Advertising Agencies

Prepared by: Professor Sameer Kulkarni

For Chanakya Mumbai-India
structure
structure &
& organization
organization

what agencies do.

and
and how
how they’re
they’re organized
organized
to
to do
do it.
it.
7 primary services:
 carry out marketing analysis
 develop an advertising plan
 prepare a creative strategy
 create advertising executions
 develop and implement a media plan
 handle billing and payments
 integrate other marketing communications
4 functions of full-service agencies

 account management
 creative
 media planning and placement
 research
 agency organization chart
Board of
Directors
[Chairman/CEO]

President
[COO]

Other Marketing Strategy Office Management

Communications Review Board [Personnel,
Services [Managment Accounting,
[PR, etc.] Committee] Legal, etc.]

Account Mgmt. Creative Research Media Dept.

Director Exec CD Director Director

Management Associate Project Associate

Supervisor Creative Managers Media
Director Director

Account Creative Research Media

Executive Group: Assistants Supervisor

Asst. Account Copy Spvr. & Art Supervisor Media Media

Executive Copywriters & Art Directors Planner Buyer

Broadcast Print Analysts

Production Production

Traffic
account management

 liaison between agency and client

 responsible for understanding...
 the client’s business
 the client’s marketing needs
 strategy development
 representing client point of view within
the agency
 account management
Account Mgmt.  account management director
Director
 management supervisor
Management.  account supervisors
Supervisor
 account executives
Account  assistant account execs
Supervisor
 account coordinators
Account  traffic
Executive

Asst. Account Account

Executive Coordinator

Traffic
creative department
• responsibility

 the
 the creative
creative department
department isis responsible
responsible
for
for creating
creating and
and producing
producing the
the print
print and
and
broadcast
broadcast advertising
advertising
 strategy
strategy is
is key
key
 good
 good creative
creative work
work is
is always
always guided
guided by
by aa
creative
creative strategy
strategy that
that sets
sets forth
forth goals
goals to
to
be
be accomplished
accomplished and and key
key message
message
points
points to
to be
be relayed
relayed
 creative department
Strategy
Review
 executive & group creative directors
Board
 creative director
Executive
Creative
 associate creative director
Director (ECD)
 copywriters
Creative
Director (CD)
 art directors
 broadcast producers
Associate
Creative
Director (ACD)
 print production managers
 traffic coordinators
Creative
Group:

Copy Spvr. & Art Supervisor

Copywriters & Art Directors

Broadcast Print
Production Production

Traffic
media department

• The media department has two main functions - planning and

buying.

 The
The planning
planning group
group handles
handles more
more
strategic
strategic marketing
marketing and
and media
media issues.
issues.
 The
The buying
buying group
group handles
handles media
media
negotiations
negotiations and
and implementation.
implementation.
 media department
Media  media director
Director
 associate media directors
Associate
Media  media supervisors
Director
 media planners
Media  media buyers
Supervisor
 media analysts
Media Media Media
Planner Buyer Plan

Analysts
big
big changes
changes in
in the
the
media
media department
department
• mega-agency media departments have now become profit
centers
• agencies have set up their media departments as free-standing
units
• many large clients now look at media as a separate service
 research
research department
department
• interpret market environment

• gather and analyze research data.

• primary and secondary techniques
• determine consumer needs/perceptions
• understand problems
• advise how ads can meet strategic
goals
• help find solutions Research
Report
 research
research department
department

Research
Director  research director
 research project managers
 research assistants
Project
Managers  outside research specialists

Research
Assistants

Outside Research
Research Report
Suppliers
auxiliary agency functions

• account planning
• strategy/creative review board
• office management
• human resources
• legal services
• accounting
• recruitment
3 ways agencies make money

• commissions
• usually 15% of gross costs
• fees
• usually based on negotiated hourly rate
• incentives
• still relatively new and problematic
• usually based on performance goals
agency commissions

• media commission system

• 15% media commission
• adjustable commission rates
• negotiate to match client budget
• sliding scale
• markups-production & service
• add a percentage markup to costs
• 17.65% of net = 15% of gross
4 types of fee systems

 fixed fee (retainer)

 cost-plus fee
 performance fee
 hybrid fee &
commission
incentives

 in theory, a good way to work

 get paid based on how well you do, not how
much you bill
 in practice, difficult to implement
 if client makes final decision (instead of agency),
how can agency be responsible for final results?
 results based on many factors, such as
competitive efforts, not just advertising
new business

• three primary sources

““•The
buildcritical
The critical objective
objective
existing client’s and
and role
business role
of
of•any
any ad
ad agency
add and agency
sell is
new IMCis gaining
gaining new
services new
• solicit new business.”
business.”
accounts
• two ongoing problems
• “spec” work
• teams “walking” with accounts
 things to think about:
• why might you be interested in going into the agency business?
• what might keep you from choosing a career in the agency
business?