Chapter 2

Advertising
Agency
Prof. Dr. S Nayak
 ADVERTISING AGENCY
An advertising agency is a
service business dedicated to creating, planning
and handling advertising (and sometimes other
forms of promotion) for its clients

An Advertising Agency is a service provider that

works for clients to create an effective and goal
oriented advertising campaign aimed at
representing the Company positively in the eyes
of its target customers.

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FUNCTIONS

RESEARCH FUNCTION
PLANNING
CREATIVE FUNCTIONS
MEDIA SELECTION
ADVERTISING BUDGET
SALES PROMOTION
NON ADVERTISING FUNCTIONS
PUBLIC RELATIONS

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DEPARTMENTS
ACCOUNT SERVICES / CLIENT SERVICES
CREATIVE TEAMS
MEDIA PLANNERS
PRODUCTION
RESEARCHERS

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ACCOUNT/CLIENT
SERVICES
Most important department.
Taking all major decisions related to a client.
Responsibilities include locating and
negotiating to acquire clients.
Works closely with the client to develop
advertising strategy.

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 CREATIVE TEAM

The principle role is to manage the overall

advertising campaign for a client.
Generating ideas, designing concepts and
creating the final advertisement.
Consists of specialists in graphic design, film
and audio production, copywriting, computer
programming, and much more.

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MEDIA PLANNERS

Understanding the nuances of different

media.
Looks for the best media match for a client
and also negotiates the best deals.
Media purchased based on advertisement.
Placing ads in appropriate media.

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PRODUCTION
Without the production department, the ads
created by the copywriter and art director
would be nothing more than words and
pictures on paper.
Ensures the TV commercial or print ad, etc.,
gets produced.
They are responsible for contracting external
vendors.
They are involved in every aspect of a
project, from the initial to delivery.

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 RESEARCHERS
who assess a clients market situation.
Also are used to test creative ideas.
Who measures whether the campaign
reached its objectives.

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 Participants in the IMC Process

Advertiser (Client)

Advertising agency

Media organizations Direct- Sales

response promotion
agencies agencies
Marketing
communications specialist
organizations
Public
Interactive
relations
agencies
Collateral services firms
 Organizing for Advertising and Promotion

The way a company (the client) organizes

depends on
Its size
The number of products it markets
The role of advertising and promotion in the
marketing mix
The budget
Its marketing organization structure
 Advertising Dept. Under Centralized System

President

Research and Human

Production Finance Marketing
develop-ment resources

Marketing Product
Advertising Sales
research planning
 Pros & Cons of a Centralized System

+ Positive - Negative
Better Less goal
communications involvement

Fewer The
personnel Centralized Longer
System response time

Continuity
Impractical for
multiple brands,
More top products, divisions
management
involvement
 Decentralized Advertising System

Corporate

Production Finance Marketing R&D Human

Resources

Sales Product Marketing

Management services

Brand Advertising Marketing

Manager Dept Research

Ad agency
Sales promotion
Brand
Manager Package design

Ad agency Merchandising
 Pros & Cons of Decentralization

+ Positive - Negative

Ineffective decision
Concentrated
making
attention

Rapid problem The Internal conflicts

response Decentralized
System
Unequal distribution
Increased of funds
flexibility

Lack of
Authority
 Test Your Knowledge

A major reason why some companies choose to use an in-house agency is to:
A) Maintain creative freshness
B) Reduce advertising and promotions costs
C) Better understand how advertising works
D) Win advertising awards that will enhance
the image of their brands
E) Do all of the above
 In-House Agencies

Benettons in-house agency works with

outside agencies to develop ads
 Pros & Cons of In-House Agencies

+ Positive - Negative

Cost Less
savings experience

The
More Less
control In-house objectivity
Agency

Better Less
coordination flexibility
 The Ad Agencys Role

Reasons for using an ad agency

Highly skilled specialists
Specialization in a particular industry
Objective viewpoint of the market
Broad range of experience
 Ad Agencies Have Skilled Specialists

Copy-Writers Researchers
Artists

Graphic
Photographers Media Planners Designers
AD AGENCY - TYPES

FULL SERVICE AGENCIES.

CREATIVE BOUTIQUES.
IN HOUSE AGENCIES.
SPECIALIST AD AGENCIES.

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FULL SERVICE AGENCIES

A full service agency is one that provide a

direct relation to the Copyright, Artwork, Ad
production, Media planning etc.
Involved in planning, creating, producing
advertisements, performing research and
selecting media.
Also provide non-advertising related services
including strategic market planning, direct
market promotion programs.

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 Full-Service Agencies

Planning advertising
Full range of Performing research
marketing
Creating advertising
communication and
promotion services Selecting media
Producing
advertising

Strategic market Interactive

planning capabilities

Sales promotions Nonadvertising Package design

services
Direct marketing Public relations and
publicity
 Typical Full-Service Agency Organization

Board of
directors

President

VP creative VP account VP marketing

services VP management
services services
and finance

Writers Print
Art directors production Sales
Media
Promotion
Account
TV supervision
production
Research Office
management Finance

Traffic Account
Accounting
Executive

Personnel
 Services Provided by Agencies

Agency Services

Account Marketing Creative Mgmt &

Services Services Services Finance

The link Research Creation, Accounting

between department execution of
agency and ads Finance
client May include
account Copywriter Human
Managed planners artists, resources
by the other New
account Media dept. specialists
obtains business
executive generation
media
space, time
CREATIVE BOUTIQUES

Specialize in "creative" or design-based

business models.
The specialized creative functions include
copy writing, artwork and production of ads.
basic interest is in the creation of the
advertisement or branding.
merge with other agencies to provide a wide
range of services.

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 The Role of Creative Boutiques

Creative
Provide only creative services
Boutiques

Full-service agencies may subcontract

with creative boutiques

Ability to turn out inventive creative

work quickly
 SPECIALIZED
AGENCIES

These agencies specialized in a particular activity

of the whole communication process.
They may specialize in certain functions,
audiences or industries or in a marketing
communication area.
These type of agencies may serve one client
only.

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 Media Buying Can be Specialized

Media Specialist Specialize in buying media, especially

Companies broadcast time

Agencies and clients develop media

strategy

Media buying organizations implement

the strategy and buy time and space
 Methods of Agency Compensation

Commissions
from media

Compensation Fee, cost, and incentive-

Methods based systems

Percentage
charges
 Evaluating Agencies

Financial Audit Qualitative Audit

Verify costs, expenses Planning

Personnel hours charged Program development

Payments to media Implementation

Payments to suppliers Results achieved

 Top Agency Value-Add Activities

Integrated
disciplines &
New media functions
guidance,
Creative ideas
solutions

Brand driver
evaluation
Collaboration

Talented Ideas/programs for

people multi comm.
programs
 Why Agencies Lose Clients

Poor Declining Personnel

performance sales changes

Changes
Poor Payment
in size of client
communications conflicts
or agency

Unrealistic Conflicts of
Policy Changes
Client demands interest

Change in
Personality Policy Changes clients strategy
conflicts
 How Agencies Gain Clients

Referrals Presentations

Solicitations

Public Relations Image, Reputation

 Direct-Marketing Agency Activities

Direct-
Marketing
Database Agencies Media services
management

Direct
Creative
mail
Database
development,
Research management Production
 Direct-Marketing Agency

Departments in a typical direct-marketing

agency
Account management
Creative
Media
Database development and management
Sales Promotion Agencies

Promotional planning

Creative research

Tie-in coordination

Fulfillment

Premium design and manufacturing

Catalog production

Contest/sweepstakes management
 Functions Performed by Public Relations Firms

Strategy Public
Special events
development affairs

Generating News releases, Managing

publicity communication crises

Coordination
Lobbying Research with promotional
areas
 Functions Performed by Interactive Agencies

Web
CD-ROMs
banner ads

Interactive Media
Web sites Text messages
Creation

Search engine
Kiosks optimization
Website for the California Milk Advisory Board
Marketing Research Companies

Help clients under-

stand target audience

Qualitative research

Quantitative studies
 Pros and Cons of Integrated Services

+ Positive - Negative

Greater synergy Budget politics

Convenience
Integrated Poor communication
Services

Single image for

No synergy
product or service
 Obstacles to Implementing IMC

Key obstacles
Lack of people with the broad perspective and
skills to make it work
Internal turf battles
Agency egos
Fear of budget reductions
Ensuring consistent execution
Measuring success
Compensation
 EXAMPLES.

Ogilvy & Mather- Vodafone, Cadbury, and

Fevicol.
JWT (J Walter Thompson)- Nestle, Ford and
Nokia.
Mudra Communication- HBO, Philips, Big
Bazaar.
FCB Ulka Advertising Ltd- Whirlpool, Santoor,
and amul.
Grey Worldwide (I) Pvt. Ltd- Hero Honda,
Maruti Suzuki.

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? ??

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THANK
YOU..!

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