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Advertising World

Participants in the IMC Process

Marketing Communications Specialist Organization

Media Organizations

Advertiser (Client)

Advertising Agency

Collateral Services

Direct Response Agencies

Sales Promotion Agencies

Interactive Agencies

Public Relations

Firms

“THE CONSUMER”

The client is ultimately a consumer for an advertising agency.

The company wants an ad to be prepared keeping in mind the final end consumer

4

Consumer in the Real World

Social class

Geo-politics

Rituals

Family Values

ReferenceGroups

(membership/aspiration)

Race /Ethnicity

Gender

Culture

Community

ObjectMeaning

Factors Affecting Consumer Decision Making

SUBCULTURESSUBCULTURES

MEDIAMEDIA

NEWSNEWSMAGAZINESMAGAZINES

RADIORADIOTELEVISIONTELEVISION

DIRECT MEDIADIRECT MEDIABLOGSBLOGS

INTERNET INFOINTERNET INFO

NEEDSNEEDS

PRICEPRICEPACKAGINGPACKAGING

ADVERTISINGADVERTISINGPROMOTIONPROMOTION

PERSONAL SELLINGPERSONAL SELLING

MARKETER-MARKETER-CONTROLLEDCONTROLLED

STIMULISTIMULI

EDUCATIONEDUCATION

VALUESVALUES // ATTITUDESATTITUDES

PASTPASTEXPERIENCEEXPERIENCE

PERSONALITYPERSONALITYPLEASUREPLEASURE

GENDERGENDER

CULTURECULTURE

LIFE-STYLELIFE-STYLE

SOCIALSOCIALCLASSCLASS

REFERENCEREFERENCEGROUPSGROUPS

FAMILYFAMILY

SITUATIONALSITUATIONALFACTORSFACTORS

CONSUMERCONSUMERDECISIONSDECISIONS

• Keeping & understanding all these in mind, an ad agency works.

Advertising AgencyAgency –of-record (AoR)

• There are special groups which operate as consultants and who aid either the advertiser, the media firm or the media in the development of the ad.

• The ad agency is an independent company set up to render specialized services in advertising in particular & marketing in general.

• Many companies have their own active advertising departments which develop the ad message and select proper media for its execution.

• While there are special service groups which operate as consultants and who aid the advertiser.

• The advertiser should select an advertising agency on the basis of compatibility, agency size, agency stability, agency team service, selling attitude, creativity & problem solving approach

• Previously ad agencies started as space brokers for handling of the advertisements placed in the newspapers.

• It may be a full scale agency or part scale agency.

• Sometimes, several agencies in the same area because they believe the competition will result in better work

Why an advertising agency?

• Provides specialized services

• Objective advice

• Experienced staffing

• Tailored management of all advertising activities and personnel.

2 primary roles of agencies

• idea generation• brand-building

Idea generation Brand Building

Ideas about promotion, product development, marketing strategies,

• To create and direct communication about a product or service so that the brand is perceived to have a unique value or brand personality.

Other Functions• complete a marketing analysis• develop an advertising plan• prepare a creative strategy• create advertising executions• develop and implement a media plan• handle billing and payments• integrate other marketing communications

Evolution of advertising agency• 1840• Some people started working as Sales

representatives / space brokers for newspapers on a commission basis.

• Advertiser media= clients for agency• This era lasted from 1840-1876• Little emphasis on advertising planning & media

schedule.• J.Walter Thompson set up a shop in Mumbai in

1929 as a part of UK based agency for eastern operations. It was India's first advertising agency.

4 functions of an Ad Agency

• Account Management

• Creative Service

• Media Service

• Research Service

Advertising Agency Organization

• Develop advertising copy and campaigns

• Copywriters, production people, and creative directors

Creative Services

Account Management

Media Services

Research Services

creative department• executive & group

creative directors • creative director• associate creative director• copywriters• art directors• broadcast producers• print production managers• traffic coordinators

Print

Traffic

ProductionBroadcast

Production

Copy Spvr. &Copywriters

Art Supervisor& Art Directors

CreativeGroup:

AssociateCreative

Director (ACD)

CreativeDirector (CD)

ExecutiveCreative

Director (ECD)

StrategyReviewBoard

Advertising Agency Organization

• Selecting the best advertising media

• Media planners develop overall media strategy

• Media buyers procure the selected media

Creative Services

Account Management

Media Services

Research Services

• media director

• associate media directors

• media supervisors

• media planners

• media buyers

• media analysts

Analysts

MediaPlanner

MediaBuyer

MediaSupervisor

AssociateMedia

Director

MediaDirector

MediaMediaPlanPlan

media department

Research Services

• Study clients’ customers’ buying habits, purchase preferences, and responsiveness

• Focus groups, mall intercepts, acquisition of syndicated research data

Creative Services

Account Management

Media Services

Research Services

• research director• research project managers• research assistants• outside research specialists

research department

ResearchSuppliers

Outside

ResearchAssistants

ProjectManagers

ResearchDirector

ResearchResearchReportReport

research department• interpret market environment

– gather and analyze research data. – primary and secondary techniques

• determine consumer needs/perceptions– understand problems

• advise how ads can meet strategic goals– help find solutions ResearchResearch

ReportReport

Advertising Agency Organization

• Link the agency with the client

• Act as liaisons so that the client does not need to interact directly with several different service departments and specialists

Creative Services

Account Management

Media Services

Research Services

• account management director• management supervisor• account supervisors• account executives• assistant account execs• account coordinators • traffic

Traffic

Asst. AccountExecutive

AccountCoordinator

AccountExecutive

AccountSupervisor

Management.Supervisor

Account Mgmt.Director

account management

Classification of agencies

On the basis of Services

On the basis of

organizational set up

Location ( in or Outside)

the organization

Centralized System

President

Production Finance MarketingResearch

and Develop-

mentHuman

Resources

Advertising Marketing Research Sales Product

Planning

On the basis of

organizational set up

FewerPersonnel

BetterCommunications

ContinuityOf Staff

LongerResponse Time

Less GoalInvolvement

BetterCommunications

FewerPersonnel

ContinuityOf Staff

Less GoalInvolvement

LongerResponse Time

Pros & Cons of Centralization

TheCentralized

System

+ Positive+ Positive - Negative- Negative

Can’t DoMultiple Product

Lines

Decentralized Brand Management System

Production Finance

Sales

BrandManager

Ad agency

BrandManager

Ad agency

ProductManagement

SalesPromotion

PackageDesign

Merchandising

AdvertisingDepartment

MarketingResearch

MarketingServices

Marketing Researchand

Development

HumanResources

Corporate

Competition for Resources

Competition for Resources

Lack of Experience

in IMC

Lack of Experience

in IMC

Rapid ProblemResponse

ConcentratedAttention

IncreasedFlexibilityIncreasedFlexibility

Rapid ProblemResponse

ConcentratedAttention

Pros & Cons of Decentralization

TheDecentralized

System

+ Positive+ Positive - Negative- Negative

Lack ofAuthority

Roles of an Advertising Manager

Advertising Functions

• Making the ad strategy in collaboration• Evaluation of the ad• Determining the ad efforts• Coordinating with the agency• New developments in advertising• Making the ad budget.

Managerial functions

• Making advertising understandable• Representing the organization• Goal setting for advertising• Administration in general• Creative thinking wrt his functions• Participation with higher ups about his

function

Classification of Agencies on the basis of Extent of their

Services

• Full service Agencies• Limited Service Agencies (A La Carte Agency)• Specialized Agencies

On the basis of Services

Creating advertising

Planning advertising

Producing advertising

Performing research

Selecting media

Sales promotion and training

Strategic market planning

Trade show materials

Package design

Planning advertisingCreating

advertisingProducing advertising

Performing research

Selecting media

Strategic market planning

Sales promotion and training

Trade show materials

Package design

Full-Services Agencies

Full Range of Marketing

Communication and Promotion

Services

Non-Advertising Services Public relations

and publicity

John Monsattal’s reasons for FSA

• Sales oriented creative work• Synergistic experience• Centralization of responsibility &

accountability• Greater objectivity• Simplified coordination & administration• Professional strength in marketing area• Stronger pool of talents.

Advantages• In-depth knowledge

and skills• Obtaining

negotiating muscle with the media

• Coordinating advertising and marketing efforts

Full-service advertising agency

Disadvantages• Some control is lost• Larger clients are

favored over small clients

• Occasionally inefficient in media buying

Limited Service Agencies

Artists

Ad Agencies Have Skilled Specialists

Writers Researchers

Photographers Media Analysts Other Skills

The Role of Creative Boutiques

CreativeBoutiques Provide Only Creative Services

Full-Service Agencies May Subcontract With Creative

Boutiques

Provide Only Creative Services

Full-Service Agencies May Subcontract With Creative

Boutiques

Other Functions Provided by the Internal Client Departments

Specialize in Buying Media, Especially Broadcast Time

Agencies and Clients Develop Media Strategy

Agencies and Clients Develop Media Strategy

Specialize in Buying Media, Especially Broadcast Time

Media Buying Can Be Specialized

Media Buying

Services

Media Buying Organizations Implement the Strategy and

Buy Time and Space

DirectMail

Data BaseManagement

Research

Creative

Media Services

Creative

Media Services

Research

DirectMail

Data BaseManagement

Direct Response Agency Activities

DirectResponseAgencies

Production

Contest/Sweepstakes Development

Contest/Sweepstakes Development

Promotion Planning

Creative Work

Research

Coordination With Advertising

Premium DesignPremium Design

Coordination With Advertising

Research

Creative Work

Promotion Planning

Data Base Marketing

Activities performed by Sales Promotion Agencies

Audio

Special Effects

Video

WebBanner Ads

Kiosks

Web Sites

CD-ROMs

Special Effects

VideoAudio

KiosksCD-ROMs

Web SitesWebBanner Ads

Functions performed by Interactive Agencies

Interactive Media Creation

DigitalContent

Animation

Planning and Implementing

Research Planning and Implementing

Research

Information Application

Analysis and Interpretation

Primary Data Collection

Qualitative & Quantitative

Secondary Data Collection

Primary Data Collection

Qualitative & Quantitative

Analysis and Interpretation

Information Application

Marketing Research Companies

StrategyDevelopment

GeneratingPublicity

LobbyingPublicAffairs

DamageControl

ImagePortrayal

StrategyDevelopment

GeneratingPublicity

LobbyingPublicAffairs

DamageControl

ImagePortrayal

Functions performed by Public Relations Firms

ProgramPlanning

Participants in the IMC Process

Full service & Limited Service Ad Agencies

Media Organizations

Advertiser (Client)

Advertising Agency

Collateral Services

Direct Response Agencies

Sales Promotion Agencies

Interactive Agencies

Public Relations

Firms

Collateral Services offered by an advertising agency

• Meta markets• They include marketing research

companies, package design firms, consultants, photographers, printers, video production houses, event marketing services companies

In House Agencies

• An organization may decide to establish its own operation for all services of an advertising agency with in its own structure.

• As the name suggests the agency is owned & operated under the direct supervision of the advertiser.

MoreControl

CostSavings

BetterCoordination

LessObjectivity

LessExperience

LessObjectivity

LessExperience

BetterCoordination

MoreControl

CostSavings

Pros & Cons of In-House Agencies

TheIn-houseAgency

+ Positive+ Positive - Negative- Negative

LessFlexibility

Selecting an agency• Have they fully

understood the brief?• Do they know how to

use market research? Can they contribute to our thinking here?

• Is their strategic thinking sound?

• Is it imaginative? Have I learned anything useful from it?

• Are they professional and businesslike?

• Can I work with their senior people? And will they be actually working on my business?

• Are their capabilities high in all key areas – management, strategy, creative, media?

• Do they work well as a team – both among themselves and with our people?

Selecting an agency• Is their creative work

of a high quality?• Is this confined to TV,

or does it go across all media?

• Does this include below-the-line? New media? Can they offer an integrated service?

• Do they have real expertise in the specialist areas which we are looking at, egl direct marketing, new media?

• Can they work with us internationally (now or in the future)

• How do they propose to evaluate the effectiveness of the campaign?

Selecting an agency• What is their attitude to

costs? Will they save us money?

• How will they relate to our media buying agency/other specialists?

• How important to them will our account be? Will we be one of their larger accounts, or simply a small fish in a very large pool?

• Will they fit with our ways of working? Are they willing and able to be business partners, or will they simply be suppliers? (This depends – of course – on how we see our own style of dealing with agencies)

CommissionsMethod

Cost-PlusAgreements

PercentageCharges

FeeArrangements

Incentive-BasedPayment

CommissionsMethod

Cost-PlusAgreements

PercentageCharges

FeeArrangements

Methods of Agency Compensation

CompensationMethods

Media Commission Mark up/Percentage charge

• Oldest method• Fixed % from the

media whenever it is booking advertising space in print or a slot in electronic media on behalf of its client.

• Administrative charges are calculated,

• Fix % of total amount & expenses is billed to the client.

Fees Incentive based

compensation• Straight fees or Fixed Fees method

( the media commissions earned are returned to the advertisers or are credited against the fees)

• Fee Commission method (fixed monthly fees is charged by the agency & commissions earned from media too are retained)

• Performance based compensation

• Commission + fee system combination

• Amount= effectiveness of the ad campaign

• Advertising goals (DAGMAR) & other factors.

• Reward or Penalize ( by paying only part of the decided fees)

Poorperformance

Unrealisticdemands

Personalityconflicts

Personnelchanges

Conflict ofinterests

Changesin strategy

Decliningsales

Paymentconflicts

Policychanges

Poorperformance

Poorcommunications

Unrealisticdemands

Personalityconflicts

Personnelchanges

Conflict ofinterests

Changesin strategy

Decliningsales

Paymentconflicts

Why Agencies Lose Clients

Referrals

How Agencies Gain Clients

Solicitations

Presentations

Public Relations Image, Reputation

Group Assignment

• Detailed history of any agency of your choice.

• Story• Man power behind its success• Their list of clients ( at least 8)• Their work/ ads

Next Class

• Types of advertisements• Appeals used in ads• Articles & research papers related to the

same from Journals• Advertising budget• Planning the advertising media