Functioning of Advertising Agency

Prakash MudaliarPranay ParikhJignesh PrajapatiBhaumik KadiaAnand Brambhatt

Preface

Who is the Advertiser? What is an Advertising Agency? Role of an Advertising Agency. Which are the Advertising/Media Tools? Functions of an Advertising agency. What are research suppliers? How agencies get clients? What are the strengths and weaknesses of the agency?

Who is the advertiser?

• It is the core institution of the field of advertising management

• Small and large-scale advertisers can be distinguished according to the degree to which they use the facilitating institutions. At times small advertisers for budgetary reasons use only parts of the system for e.g, retail clients like say CANMART, etc.

• Advertisers differ according to the markets they serve, the goods and services they produce, and the media they use. In the private sector, advertisers can be distinguished according to whether they are predominantly consumer, industrial or retail advertisers

What is an advertising agency?

• It is an independent organisation of creative people and business people who specialise in developing and preparing advertising plans, advertisements, and other promotional tools.

• The agency purchases advertising space and time in

various media on behalf of different advertisers.

Role of Advertising Agency Advertising is a large and highly competitive industry occupying a

very important position in most developing and developed economies. With a plethora of brands on offer, the need to inform, persuade and convince the customer is becoming increasingly important.

And this is where the tools of Advertising and Advertising Agencies that use this tool step in!

A number of Businesses, Corporations, Government Organizations and Non Profit set-ups hire advertising agencies  to advertise their products, brands and services to present and prospective customers.

Various Functions of Advertising Agency

Brand Management

Corporate Communictions

Multimedia/ Website Development /Animation

3D Product Modelling

Outdoor Publicity

Sales & promotion

Studio/Printing

Various Functions of Advertising Agency

Media

Documentary Films

CD Presentations

Event Management

Advertising/Media Tools Print Media

Television Media

Radio

Internet

Direct Marketing

Outdoor

Events & Exhibitions

Brand Management

The brand is nothing but how is the company, product or service is perceived.

The agency creates the brand identity and image distinctiveness.

Corporate Communication Any company big or small, needs Communication Materials at every

stage of it’s selling process.

It’s all about informing your target segment about your offerings or establishing conviction that your solutions are what the prospects want to buy.

Ex: Corporate brochures, Corporate Stationery, company profile, product brochure or leaflet, POP material so on and so forth….

Multimedia/Animation/Website Development

The agency can lift the clients business into internet age by developing & maintaining a website.

It reinforce the company's corporate image & gives an interactive web presence.

3D Modeling/Outdoor Publicity Transforming an item or concept into an easily viewable 3D object! Using of advanced technology in the industry to generate models and

animations. Visual representation of product or concept reinforces the verbal

explanations and enables complex theories or objects to be easily clarified for increased understanding.

Having the ability to create a 3D model and animation of any concept or product for business.

Outdoor advertising, executed effectively, has a way of grabbing consumers attention and smacking them between the eyes with your message.

Sales & Promotions This includes the direct sales and other direct promotions like kiosk

selling, sampling etc.

It gives the designs that not only create the right impression for clients and visitors but also secure more sales leads and giving a real presence in the market.

Media (Planning & Buying)

The department which decides how much client money to be spend on a campaign/across media.

Negotiating the best rates for the client and trying to cut the cost of the campaign and giving the best output for the same.

Event Management From conceptualization to execution, with adequate and expert

manpower, agency organize any kind of events like product launches, seminars, conferences, entertainment events, road shows, corporate gatherings etc.

Its an important marketing tool in the hands of many companies to attract the maximum audiences in the country like ours where film stars, and sports are worshiped.

Departments Client Servicing/Account Planning

Creative Department

Media Department

Others

AD Agency

Core Functions Non Core Functions

Client Servicing Account Planning

Creative (Art & Copy)

Media (Planning & Buying)

Studio Operations

Productions (Print/Television/Radio/Outdoor)

HR

Finance Legal Administration

Head of the Agency

Creative Department Client Servicing Media Department

Art Copy Buying Planning

Media Research Agencies

Client

OutsourcingProduction

Outsource Creative

AccountPlanning

Market Research

Client Servicing/Account Planning

Client service executive is representative within the agency who understands the client’s mktg strategy and convert it to an appropriate advertising strategy. (sometime overlooks consumer needs)

So account planner keeps consumer in focus and helps in the development of appropriate advertising campaign.

With merging of two capabilities there is beginning of outstanding advertising campaign.

Client Service Executive----------------- >Dr/VP Client Service

Account Planner--------------------------- >Dr/VP Account Planning

Nowadays known as “Brand Communication specialists”.

Client Servicing

Media Creative

The Client

Advertising Operations

Creative DepartmentCreative Department The team duo responsible for the creative output in form of print ad,

radio jingle, television commercials etc, namely the artist & copywriter.

These two individuals work in a team on the campaign as the written and art element of the ad to be sync with each other for maximum impact.

Copy Writer

Creative Director

Artist

Media Department The media department in an ad agency consist of media planner &

buyer, are tough negotiator to get good rates from media.

They are responsible for deciding how much money should the client spend on a campaign and across what media.

In today competitive market there is plethora of digitized media data.

Media Planner/Media Buyer ------------- > Media Director/VP Media

Prominent media houses in country are Group M, Madison Media, Carat, Starcom and Optimum Media Solutions.

Which are the research suppliers?

• ABC (Audit Bureau of Circulation) certifies circulations of newspapers/magazines/agency faqs

• IMRB, IMRS, ORG-MARG - Research Agencies

• NRS, IRS provides readership for various dailies/magazines

• TAM provides rating points to various TV programmes while ADEX provides monitoring reports of various TV spots in the programme

Studio Operations It is responsible to convert the output of creative department into a

print ready format.

Due to digitisation studio department has considerably shrunk in size.

Some of the studio work include ad shooting, photo shooting, location finalizing, model selection, radio jingles etc.

Production (Print/Television/Radio/Outdoor) It is generally not a in-house facilities.

Mostly the works are outsourced and the production department does the coordination work with the outside suppliers for this work.

The production department is normally run by a production manager with needed couple of assistants depending upon the need.

HR Department

The department looks after the recruitment, induction, training & development, performance appraisal & compensation of the agencies employees.

Advertising is essentially a business of people having great creativity & innovation.

So the defy with HR is how to keep them motivated & thriving always.

Finance/Legal & Administration

The finance, legal & administration function is the department that keeps the agency afloat when major clients defaults on payments.

Its role is very often undermined in the ad agencies.

Agency Commission

• In case of media releases the agency earns 15% commission which is inbuilt in the media rates.

• While to create a magazine ad or any literature, the agency buys type, photography, illustrations and variety of other services or materials from outside suppliers.

• The agency pays a set fee and adds a markup to the client’s bill – typically 17.65 percent. When adding 17.65 percent to an invoice, the amount added becomes 15% of the new total.

Rs. 85 + 17.65% = Rs. 100

Rs. 100 – 15% = Rs. 85

Agency Commission The main source of revenue is the commission at 15% on the media

releases done by the agency in addition to creative fee based on a rate card & outsourced production jobs.

Nowadays its either form of a retainer ship on a monthly basis or a flat fee for a project.

Incentive System, is a new type of agency compensation. Here, the agency earns more if the campaign attains specific, agreed-on goals.

In the current market scenario agencies have began to feel pressure, because clients demanding more for less, leading to the restructuring within the agencies.

What are its strengths & weaknesses?

• Creative reputations matter a great deal in any agency’s selection. In the survey conducted by a research centre in the year 1984 following attributes of the agency were identified as most important: 1) Creativity 2) Servicing 3) Media 4) Top management 5) Marketing and 6) Research.

• From the above attributes, it was concluded that creative talent and knowing the client business and the quality of people were the most necessary strengths.

• Not knowing the client business, inadequate cost estimating, lack of creativity, poor account executives, and misrepresentation are the weak spots.

How agencies get the clients?

• Referrals:Most good agencies get clients by referral – from existing clients, friends, or even other agencies. Media representatives can also refer local advertisers to an agency they have a good relationship with.

• Soliciting for New Business:Some agencies take aggressive stance and pitch for new clients by way of cold calling.

• Reputation and Community Relations:The best source for new business is a good reputation.

Bodies GoverningAdvertising Agency

There are professional bodies that represent the advertiser, the advertising agency and the media. The names of these representative bodies are

–The Indian Society of Advertisers (ISA)–The Advertising Agencies Association of India (AAAI)–The Indian Newspaper Society (INS)

Agency Evaluation The core competence of an advertising agency is primarily the ability

to meet the requirements of the client in terms of answering three fundamental question.

What to say?How to say? When & Where to Say?

Advertising Strategy

Creative Strategy

Media

strategy

The successful measure of the advertising strategy would be to identify through tracking studies, the perceptual maps of various brands & their effect on purchase behavior.

The creative strategy essentially involves arriving at a creative work which appeals to the target segment & creates, awareness, interest, desire & ultimately purchase of the brand.

The media strategy essentially involves arriving at an optimum media plan, which delivers the maximum mileage by getting best media rates for the client.

Agency Evaluation

The client evaluates the ad agency by following criteria.

Understanding of product strategy.

Any experience in handling product category.

Reputation of the team that is going to handle the business.

Overall reputation of the agency.

Financial status.

Kinds of financial terms.

Agency Evaluation

Summary The ad agencies are ranked/survived on parameters like client

servicing, creative ability, account planning ability, 360 degree capability, partnering with client, investment in employees, innovation & thought, leadership & business development ability.

The advertising agency of today is very different from the advertising agency of yesterday and the advertising agency of tomorrow will be very different from the advertising agency of today.