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o "a their offices from Hong Kong to Shanghai to be closer to the world's largest consumer market, on the mainland of China.

Many American companies prefer to use a U.S.-based agency with foreign offices; this gives them greater control and convenience and also facilitates coordination of overseas advertising. Companies often use the same agency to handle international and domestic advertising. As discussed in Chapter 3, the flurry of mergers and acquisitions in the ad agency business in recent years, both in the United States and in other countries, has created large global agencies that can meet the international needs of global marketers. A number of multinational companies have consolidated their advertising with one large agency. The consolidation trend began in 1994 when IBM dismissed 40 agencies around the world and awarded its entire account to Ogilvy & Mather Worldwide.75 A year later Colgate-Palmolive consolidated all of its global advertising with New York-based Young & Rubicam. The move, which followed the worldwide restructuring of Colgate's manufacturing and distribution system, marked the first time a large multibrand advertiser put all of its billings with one agency.76

There are a number of reasons why global marketers consolidate their advertising with one agency. Many companies recognize they must develop a consistent global image for the company and/or its brands and speak with one coordinated marketing voice around the world. For example, IBM officials felt the company had been projecting too many images when its advertising was divided among so many agencies. The consolidation enabled IBM to present a single brand identity throughout the world while taking advantage of one of the world's best-known brand names. Likewise, the H. J. Heinz Company consolidated the advertising for its flagship ketchup brand to help develop a consistent message and image worldwide.

Companies are also consolidating their global advertising in an effort to increase efficiency and gain greater leverage over their agencies. Colgate notes that a major reason for its agency consolidation is to achieve greater cost efficiency. The company has moved into 25 new countries in recent years and increased its advertising and promotional spending in many markets around the globe (Exhibit 20-13). Consolidation has generated savings that can be invested in additional advertising. Consolidation also gives advertisers greater leverage over their agencies. When a major client puts all of its advertising with one agency, that company often becomes the agency's most important account. And, as one IBM executive notes, "You become a magnet for talent and attention."77

Advertising executives also noted that a major reason for all of the account consolidation is that agencies now have the ability to communicate and manage globally. Fax machines, e-mail, and airline connections make it much easier to manage accounts around the globe. Of course, placing an entire global advertising account with one agency can be risky. If the agency fails to deliver an effective campaign, the client has no backup agency to make a fast rebound and the search for a new agency can be very time-consuming. Clients who consolidate also face the problem of selling the idea to regional offices, which often previously enjoyed their own local agency relationship.

Exhibit 20-13 Colgate has consolidated all of its global advertising with one agency

However, it appears that more and more companies are willing to take these risks and rely on one agency to handle their advertising around the world.

A second alternative for the international marketer is to choose a domestic agency that, rather than having its own foreign offices or branches, is affiliated with agencies in other countries or belongs to a network of foreign agencies. An agency may acquire an interest in several foreign agencies or become part of an organization of international agencies. The agency can then sell itself as an international agency offering multinational coverage and contacts. For example, many U.S. agencies are expanding into Latin America by forming associations with regional agencies and acquiring partial or full ownership of agencies in various countries. Leo Burnett has majority stakes in agencies in 11 Latin American countries and minority ownership or associations in seven others.78

The advantage of this arrangement is that the client can use a domestic-based agency yet still have access to foreign agencies with detailed knowledge of market conditions, media, and so on in each local market. There may be problems with this approach, however. The local agency may have trouble coordinating and controlling independent agencies, and the quality of work may vary among network members. Companies considering this option must ask the local agency about its ability to control the activities of its affiliates and the quality of their work in specific areas such as creative and media.

The third alternative for the international marketer is to select a local agency for each national market in which it sells its products or services. Since local agencies often have the best understanding of the marketing and advertising environment in their country or region, they may be able to develop the most effective advertising.

Some companies like local agencies because they may provide the best talent in each market. In many countries, smaller agencies may, because of their independence, be more willing to take risks and develop the most effective, creative ads. Choosing local agencies also increases the involvement and morale of foreign subsidiary managers by giving them responsibility for managing the promotion function in their markets. Some companies have the subsidiary choose a local agency, since it is often in the best position to evaluate the agency and will work closely with it.

Criteria for Agency Selection The selection of an agency to handle a company's international advertising depends on how the firm is organized for international marketing and the type of assistance it needs to meet its goals and objectives in foreign

Figure 20-3 Criteria for selecting an agency to handle international advertising

• Ability of agency to cover relevant markets

• Quality of agency work

• Market research, public relations, and other services offered by agency

• Relative roles of company advertising department and agency

• Level of communication and control desired by company

• Ability of agency to coordinate international campaign

• Size of company's international business

• Company's desire for local versus international image

• Company organizational structure for international business and marketing (centralized versus decentralized)

• Company's level of involvement with international operations

Continue reading here: Media Selection

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