Agency Management Advertising Agency

ADVERTISING AGENCY
INTRODUCTION:
Advertising agency is an independent organization that provides one or more specialized
advertising & promotion related services to assist companies in developing, preparing &
executing their advertising & other promotion programmes. Most large & medium sized
companies usually use an advertising agency. The advertiser hires the independent agencies
to plan & implement part or all of their advertising efforts. The working arrangement is
known as the agency-client partnership
DEFINITION:
American Advertising Association of Advertising Agencies (AAAA) has given the following
definition:
“Advertising agency is an independent business, composed of creative & business people
who develop, prepare & place advertising in advertising media for sellers seeking to find
customers for their goods & services.”
SERVICES OFFERED BY AGENCY:
1) Marketing Services:
a. Advertising services
b. Public Relation activities
c. Sales promotion
d. Event marketing
2) Advertising services
a. Creative planning
b. Media planning
c. Media buying
d. Evaluating the campaign
3) Content writing services
a. Content & copywriting for print ads, TVC’s, animated contents, etc.
4) Market Research:
a. Consumer demand analysis
b. Sales forecasting
c. Competitive analysis
5) Integrated marketing communication
a. Use of promotion mix to communicate advertising message
6) Internet marketing:
a. Advertising online( banner ads, pop windows, tickers, etc)
b. Electronic presence through website, web communities
7) Brand Building:
a. Logo designing
b. Packaging
c. Brand positioning
8) Direct Marketing:
a. Direct mailers
b. Catalogue
c. Telemarketing
d. Brochure
9) Corporate Identity:
Through Business stationery
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a. Visiting cards
b. Letter head
c. Envelope
ORGANISATION STRUCTURE OF AD AGENCIES (FULL SERVICE AGENCIES)
& THEIR FUNCTIONS:
Even a relatively small agency may meet the qualifying criteria of a full-service agency. The
function of an advertising agency is to see that its client’s advertising leads to greater profits
in the long run. Most such agencies are usually large in size & offer their clients a full range
of services in the field of marketing, communications & promotions. These include planning,
creating & producing the advertising; media selection & research. The full service agency is
composed of various departments; each is responsible to provide required inputs to perform
various functions to serve the client. A typical organization structure of a full service agency
often has five functional areas namely: account management, creative development &
production, media planning & buying, account planning & research and internal services.
1. Account management or Account Services:
The account management department acts as liaison between the client & the agency.
Account executive’s job requires high degree of diplomacy & tact as misunderstandings may
lead to loss of account. The account executive represents the client by explaining the firm’s
point of view to all agency personnel working on the account & also represents the agency
point of view to the client. He/she is also responsible to gain knowledge about the client’s
business & advertising objectives. The ideal account executive has a strong marketing
background & a deep understanding of all aspects of advertising process.
The account executive is responsible to formulate the basic advertising strategy
recommended by the agency & obtain the client approval for media schedules, budget &
rough ads or storyboards. The next task is to make sure that the agency personnel produce the
advertising to the client’s satisfaction. Once the client (or the client & the agency together)
establishes the general guidelines for a campaign or advertisement, the account management
department supervises the day-to-day development within these guidelines. The account
management in a major agency has three levels: management supervisor, who provides
leadership on strategic issues & looks for a new business opportunities; account supervisor,
who is the key executive working on a client’s business & the primary liaison between the
client & the agency & the account executive (as well as the assistant account executives),
who is responsible for day-to-day activities &operates like a project manager. The Account
Director is above the account supervisor. A smaller agency will combine some of these
levels.
2. Creative Development & Production
Success of an agency to a large extent depends on the creative services department,
responsible for the creation & execution of advertisements. The creative specialists are
known as Copywriters. They are ones who conceive the ideas for the ads & write the
headlines, subheads & body copy. They are also involved in determining the theme or basic
appeal of the advertising campaign, & often prepare the rough layout of the print ad or the
storyboard for TV commercial.
Creation of ad message is the responsibility of copywriters & the art department decides how
the ad should look. The art director & the graphic designers coordinate their work & prepare
the layouts for a print ad. These sketches or drawings of the ad show what it will look when it
is fully completed. The layout prepared for TV commercial is a sequence of frames showing
the commercial in still form & is called a story board.
The agency’s creative director is responsible for all the advertising produced by the agency &
supervises the work of copywriters & artists. After completion & approval of the copy,
layout, illustrations & mechanical specifications, the ad is handed over to the production
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department. Generally agencies do not actually produce finished ads, instead they hire
printers, photographers, typographers & others to complete the finished ad. For the
production of approved TV commercial, the production department may supervise the casting
of actors to appear in the ad, the settings for the scenes & selecting an independent
production studio. The production department sometimes hires an outside director to
transform the creative concept into a commercial.
Creation of an ad often takes several months & may involve many people. A major problem
with large agencies handling many accounts is coordinating the creative & production
processes. The responsibility of traffic department is to coordinate all phases of production &
ensure that the ads are completed on time to meet the media deadlines.
3. Media Planning & Buying:
Agencies that don’t rely on outside media specialists will have a media department that
recommends to the client, the most efficient means of delivering the message to the target
audience. Media planning takes into account all decisions regarding the time & place of
advertising in addition to the selection of media. A media plans outlines how advertising time
& space in various media will be used to achieve the marketing objectives of the company
through advertising. Its basic purpose is to select the right media (media vehicle) in order to
reach the right target audience so as to have desired response.
4. Account Planning & Research:
A full-service agency usually has a separate department specifically devoted to planning & to
do research. Today the emphasis in agency research is on developing an advertising message
that focuses on the consumer’s perspective & relationship with the brand. An account planer
is a type of planner who gathers all available intelligence in the market & consumers & acts
as the voice of the consumer. Account planners are strategic specialists who prepare
comprehensive recommendations about the consumer’s wants, needs & relationship to the
client’s brand, & how the advertising should work to satisfy those elements based on insights
they derive from consumer research. Most major agencies conduct consumer research to
make the advertising more focused & appropriate to the target audience. They also purchase
research from companies that specialize in this area.
5. Internal Agency Department:
The departments that serve the operations within the agency include the traffic department &
print production, as well as the more general financial services & human resources or
personnel. The traffic department is responsible for internal control & tracking of projects to
meet deadlines. The account executive works closely with the assigned traffic coordinator or
traffic manager to review deadlines & monitor progress. The traffic department is the
lifeblood of an agency, & its personnel keep track of everything that is happening there.
Taking a layout, a visual, & a page of copy & turning them into a four-color magazine page
or a full-page newspaper advertisement is the work of the print production department.
DIFFERENT TYPES OF ADVERTISING AGENCIES:
The following are the different types of ad agencies:
1. Full Service Ad agencies:
It includes four major staff functions: account management, creative services, media planning
& buying & account planning. A full-service advertising will have its own accounting
department, a traffic department to handle internal tracking on completion of projects, a
department for broadcast & print production (usually organized with creative department, & a
human resources department
2. Specialized Agencies:

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Many agencies do not follow the traditional full-service agency approach. They either
specialize in certain functions (writing copy, producing art, or media buying), industries
(health care, computers, agriculture, and business-to-business communication).
a. Specializing in financial advertising: in India we have agencies specializing in financial
advertising e.g. DAVP (Directorate of Advertising Visual Publicity) which publicizes
government’s policies and programmes. Example: Ogilvy Financial.
b. Strategic planning: Ad agencies are extending strategic planning functions to
complement client companies' marketing functions. While the focus has always been on the
consumer in order to add value to the client's brands and strategy, Rediffusion DY & R took a
big leap forward recently to offer a brand new service in the area of strategic market planning
to its existing clients. Looking at a new stream of communication, Rediff DY&R is expected
to help its existing clients in evolving categories such as telecom to help define and identify
new consumers.
c. Brand Consultancies: There are brand consultancies being floated by agencies such as
FCB Ulka's Cogito Consulting and Contract's Core Consulting, which have been trying to
add value to the marketing and branding functions of clients. Client pressure to reduce
agency compensation has seen a rapid decline of several `think' departments in many agency
networks.
3. Creative Boutiques:
Such an agency provides only creative services. These creative boutiques have grown in
response to advertisers’ desire to use only the high quality creative talent of an outside
service provider & rest of the functions are completed within the advertiser’s organization.
Many full-services agencies too sub contract work to creative boutiques when they want to
avoid increasing full time employees or are very busy. These boutiques usually work on
agreed fee basis.
Examples of creative boutiques are:
1. RMG David
2. Vyas Gianetti Creatives
3. Chlorophyll

4. Media Buying Services:

There are independent agencies specializing in media buying services & have being
experiencing strong growth. Advertising media buying has become complex with the increase
in specialized media. Clients & ad agencies generally develop their own media strategies &
contact media buying services to execute them. Agencies offering this service buy large
chunks of space & time, receiving large discounts, & save money for clients & small ad
agencies on media purchases.
Examples of media buying agencies are:
1. Mindshare
2. Initiative Media (LOWE)
3. Zenith Media (Bates, Saatchi & Saatchi)
4. Optimedia (Publicis)
5. Starcom (Leo Burnett)
6. Fulcrum (HTA)
5. The In- House Agency:
It is owned & operated by advertiser & handles large sums of advertising money. The
substantial advertising money paid to outside agencies in the form of media commissions
goes to the in-house agency.
Some companies exclusively use in-house agency, while others are flexible & combine in-
house agency efforts with those of independent outside advertising agencies. Advantages of
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in-house agency are cost savings, more control on activities & increased coordination. The
disadvantage is the limited experience, less objectivity & it is less flexible.
Reasons for using in-house agency include advertiser’s bad experience with outside agencies,
gaining increased & very useful knowledge & understanding of the market by working on
advertising & other promotions for company products/services, & time savings. Some
companies use in-house advertising agency simply because of their belief that they can do a
better job than an outside agency could.
Critics of in-house advertising agency system say that the advertiser’s in-house agency efforts
cannot match the exposure, experience & objectivity of outside as agencies, & also the range
of services provided by them. The supportive arguments are that outside agencies attract the
best creative talents; their personnel are highly skilled specialists & have more varied
perspective of advertising problems. An in–house agency personnel may have a narrow
perspective & may become stale because of working on same products or services, while
outside agency may have different people with varied backgrounds & ideas to work on
accounts. The advertiser can change the ad agency if not satisfied, but changes in an in-house
agency can be accomplished rather slowly & could prove to be more disruptive.
Examples of in-house agencies in India are:
1. Levers - Lintas (previously)
2. Videocon – Confidence
3. Reliance – Mudra
6. Virtual Agencies
A recent phenomenon is the cogency that operates like a group of freelancers. This type of
agency abandons conventional office space. In a virtual agency, staff members do not have
fixed offices; they work at home, or at their clients’ offices. It translates into lower overhead
for clients & lower hourly cost to clients.
7. Satellite Agencies or Subsidiaries of Large Agencies or Second Agency.
Bigger agencies these days form smaller subsidiary agencies called satellite agencies. It is a
sensible way for a big agency to offer nimbleness and personal service of a small shop.
Lowe has set up Karishma as its subsidiary. The connection with the parent agency helps the
subsidiaries in terms of a few initial accounts and talents to create good copies. Subsidiaries
can have fresh, creative approach and can cater to smaller accounts. Subsidiaries can also
take up a competing firm’s account. Subsidiaries consolidate business and improve market
share. But it can also draw on the parent agency, say, by taking advantage of its clout as a
media buyer. Forming subsidiary does not mean partitioning a little office space and putting a
new sign-board. It must be totally independent resource-wise.

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