ADVERTISING AGENCY

Prof.Anindita Banerji
 • Advertising is any paid form of non personal
presentation and promotion of ideas , goods or
services by an identified sponsor.
• Advertising is multidimensional. It is :
▪ A form of mass communication
What is ▪ A powerful marketing tool
Advertising? ▪ A component of economic system
▪ An art form
▪ A field of employment and a profession
Functions of Advertising

❖Communicates goods available

❖Motivates to buy
❖Reminders to use
❖Creates brand awareness
❖Provides mass appeal
❖Educates the masses
❖Persuades people
❖Creates brand image
5 Ms of Advertising

Media Message Mission

Money Measurement
An Advertising Agency
a) an independent business organisation
b) Composed of creative people
c) Who develop ,prepare, and place ads in
advertising media
d) For sellers seeking to find customers for their
goods and services
 ➢Ad Agency is a service organisation.
➢An agency has copywriters media experts,
An researchers, television producers, account
executives, and various experts.
Advertising ➢Ad Agency originated in USA in 1841.The
Agency first agency was set up by Volney. B. Palmer
in Philadelphia.
…CONTD
➢Ad agencies used to provide
space in the media.
Need for Ad Agency
• Expert services through skilled personnel
• Economical services
• Wide range of services and study
of marketing problems
• Media contacts
• Creativity in advertising
• Innovative approach
• Flexibility- an advertiser can shift
from one agency to another
Functions of an Ad
Agency
1. Collection of clients and
2. Advertisers
3. Advertising planning
4. Media selection
5. Creative functions
6. Research
7. Sales promotion
 Co-ordination

Provides guidance to clients

Functions Supports sales promotion
of an Ad Preparation and execution of ad plan
Agency
Use of expert staff

Budget control
Advantages of Ad agency

• Developing Campaigns
• Creative expertise
• Market research
• Save time and money
• branding
Types of ad agency
1. In-house agencies
- Some large scale advertisers have huge budget
so they prefer in-house agencies
- This agency undertakes all functions of an
external ad agency
- The advertiser is self dependent
- Its economical
- Sometimes they accept
outside ads
 2. Full service agencies

- These provide different types of marketing services

- They also provide services like media planning,
buying, copywriting, film-shooting, music, editing,
markerting research etc.
Types of ad
It can be classified into:
agency a. General Consumer Agencies – these agencies
mostly concentrate on consumer accounts

b. Business-to- Business agencies – These

agencies market product to other businesses
such as components for computer
manufacturers, machines used in industries, etc.
Specialised agencies – specialised in
one type of ads; ad-campaigns
- eg. Financial, Government, etc.

Creative Boutiques – Undertake only

creative functions (illustrations, lay-out,
media selection, photography, etc.)

Virtual Agencies
Organisation of an Ad Agency

Account Account Finance and

Media Creative Production
Service Planning accounting

Planning Copy

Buying Arts
 • The account Management Department is the link between
the Ad Agency and its clients

• Depending upon the size of the account and its advertising

Account budget, one or two account executive (AE) serve as liaison to
the client
Service
• The AE is responsible to collect information about the
Department clients’ business, profit goals, marketing problems and
advertising objectives
 • The AE is responsible for getting approved the
media schedules, budgets and rough ads or story
boards from the client.

Account • The next task is to make sure that the agency

personnel produce the advertising to the clients’
Service satisfaction.
Department
• The biggest role of AE is keeping the agency ahead
of the client through follow-up and
communication.
Media
Department
• The responsibility of the agency’s media
department is to develop a media plan to
reach the target audience effectively in a
cost-effective manner
• The staff analyses, selects and contracts
for media time or space. This is an
important decision as a significantly large
amount of clients money is spent on
media time or space.
• Media department is very
important deptt. in the agency
 • To a large extent the success of an Ad- Agency depends upon the
creative department responsible for the creation and execution of
advertisements

• The creative specialists are known as copy-writers

Creative
Department • They are the ones who conceive ideas for ads and write the head lines,
sub heads and the body copy
 Creative
Department

• They are also involved in deciding the basic

theme of the advertising campaign.

• They prepare rough layout of the print ad or

the commercial story board

• Creation of an ad is the
responsibility of copy writers
and the art department
decides how the ad should look.
 Production Department
• After the completion and approval of the copy and
the illustrations, the ad is sent to the production
department

• Generally agencies do not actually produce the

finished ads, instead they hire printers
photographers, engravers etc. to complete the
finished ads

• For the production of TV commercial the production

department may supervise the casting of actors, to
appear in the ads, the setting for the scene and an
independent production studio.
Public Relation Department

• Cordial relation with clients media etc. are absolutely

essential for the survival an growth of an Ad Agency.

• Here Public Relation Department plays a crucial role

• The Department acts as a link between agency and

others connected with the Agency

• The Department makes efforts for creating goodwill and

reputation in the business world in general and
advertising world in particular
Public Relation
Department
• The Department is headed by
Public Relations Officer who
has to take all possible steps
for maintaining cordial
relations with clients media
owners and society at large

• The Department has to

create good public image for
the Ad Agency
Finance and Accounting Department

• This department performs

various functions such as
accounting, finance, human
resource etc.
• This department is important
since bulk of the agencies
income goes as salaries and
benefits to employees
 How ad agencies
Gain clients

1) Referrals- clients and media

agencies give references
2)Image and Reputation
3)Public Relation-work with
civic and social groups and with
organisations, provides free
publicity
4)Presentations
Stages in the client-agency relationship

1)Pre-relationship stage
2)Development stage
3)Maintenance stage
4)Termination stage
Building a Client
Profile
• A Client Profile consists of-
1) A brief statement of the client’s business
2) A list of key client contacts and information about
each one
3) A brief history of the client’s business
4) A simple profile of clients’ customers
5) A statement of the clients’ overall business goals
6) A list of client’s competitors
Client- Agency Relationship

1) Give and take approach

2) Understanding
3) Misunderstanding should be
cleared
4) Agency should work sincerely
and honestly
5) Client should honour terms and
conditions
6) Effective communication
7) Proper rapport
Suggestions for client
a) Courtesy
b) Encourage and show enthusiasm
c) Involvement with the agency
d) Provide a thorough brief
e) Consult each other
f) Give approval to the ad plan well ahead in time
g) Treat advertising profession with respect
h) Pay the bills as per terms and conditions
i) Avoid personal favours
j) Avoid disputes ,confusions, misunderstandings
Suggestions to Agency
a) Avoid competitor’s work
b) Collect complete knowledge
c) Continuous communication
d) Procedure of compensation and communication should be cleared in the
beginning
e) Approach of the agency should be positive and constructive
f) Accept the client’s superior position
g) Client should be informed about changes
h) Discipline and punctuality should be maintained
 • When an advertiser leaves one agency and shifts to
another agency, it is termed as client turnover.
Reasons for client turnover-
a) Absence of profitable and result- oriented services
b) Use of new media
c) Absence of cordial relations
Client d) Lack of confidence
Turnover e) Changes in personnel
f) High rates
g) Change of location
h) Entry of new ad agency
i) Handling of competitor’s account
j) Absence of co-ordination
Functions of the modern ad
agency
• The multifaceted services of an ad agency can be grouped
under the following heads:
• Planning the ad campaign
• Planning below the line activities and other communication
packages
• Providing support systems
Planning the ad
campaign

• Developing the brand positioning statement

• ai)a study of the clients product or service; the
advantages and disadvantages of the product
• ii) an analysis of present and potential markets
• iii) Knowledge of factors of distribution and
sales
• b) developing the central theme or appeal to
be used in the ad
• c) developing the creative strategy
Planning the ad campaign contd…..
• Executing the strategy
• Preparing the mechanical details of the ad that is preparing the art
work
• Preparing storyboards for TVCs and filming the commercial
• In case of radio a record will be cut
• Executing the ad campaign by placing it in relevant media
• A knowledge of all the available media and means that can be
profitably used to carry the interpretations of product
 • Formulation of a definite plan and presentation to
the client
• Execution of this plan through:
• i) writing ,designing and illustrating the ads
• ii) Contracting for space , time or other means of
Planning the advertisement
• iii)Incorporation of the message in mechanical form
ad campaign and forwarding it to the media
contd…. • iv) checking and verifying insertions ,displays etc.
• v) auditing and billing
• The above activities are called above- the- line
activities as they are the direct functional activities.
 • Agencies are expected to provide innovative
programmes to reach the consumers
through Direct Marketing, sales promotions,
Planning PR activities and corporate image building
campaigns, personal selling and Internet
below-the- marketing.
line activities • PROVIDING SUPPORT SYSTEMS
• An ad agency is expected to provide
research inputs before the ad campaign and
also after the campaign.
Methods of
Agency
Compensation
• Commission Method
• In this method ad agency takes
their compensation on commission
basis.
• Agency charges for time and effort
spent in selecting and supervising
production work done by another
company.
• (e.g. printing, filming,
photoengraving ,photography,
commercial recording.)
• Amount charged is 17.65%
of the gross production cost.
Cost –Plus Agreement

• A cost-plus contract –
also termed as Cost
Reimbursement contract, is a
contract where an agency is paid
for all the expenses to a limit set
,plus additional payment to allow a
profit.

• Fixed Price contract

Is in which the contractor is paid
a negotiated amount
regardless of incurred expenses.
Percentage Charges
• Percentage based compensation is defined as any compensation that
is based on a percentage of contributions raised.
 • A fee arrangement or conditional fee is any
fee for services provided where the fee is
payable only if there is a favorable result.
Fee
arrangement • Incentive –based payment
• Pay for performance is generally given for
specific performance results rather than
simply for work.
Why agencies lose clients
• Poor performance
• Unrealistic demand
• Poor communication
• Changes in strategies
• Payment conflict
• Policy changes
• Declining sales
• Personality conflict