Module 2

Advertising Agency:
Type of agencies
Services offered by various agencies
Criteria for selecting the agencies
Evaluation
Top Ad Agencies – World (2017)
Advertising Firms Scope of Work

BBDO Worldwide Commercials, print advertisements

DDB Worldwide Motion graphics

Droga5 Prototyping, experiential marketing, brand strategy

Ogilvy & Mather Consumer analysis, digital marketing, customer engagement

MullenLowe Group Public relations, performance analytics, digital marketing

Wieden + Kennedy Commercials, music videos

 Top Ad Agencies – India (2017)
Scope of Work
Advertising Firms
Clients
Consumer analysis, digital marketing, customer engagement
Ogilvy & Mather
Cadbury Dairy Milk and Vodafone
GWT Hindustan Advertisement and marketing
Thompson Associates Nestle, Unilever
advertisement, web design, consultancy, social media,
Rediffusion-dy&r promotions, and program setups
Exide, Hamdard, Emami, ITC, Amway,
India’s largest integrated marketing communications and
Mudra
services network: Media, OOH, Retail and Experiential
Communications Ltd
HDFC, Asian Paints, Akai, Reebok, Bata, Future Group,
(DDB Mudra)
Ashok Leyland, Cipla, and Aircel
Mccann-Erickson Thrice “Global Agency of the Year” by Adweek
India Ltd MasterCard commercial, Coca-Cola, and Nescafé
 Participants in the IMC Process
Advertiser
Advertiser (Client)
(Client)

Advertising
Advertising agency
agency

Media
Media organizations
organizations
Direct-response
Direct-response Sales
Salespromotion
promotion
agencies
agencies agencies
agencies

Marketing
Marketing communications
communications
specialist
specialist organizations
organizations
Public
Publicrelations
relations Interactive
Interactive
firms
firms agencies
agencies
Collateral
Collateral services
services
 Advertisers or Client
• Have the products to be marketed
• Provide funds for ads and promotion
• Develop mktg program
• Make final decisions regarding ads and promotions
• Can have advertising department or an in-house agency
 Advertising agency
• A specialized organization which assist the companies in
developing, preparing and executing promotional
programs
– Independent business
– Works for clients / advertisers
– Composed of creative people
– Provides various services to the clients
– Chargers fee for the service
 Marketing Communication Specialist Organizations

• Direct response agency develops and implements direct

marketing programs
• Sales promotion agency develops promotions programs
(contests, offers, samples, etc)
• Interactive agency develops websites
• PR firm generates and manages publicity
 Media Organizations
• Provide environment for the firm’s marketing
communications message
• Editorial / program content to attract consumers so that
advertisers are willing to buy time and space
• Primary objective is to sell itself in a way for companies
to reach their target market with their messages effectively
 Collateral Services
• Wide range of support functions used by advertisers, ad
agencies, media organizations and specialized marketing
communications firms
• Can be individuals or companies
• Perform specialized functions that the above said parties
don’t take up (Ex: marketing research, package design
firms, consultants, photographers, event sponsorship
firms)
 Organizing for Advertising and Promotion
• The way a company (client) organizes depends on:
– Its size
– The number of products it markets
– The role of advertising and promotion in the marketing mix
– The budget
– Its marketing organization structure

• 2 ways of organizing:
– Centralized
– Decentralized
 Advertising Dept. Under Centralized System
President

Research and
Production Finance Marketing Human resources
development

Marketing
Advertising Sales Product planning
research
 Pros & Cons of a Centralized System
Better
communications Less goal
Less goal
involvement
involvement
Fewer
personnel
personnel The
Longer
Longer
Centralized response time
response time
System
Continuity
Continuity
Impractical forfor
Impractical
multiple brands,
multiple brands,
More products, divisions
products, divisions
More top
top
management
management
involvement
involvement
 Decentralized Advertising System
Corporate

Production Finance Marketing R&D Human

Resources

Sales Product Marketing

Management services

Brand Advertising Marketing

Manager Dept Research

Ad agency Sales promotion

Brand
Manager Package design
Ad agency Merchandising
 Pros and Cons of Decentralization
Ineffective decision
making
Concentrated
attention

Internal conflicts
Rapid problem The
response Decentralized
System
Unequal distribution
of funds
Increased
flexibility
Lack of
Authority
 Marketers of the Year 2016

Sanjiv Mehta, MD & CEO, HUL

Acharya Balkrishna, Managing Director, Vipul Prakash, CMO,
Patanjali Ayurved Pepsico India

Delna Avari, Former Head of Marketing Communication Kirthiga Reddy & Umang Bedi,
& Services, Tata Motors and Director, Concorde Motors Facebook India
Creating Eye-catching ads play a vital role in
advertising management
Creating Eye-catching ads play a vital role in
advertising management
Creating Eye-catching ads play a vital role in
advertising management
 Types of Advertising Agency
1. In-house agency
2. Advertising agency
1. Full Service Advertising agencies
1. Account services
2. Marketing services
3. Creative services
4. Management and finance
2. Creative boutiques
3. Media buying services
In-House Agencies

Benetton’s in-house agency works with

outside agencies to develop ads
 Pros & Cons of In-House Agencies

Cost
Cost Less
Less
savings
savings experience
experience

The
The
More
More Less
Less
control
control
In-house
In-house objectivity
objectivity
Agency
Agency

Better
Better Less
Less
coordination
coordination flexibility
flexibility
 In-house agencies
• The percentage of brands taking their digital efforts 
in-house grew significantly in 2015, with 27% of brands now
claiming to work with no agencies for their digital marketing,
more than double the figure from the same study in 2014.
• 2014: Apple was creating some of its advertising work
internally
• 2015: Facebook campaign from its in-house unit The Factory
• Internal teams -- from Specsavers to Jaguar Land Rover --
are continuing to win awards for their creative output.
 The Ad Agency’s Role
• Reasons for using an ad agency

– Highly skilled specialists

– Specialization in a particular industry
– Objective viewpoint of the market
– Broad range of experience
 Skilled Specialists

Artists
Artists Writers
Writers Researchers
Researchers

Photographers
Photographers Media
Media Analysts
Analysts Other
Other Skills
Skills
 Full Service Agencies
Planning advertising
Planning advertising
Performing research
Full range of marketing Performing research
Creating advertising
Full range of marketing
communication and
Creating advertising communication
promotion and
services
promotion services Selecting media
Selecting media
Producing advertising
Producing advertising

Strategic market Interactive capabilities

Strategic
planningmarket Interactive capabilities
planning

Sales promotions Non advertising services Package design

Sales promotions Non advertising services Package design

Direct marketing Public relations and

Direct marketing Public relations and
publicity
publicity
 Typical Full-Service Agency Organization
Board of
directors

President

VP creative VP account VP marketing

VP management
services services services
and finance

Writers Print
Art directors production Sales
Media
Promotion
Account
TV supervision
production
Office
Research Finance
management

Account
Traffic Accounting
Executive

Personnel
 Services Provided by Agencies

Agency
AgencyServices
Services

Marketing
Account Services Marketing Creative Services Mgmt & Finance
Account Services Services Creative Services Mgmt & Finance
Services

The link Research Creation, Accounting

Theagency
between link Research
department Creation,
execution of ads Accounting
between agency department execution of ads Finance
and client Finance
and client May include Copywriter
Mayplanners
include Copywriter Human
Managed by the account artists, other Human
Managed resources
account by the account planners artists,
specialistsother resources
account Media dept. specialists
executive Media dept. New business
executive obtains media New business
obtainstime
media generation
space, generation
space, time
 Account Services
• The link between ad agency and its clients
• Account executive serves as a liaison
– Understands the marketing and promotion needs of the client
and interprets them to the agency
– Coordinates agency efforts in planning, creating and producing
ads
– Presents agency recommendations to client for approval
– Depending on the size and budget of the client, 1 or more
executives are assigned
 Marketing Services
• Research department
– Gather, analyze and interpret information that is useful in developing ads for
the client
– Employs both primary and secondary research
– Conducts pre-test and post-test
• Account planners
– Gather information relevant to the client’s product / business that can be used
in developing creative strategy and other aspects of IMC
• Media department
– Analyses, selects and contracts for space or time in media
– Must know the audiences, media reach, rates, and target market match
– Review information on demographics, readership, viewership, etc.
 Management and Finance
• Large agencies employ admin, managerial and clerical
staff to optimally layout budget and maximize
productivity
 Creative Services
• The creative services department is responsible for the creation and
execution of advertisements
• Copywriters are the individuals who conceive the idea for the ad and
write the headlines, subheads and body copy(words constituting the
message)
• The art department is responsible for how the ad looks.
• Print ad-art director and graphic designer prepare layout(drawings that
show how the ad looks)
• TV commercials(the layout is called as a story board. It is a sequence
of frames or panels that depict the commercial in still form.)
 Creative Boutiques
• Creative services providers
• Companies wanted to use the creative services of an outside agency (creative boutiques)
while retaining control of other functions internally
• Small ad agencies that provide only creative services.
• They have creative personnel like writers and artists on staff but do not have media,
research or account planning capabilities
• Most of them work directly for companies, full service agencies subcontract work to
them when they are busy. They are compensated on a project or a hourly fee basis
• Advantages:
– Their ability to turn out inventive creative work quickly and without the cumbersome bureaucracy
and politics of larger agencies.
– Many companies prefer working directly with a smaller creative boutique because they can get
more attention and better access to creative talent than they would at a larger agency.
 The Role of Creative Boutiques

Creative
Provide only creative services
Boutiques

Full-service agencies may subcontract with

creative boutiques

Ability to turn out inventive creative work

quickly
 Media Buying Services
• Specialize in buying media (television and radio time in
particular)
• Agencies and clients hire them after creating a media
strategy of their own
• Save money on media purchases for small clients /
agencies
• Paid fee or commission
 Specialized Media Buying

Media Specialist Specialize in buying media, especially broadcast

Companies time

Agencies and clients develop media strategy

Media buying organizations implement the

strategy and buy time and space
 Criteria for Selecting and Ad Agency
1. Reputation
2. Understand problems
3. Creativity- With simplicity
4. Management- Sound track record
5. Ability- to understand client’s problem/ objective
6. Stability
7. Case history- Work produced for other clients in past
8. Compatibility- personal equation with client
9. Presentation
10. Lowest outflow of key personnel
11. Lowest loss of clients.
Methods of Agency Compensation
Commissions
from media

Fee, cost, and incentive-based

systems

Percentage
charges
 Agencies: Compensation
Media Commissions

Agency Agency
Ad rate Agency
buys ad bills client
card keeps
at 15% full ad
price: $15,000
discount: amount:
$100,000 difference
$85,000 $100,000
 Agencies: Compensation
Markups

Agency
Agency Agency
Materials bills for
buys bills
cost materials
materials $100,000
$85,000 plus a
for (cost plus
17.65%
campaign markup)
markup
 Agencies: Compensation
Fees

Fee-
Incentive
commission Straight-fee
system
combination (retainer)
method
 Evaluating Agencies

Financial Audit Qualitative Audit

Verify costs, expenses Planning

Personnel hours charged Program development

Payments to media Implementation

Payments to suppliers Results achieved

Value addition by Ad Agencies
Integrated
disciplines &
New media functions
guidance,
solutions Creative ideas

Brand driver
evaluation
Collaboration

Talented Ideas/programs for

people multi comm.
programs
 Loyalty to a Single Agency

• The "Amul Girl" was conceived in 1966 by an agency called Advertising and Sales Promotions led by Sylvester daCunha, soon
after it was appointed by Dr Verghese Kurien, head of GCMMF and father of India’s "White Revolution" – the world’s biggest
dairy development programme.

• The first Amul billboard was created by daCunha and art director Eustace Fernandes. In 1969, daCunha Communications was
formed and the account moved to the new agency.   

• Rahul daCunha – Sylvester’s son, who now runs the shop – is engaged in a lot more than the posters and print ads, but they
remain the indelible symbol of Amul for a large part of India.

•Copy writer is  Manish Jhaveri and Jayant Rane is the artist who has been sketching Amul cartoons for a quarter-century
 Why Agencies Lose Clients?
Personality Conflicts
Poor Declining
&
performance sales
Personnel changes

Poor Changes in size of Payment

communications client or agency conflicts

Unrealistic Conflicts of Policy Changes

Client demands interest

Conflicts over mktg Change in Lack of Integrated

/ creative strategy client’s strategy Mktg capabalities
 How Agencies Gain Clients?

Referrals Presentations

Solicitations

Public Relations Image, Reputation

Specialized Services
Direct Marketing Agency Activities
Direct-Marketing
Agencies
Database
Media services
management

Direct Database
Creative
mail development

Research Production
 Direct Marketing Agency - Departments

Departments in a typical direct-marketing agency

1. Account management
2. Creative
3. Media
4. Database development and management
 Sales Promotion Agencies - Activities
Promotional planning

Creative research

Tie-in coordination

Fulfillment

Premium design and manufacturing

Catalog production

Tie-in: Designating a sale in which the buyer in Contest/sweepstakes management

order to get the item desired must also purchase
one or more other, usually undesired, items.
Functions Performed by Public Relations Firms

Strategy Public
Special events
development affairs

Generating News releases, Managing

publicity communication crises

Lobbying Research Coordination with

Promotional areas
Functions Performed by Interactive Agencies

Web
banner ads CD-ROMs

Interactive Media Text messages

Web sites
Creation

Search engine
Kiosks
optimization
Functions Performed by Mktg Research Agencies

Help clients under-

stand target audience

Qualitative research

Quantitative studies
 Pros and Cons of Integrated Services
+ Positive - Negative

Greater synergy Budget politics

Convenience Poor communication

Single image for

No synergy
product or service
 Obstacles to Implementing IMC
• Key obstacles
– Lack of people with the broad perspective and
skills to make it work
– Internal turf battles
– Agency egos
– Fear of budget reductions
– Ensuring consistent execution
– Measuring success
– Compensation