The Advertising Agency

Advertising Agency
• An ad agency is an independent company set
up to render specialized services in advertising
in particular and in marketing in general.

• A firm that specializes in the creation,

production and placement of advertising
messages and may provide other services that
facilitate the marketing communication
process.
 A.A.A.A

• An independent business organization

• Composed of creative and business people
• Who develop, prepare and place advertising
on advertising media
• For sellers seeking to find customers for their
goods and services
 Types of Ad Agencies

• In-house Advertising Agency

• A la carte Agency
• Creative Boutiques
• Media Buying Agencies
• Full-service Advertising Agency
 In-house advertising operation

• Necessitates employing an advertising staff

and absorbing the operation costs
• Unprofitable unless a company does a large
and continuous advertising
 A la carte Agency
Advantages Disadvantages
• Use services only when • Specialists approach client
they 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
 Creative Boutiques
• Creative shops
• Using briefs from clients – create
advertisements
• Often freelancers
• Assist full service agencies when under
pressure
 Media Buying Agencies

• Buy space or time from media business

• Effectively became media wholesalers
• An important source of advertising research
 Full-service advertising agency
Disadvantages
Advantages
• Some
In-depth
control
knowledge
is lost and skills
• Larger
Obtaining
clients
negotiating
are favored
muscle
overwith
smallthe
clients
media
• Occasionally
Coordinating inefficient
advertisinginand
media
marketing
buying efforts
 Full-service advertising agency
Disadvantages
Advantages
• Some
In-depth
control
knowledge
is lost and skills
• Larger
Obtaining
clients
negotiating
are favored
muscle
overwith
smallthe
clients
media
• Occasionally
Coordinating inefficient
advertisinginand
media
marketing
buying efforts
 Functions of Advertising Agencies
• 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
 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
 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
Research Services the 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
Selecting an Agency
• Have
Are theytheyprofessional
fully understood
and businesslike?
the brief?
• Can
Do they
I work
knowwithhow
their
tosenior
use market
people?
research?
And willCan
they
they
be
contribute
actually working
to ouron
thinking
my business?
here?
• Are
Is their
their
strategic
capabilities
thinking
highsound?
in all key areas – management,
• strategy, creative,Have
Is it imaginative? media?I learned anything useful from it?
• Do they work well as a team – both among themselves and
with our people?
Selecting an agency
• Is
Dotheir
theycreative work
have real of a high
expertise quality?
in the specialist
areas
• Is this which weto
confined areTV,
looking
or doesat,itegl
go direct
across all
marketing, new media?
media?
Can they
• Does this work with
include us internationally
below-the-line? New(now
media?or
in the
Can future)
they offer an integrated service?
• How do they propose to evaluate the
effectiveness of the campaign?
Selecting an agency
• What
Will they
is their
fit with
attitude
our ways
to costs?
of working?
Will theyAre
save
they
uswilling
money? and
• able
How towillbethey
business
relatepartners, or will
to our media they simply
buying be suppliers?
agency/other
(This depends – of course – on how we see our own style of
specialists?
• dealing with agencies)
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?
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
 Types of fee systems

• fixed fee
• cost-plus fee
• performance fee
• hybrid fee &
commission