MODULE 3 - ADVERTISING AGENCY A Meaning and Definition ‘An advertising agency is a firm that specializes in the creation, design and placement of advertisements, and in the planning and execution of promotional campaigns for products and services of their clients. It is one of the active participants O Basically a service organisation CA link between the Advertiser and Media a a a Acts as an agent and receives commission Media pay commission to the ad agencies C1 Advertiser pays them service charges AAAA(American Advertising Agencies Association) defines “an Ad Agency as an independent business organisation, composed of creative and business people, who develop, prepare and place advertisements in ad media for sellers, finding customers for their goods and services” Organisation Structure of an Advertising Agency And Services The following chart depicts organisation structure of a typical advertising agency Tesaa a 1 Vice President ee a ot ee ret paca r al es ei taal [— The Chart can be explained as under: 1. Creative services Department a. Copywriting b. Artwork c. Production d. Traffic 2. Account Servic a, Client Servicing b. Preparation of Advertising Plan c. Ageney ~ Client Relations 3. Marketing Services a. Media Services b. Marketing Research c. Sales Promotion 4, Administration and finance a. Office Administration b. Accounting c. Budgeting 4. Auditing Main functions/services of an Ad Agency 1. Research Function: conducting research about the market, product, media, distribution, competition, etc. and providing the inputs to clientsAdvertising Planning: what to include, when and how to execute the ad campaign Ad Creation: preparing an effective Ad Copy and getting it pre-tested also Media Selection: Media planning, buying and scheduling Advertising Budget: prepares or helps clients in its preparation Advising the clients in STP (market Segmentation, market Targeting & product Positioning) Advise clients in product design & its package, trademarks, labels, brand name, ete. Helps clients in designing an appropriate pricing strategy, developing distribution network and sales promotion strategies Public Relations: image building of the ad agency ‘Types of Advertising Agencies 1. IMC Agency - Very comprehensive, covers many more activities, other than Advertising, it covers... Direct marketing Sales promotion Public relations Publicity Personal selling or Salesmanship, ete. Full-Service Agency: Normally, they are large sized agencies Deals with all stages of advertisement Different expert people for different departments Includes full package services such as market research, copy making, media planning and buying, product and advertising research, budget preparation, ete. Creative Boutiques - Specialise in creative services No other function is performed other than creating the ads They are small sized agencies with their own copywriters, directors, and creative people In-House Ad Agencies - Established by big advertisers as their own agency or department to carry out their own advertising related works ‘They don’t accept the work of any other clients E.g. Lintas was established by the then HLL as an In-house ad agency Media Buying Agencies - Buys place and time slots in bulk from media owners and sells them to the advertisers Supervises whether the ad has been placed at the chosen time and place or not in the selected media Interactive Agencies - Uses Internet related ads Develops websites, blogs, webpages, social media ads, mobile phone ads, ete. Specialised Ad Agencies - Undertake only one type or specialised activity Act as the Niche agency. May be related to Outdoor ad work e.g. Bright, Selwel, etc. May handle only financial or capital market ads such as Capital, Sobhagya, Percept, etc. B Agency Selection Criterion Criteria for selecting an Ad Agency (factors to be considered while selecting an Ad Agency) 1. Age/Experience: the number of years in the industry 2. Recognition/Reputation: an ad agency which is recognized and is known for delivering good services to clients 3. Creative skills: Find out the creative skills 4, Past performance: the successful work done for other clients 5. Other Clients: inquire about the agency’s current and past clients6. Location: it is always better to look for an advertising agency which is located nearby so that it is easy to establish an effective communic: 7. Cost/Fees: Fees charged by an agency and terms of payment, credit period, ete. 8. Network of Relations: with media and other service providers 9. Infrastructure faciliti 10. Creative Staff of an Agency Client Turnover: concept - Shifting of a client from one ad agency to another A client leaves one ad agency and joins another End of relations between them: not a happy situation for both Itis like a divorce between the client and an ad agency May be due to various reasons Both the parties may be at fault to some extent Reasons of Client Turnover Dissatisfaction: poor & unprofitable work Lack of understanding Loss of confidence Change in the creative staff Change in location of an agency Sudden increase in fees: expensive Handling of the competitor’s account 8. Inadequate network & facilities 9. Failure or withdrawal of a brand/business 10. Merger: of an ad agency or client 11. Change for the sake of change ry Maintaining Agency — Client Relationship The agency client relationship stars when the client contracts work to the agency. Such a relationship is based on mutual trust and respect. An article published in the economic times of India on 17% January 1988 has made some suggestions in this regard: What the Clients have to do? ‘ourtesy at all times * Create enthusiasm «Involve the agency * Provide a thorough brief Client must encourage the agency to consult them Should not reject the approval on whims and fancies Have faith Pay agency bill Avoid personal favours Reduce disputes What the agency has to do? ‘Much not handle conflicting accounts. ‘© Discuss details of compensation Decide clearly as to who will handle the account Establish a continuous communication network Collect complete information about the clients business Maintain a regular performance audit Come out with new marketing ideas© Never hurt the clients ego © Keep the client well informed © Maintain discipline, punctuality and submit progress Creative Pitch ‘A creative pitch is a presentation that describes the concepts that a company (Such as an agency) proposes to use to create a media program or promotional message. It refers to the presentation by advertising agency people to a prospective account. 1. A creative pitch is ‘the proposal or presentation made by an advertising agency to the prospective clients to get the advertising work from them’ In advertising language, ‘pitching is like selling? Through Creative Pitch, an ad agency tries to sell its services and obtain a new client The pitch states the objectives for the campaign and describes how the campaign will achieve them Advertisers(clients) request ad agencies, normally not more than three at a time, to prepare and present creative pitches so that they can select the most suitable proposal from them The Ad Agency approaches the prospective clients on its own The client invites the ad ageney/agencies ‘The ad agency may request its existing clients to recommend its name to others An advertiser may find from others who is their ad agency and may request any one of them to speak to their agency to handle his account c Agency Accreditation ‘Accreditation is a process in which certification of competency, authority, or credibility is presented. Agency accreditation refers to official recognition given to an advertising agency authorities by certain organisation, body or authority such as INS, ATR, AAAI, ete. upon fulfilling certain eriteria’ Criteria may include number of years’ existence, skills & experience, certain minimum business, rules & regulations, etc. Advantages/Benefits of Accreditation An Ad Agency gets official recognition 1. 2. Professional status: promise of minimum quality standards 3. Enhanced image 4. More business from clients: brings new clients 5. Better media contacts- gets credit facility from media (45 to 60 days) More commission/earnings Criteria for Accreditat 1. Skill and Experience 2. Rules and Regulations 3. Minimum Business Limits ‘Agency Compensation - how ad agencies are paid or how they earn from clients 1. Commissions from Media: here an Ad Agency receives a specified commission (usually @15 % to an accredited agency) from media E.g. Assume an ageney prepares a full-page magazine ad at a cost of Rs 100,000. Once the ad is run, the magazine will bill the agency for Rs 100,000, less 15%(Rs 15,000) commission 2, Fees based: Under the fee structure, the client and the ad agency negotiate a flat sum to be paid to the ageney for all work done The agency estimates the cost (including out of pocket expenses) of servicing the clientAgency and client agree on the specific work to be done and the amount the client will pay to an agency 3. Cost plus System: The cost-plus system is generally used when the media billings are relatively low and a great deal of agency service is required by the client Here, the client agrees to pay the agency a fee, based on the costs of its work, plus some agreed % of profit margin (Often a percentage of total costs) 4. Incentive-Based Compensation: Many clients these days are demanding more accountability from their agencies and tying agency compensation to performance through some type of centive-based system, the agency’s ultimate compensation amount will depend on how well it meets predetermined performance goals for the clients Career Options Career with an Ad Agency Art Director: art-related work Account Executive/Supervisor: looks after the clients and their relations Copywriter: deals with the creative work Production Designer/Supervisor Media Buyer/Planner Research Manager/Supervisor PR Career with Media 1. Media selling stat space/time earch for the media bt ers, negotiating with them and selling media 2. PR related jobs 3. Production-related work 4. Social media jobs: creative work, blogging, ete, Modeling and model coordinators Announcing and dubbing artists Choreography Lyricists and musician: Designers: set, dress, ete. Photographers and video shooters Graphics and animation ingle writing 1 2. 4 5. 6 1,