Organizing for Advertising and Promotion: Role of Ad Agencies and Marketing Communication Organizations
LEARNING OBJECTIVES
LO1
To understand how companies organize for advertising and other aspects of integrated marketing communications. To evaluate the advantages and disadvantages of the various ways companies organize for advertising and promotion. To understand the role of advertising agencies and the services they perform as well as the various types of agencies and media specialist companies. To examine methods for selecting, compensating, and evaluating advertising agencies. To explain the role and functions of specialized marketing communications organizations. To examine various perspectives on the use of integrated services and responsibilities of advertisers versus agencies.
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3
Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communication Organizations
UNDER ARMOUR PROTECTS ITS HOUSE BY STAYING IN-HOUSE
Adidas, Puma, and Reebok are well known brand names in the athletic shoe and apparel business and have one thing in common. They have all been trying to keep pace with Nike, the Beaverton, Oregon, based company which has global sales of nearly $20 billion and whose swoosh has become the most pervasive logo in sports. However, when asked to name the competitor that has the most realistic chance of challenging Nike, many industry analysts do not mention adidas (which now owns Reebok) or Puma, both of which have been competing against Nike for decades. Instead they point to Under Armour, the young Baltimore-based company that many have already nicknamed “the next Nike.” Under Armour (UA) was founded in 1996 by Kevin Plank, a former Maryland football player, who began by selling compression clothing that could “wick” sweat away from the body to college sports teams out of the trunk of his car. In 2005 the company went public and its stock nearly doubled the first day it was traded. Under Armour has averaged nearly 60 percent annual growth and had sales of $725 million in
LO1
To understand how companies organize for advertising and other aspects of integrated marketing communications. To evaluate the advantages and disadvantages of the various ways companies organize for advertising and promotion. To understand the role of advertising agencies and the services they perform as well as the various types of agencies and media specialist companies. To examine methods for selecting, compensating, and evaluating advertising agencies. To explain the role and functions of specialized marketing communications organizations. To examine various perspectives on the use of integrated services and responsibilities of advertisers versus agencies.
LO2
LO3
LO4
LO5
LO6
3
Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communication Organizations
UNDER ARMOUR PROTECTS ITS HOUSE BY STAYING IN-HOUSE
Adidas, Puma, and Reebok are well known brand names in the athletic shoe and apparel business and have one thing in common. They have all been trying to keep pace with Nike, the Beaverton, Oregon, based company which has global sales of nearly $20 billion and whose swoosh has become the most pervasive logo in sports. However, when asked to name the competitor that has the most realistic chance of challenging Nike, many industry analysts do not mention adidas (which now owns Reebok) or Puma, both of which have been competing against Nike for decades. Instead they point to Under Armour, the young Baltimore-based company that many have already nicknamed “the next Nike.” Under Armour (UA) was founded in 1996 by Kevin Plank, a former Maryland football player, who began by selling compression clothing that could “wick” sweat away from the body to college sports teams out of the trunk of his car. In 2005 the company went public and its stock nearly doubled the first day it was traded. Under Armour has averaged nearly 60 percent annual growth and had sales of $725 million in