Institute for Communication Management, Währinger Gürtel 97, 1180 Vienna, Austria

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1 ON THE ROLE AND RELEVANCE OF AGENCIES IN INTEGRATED MARKETING COMMUNICATIONS: A quantitative study assessing which contributions to an integrated corporate image large Austrian enterprises require from their agencies Sieglinde Martin a, Peter Winkler a a FHWien-University of Applied Sciences of WKW, Vienna Institute for Communication Management, Währinger Gürtel 97, 1180 Vienna, Austria ABSTRACT Motivation: This study analyses the cooperation of companies with agencies in the context of implementing an integrated corporate image, which in the German-speaking context has received scant academic attention so far. For this purpose, heads of communication in Austria s top 500 enterprises were asked by means of questionnaire to assess diverse criteria they require their agencies to meet.. Results: The 105 responding companies state that in more than 80% of the cases Integrated Marketing Communications has been institutionally implemented for a few years already and the majority of departments relevant for communication are actively involved in the process. Despite agency cooperations being fairly stable, agencies are predominantly viewed in a supportive role and credited with only moderate initiative in the field of Integrated Marketing Communications (IMC). The structural equation analysis of company expectations from agencies yields the following result: On the one hand, agencies have to meet high expectations regarding their compliance with requirements relevant for the implementation of integrated communication, be it in terms of content, formal standards, or timing of integration. However, only very few criteria relating to the content of performance and cooperation (i.e. generalist knowledge, speed of delivery, integration of internal communication) are credited with making a significant contribution towards the concrete implementation of integrated communication. By contrast, the relevance of criteria which are aimed more strongly at coordination and cooperation on an organisational or a personal level is not considered significant. Conclusions: These results suggest the interpretation that in Austria IMC is viewed as a management function which is to be the domain of few qualified departments. These departments control the process of coordination and define standards according to which agencies have to complete their assignments. A more substantive cooperation is not called for and possibly even viewed as counter-productive. Especially in the case of long-standing co-operations, this process can well be seen to save resources and to provide the advantage of maintaining clarity of hierarchical structures and the division of work. However, it must be questioned whether this is sufficient to ensure survival in an increasingly flexible communication industry, whether knowledge on both sides is actually used productively, and whether the idea of integration itself is not neglected. Contact:

2 1 INTRODUCTION For some time, research of communication in management has focused predominantly on the approach of Integrated Marketing Communications (Schultz et al. 1995). This approach rests on the assumption that in times of increasing competition in communication, flexible behaviour of stakeholders, and fast technological developments, consistent communication directed towards both internal and external stakeholders is crucial for the success of a company. Relevant empirical analyses conducted in the German-speaking area so far have primarily focused on assessing how established the approach of integration has already come to be in business practice and how corporate departments and processes relevant for communication are actually coordinated with each other (Bruhn 2006). Until now, the contribution made by external agencies which traditionally have played an important part especially in the field of communication has received little attention. Therefore, this study aims to provide a first systematic assessment of the said agency contribution. Specifically, it analyses from the perspective of companies how communication departments in large Austrian enterprises involve agencies in their agenda, and which specific requirements are set for agencies regarding their performance, cooperation, and their contribution towards the implementation of integrated communication. 2 METHODS The study presented here was conducted in the context of a research cooperation between the Centre of Business Studies of the University of Basel (Switzerland) and the Institute for Communication Management of the University of Applied Sciences Vienna (Austria). For the purpose of the study, heads of communication departments of the largest enterprises in terms of turnover (more than 250 employees) in Switzerland and Austria were asked to assess their cooperation with agencies by means of mailed questionnaires. The survey focused firstly on gathering structural data on the respective company as well as the type and duration of the cooperation between communication departments and agencies. Secondly, the targeted heads of communication were asked to assess their requirements from agencies regarding performance, cooperation and the concrete contribution towards the implementation of integrated communication according to their relevance. The structural data was subjected to a descriptive analysis using SPSS The company requirements from agencies were examined by means of a structural equation analysis using the programme PLS Graph 3.0. The logic of the underlying model will be illustrated in figure 1 below: Five theoretical constructs of requirements for performance and cooperation of agencies were defined in advance on the basis of open interviews with communication experts (ovals on the left). The process of formulation was guided by the assumption that these five constructs would provide a relevant contribution towards explaining the successful implementation of integrated corporate communication (oval on the right). These five constructs of requirements were subsequently included for assessment in the questionnaire in the form of a list of altogether 24 individual variables (boxes on the left, weights are indicated in brackets). By the same token, the construct of contribution towards the implementation of integrated corporate communication was assessed via seven variables (boxes on the right, factor loadings are indicated in brackets) describing the required contribution towards integration in terms of content, formal criteria, and timing. The next step consisted in identifying those variables that have a significant effect on the respective construct (highlighted variables). This provided the basis for assessing which

3 of the five interdependencies between the constructs stipulated hypothatically in advance provide(s) a significant contribution in the concrete case (highlighted constructs) and for determining the size of the variance explained (R²) by a given construct. 3 RESULTS This publication will give first insights into the Austrian results. Of the 105 enterprises that completed the survey (response rate of 21%), 48% fall in the category of service companies, followed by manufacturing companies (45%) and a small share of public enterprises (7%). The majority of companies (82%) indicate that the approach of IMC has already been pursued for three and a half years on average. The majority of communication departments are described as strongly involved in the coordination process. Thereby, the lead is attributed mostly to the marketing department, followed by the PR department, and managing directors. The majority of departments surveyed (75%) work with a manageable number of agencies ranging from one to three, in the form of a fairly stable cooperation, which lasts for approximately four and a half years on average. Agencies are primarily considered to provide a supportive function in completing specific communication tasks: According to almost 50% of respondents, it is only the area of media advertising which is handled exclusively by the agency. In connection with all tasks specific to PR, marketing, and sales, agencies are mostly asked to provide mere support. Moreover, the areas of customer relationship management and sponsoring are frequently managed without any support from agencies whatsoever. PR and advertising agencies are named as those involved most in the integration process, followed by full service agencies; however, all agencies are very rarely (5%) described as showing strong initiative in the field of integrated communication. Figure 1. Structural Equations Model

4 Our structural equations model (see figure 1) yields the following results on companies expectations from agencies: The standards required from agencies for the purpose of implementing integrated communication show highly significant values on all levels of integration i.e. integration of content, formal integration, and timing of integration. Hence, consistent use of messages and visual elements when addressing target groups on different market levels, compliance with formal design standards for logos and slogans, as well as the coordinated timing of measures and instruments are viewed as essential elements of agency performance. However, exploring the issue of which concrete requirements regarding the performance and cooperation of agencies are considered to make a significant contribution towards implementing such an integrated corporate image leads to a surprising result: out of the five constructs of requirements from agencies formulated, only the two requirements describing the content of performance and cooperation are shown to make a significant and almost complete contribution towards explaining the successful implementation of IMC (91.1% of variance explained). This result is all the more astonishing as it is only a very limited number of variables within each of the two constructs that yield significant values. Specifically, these comprise the presence of generalist knowledge which is broad rather than indepth, the speed of delivery, and the consideration of internal communication in the communication content. By contrast, all other requirements regarding content some of which address the aspect of integration much more explicitly are not significant: On the level of performance requirements, these comprise the variables of full service and coordination of instruments, more in-depth specialist know-how, as well as operational and strategic competences, on the level of cooperation requirements these variables include shared understanding of integrated communication, sensitivity to its importance, as well as an agency s performance record in integrated communication and its knowledge of corporate objectives per se. Accordingly, requirements defining the cooperation on an organisational level do not prove to be significant either. This applies to the criteria of regular cooperation and exchange of information, formal rules of coordination and decision-making, as well as local proximity. And finally, by the same token, requirements describing performance and cooperation on a personal level are not assigned a significant role. These include commitment to and acquisition of knowledge on integrated communication on part of the agency, shared understanding of the agency s role, as well as an agency s willingness to cooperate and maintain a constant coordination process, and the qualities of confidentiality, flexibility and reliability. 4 DISCUSSION OF RESULTS The results from Austria hence provide an ambiguous view: on the one hand, companies that communicate in an integrated manner are already characterised by a fairly large extent of internal coordination. Besides, regarding the implementation of communication measures, they also formulate a demanding profile of requirements vis-à-vis agencies that cover integration of content, formal integration and the coordinated timing of measures. On the other hand, an analysis of the specific expectations regarding agency performance and cooperation produces a rather traditional profile of requirements: The agency s contribution is primarily seen in its capacity to manage clearly defined tasks, which it is commissioned to complete, promptly and independently. Tendencies that point towards an intensified cooperation in the course of performing a job or towards the active involvement of an agency in the corporate communication process as a whole play a lesser role even though cooperation tends to be fairly stable over time. This holds true even more in connection with soft personal factors like build-

5 ing a shared understanding of communication or acquisition of knowledge about and commitment to integrated communication on the part of the agencies themselves. These results suggest the following interpretation: Apparently the large enterprises surveyed consider the integration of corporate communication an essential strategic function which is to be the domain of few qualified departments in the case of Austria these being marketing, PR and/or managing directors. These departments are not only in charge of deciding on and coordinating internal processes, but also of defining standards regarding the content, formal aspects, and the timing of integration which agencies must comply with when performing communication tasks. Consequently, a more far-reaching involvement of agencies in the coordination process is not considered necessary possibly even deemed counter-productive with a view to efficient decision-making and completion of tasks. If the logic of this interpretation is applied, the profile of requirements from agencies formulated by the companies surveyed also makes sense: in order to facilitate compatibility with companies communicating in an integrated manner, the agency must primarily be capable of grasping the company standards defining the content, formal aspects, and the timing of integration as comprehensively as possible and of applying them to the concrete task at hand. This coincides with the two requirements from agencies which relate to content and are considered significant, i.e. broad rather than in-depth generalist knowledge and speed of delivery. Only these qualities ensure that diverse company standards can be adapted in an adequate and yet timely manner. The relevance of the third requirement deemed significant i.e. consideration of internal communication can possibly be explained by the fact that the communication with employees had only played a modest role in theory and business practice for a long time and has only recently captured increasing attention as a success factor (Schick 2002). From this perspective the following recommendation for agencies can be formulated: a holistic view of the requirements made, detailed knowledge about the operational implementation of integrated measures as well as an interest not only in external effects, but also in the internal processes of a company are qualities which are mandatory in the cooperation with large enterprises that practise integrated communication, and which these enterprises also expect their agencies to possess on a high level. Furthermore, in the course of the cooperation it is crucial to demonstrate high flexibility and independence when completing tasks and following further instructions which will, however, hardly be possible in a successful way in the absence of in-depth knowledge about the client - be it already existing or yet to be researched. Hence, agency cooperation in the large Austrian enterprises surveyed can be seen as a process in which both companies and agencies operate independently to a fairly large extent. Coordination takes place in a somewhat reduced form, along standards set by the company and their prompt adaptation on the part of the agency. Such a cooperation can well provide advantages especially, as in our case, where both parties cooperate on a fairly long-standing basis and therefore an implicit well-rehearsed understanding of mutual expectations can be taken to exist: Reduced cooperation, for one, saves resources and secures existing hierarchical structures and a clear division of work. Moreover, it has to be considered at this point that many of the companies surveyed are subsidiaries of large multinationals. In these cases standards are frequently formulated on an international level, and consequently cooperation with an agency on the national level can hardly take a different form. Besides, it should be taken into consideration that the form of cooperation outlined could also be specific to large enterprises, which are mostly characterised by a highly structured division of tasks. In small and medium-sized enterprises in Austria, which are much more common in this country, agency cooperation could take a completely different, in some cases also much more cooperative, form. On a more fundamental level, however, it should be critically noted that current developments in communications especially in the field of the Social Web (Zerfaß 2008) are making it increasingly difficult to define processes and regulations in communication management in advance and are calling

6 for continuous coordination and increased participation instead. It is reasonable to assume that this context of increasing flexibility, if nothing else, will probably render the current form of cooperation between large enterprises and agencies insufficient. Moreover, for the practice of cooperation discussed here it must be pointed out that the parsimonious exchange of information, albeit saving resources, also leads to much mutual knowledge about the completion of shared tasks being lost knowledge which could well constitute a competitive advantage if properly reflected on. And finally we wish to critically address another issue discussed primarily by practitioners: especially campaigns claiming to live up to the standards of integrated communication which have been managed by agencies are frequently criticised for showing distinct weaknesses on the concept level, although they communicate a consistent image on the design level. Our results for Austria provide the basis for raising the critical question whether it is exclusively agencies which are to blame for this shortcoming, or whether this may in some cases also be due to clients themselves showing too little cooperation. 5 ACKNOWLEDGEMENTS First and foremost, we wish to thank Manfred Bruhn and Verena Batt of the University of Basel for the inspiring research cooperation. We would also like to thank Elisabeth Hassek-Eder for the translation into English. 6 REFERENCES Bruhn, M. (2006): Integrierte Kommunikation in den deutschsprachigen Ländern: Bestandsaufnahme in Deutschland, Österreich und der Schweiz. Gabler. Schick, S. (2002): Interne Unternehmenskommunikation: Strategien entwickeln, Strukturen schaffen, Prozesse steuern. Schäffer-Poeschel. Schultz D. E., Tannenbaum, S.E., Lauterborn R..F (1995): Integrated Marketing Communications. NTC Business Books. Zerfaß, A. (2008, eds.): Kommunikation, Partizipation und Wirkungen im Social Web. Halem.

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