a company's advertising and promotional activities
will be the responsibility of the advertising manager.
A.
brand manager system
B.
decentralized marketing system
C.
centralized system
D.
media buying service
E.
creative boutique
In a centralized system, the advertising manager controls the entire promotions operation,
including budgeting, coordinating creation and production of ads, planning media schedules,
and monitoring and administering the sales promotions programs for all the company's
products or services.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Centralized System
16.
(p. 72)
Problems associated with a(n) _____ include difficulty of the advertising department
to understand the overall marketing strategy for the brand.
A.
decentralized marketing system
B.
in-house agency
C.
centralized marketing system
D.
brand management system
E.
creative boutique
Problems are inherent in a centralized operation. First, it is difficult for the advertising
department to understand the overall marketing strategy for the brand.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Centralized System
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
17.
(p. 72)
Which of the following can be stated a responsibility of a brand manager in a
decentralized marketing system?
A.
Planning of the marketing program
B.
Manufacturing the products
C.
Compensating all the employees
D.
Distributing products
E.
Developing departments in the organization
Many companies that use a decentralized system assign each product or brand to a brand
manager who is responsible for the total management of the brand, including planning,
budgeting, sales, and profit performance. The brand manager, who may have one or more
assistant brand managers, is also responsible for the planning, implementation, and control of
the marketing program.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Decentralized System
18.
(p. 73)
Under a decentralized system, the advertising department is generally a part of _____
department.
A.
production
B.
sales
C.
product management
D.
marketing
E.
research and development
As shown in Figure 3-3, the advertising department is part of marketing services and provides
support for the brand managers.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Decentralized System
3-38
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
19.
(p. 73)
The role of the advertising department in a company using a decentralized product
management system is to:
A.
plan and coordinate the advertising campaign.
B.
provide advertising and promotion related support to the brand managers.
C.
conduct marketing research based on the problems identified during segmentation.
D.
develop sales programs that would be effective against the target market.
E.
check manufacturing of the products according to the demand in the market.
As shown in Figure 3-3, the advertising department is part of marketing services and provides
support for the brand managers. The role of marketing services is to assist the brand managers
in planning and coordinating the integrated marketing communications program.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Decentralized System
20.
(p. 72)
In a decentralized system of advertising organization, the responsibility of planning,
implementing, and controlling the marketing program for an individual brand belongs to the:
A.
product manager.
B.
creative director.
C.
account executive.
D.
layout editor.
E.
communications team.
Many companies that use a decentralized system, the brand manager, who may have one or
more assistant brand managers, is also responsible for the planning, implementation, and
control of the marketing program. (The term
product manager
is also used to describe this
position.)
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Decentralized System
3-39
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
21.
(p. 74)
Individuals who have the responsibility of coordinating efforts of various product or
brand managers for a particular product class are known as:
A.
category managers.
B.
superordinate managers.
C.
account executives.
D.
account supervisors.
E.
media planners.
Some companies have a layer of management above the brand managers to coordinate the
efforts of all the brand managers handling a related group of products. This system—
generally referred to as a category management system— includes category managers as well
as brand and advertising managers.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Decentralized System
22.
(p. 74)
A _____ advertising organizational system has the advantages of concentrated
managerial attention, rapid response to problems, and increased flexibility.
A.
centralized
B.
decentralized
C.
democratic
D.
collateral system
E.
functionally-incorporated
An advantage of the decentralized system is that each brand receives concentrated managerial
attention, resulting in faster response to both problems and opportunities. This system is also
more flexible and makes it easier to adjust various aspects of the advertising and promotional
program, such as creative platforms and media and sales promotion schedules.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Decentralized System
3-40
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
23.
(p. 74)
PrimeTime is a multi-product firm that follows an advertising organizational system
where the manager has the 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 brands and ensures that each brand
receives concentrated managerial attention. However, each brand may compete against other
brands in the same company. Which advertising organizational system is PrimeTime
following?
A.
Centralized system
B.
Decentralized system
C.
Creative boutique
D.
Collateral system
E.
Democratic system
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.
AACSB: Reflective Thinking
Bloom's: Apply
Difficulty: Hard
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Decentralized System
3-41
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
24.
(p. 74)
Which of the following describes a limitation associated with the decentralized
organizational structure for advertising?
A.
Brand managers are often overqualified and want too much input into advertising.
B.
Brand managers are typically highly experienced in advertising and understand exactly
what advertising can do for a brand.
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.
With their reliance on intuition, brand managers often jeopardize the creative activities of
the advertising agency.
There are some drawbacks to the decentralized approach. Individual brand managers often
end up competing for management attention, marketing dollars, and other resources, which
can lead to unproductive rivalries and potential misallocation of funds.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: The Decentralized System
25.
(p. 75)
A(n) _____ is an advertising agency that is set up, owned, and operated by the
advertiser.
A.
creative boutique
B.
full service agency
C.
in-house agency
D.
self sufficient agency
E.
collateral agency
Some companies, in an effort to reduce costs and maintain greater control over agency
activities, have set up their own advertising agencies internally. An in-house agency is an
advertising agency that is set up, owned, and operated by the advertiser.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: In House Agencies
3-42
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
26.
(p. 75)
When the client assumes the entire promotional function, it is said to operate:
A.
on a client management basis.
B.
on a creative and functional basis.
C.
as an in-house agency.
D.
as a collateral service provider.
E.
as a self-sufficient agency.
Some companies, in an effort to reduce costs and maintain greater control over agency
activities, have set up their own advertising agencies internally. An in-house agency is an
advertising agency that is set up, owned, and operated by the advertiser.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: In House Agencies
27.
(p. 75)
Which of the following is an advantage associated with an in-house advertising
agency?
A.
Lower advertising costs
B.
More highly skilled specialists
C.
More varied perspective on advertising problems
D.
Greater flexibility
E.
Disseminate control to outside agencies.
Saving money is not the only reason companies use in-house agencies. Time savings, bad
experiences with outside agencies, and the increased knowledge and understanding of the
market that come from working on advertising and promotion for the product or service day
by day are also reasons.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: In House Agencies
3-43
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
28.
(p. 75)
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.
compete with external advertising agencies.
D.
win advertising awards that will enhance the image of their brands.
E.
disseminate control to outside agencies.
Saving money is not the only reason companies use in-house agencies. Time savings, bad
experiences with outside agencies, and the increased knowledge and understanding of the
market that come from working on advertising and promotion for the product or service day
by day are also reasons.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: In House Agencies
29.
(p. 78)
Which of the following is an advantage of an in-house agency?
A.
Increased coordination and cost savings
B.
Different brand images and large number of marketing partners
C.
Increased coordination and greater cost savings
D.
More overall control and freshness in ideas and work
E.
Greater flexibility and more objectivity
Saving money is not the only reason companies use in-house agencies. Companies can also
maintain tighter control over the process and more easily coordinate promotions with the
firm's overall marketing program (Refer to Figure 3-4).
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: In House Agencies
3-44
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
30.
(p. 75)
Company A used to rely on outside advertising agencies for its advertising needs but
since it is a global company, it is now worried that using external agencies may lead to non-
consistency of its brand image. The years on experience with outside agencies has made it
realize that it results in wastage of both time and money. It also wants to maintain tighter
control over its advertising and promotion activities. Which of the following advertising
agencies should it adopt?
A.
Collateral service agency
B.
Full service agency
C.
In-house agency
D.
Democratic agency
E.
Creative boutique
Some companies, in an effort to reduce costs and maintain greater control over agency
activities, have set up their own advertising agencies internally. An in-house agency is an
advertising agency that is set up, owned, and operated by the advertiser. Some companies
with global brands prefer an in-house shop so they can have a consistent brand image
worldwide and reduce the number of marketing partners with which they work.
AACSB: Reflective Thinking
Bloom's: Apply
Difficulty: Hard
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: In House Agencies
31.
(p. 78)
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.
Some of the disadvantages of in-house agency includes less flexibility, less objectivity, and
lack of access to the top creative talent. (Refer: Figure 3-4)
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: In House Agencies
3-45
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
32.
(p. 78)
A company that uses an in-house agency might turn its advertising and promotion
tasks over to an outside agency to:
A.
get more control over the advertising process.
B.
save money.
C.
get an objective.
D.
make coordination of the advertising and promotional process easier.
E.
save media commissions.
A major disadvantage of in-house agencies include less objectivity. Firms can turn its
advertising and promotion tasks over to an outside agency to get more objectivity.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-02 To evaluate the advantages and disadvantages of the various ways companies organize for advertising and
promotion.
Topic: In House Agencies
33.
(p. 79)
Which of the following statements about the U.S. advertising agency business is
true?
A.
Most U.S. ad agencies are large businesses with billings exceeding $100 million per year.
B.
Most U.S. ad agencies are individually owned small businesses employing fewer than five
people.
C.
Nearly all of the U.S. domestic billings are handled by the top 100 agencies.
D.
Most of the top U.S. ad agencies are headquartered in Chicago.
E.
There are approximately 1,000 agencies listed in the
Standard Directory of Advertising
Agencies
.
More than 15,000 U.S. and international agencies are listed in the
Standard Directory of
Advertising Agencies
(the "Red Book"); however, most are individually owned small
businesses employing fewer than five people. The U.S. ad agency business is highly
concentrated. Nearly two-thirds of the domestic billings (the amount of client money agencies
spend on media purchases and other equivalent activities) are handledby the top 500 agencies.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Advertising Agencies
3-46
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
34.
(p. 79)
Which of the following is 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.
Traffic compensation
Billings is the amount of client money that agencies spend on media purchases and other
equivalent activities.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Advertising Agencies
35.
(p. 80)
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 agencies could provide their clients with integrated marketing communications services
worldwide.
E.
to lessen the need for competitive pricing.
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.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Advertising Agencies
3-47
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
36.
(p. 80)
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 form 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 became disenchanted with the superagencies moved to form larger
agencies that were inflexible and less responsive.
E.
They were formed so that agencies could provide clients with just-in-time inventory
management system.
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. Some advertisers became disenchanted with the
superagencies and moved to smaller agencies that were flexible and more responsive.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Advertising Agencies
37.
(p. 81)
Which of the following statements explain why an organization would want to use an
external advertising agency?
A.
It saves money for the client.
B.
It helps the client 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 brand image worldwide and reduces the number of marketing
partners for the client firm.
E.
It provides the client with the services of highly skilled individuals.
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.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: The Ad Agencies Role
3-48
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
38.
(p. 81)
Which of the following statements is true about advertising agencies?
A.
Most large, national advertisers use in-house agencies.
B.
Agencies are often used because of the skill, expertise, and experience they can offer in the
advertising area.
C.
Most large agencies offer only creative services to their clients.
D.
Agencies must be used since companies do not have the capabilities of developing their
own advertising.
E.
Most large advertisers are totally content with the current commission system of
compensation.
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.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: The Ad Agencies Role
39.
(p. 82)
Which type of ad agency is most likely to assist the client in areas such as marketing
strategy and research, campaign planning and execution, and media planning and buying?
A.
A creative boutique
B.
A full-service agency
C.
A media buying service
D.
A collateral agency
E.
A full time agency
Many companies employ what is known as a full-service agency, which offers its clients a full
range of marketing, communications, and promotions services, including planning, creating,
and producing the advertising; performing research; and selecting media.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
3-49
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
40.
(p. 82)
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.
in-house agency.
D.
full-service agency.
E.
integrated marketing organization.
Many companies employ what is known as a full-service agency, which offers its clients a full
range of marketing, communications, and promotions services, including planning, creating,
and producing the advertising; performing research; and selecting media.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
41.
(p. 82)
AdonDemand, a new advertising agency in San Diego, is offering its clients various
services such as marketing, sales promotion, research, promotion, package designing, direct
marketing, publicity along with planning, creating, and producing the advertising. Company
A is a(n):
A.
creative boutique.
B.
full-service agency.
C.
media buying organization.
D.
in-house agency.
E.
media specialist company.
A full-service agency offers its clients a full range of marketing, communications, and
promotions services, including planning, creating, and producing the advertising; performing
research; and selecting media. It may also offer nonadvertising services such as strategic
market planning; sales promotions, direct marketing, and interactive capabilities; package
design; and public relations and publicity.
AACSB: Reflective Thinking
Bloom's: Apply
Difficulty: Hard
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
3-50
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
42.
(p. 82)
Which of the following statements is true about account services?
A.
It is an in-house service for the agency which is independent of its clients' obligations.
B.
It provides the creative team with more insight on how to use advertising and other IMC
tools to communicate with customers.
C.
It provides the creative team with more insight into consumers.
D.
It is an advertisement agency service which is not link to its client.
E.
It is the link between the ad agency and its clients.
Account services, or account management, is the link between the ad agency and its clients.
Depending on the size of the client and its advertising budget, one or more account executives
serve as liaison.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
43.
(p. 82)
The _____ 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.
account planner
The account executive is responsible for understanding the advertiser's marketing and
promotions needs and interpreting them to agency personnel. He or she coordinates agency
efforts in planning, creating, and producing ads. The account executive also presents agency
recommendations and obtains client approval.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
3-51
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
44.
(p. 82)
The agency person who is the focal point of the agency-client relationship is the:
A.
media buyer.
B.
account planner.
C.
copywriter.
D.
brand manager.
E.
account executive.
The account executive is responsible for understanding the advertiser's marketing and
promotions needs and interpreting them to agency personnel. As the focal point of agency-
client relationships, the account executive must know a great deal about the client's business
and be able to communicate this to specialists in the agency working on the account.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
45.
(p. 83)
The function of gathering, analyzing and interpreting information that is useful in
developing advertising is the responsibility of the agency's _____ department.
A.
production
B.
traffic
C.
media
D.
account management
E.
research
Most full-service agencies maintain a research department whose function is to gather,
analyze, and interpret information that will be useful in developing advertising for their
clients.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
3-52
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
46.
(p. 83)
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. Which position has Greg been hired for?
A.
Research department personnel
B.
Account planner
C.
Creative team member
D.
Media specialist
E.
Account executive
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 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.
AACSB: Reflective Thinking
Bloom's: Apply
Difficulty: Hard
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
47.
(p. 83)
The _____ is a document that the agency's creative department uses to guide the
development of advertising ideas and concepts.
A.
tagline brief
B.
creative boutique
C.
creative brief
D.
copywriter article
E.
marketing plan
Account planners gather and organize information about consumers as well as developments
in the marketplace that can be used to prepare the creative brief, which is a document that the
agency's creative department uses to guide the development of advertising ideas and concepts.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
3-53
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
48.
(p. 83)
Account planning has become a very important and demanding function in many
agencies because:
A.
public relations has replaced advertising to achieve global integrated marketing
communications.
B.
budgeting services have reduced the redundancy associated with on-task account planning.
C.
marketing research has expanded the creative capacity of ad agencies.
D.
of the increase in the number of marketing communication channels and ways of
contacting consumers.
E.
of the reducing roles of account executives.
Account planning has become a very important function in many agencies because it provides
the creative team, as well as other agency personnel, with more insight into consumers and
how to use advertising and other IMC tools to communicate with them. The account planning
function has also become more demanding as the number of marketing communication
channels and ways of contacting consumers increases.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
49.
(p. 83)
Which of the following departments of the full-service agency, analyzes, selects, and
contracts for space or time in the media that will be used to deliver the client's advertising
message?
A.
Research department
B.
Media department
C.
Account management department
D.
Creative services department
E.
Art department
The media department of an agency analyzes, selects, and contracts for space or time in the
media that will be used to deliver the client's advertising message.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
3-54
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
50.
(p. 83)
Which of the following statements about the role of ad agency media departments is
true?
A.
Large advertisers do not use media departments to purchase media time and space.
B.
Media departments do not have the ability or the authority to negotiate prices.
C.
It reviews information on demographics, and consumers' television viewing habits.
D.
Consolidating media buying is not cost effective and may reduce media efficiency.
E.
The media buyer implements the media plan by selling the actual time and space.
Media specialists must know what audiences the media reach, their rates, and how well they
match the client's target market. The media planning department reviews information on
demographics, magazine and newspaper readership, radio listenership, and consumers'
Internet and TV viewing patterns to develop an effective media plan.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
51.
(p. 85)
_____ are the individuals who conceive the ideas for the ads and write the advertising
message.
A.
Copywriters
B.
Art directors
C.
Account planners
D.
Account executives
E.
Media planners
The individuals who conceive the ideas for the ads and write the headlines, subheads, and
body copy (the words constituting the message) are known as copywriters.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
3-55
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
52.
(p. 85)
The _____ is responsible for creating the visual portion of an ad such as layouts and
the commercial storyboards.
A.
account executive
B.
copywriter
C.
product management department
D.
research department
E.
art department
The art department is responsible for how the ad looks. 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.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
53.
(p. 85)
_____ are drawings that show what the print ad will look like and from which the
final artwork will be produced.
A.
Creative briefs
B.
Copywriters
C.
Layouts
D.
Designs
E.
Logos
The art department is responsible for how the ad looks. 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.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
3-56
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
54.
(p. 86)
Which department within an advertising agency supervises the casting of people to
appear in the ad and the setting for the scenes?
A.
Media department
B.
Art department
C.
Copywriters
D.
Traffic department
E.
Production department
The production department supervises the casting of people to appear in the ad and the setting
for the scenes as well as chooses an independent production studio. The department may hire
an outside director to turn the creative concept into a commercial.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
55.
(p. 86)
The _____ department coordinates all phases of production to ensure the proper
progression of the advertisement.
A.
research
B.
production
C.
art
D.
traffic
E.
media
A traffic 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.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
3-57
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
56.
(p. 86)
Most of an advertising agency's expenses are in the area of:
A.
media costs.
B.
salaries and benefits for employees.
C.
personal selling.
D.
production facilities.
E.
commissions.
The bulk of an agency's income (approximately 64 percent) goes to salary and benefits for its
employees.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
57.
(p. 86)
A _____ is an agency organizational structure in which each functional area is set up
as a separate department. The parts of this structure are called on as needed to perform their
particular specialty and serve all of the agency's clients.
A.
departmental system
B.
group system
C.
creative boutique
D.
matrix system
E.
media buying service system
Under the departmental system, each of the agency functions is set up as a separate
department and is called on as needed to perform its specialty and serve all of the agency's
clients. (Refer to Figure 3-6)
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
3-58
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
58.
(p. 86)
Jackson & Morris is an advertising agency that handles each of its clients by
assigning individuals from various departments to work together as a team on their accounts.
The agency is using a _____ organizational system.
A.
departmental
B.
group
C.
matrix
D.
boutique
E.
dedicated
Many large agencies use the group system, in which individuals from each department work
together in groups to service particular accounts.
AACSB: Analytic
Bloom's: Apply
Difficulty: Hard
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
59.
(p. 86)
An advertising agency that wants its employees to develop expertise in servicing a
variety of accounts should use a(n) _____ structure.
A.
group system
B.
departmental system
C.
creative boutique
D.
in-house
E.
decentralized
Some agencies prefer the departmental system because it gives employees the opportunity to
develop expertise in servicing a variety of accounts.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Types of Ad Agencies
3-59
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
60.
(p. 87)
A(n) _____ is an agency that specializes in and provides only creative services.
A.
creative boutique
B.
full-service agency
C.
in-house advertising agency
D.
decentralized organizational system
E.
media boutique
Creative boutiques are small ad agencies that provide only creative services and have long
been an important part of the advertising industry.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Other Types of Agencies and Services
61.
(p. 87)
Creative boutiques are agencies that:
A.
limit their client service to creative planning and execution.
B.
have resulted from advertisers wanting to save money in buying media space.
C.
perform the same functions as full-service agencies for their clients, but charge more.
D.
are used only when advertising is not important to the marketing success of the company
that hired them.
E.
that wants its employees to develop expertise in servicing a variety of accounts.
Creative boutiques are small ad agencies that provide only creative services and have long
been an important part of the advertising industry.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Other Types of Agencies and Services
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
62.
(p. 87)
Which of the following statements is true about creative boutiques?
A.
They generally have media, research and account planning capabilities.
B.
They are large ad agencies that provide all types of advertising and promotion services.
C.
They often subcontract work to full service agencies.
D.
They tend to provide quicker creative services due to less bureaucracy.
E.
Large companies visit them when they are looking for a huge range of services and there
are cutbacks in the advertising spending.
Many creative boutiques have been formed by members of the creative departments of full-
service agencies who leave the firm and take with them clients who want to retain their
creative talents. An advantage of these smaller agencies is their ability to turn out inventive
creative work quickly and without the cumbersome bureaucracy and politics of larger
agencies.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Other Types of Agencies and Services
63.
(p. 87)
Independent companies that specialize in the purchase of radio and television time
are known as:
A.
creative boutiques.
B.
mid-sized agencies.
C.
full-service agencies.
D.
media specialist companies.
E.
media boutiques.
Media specialist companies are companies that specialize in the buying of media, particularly
radio and television time.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Other Types of Agencies and Services
3-61
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
64.
(p. 87)
Clients and creative boutiques that have developed their own media strategies may
employ _____ to execute them.
A.
media specialist companies
B.
full-service agencies
C.
in-house agencies
D.
media departments
E.
product managers
Media specialist companies are companies that specialize in the buying of media, particularly
radio and television time. The task of purchasing advertising media has grown more complex
as specialized media proliferate, so media buying services have found a niche by specializing
in the analysis and purchase of advertising time and space. Agencies and clients usually
develop their own media strategies and hire the buying service to execute them.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Other Types of Agencies and Services
65.
(p. 87)
Which of the following statements about creative boutiques is true?
A.
Creative boutiques are more successful today than ever before.
B.
The demand for IMC services has had little influence on how creative boutiques do
business.
C.
Creative boutiques use an aggregated business model instead of niche marketing.
D.
Creative boutiques today are having trouble because clients often want a range of services.
E.
Consolidation has led to the demise of creative boutiques.
Creative boutiques will continue to be an important part of the advertising industry. However,
they face challenges as many find themselves competing against larger agencies for business,
particularly when there are cutbacks in advertising spending. Moreover, many clients want the
range of services that large agencies provide as they are often looking for business-building
ideas rather than just creative work.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-03 To understand the role of advertising agencies and the services they perform as well as the various types of
agencies and media specialist companies.
Topic: Other Types of Agencies and Services
3-62
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
66.
(p. 88)
The traditional method of compensating ad agencies is through:
A.
a commission system.
B.
hourly billings.
C.
a fee system.
D.
a straight salary method.
E.
an objective-and-task compensation system.
The traditional method of compensating agencies is through a commission system, where the
agency receives a specified commission (usually 15 percent) from the media on any
advertising time or space it purchases for its client.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Commissions from Media
67.
(p. 88)
Agency compensation under the commission system is based on:
A.
total number of hours worked.
B.
a percentage of a client's marketing budget.
C.
a specified percentage of the cost of any advertising time or space the agency purchases for
its client.
D.
a percentage of advertising production costs.
E.
the client's position in the distribution channel.
The traditional method of compensating agencies is through a commission system, where the
agency receives a specified commission (usually 15 percent) from the media on any
advertising time or space it purchases for its client.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Commissions from Media
3-63
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
68.
(p. 88)
An advertising agency works with its clients under a traditional commission system
compensation arrangement. The agency places a 30-second spot for one of its clients on an
episode of
Friends
, which costs $500,000. A reasonable estimate of the agency's commission
on this space buy is:
A.
$15,000.
B.
$30,000.
C.
$45,000.
D.
$75,000.
E.
$80,000.
The traditional method of compensating agencies is through a commission system, where the
agency receives a specified commission (usually 15 percent) from the media on any
advertising time or space it purchases for its client.
AACSB: Reflective Thinking
Bloom's: Apply
Difficulty: Hard
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Commissions from Media
69.
(p. 89)
Opponents of the agency commission system argue this system is not effective
because:
A.
a commission keeps the emphasis on creative skills not the bottom-line.
B.
a commission is simple to administer.
C.
the agency time spent on an account may not be proportional to the compensation received
for it.
D.
a commission encourages agencies to limit their client's advertising expenditures.
E.
a commission does not tie agency compensation to media costs.
Proponents of the system argue that agency services are proportional to the size of the
commission, since more time and effort are devoted to the large accounts that generate high
revenue for the agency.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Commissions from Media
3-64
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
70.
(p. 89)
Which of the following statements about changes in the way advertising agencies are
being compensated is true?
A.
Most clients do not pay full commissions to their agencies because they prefer to use some
type of fee or incentive-based system as they seem more equitable than the commission
system.
B.
With the move toward integrated marketing services, it is likely that there will be a return
to the commission system of compensation.
C.
From the viewpoints of both the client and the agency, the traditional commission system
is much superior to negotiated commissions.
D.
Since most clients want their agencies to be in total charge of the integrated marketing
communications process, they are willing to compensate them based on media commissions.
E.
In a negotiated commission system, commission is usually greater than 15 percent.
Since many believe the commission system is not equitable to all parties, many agencies and
their clients have developed some type of fee arrangement or cost-plus agreement for agency
compensation. Some are using incentive-based compensation, which is a combination of a
commission and a fee system.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Fee, Cost, and Incentive-Based Systems
71.
(p. 89)
A major argument put forth by defenders of the commission system is that a
commission:
A.
keeps the agencies from placing advertising in expensive media.
B.
ties agency compensation to the inflation in media costs.
C.
is very complex to administer.
D.
is simple and keeps the emphasis in agency compensation on non-price factors.
E.
encourages agencies to use noncommissionable media such as direct mail.
Defenders of the commission system argue that it is easy to administer and keep the emphasis
in agency compensation on nonprice factors such as the quality of the advertising developed
for clients.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Commissions from Media
3-65
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
72.
(p. 89)
Critics argue the use of _____ can encourage agencies to ignore cost accounting
systems and avoid media such as direct mail and sales promotions.
A.
percentage charges
B.
fixed fee arrangements
C.
cost-plus agreements
D.
the commission system
E.
the objective-and-task compensation system
Critics of the commission system have long argued that it encourages agencies to recommend
high-priced media to their clients to increase their commission level. The system has also
been criticized on the grounds that it ties agency compensation to media costs, which have
been skyrocketing over the past decade.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Commissions from Media
73.
(p. 89)
Under which type of compensation system might an agency be more inclined to
recommend expensive media such as network television and national magazines to its
clients?
A.
Commission system
B.
Fee arrangement system
C.
Cost-plus system
D.
Incentive-based compensation system
E.
Objective-and-task compensation system
Critics of the commission system have long argued that it encourages agencies to recommend
high-priced media to their clients to increase their commission level. Still others charge that
the system encourages agencies to recommend mass-media advertising and avoid
noncommissionable IMC tools such as direct mail, sales promotion, public relations, or event
sponsorships, unless they are requested by the clients.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Commissions from Media
3-66
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
74.
(p. 89)
Which of the following statements is true about agency commissions?
A.
Some leading agencies now receive average commissions of 8 to 10 percent.
B.
Nearly all of the leading agencies still earn a 15 percent commission.
C.
Most agencies are earning more of their income from fixed commissions as clients expand
their IMC programs to include other forms of promotion.
D.
Most agencies are unwilling to negotiate their commission rates.
E.
Leading agencies often get 20 percent commissions.
Many advertisers have gone to a negotiated commission system whereby the commissions
average from 8 to 10 percent or are based on a sliding scale that becomes lower as the clients'
media expenditures increase.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Commissions from Media
75.
(p. 89)
Negotiated commission rates for advertising agencies:
A.
are becoming more commonplace.
B.
are becoming less common.
C.
set a 15 percent minimum commission rate for all agency work.
D.
are rarely used by consumer-products advertisers.
E.
are designed primarily to benefit agencies.
Among those companies that pay commissions, most do not pay the traditional 15 percent.
Many advertisers have gone to a negotiated commission system whereby the commissions
average from 8 to 10 percent or are based on a sliding scale that becomes lower as the clients'
media expenditures increase.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Commissions from Media
3-67
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
76.
(p. 90)
A(n) ______ is a type of compensation arrangement where an agency charges a client
a fixed monthly amount of money for all of its services and credits to the client any media
commissions earned.
A.
fixed fee
B.
negotiated commission
C.
cost-plus agreement
D.
incentive-based compensation
E.
fee-commission combination
In the straight or fixed-fee method, the agency charges a basic monthly fee for all of its
services and credits to the client any media commissions earned.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Fee, Cost, and Incentive-Based Systems
77.
(p. 90)
Under the _____ system of compensation, the client agrees to pay the agency a fee
based on the costs of its work plus some agreed-on profit margin.
A.
fixed fee
B.
negotiated commission
C.
fee-commission combination
D.
incentive based
E.
cost plus
Under a cost-plus system, the client agrees to pay the agency a fee based on the costs of its
work plus some agreed-on profit margin (often a percentage of total costs).
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Fee, Cost, and Incentive-Based Systems
3-68
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
78.
(p. 90)
If an advertiser wants a very detailed accounting of how its advertising and
promotional monies are being spent and what it is being charged by its ad agency, it is likely
to use a(n) _____ compensation system.
A.
fee arrangement
B.
media commission
C.
incentive-based
D.
fee-combination
E.
cost-plus
Under a cost-plus system, the client agrees to pay the agency a fee based on the costs of its
work plus some agreed-on profit margin (often a percentage of total costs). This system
requires that the agency keep detailed records of the costs it incurs in working on the client's
account.
AACSB: Reflective Thinking
Bloom's: Analyze
Difficulty: Hard
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Fee, Cost, and Incentive-Based Systems
79.
(p. 90)
Under which of the following compensation arrangement is the agency compensation
tied to their performance?
A.
Fixed-fee system
B.
Incentive based system
C.
Cost plus system
D.
Negotiated commission system
E.
Fee-commission combination system
Many clients are demanding more accountability from their agencies and tying agency
compensation to performance through some type of incentive-based system. Recognizing the
movement toward incentive-based systems, most agencies have agreed to tie their
compensation to performance.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Fee, Cost, and Incentive-Based Systems
3-69
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
80.
(p. 90)
The DDB Needham advertising agency receives compensation from its clients based
on their sales and market share performance. This is an example of a(n) _____ compensation
system.
A.
fixed-fee
B.
mediated
C.
value based
D.
cost-plus system
E.
fee-commission
Many clients are demanding more accountability from their agencies and tying agency
compensation to performance through some type of incentive-based system. Recently a new
variation of this system has emerged in the form of
value-based compensation
whereby
agencies are compensated above their basic costs, if they achieve or exceed results as
measured by agreed-upon metrics.
AACSB: Reflective Thinking
Bloom's: Analyze
Difficulty: Hard
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Fee, Cost, and Incentive-Based Systems
81.
(p. 90)
Why would General Motors switch to an incentive-based compensation system with
several of its agencies?
A.
To encourage its agencies to use more mass media advertising.
B.
To encourage its agencies to stop using network TV advertising.
C.
To reduce control.
D.
To demand more accountability and pay the agencies based on their performance.
E.
To accomplish all of the above objectives.
Recognizing the movement toward incentive-based systems, most agencies have agreed to tie
their compensation to performance. Agency executives note that pay for performance works
best when the agency has complete control over a campaign.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Fee, Cost, and Incentive-Based Systems
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
82.
(p. 91)
As more companies adopt the integrated marketing communications approach to their
advertising and promotions,
A.
they are increasing their reliance on mass media advertising and paying full commissions
to agencies.
B.
they are reducing their reliance on mass media advertising and changing their agency
compensation system.
C.
they are likely to move totally to cost-plus compensation systems.
D.
incentive systems are becoming less important in compensating agencies.
E.
none of the above is occurring.
The ANA study concluded that the use of performance incentives as the basis for agency
compensation continues to grow, and is generally gaining popularity across the board,
regardless of advertiser type or size or type of agency service. As more companies adopt IMC
approaches, they are reducing their reliance on traditional media advertising, and this is
leading to changes in the way they compensate their agencies.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: The Future of Agency Compensation
83.
(p. 92)
A _____ audit of an agency focuses on factors such as costs, expenses and payments
to outside suppliers while a _____ audit focuses on factors such as the agency's efforts in
planning, development and implementing the advertising program.
A.
financial; qualitative
B.
qualitative; financial
C.
financial; creative
D.
qualitative; quantitative
E.
fixed costs; variable costs
The financial audit focuses on how the agency conducts its business. It is designed to verify
costs and expenses, the number of personnel hours charged to an account, and payments to
media and outside suppliers. The qualitative audit focuses on the agency's efforts in planning,
developing, and implementing the client's advertising programs and considers the results
achieved.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Evaluating Agencies
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
84.
(p. 96)
During a merger or acquisition of the agency by some other larger agency, the main
reason for the discontinuation of the agency-client relationship is:
A.
conflict of interest.
B.
poor performance.
C.
poor communication.
D.
changes in client's corporate strategy.
E.
declining sales.
A conflict may develop when an agency merges with another agency or when a client is part
of an acquisition or merger. In the United States, an agency cannot handle two accounts that
are in direct competition with each other. In some cases, even indirect competition will not be
tolerated.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Gaining and Losing Clients
85.
(p. 98)
Which of the following statements is true about speculative presentations?
A.
Speculative presentations require little time and effort on the part of agencies.
B.
Many agencies do not like to participate in speculative presentations because there is no
guarantee they will win the account, and they require time and money.
C.
Speculative presentations are rarely used in the advertising industry.
D.
Most agencies do not participate in speculative presentations to acquire new business.
E.
They are also known as storyboards.
The agency may be asked to make a speculative presentation, in which it examines the client's
marketing situation and proposes a tentative communications campaign. Because
presentations require a great deal of time and preparation and may cost the agency a
considerable amount of money without a guarantee of gaining the business, many firms refuse
to participate in "creative shootouts."
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Gaining and Losing Clients
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
86.
(p. 99)
A(n) _____ is an individual who specializes in helping clients choose their
advertising agencies.
A.
media specialist
B.
ad agency review consultant
C.
account representative
D.
brand manager
E.
compensation specialist
Due in part to the emphasis on speculative presentations, a very important role has developed
for
ad agency review consultants,
who specialize in helping clients choose ad agencies.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Gaining and Losing Clients
87.
(p. 99)
Probably the most effective way for an agency to acquire new business is through:
A.
its image and reputation.
B.
its public relations effort.
C.
solicitations.
D.
referrals.
E.
its pricing strategy.
Perhaps the most effective way an agency can gain new business is through its reputation for
doing excellent work for the clients it serves. Word travels fast through the advertising and
marketing industry regarding the agencies that are doing outstanding creative work in
advertising as well as in other areas of IMC.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-04 To examine methods for selecting; compensating; and evaluating advertising agencies.
Topic: Gaining and Losing Clients
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
88.
(p. 100)
_____ are agencies that specialize in offering services, such as database
management, and the ability to create, produce, and disseminate direct mail and other types of
communications that go straight to target customers.
A.
Full function ad agencies
B.
Sales promotion agencies
C.
Direct-response agencies
D.
Public relations firms
E.
Creative boutiques
Direct-marketing agencies provide a variety of services, including database management,
direct mail, research, media services, and creative and production capabilities. While direct
mail is their primary weapon, many direct-response agencies are expanding their services to
include such areas as infomercial production and database management.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Direct Marketing Agencies
89.
(p. 100)
Direct-response agencies:
A.
manage premium and incentive offers.
B.
specialize in the development of Web sites.
C.
engage in crisis management.
D.
manage clients' databases.
E.
respond directly to the client's customers.
Direct-marketing agencies provide a variety of services, including database management,
direct mail, research, media services, and creative and production capabilities. Many
companies are using database marketing to pinpoint new customers and build relationships
and loyalty among existing customers.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Direct Marketing Agencies
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
90.
(p. 100)
A typical direct-response agency is divided into three main departments. They are:
A.
customer relations, production, and traffic.
B.
media, customer relations, and sales.
C.
sales, account management, and production.
D.
account management, creative, and media.
E.
creative, traffic, and financial.
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.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Direct Marketing Agencies
91.
(p. 100)
_____ specialize in the development and management of sweepstakes, refund and
rebate offers and incentive programs.
A.
Sales promotion agencies
B.
Direct response agencies
C.
Creative boutiques
D.
Interactive agencies
E.
Public relations firms
Developing and managing sales promotion programs such as contests, sweepstakes, refunds
and rebates, premium and incentive offers, and sampling programs are very complex tasks.
Most companies use a sales promotion agency to develop and administer these programs.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Sales Promotion Agencies
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
92.
(p. 100)
Which type of specialized service would have most likely coordinated a program to
allow consumers to mail in UPC codes from three Reynolds products to receive a free
Blockbuster movie rental?
A.
Sales promotion agency
B.
Public relations firm
C.
Creative boutique
D.
Interactive agency
E.
Direct-response agency
Developing and managing sales promotion programs such as contests, sweepstakes, refunds
and rebates, premium and incentive offers, and sampling programs are very complex tasks.
Most companies use a sales promotion agency to develop and administer these programs.
AACSB: Reflective Thinking
Bloom's: Apply
Difficulty: Hard
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Sales Promotion Agencies
93.
(p. 101)
A(n) _____ is the type of firm an organization would hire to develop and implement
programs to manage the organization's publicity and affairs with consumers and other relevant
publics.
A.
public relations agency
B.
advertising agency
C.
media mix organization
D.
creative boutique
E.
direct-response agency
Many large companies use both an advertising agency and a PR firm. The public relations
firm develops and implements programs to manage the organization's publicity, image, and
affairs with consumers and other relevant publics, including employees, suppliers,
stockholders, government, labor groups, citizen action groups, and the general public.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Public Relations Firm
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
94.
(p. 101)
Which specialized service would be responsible for promoting and managing the
concert a client wants to hold to benefit Habit for Humanity?
A.
The traffic department
B.
A marketing research firm
C.
An interactive agency
D.
A public relations firm
E.
A sales promotion agency
Many large companies use both an advertising agency and a PR firm. The activities of a
public relations firm include planning the PR strategy and program, generating publicity,
conducting lobbying and public affairs efforts, becoming involved in community activities
and events, preparing news releases and other communications, conducting research,
promoting and managing special events, and managing crises.
AACSB: Reflective Thinking
Bloom's: Apply
Difficulty: Hard
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Public Relations Firm
95.
(p. 102)
Organizations that specialize in the creation of interactive media such as CD-ROMs,
kiosks, and web sites are known as:
A.
sales promotion agencies.
B.
public relations firms.
C.
creative boutiques.
D.
interactive agencies.
E.
direct-response agencies.
Many marketers are using interactive agencies that specialize in the development and strategic
use of various interactive marketing tools such as web sites for the Internet, banner ads, search
engine optimization, mobile marketing, and social media campaigns.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Interactive Agencies
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
96.
(p. 102)
To implement BMW's new branding campaign, the decision was made to use short
digital films and to create a Web site where consumers could view the films. Which
specialized service would have most likely been involved in this campaign?
A.
Sales promotion agencies
B.
Public relations firms
C.
Creative boutiques
D.
Interactive agencies
E.
Direct-response agencies
Many marketers are using interactive agencies that specialize in the development and strategic
use of various interactive marketing tools such as web sites for the Internet, banner ads, search
engine optimization, mobile marketing, and social media campaigns.
AACSB: Reflective Thinking
Bloom's: Apply
Difficulty: Hard
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Interactive Agencies
97.
(p. 102)
Package design firms, market research companies, photographers, and printers are
examples of:
A.
sales promotion agencies.
B.
interactive agencies.
C.
companies that provide collateral services.
D.
marketing support agencies.
E.
support agencies.
The final participants in the promotional process are those that provide various collateral
services. They include marketing research companies, package design firms, consultants,
photographers, printers, video production houses, and event marketing services companies.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Collateral Services
3-78
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
98.
(p. 102)
National Fruit Company makes "WhiteHouse" apple juice. Market research
determined that the company needed to mold its bottle so as to make it easier to grasp. Its
market research would have been conducted by a(n) _____, and its packaging changes would
have been done by a(n) _____.
A.
specialized service; interactive agency
B.
interactive agency; collateral service
C.
collateral service; specialized service
D.
interactive service; creative boutique
E.
collateral service; collateral service
The final participants in the promotional process are those that provide various collateral
services. They include marketing research companies, package design firms, consultants,
photographers, printers, video production houses, and event marketing services companies.
AACSB: Reflective Thinking
Bloom's: Apply
Difficulty: Hard
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Collateral Services
99.
(p. 103)
Which of the following is likely to conduct in depth interviews, market surveys, and
focus groups etc. in order to gather objective information that is valuable to the advertiser's
promotional programs?
A.
Market research companies
B.
Media specialist organizations
C.
Media buying organizations
D.
Creative boutiques
E.
Interactive agencies
Marketing research companies offer specialized services and can gather objective information
that is valuable to the advertiser's promotional programs. They conduct qualitative research
such as in-depth interviews and focus groups, as well as quantitative studies such as market
surveys.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Collateral Services
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
100.
(p. 103)
Marketing research firms:
A.
seldom conduct qualitative research for ad agencies.
B.
are one of the most widely used types of collateral service organizations.
C.
are actually classified as data warehouses because of their relations with ad agencies.
D.
are not typically used by ad agencies.
E.
can gather only subjective information.
One of the more widely used collateral service organizations is the marketing research firm.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 03-05 To explain the role and functions of specialized marketing communications organizations.
Topic: Collateral Services
101.
(p. 103)
Which of the following is true about integrated services?
A.
Companies prefer separate agencies for sales promotion, direct marketing, interactive
marketing etc. as they are easier to coordinate.
B.
An agency with integrated marketing capabilities can create a single image for the product
or service.
C.
Not many advertisers and agencies feel that integrated marketing is important to their
organizations' success.
D.
Most advertisers want their ad agencies to set strategy for and coordinate the integrated
marketing communications program for them.
E.
Most of the large marketers feel that the agency executives are capable of handling the
various elements of an integrated campaign.
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.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-06 To examine various perspectives on the use of integrated services and responsibilities of advertisers versus
agencies.
Topic: Pros and Cons of Integrated Services
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Chapter 03 - Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing
Communication Organizations
102.
(p. 104)
A study by the Corporate Executive Board's Advertising and Marketing
Roundtable found:
A.
consumers are more interested in integrated marketing communications.
B.
clients prefer full service agencies over brokered advertising services.
C.
situational factors are creating a promotional overlay effectively synthesizing.
D.
integrated marketing communications in most organizations.
E.
marketers are using numerous partners to access the special talents and expertise as
needed.
A study by the Corporate Executive Board's Advertising and Marketing Roundtable found
that "the traditional, static model of a single ad agency or a fixed roster of agencies working
on a brand is being supplanted by an open-source model for some marketers. Under this
model, marketers hire numerous disparate marketing partners—sometimes on a project basis
—to leverage their special talents and expertise as needed."
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
Learning Objective: 03-06 To examine various perspectives on the use of integrated services and responsibilities of advertisers versus
agencies.
Topic: Responsibility for IMC: Agency versus Client
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Contemporary Marketing
Marketing
ISBN:9780357033777
Author:Louis E. Boone, David L. Kurtz
Publisher:Cengage Learning