The Agency World

Chapter 2
 The Agency World
 The traditional agency
 New agency structures
 The growing range of specialists
 Selecting an agency
 Paying the agency
 The agency world
Objectives
 Understand the role of advertising agencies
and the relationship between agency and client
 Appreciate the factors that promote creative
and effective advertising
 Introduction
 No business needs an agency

 Can buy different services from

separate specialists
 Most businesses find it easier to use
an agency
 Alternative ways to perform
the advertising function
In-house advertising operation
 Necessitates employing an advertising staff
and absorbing the operation costs
 Unprofitable unless a company does a large
and continuous advertising
 Full-service advertising agency
Advantages Disadvantages
 In-depth knowledge and  Some control is lost
skills  Larger clients are favored
 Obtaining negotiating over small clients
muscle with the media  Occasionally inefficient in
 Coordinating advertising media buying
and marketing efforts
 A la carte
Advantages Disadvantages
 Use services only when they  Specialists approach client
are needed problems in a stereotyped
 Availability of high-caliber fashion
creative talent  Lack of cost accountability
 Potential cost efficiencies  Financial instability of
smaller boutiques
Advertising Agency Organization

Creative Services  Develop advertising copy

and campaigns
 Copywriters, production
Media Services
people, and creative
directors
Research Services

Account Management
Advertising Agency Organization

Creative Services  Selecting the best

advertising media
Media Services
 Media planners develop
overall media strategy
 Media buyers procure the
Research Services selected media

Account Management
Advertising Agency Organization

Creative Services  Study clients’ customers’

buying habits, purchase
preferences, and
Media Services responsiveness
 Focus groups, mall
intercepts, acquisition of
Research Services
syndicated research data

Account Management
Advertising Agency Organization

Creative Services  Link the agency with the

client
 Act as liaisons so that the
Media Services
client does not need to
interact directly with
several different service
Research Services
departments and
specialists
Account Management
 Memorable Advertising

Apple Computer’s “1984” TV Commercial

What Makes Effective Advertising?
Consumer’s
Sound
View Persuasive
Strategy

Effective
Advertising

Break Deliver on Doesn’t

Clutter Promises Overwhelm
Creating Effective Advertising

 The Role of Creativity

 Being Creative

Characteristics of  Energizer Batteries

creative campaigns

 Differentiates itself

 Out-if-the-ordinary
Energizer Batteries
 Energizer Batteries
keep going, and going,
and going…
 Like the drum-beating
bunny that reinforces
the argument
 Being Creative

Characteristics of  Energizer Batteries

creative campaigns
 Pepsi-Cola
 Differentiates itself

 Out-if-the-ordinary
Pepsi-Cola
Pepsi-Cola
commercial
pokes fun at its
competitor,
Coca-cola
and subtly
conveys the
message that
perhaps
Pepsi is better
than Coke
 Being Creative

Characteristics of  Energizer Batteries

creative campaigns
 Pepsi-Cola
 Differentiates itself  Volkswagen Golf

 Out-if-the-ordinary
 Being Creative

Characteristics of  Energizer Batteries

creative campaigns
 Pepsi-Cola
 Differentiates itself  Volkswagen Golf
 Bud Light
 Out-if-the-ordinary
 Creating Effective Advertising
The Role of Creativity

 Spuds MacKenzie campaign

 Budfrogs
 Louie and Frank
 Whassup?!
Little Caesar’s
The toga-clad “Pizza,
Pizza” man captures
and holds the viewer’s
attention and provides
Little Caesar’s with a
unique image vis-a-vis
its more laid-back
competitors
 Volkswagen Golf

This simple ad dramatizes that the Volkswagen

Golf is a roomy car while holding the viewer’s
attention in an entertaining manner
 New agency structures
 Three factors that influence the ways in which
new agency formats have emerged
 The new agency structures
 Technological changes
 Growing importance of internationally held
accounts for large agencies
 Recognition that different clients have
diversified needs
 Reorganizing the old
 The ‘account room’ approach
 Structure the agency around its clients
 - creates a focus for the account team
 - keeps them close to the brand
 Reorganizing the old
 The “Virtual Account Group” or “Virtual
agency”
 Uses linked computers
 Intranet
 Video conferencing
 High tech connections
 Reorganizing the old
 “hot desking”
 First come first served offices
 Results of reorganization
 Gets agencies away from what they always
criticized in their clients.
 - focus on products and production with less
regard to customers needs
- Allows for anyone on the team to be involved
in the creative process.
 Specialist Agencies
 Media Buying agencies
 Creative boutiques
 Direct marketing
 Account planning
 Management consultants
 Media Buying Agencies
 Buy blocks of space or time from media
business
 Effectively became media wholesalers
 An important source of advertising research
 Creative Boutiques
 Creative hot-shops
 Using briefs from clients – create
advertisements
 Often freelancers
 Assist full service agencies when under
pressure
 Direct Marketing
 Nowadays full service agencies are merging or
aquiring direct specialists
 Allows for common creative direction

 Also developing new skills necessary for the

internet advertising market
 Account Planning
 Take over the planning role for an agency
 Act as supplementary source of ideas for
agency or advertiser
 Management consultants
 Provide general consultancy on brand strategy
 Selecting an agency
 Have they fully understood
the brief?
 Do they know how to use
market research? Can they
contribute to our thinking
here?
 Is their strategic thinking
sound?
 Is it imaginative? Have I
learned anything useful
from it?
 Are they professional and
businesslike?
 Can I work with their senior
people? And will they be
actually working on my
business?
 Are their capabilities high in
all key areas – management,
strategy, creative, media?
 Do they work well as a team
– both among themselves
and with our people?
 Selecting an agency
 Is their creative work of  Do they have real
a high quality? expertise in the specialist
 Is this confined to TV, areas which we are
or does it go across all looking at, egl direct
media? marketing, new media?
 Can they work with us
 Does this include
internationally (now or in
below-the-line? New the future)
media? Can they offer
an integrated service?
 How do they propose to
evaluate the effectiveness
of the campaign?
 Selecting an agency
 What is their attitude to
costs? Will they save us
money?
 How will they relate to our
media buying agency/other
specialists?
 How important to them will
our account be? Will we be
one of their larger accounts,
or simply a small fish in a
very large pool?
 Will they fit with our ways
of working? Are they
willing and able to be
business partners, or will
they simply be suppliers?
(This depends – of course –
on how we see our own
style of dealing with
agencies)
 Agency Compensation

•Commissions from media (15%)

•Reduced commission system(<15%)
Three
Sources
•Labor-based fee system

•Outcome-based