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Part Two Integrated Marketing Program Situation Analysis
Belch: Advertising and
Promotion, Sixth Edition
Figure 3-5 Comparison
of advertising organization
systems
II. Integrated Marketing
Program Situation Analysis
3. Organizing for
Advertising & Promotion
© The McGraw−Hill
Companies, 2003
relations at a lower cost than outside agencies. A study by M. Louise Ripley found that
creative and media services were the most likely functions to be performed outside,
while merchandising and sales promotion were the most likely to be performed inhouse.
7
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. Companies can also maintain tighter
control over the process and more easily coordinate promotions with the firm’s overall
marketing program. Some companies use an in-house agency simply because they
believe it can do a better job than an outside agency could. 8
Opponents of in-house agencies say they can give the advertiser neither the experience
and objectivity of an outside agency nor the range of services. They argue that
outside agencies have more highly skilled specialists and attract the best creative talent
and that using an external firm gives a company a more varied perspective on its
advertising problems and greater flexibility. In-house personnel may become narrow
or grow stale while working on the same product line, but outside agencies may have
different people with a variety of backgrounds and ideas working on the account.
Flexibility is greater because an outside agency can be dismissed if the company is not
satisfied, whereas changes in an in-house agency could be slower and more disruptive.
The cost savings of an in-house agency must be evaluated against these considerations.
For many companies, high-quality advertising is critical to their marketing success
and should be the major criterion in determining whether to use in-house services.
Companies like Rockport and Redken Laboratories have moved their in-house work
to outside agencies in recent years. Redken cited the need for a “fresh look” and objectivity
as the reasons, noting that management gets too close to the product to come up
with different creative ideas. Companies often hire outside agencies as they grow and
their advertising budgets and needs increase. For example, Gateway hired a fullservice
outside agency to handle its advertising as the personal computer company
experienced rapid growth during the 90s. 9
The ultimate decision as to which type of advertising organization to use depends
on which arrangement works best for the company. The advantages and disadvantages
of the three systems are summarized in Figure 3-5. We now turn our attention to the
functions of outside agencies and their roles in the promotional process.
Organizational
system Advantages Disadvantages
Centralized • Facilitated
communications
• Fewer personnel required
• Continuity in staff
• Allows for more topmanagement
involvement
Decentralized
In-house agencies
• Concentrated managerial
attention
• Rapid response to
problems and
opportunities
• Increased flexibility
• Cost savings
• More control
• Increased coordination
• Less involvement with and
understanding of overall
marketing goals
• Longer response time
• Inability to handle multiple
product lines
• Ineffective decision
making
• Internal conflicts
• Misallocation of funds
• Lack of authority
• Less experience
• Less objectivity
• Less flexibility