advertising business

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The Advertising BusinessThe Advertising BusinessAd Agencies

Roles, Structure & FunctionsIncome

Client Agency Relationship

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



• Has strategic and creative expertise, media knowledge, workforce talent, and negotiating abilities– Advertising

department– In-house agency

The Key Players



• 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



• Assist advertisers, agencies, and the media in creating and placing the ads

• Vendor services are often cheaper than those in-house

The Key Players



• 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

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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

Agencyroles

Develop marketing & ad plans

Develop ads & promotions

Purchase ad space and time

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Structure of a decentralized department

Corporate

Consumer Products Division

Industrial Products Division

International Division

R& D Manufacturing Marketing Marketing Services

Brand Mgr

Ad AgencyBrand MgrAd Agency

Brand Mgr

Ad Agency

Sales Promotions

Package Design

Merchandising

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Structure of an Ad Agency

Agency Head

Client Servicing

Account Planning

Creative Media Studio/

Production

HR Finance

Acc.Dir

Acc. Sup.

Acc. Exec

Art Copy

Planners Buyers

Creative dir.

Traffic

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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

Studio/ProductionMedia Planner

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• 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 Planner’s

research is involved- visual & headline

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• Creatives• Ideates and designs ad campaigns by

interpreting Acc. Planners insights and client’s 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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• 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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• Media Planning and Buying• Determine how a client’s 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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Agency’s income

• Media Commissions

Ad ratecard price:

Rs.100,000Agencybuys adat 15%

discount:Rs.85,000

Agencybills client

full ad amount:

Rs.100,000

Rs.15,000difference

Is keptBy theagency

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Agency’s income

• Other Commissions• Markups – 17.65% on the invoice from outside

suppliers

Agencybuys

materialsfor

campaign

Materialscost

Rs.8,500

Agencybills for

materials plus a

17.65%markup

Agency bills

Rs.10,000which is

costs plus markup

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Agency’s 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 campaign’s goal

attainment• Eg: DDB Needham has a grade point scale to

evaluate campaigns

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Agency’s 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 brand-building advertising

advertising business

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