Question 1

_____ is a 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.

Accepted Answer

A)  Negotiated commission system
B)  Fixed-fee commission system
C)  Cost-plus commission system
D)  Incentive commission system
E)  Pro-rata commission system

Question 2

With respect to the creative services department of a full-service agency, the layout for TV commercials is known as a(n) :

Accepted Answer

A)  storyboard.
B)  logo.
C)  art infusion.
D)  packshot.
E)  creative brief.

Question 3

With respect to the types of organizational structures, many advertising agencies prefer the group system because:

Accepted Answer

A)  it completely avoids the usage of the incentive-based compensation system.
B)  it leads to continuity in client servicing.
C)  it avoids the involvement of the top management in the decision making processes.
D)  it converts a full-service agency into a media specialist agency.
E)  it keeps the departments within an organization independent of each other.

Question 4

Which of the following statements explain why an organization would want to use an external advertising agency?

Accepted Answer

A)  It reduces advertising and promotional costs for the client.
B)  It enables the client to 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 and integrated global brand image.
E)  It provides the client with the services of highly skilled individuals.

Question 5

The layout of a print ad is known as a storyboard.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true about integrated services?

Accepted Answer

A)  They help in eliminating the requirement for economies of scale.
B)  They help in maintaining control of the entire promotional process.
C)  They create individual branding for varied products or services.
D)  They make it difficult for the client to coordinate all of its marketing efforts.
E)  They reduce synergy in the promotional process.

Question 7

An ad agency that offers its clients a complete range of marketing, communication, and promotion services is known as a(n) :

Accepted Answer

A)  creative boutique.
B)  media buying service.
C)  account service agency.
D)  full-service agency.
E)  buzz marketing agency.

Question 8

Which of the following refers to the amount of client money that agencies spend on media purchases and other equivalent activities?

Accepted Answer

A)  Billings
B)  Media commissions
C)  Retainers
D)  Activity fees
E)  Ad traffic compensation

Question 9

Under a decentralized system, the advertising department is generally a part of _____.

Accepted Answer

A)  finance
B)  sales
C)  product development
D)  marketing services
E)  research and development

Question 10

Which of the following differentiates a centralized organization from a decentralized organization?

Accepted Answer

A)  In a centralized organization, the advertising manager is responsible for all promotions activities including sales, whereas in a decentralized organization, the advertising manager is responsible for all promotions activities except sales.
B)  A centralized organizational structure is used in large companies with more than 1000 employees, whereas a decentralized organization system is used only in smaller companies which have not more than 500 employees.
C)  In a centralized organization, an advertising manager controls the entire promotions operation for all the products of a company, whereas in a decentralized organization, each product is assigned to a different brand manager.
D)  A centralized organizational structure includes a category management system, whereas a decentralized organizational structure does not include one.
E)  In a centralized organization, the efforts of all the brand managers are coordinated by the category managers, whereas in a decentralized organization, the efforts of all the brand managers are coordinated by the advertising managers. C

Question 11

Which of the following statements is true about agency commissions?

Accepted Answer

A)  The negotiated commission system is increasingly replacing the traditional commission system.
B)  Agencies are increasingly relying on mass media for their income.
C)  Agencies rely on incentive-based commission as companies are expanding their IMC programs.
D)  Typically, agencies are unwilling to negotiate their commission rates.
E)  Generally, agencies receive their highest commissions from direct mail and sales promotions.

Question 12

Superagencies were formed when large advertising organizations disintegrated to form separate, more specialized individual agencies.

Accepted Answer

A) True 
 B)False

Question 13

With respect to the major participants in the advertising and promotions process, which of the following participants include sales promotion agencies, digital/interactive agencies, and public relations firms?

Accepted Answer

A)  Advertising agencies
B)  Media organizations
C)  Collateral service agencies
D)  Specialized marketing communications service agencies
E)  Bait-and-switch marketing service agencies D

Question 14

Which of the following is a disadvantage of using an in-house advertising agency?

Accepted Answer

A)  Focus is external rather than internal
B)  Lesser access to top level talent
C)  Reduced cost savings
D)  Lesser stability
E)  Decreased coordination

Question 15

Under the _____ system of compensation, the client agrees to pay the agency a fee based on the price of its work along with some agreed-on profit margin.

Accepted Answer

A)  fixed fee
B)  negotiated commission
C)  straight fee
D)  incentive-based
E)  cost-plus

Question 16

Mars Inc., a San Diego based advertising agency, offers various services, such as sales promotion, marketing research, package design, direct marketing, publicity as well as planning, creation, and advertising production. In this scenario, Mars is an example of a(n) :

Accepted Answer

A)  creative boutique.
B)  full-service agency.
C)  media buying organization.
D)  account service organization.
E)  media specialist company. B

Question 17

A typical direct-response agency does not include a creative department.

Accepted Answer

A) True 
 B)False

Question 18

Media buying services have been experiencing strong growth in recent years as clients seek alternatives to full-service agency relationships.

Accepted Answer

A) True 
 B)False

Question 19

The _____ 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.

Accepted Answer

A)  research
B)  production
C)  art
D)  traffic
E)  personnel

Question 20

In a decentralized system, individuals who oversee management of the entire product category and focus on the strategic role of the various brands in order to build profits and market share are known as:

Accepted Answer

A)  category managers.
B)  art directors.
C)  account executives.
D)  account supervisors.
E)  media planners.

Exam 3: Organizing for Advertising and Promotion: The Role of AD Agencies and Other Marketing Communication Organizations

_____ is a 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.

Correct AnswerverifiedShow Answer

With respect to the creative services department of a full-service agency, the layout for TV commercials is known as a(n) :

Correct AnswerverifiedShow Answer

With respect to the types of organizational structures, many advertising agencies prefer the group system because:

Correct AnswerverifiedShow Answer

Which of the following statements explain why an organization would want to use an external advertising agency?

Correct AnswerverifiedShow Answer

The layout of a print ad is known as a storyboard.

Correct AnswerverifiedShow Answer

Which of the following is true about integrated services?

Correct AnswerverifiedShow Answer

An ad agency that offers its clients a complete range of marketing, communication, and promotion services is known as a(n) :

Correct AnswerverifiedShow Answer

Which of the following refers to the amount of client money that agencies spend on media purchases and other equivalent activities?

Correct AnswerverifiedShow Answer

Under a decentralized system, the advertising department is generally a part of _____.

Correct AnswerverifiedShow Answer

Which of the following differentiates a centralized organization from a decentralized organization?

Correct AnswerverifiedC

Which of the following statements is true about agency commissions?

Correct AnswerverifiedShow Answer

Superagencies were formed when large advertising organizations disintegrated to form separate, more specialized individual agencies.

Correct AnswerverifiedShow Answer

With respect to the major participants in the advertising and promotions process, which of the following participants include sales promotion agencies, digital/interactive agencies, and public relations firms?

Correct AnswerverifiedD

Which of the following is a disadvantage of using an in-house advertising agency?

Correct AnswerverifiedShow Answer

Under the _____ system of compensation, the client agrees to pay the agency a fee based on the price of its work along with some agreed-on profit margin.

Correct AnswerverifiedShow Answer

Mars Inc., a San Diego based advertising agency, offers various services, such as sales promotion, marketing research, package design, direct marketing, publicity as well as planning, creation, and advertising production. In this scenario, Mars is an example of a(n) :

Correct AnswerverifiedB

A typical direct-response agency does not include a creative department.

Correct AnswerverifiedShow Answer

Media buying services have been experiencing strong growth in recent years as clients seek alternatives to full-service agency relationships.

Correct AnswerverifiedShow Answer

The _____ 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.

Correct AnswerverifiedShow Answer

In a decentralized system, individuals who oversee management of the entire product category and focus on the strategic role of the various brands in order to build profits and market share are known as:

Correct AnswerverifiedShow Answer

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C

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D

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B

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