The Advertising Business

Ad Agencies Roles, Structure & Functions Income and Pitching Client Agency Relationship

Why an Ad Agency?
Branding as a concept developed Brands are assets Advertising function required specialized skill sets Intra-organization bias could be reduced Outsourcing was viewed as a cheaper option
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Agencies: Roles

Develop marketing & ad plans

Agency roles

Develop ads & promotions

Purchase ad space and time

Structure of a decentralized department

Corporate

Consumer Products Division

Industrial Products Division

International Division

R& D

Manufacturing

Marketing Brand Mgr

Ad Agency

Marketing Services Sales Promotions

Package Design
Brand Mgr
Ad Agency

Merchandising

Brand Mgr
Ad Agency

The Key Players

Advertiser (client) Agency Media Supplier Audience
Uses advertising to send out a message about its products Initiates the advertising effort by identifying a marketing problem Approves audience, plan and budget Hires the advertising agency

The Key Players Advertiser (client) Agency Media Supplier Audience

Has strategic and creative expertise, media knowledge, workforce talent, and negotiating abilities
Advertising department In-house agency

The Key Players

Advertiser (client) Agency Media Supplier Audience
The channels of communication that carry the message to the audience Are also companies or huge conglomerates Mass media advertising can be cost effective because the costs are spread over the large number of people the ad reaches

The Key Players Advertiser (client) Agency Media Supplier Audience

Assist advertisers, agencies, and the media in creating and placing the ads Vendor services are often cheaper than those in-house

The Key Players

Advertiser (client) Agency Media Supplier Audience
The desired audience for the advertising message Data-gathering technology improves accuracy of information about customers Advertisers must recognize the various target audiences they are talking to and know as much about them as possible

Structure of an Ad Agency
Agency Head

Client Servicing

Account Planning

Creative Creative dir.

Media Studio/ Production

HR

Finance

Acc.Dir Art

Traffic Copy Acc. Sup.

Acc. Exec

Planners

Buyers
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Functions of different roles

Account Management
Otherwise called client servicing department Liaison between the client and the agency Understand client needs and translate company briefs into creative briefs Create advertising opportunities for the agency Ability to manage tough timelines
Brand Manager Acc. Ex/Mgr Creatives

Media Planner

Studio/Production

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Functions of different roles

Research & Account Planning
Finds out market trends, media trends Provides insights consumer needs and lifestyles through primary research Helps in better connecting the brand to its T.A. Decides on how the tone and language should be

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Account Planners research is involved - visual & headline

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Functions of different roles

Creatives
Ideates and designs ad campaigns by interpreting Acc. Planners insights and clients needs Develops ideas on the positioning and makes it interesting, true, and simple Produce print ads, TVCs, packaging designs, POP designs, direct mailers etc Copywriters, art directors, and graphic designers
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Functions of different roles

Studio/Production
Buying for print ads: type, photos, illustrations, printers, engravers Work on approved copy and visuals, scripts, storyboards, DM kits Use actors, camera operators, and production specialists

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Functions of different roles

Media Planning and Buying
Determine how a clients message can most effectively and efficiently reach the T.A. Building media plans and budget optimization Tough negotiation and attention to details In-depth knowledge of T.A. media habits, geographic market dynamics, and product market potentials
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Agencys income
Media Commissions
Agency bills client full ad amount:
Rs.100,000

Ad rate card price:

Rs.100,000

Rs.15,000

Agency buys ad at 15% discount:

Rs.85,000

difference Is kept By the agency

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Agencys income
Other Commissions Markups 17.65% on the invoice from outside suppliers
Agency buys materials for campaign Agency bills for materials plus a 17.65% markup

Materials cost
Rs.8,500

Agency bills
Rs.10,000

which is costs plus markup

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Agencys income
Fee-commission combination
Basic monthly fee + media commissions

Straight-fee or retainer fee

Charges all services together on hourly or monthly basis

Incentive system
Compensation depends on campaigns goal attainment Eg: DDB Needham has a grade point scale to evaluate campaigns

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Agencys income
Competency-based system Followed by Leo Burnett, Lintas, and a few others, which links agency remuneration to sales figures Can be a serious hindrance to brandbuilding advertising

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