Strat Comm Agencies

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Strat Comm Agencies

  1. 1. Strategic Communications Agencies
  2. 2. Agencies <ul><li>The key players </li></ul><ul><li>Types of agencies </li></ul><ul><li>How agencies charge clients </li></ul><ul><li>Organization of agencies </li></ul>
  3. 3. The Four Players <ul><li>The Clients </li></ul><ul><li>The Strategic Communication Agencies </li></ul><ul><li>The Media </li></ul><ul><li>The Vendors </li></ul>
  4. 4. Types of Clients <ul><li>Manufacturers </li></ul><ul><li>Resellers (retailers) </li></ul><ul><li>Institutions </li></ul><ul><li>Individuals </li></ul>
  5. 5. The Agencies <ul><li>Independent communications agencies </li></ul><ul><ul><li>Full service agencies </li></ul></ul><ul><ul><li>Creative boutiques </li></ul></ul><ul><ul><li>Specialty shops </li></ul></ul><ul><li>In-house communication departments </li></ul>
  6. 6. Advertising Media <ul><li>Print (newspapers, magazines) </li></ul><ul><li>Broadcast (television, radio) </li></ul><ul><li>Outdoor (billboards, transit) </li></ul><ul><li>Direct response (direct mail, telemarketing) </li></ul><ul><li>Internet and Interactive </li></ul><ul><li>Miscellaneous </li></ul>
  7. 7. The Vendors <ul><li>Freelancers </li></ul><ul><li>Consultants </li></ul><ul><li>Production Professionals </li></ul>
  8. 8. Types of Agencies <ul><li>The full-service agency </li></ul><ul><li>Creative boutiques </li></ul><ul><li>Medical agencies </li></ul><ul><li>Political agencies </li></ul><ul><li>Minority agencies </li></ul><ul><li>In-house agencies </li></ul><ul><li>Media buying services </li></ul>
  9. 9. The Full-Service Agency <ul><li>Major staff functions: </li></ul><ul><ul><li>Research and account planning </li></ul></ul><ul><ul><li>Account management/client service </li></ul></ul><ul><ul><li>Creative services </li></ul></ul><ul><ul><li>Media planning and buying </li></ul></ul><ul><ul><li>Pubic relations </li></ul></ul><ul><ul><li>Promotions and event planning </li></ul></ul><ul><ul><li>Direct response </li></ul></ul><ul><ul><li>Interactive </li></ul></ul>
  10. 10. The Full-Service Agency <ul><li>Other major agency functions: </li></ul><ul><ul><li>Accounting </li></ul></ul><ul><ul><li>Legal Services </li></ul></ul><ul><ul><li>Traffic </li></ul></ul><ul><ul><li>Production </li></ul></ul><ul><ul><li>Human resources </li></ul></ul>
  11. 11. Services Provided <ul><li>Analysis of marketing and cultural data </li></ul><ul><li>Formulation of core strategy and tactics </li></ul><ul><li>Recommendation of creative direction </li></ul><ul><li>Production of brand messages - Ad/PR </li></ul><ul><li>Create promotions and databases </li></ul><ul><li>Placement in print, broadcast & Internet </li></ul><ul><li>Verification of message placement </li></ul>
  12. 12. Creative Boutiques <ul><li>Small agencies focus on creative </li></ul><ul><li>Specialize in producing ads </li></ul><ul><li>Little staff for research, strategy, media planning, or public relations </li></ul><ul><li>Sub-contract for creative work from full-service agencies </li></ul><ul><li>Often have short life spans </li></ul>
  13. 13. Medical/Political Shops <ul><li>Entirely service specialized clients </li></ul><ul><li>Specialized knowledge of category </li></ul><ul><li>Provide full-service functions </li></ul>
  14. 14. Minority Agencies <ul><li>Often full-service agencies </li></ul><ul><li>Specializing in campaigns that target minorities/specialized populations </li></ul><ul><ul><li>Blacks, Hispanics, Asians, Gay/Lesbian </li></ul></ul>
  15. 15. In-house Agencies <ul><li>Owned and supervised by company </li></ul><ul><li>Reasons for in-house agencies: </li></ul><ul><ul><li>Savings </li></ul></ul><ul><ul><li>Specialization </li></ul></ul><ul><ul><li>Priority service </li></ul></ul><ul><ul><li>But, minimum staffing of experts and possibility of “group-think” </li></ul></ul>
  16. 16. Media Buying Services <ul><li>Original format of ad agencies </li></ul><ul><li>Sole function is media buying </li></ul><ul><li>Growing complexity of media buying </li></ul><ul><li>Buying media in bulk </li></ul>
  17. 17. How Agencies are Paid <ul><li>The Commission System </li></ul><ul><li>The Fee System </li></ul><ul><li>Incentive-based Systems </li></ul>
  18. 18. The Commission System <ul><li>Standard rate: 15% of media buys </li></ul><ul><li>Trend toward negotiated commission </li></ul><ul><li>Fierce competition among agencies </li></ul>
  19. 19. The Fee System <ul><li>Negotiated hourly fee </li></ul><ul><li>Media buys billed directly to client </li></ul><ul><li>Hourly rate rule of thumb: </li></ul><ul><ul><li>3 x hourly salary of each employee </li></ul></ul><ul><li>Employee hourly salary = </li></ul><ul><ul><li>Salary / Hours worked per year </li></ul></ul>
  20. 20. Incentive-based Systems <ul><li>Higher fees for good performance </li></ul><ul><li>Incentives negotiated in advance </li></ul><ul><li>Pay per performance system </li></ul>
  21. 21. Organization of Agencies <ul><li>Organized around departments </li></ul><ul><li>Organized around clients </li></ul><ul><li>Organized around tasks </li></ul><ul><li>Organized by ownership </li></ul>
  22. 22. Organizing Agencies
  23. 23. Tradeoffs in Agency Organization
  24. 24. Agency Assignment <ul><li>Get in your agencies and decide what structure you want to adopt </li></ul><ul><ul><li>Greater integration usually results in more coherent campaigns </li></ul></ul><ul><ul><li>More need to negotiate decisions - share responsibilities for sections </li></ul></ul><ul><ul><li>Be realistic about level of integration </li></ul></ul>

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