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A study on Advertising Agencies ...

A study on Advertising Agencies

Rohitha Sankar
BA Journalism

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  • 1. advertising agencies
  • 2. the first advertising agents 1843 volney palmer agent for media, not advertisers 1864 - george p. rowell “the johnny appleseed of advertising” Rowell’s American Newspaper Directory space wholesaler shared his “secret” 1888 - “Printer’s Ink”
  • 3. the first advertising agency n.w. ayer & son founded in 1864 by francis w. ayer, 20 “& son” made the business seem more established worked for advertiser slogan - “keeping everlastingly at it brings success.”
  • 4. 4 full-service agency functions: today, “full-service” agencies provide the following: account management creative media planning and media placement (media buying) research many adding “below the line” services - PR, sales promotion, Interactive
  • 5. major types of agency: mega-agency groups independent agencies national, regional, and local specialized/niche agencies agency service suppliers media buying, creative services
  • 6. mega-agency groups prompted by mergers and client globalization financial pressures service multinational accounts subsidiaries provide“IMC” (integrated marketingcommunication) services
  • 7. Some mega-agency groups:OmniCom Group $4.15 billionWPP Group $3.64 billionInterpublic Group $3.38 billionDentsu (Japan) $1.98 billionYoung & Rubicam $1.49 billion
  • 8. mega-agency groups: WPP Group $6.69 billion (including Y&R) Omnicom Group 5.74 billion Interpublic Group $5.08 billion Havas $2.39 billion Publicis $2.17 billion (including Saatchi)
  • 9. mega-agency pros & cons positives: negatives: larger talent pool people vs. profit negotiating clout creativity vs. size financial rewards conflict of account security interests competitive edge people business strong partnerships more services international link
  • 10. national, regional & local these are independent agencies there are now fewer national agencies which are not part of mega-agency groups regional and local agencies work with smaller clients who are usually located nearby
  • 11. Famous ad agencies1. J. Walter Thompson2. Leo Burnett Worldwide3. McCann-Erickson Worldwide4. BBDO Worldwide5. Grey Advertising6. DDB Worldwide7. Ogilvy & Mather Worldwide8. FCB Worldwide9. Y&R Advertising10. Publicis Worldwide
  • 12. specialized/niche agencies industry specialists ethnic agencies internet agencies business-to-business agencies creative boutiques and design houses
  • 13. other suppliers provide “unbundled” services one part of what an agency does media buying services freelancers & consultants production companies in-house or “house” agencies agencies owned by clients
  • 14. in-house agencies advantages & disadvantages
  • 15. in-house agencies advantages & disadvantages familiarity specialization fast service cost savings confidentiality
  • 16. in-house agencies advantages & disadvantages familiarity objectivity specialization resources fast service fresh ideas cost savings extra cost and confidentiality overhead
  • 17. 2 primary roles of agencies idea generation brand-building
  • 18. idea generation manufacture ideas ideas are lifeblood of the agency create intellectual capital create and sell different kinds of ideas marketing strategies promotional opportunities even new product ideas...
  • 19. brand-building “The agency’s purpose is to createand direct communication about aproduct or service so that the brandis perceived to have a uniquevalue or brand personality.” Let’s look at some examples...
  • 20. brand-building Marlboro Leo Burnett
  • 21. brand-building McDonald’s DDB Needham
  • 22. brand-building Pepsi BBDO
  • 23. brand-building Nike Wieden + Kennedy QuickTime™ and a Sorenson Video 3 decompressor are needed to see this picture.
  • 24. brand-building American Express Ogilvy & Mather
  • 25. brand-building Apple Chiat/Day
  • 26. brand-buildingmeans integration more and more, agencies are being involved in all areas of marketers’ brand-building activities today, it’s more than advertising it’s integrated marketing communications (IMC)
  • 27. integrated marketing communicationthe imc promotion mix advertising public relations direct response sales promotion personal selling
  • 28. structure & organization what agencies do.and how they’re organized to do it.
  • 29. 7 primary services: complete a 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
  • 30. 4 functions of full-service agencies account management creative media planning and placement research
  • 31. agency organization chart B a do or f D et r i co s r [ h i mnC O C ar a / E ] Pe i e t r sd n [ O ] C O O e Mr e i g t r a k tn h Sr t g t ae y O i eMn g mn f c f a ae e t C m u i ai n o m nc t o s Rve B a d ei w or [ e s n e, Pr o n l Sr i e e vc s [ a a mn Mn g e t Ac u t n , c o ni g [ R e c] P , t. Cm i t e o m e] t L g l e c] e a, t .Ac u t Mm co n g t. Ce t v r ai e Rs a c ee r h M i Dp. e a e t d D et r i co r Ee C xc D D et r i co r D et r i co r Mn g mn a ae e t As ca e soi t P oe t rjc As cae soi t S pr i o u e vs r Ce t v r ai e Mn g r a aes M i e a d D et r i co r D et r i co r Ac u t co n Ce t v r ai e Rs a c ee r h M i e a d E e ui e x c tv Go p ru: As s a t s i t ns S pr i o u e vs rAs . Ac u t st co n Cp S v . & o y pr At S p r i o r u e vs r M ie a d M i e a d E e ui e x c tv C p wi e s o y rt r & r D et r At i c o s r Pa n r l ne Byr ue Broadcast Print Analysts Production Production Traffic
  • 32. account management liaison between agency and client responsible for understanding... the client’s business the client’s marketing needs strategy developmentrepresenting client point of viewwithin the agency
  • 33. account management A c c o u n t M g m t. D ir e c to r account management director M a n a g e m en t. S u p e r v is o r management supervisor A ccount S u p e r v is o r account supervisors A ccount account executives E x e c u tiv e assistant account execsA sst. A c c o u n t A ccoun t E x e c u tiv e C o o r d in a to r account coordinators Traffic traffic
  • 34. creative department responsibility the creative department is responsible for creating and producing the print and broadcast advertising strategy is key good creative work is always guided by a creative strategy that sets forth goals to be accomplished and key message points to be relayed
  • 35. creative department S tr a te g y R e v ie w B oard executive & group creative E x e c u tiv e directors creative director C r e a tiv e D ir e c to r (E C D ) C r e a tiv e D ir e c to r (C D ) associate creative director A s s o c ia te C r e a tiv e D ir e c to r (A C D ) copywriters C r e a tiv e art directors G roup:C opy Spvr. & A r t S u p e r v is o r broadcast producers print production managers C o p y w r ite r s & A r t D ir e c to r s Broadcast Print Production Production Traffic traffic coordinators
  • 36. media department The media department has two main functions - planning and buying. The planning group handles more strategic marketing and media issues. The buying group handles media negotiations and implementation.
  • 37. media department media director M e d ia D ir e c to r A s s o c ia te M e d ia associate media directors D ir e c to r media supervisors M e d ia media planners S u p e r v is o r Media M e d ia M e d ia PlanP la n n e r B uyer media buyers Analysts media analysts
  • 38. big changes in themedia 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
  • 39. research departmentinterpret market environment gather and analyze research data. primary and secondary techniquesdetermine consumer needs/perceptions understand problemsadvise how ads can meet Research strategic goals Report help find solutions
  • 40. research departmentR esea rchD ir e c to r research director P r o je c tM anagers research project managers R esea rch research assistantsA s s is ta n ts Research Outside outside research Report Research Suppliers specialists
  • 41. auxiliary agency functions account planning strategy/creative review board office management human resources legal services accounting recruitment
  • 42. 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
  • 43. 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
  • 44. 4 types of fee systems fixed fee (retainer) cost-plus fee performance fee hybrid fee & commission
  • 45. beyond 2000advertisingagency trends
  • 46. agency trendsclutter, overload, “overchoice” increased media options increasing audience fragmentation more messages everywhere doing more with less economic pressures, “downsizing” ongoing client budget pressures managing size more mergers and mega-agencies
  • 47. agency trends managing technology interactive marketing e-mail, web sites improving internal systems account planning re-engineering agency organization improving delivery of imc services
  • 48. in conclusion...as long as marketers needideas to build their brands,they’re going to needadvertising agencies