advertising agencies

what agencies do. structure & organization and how they’re organized to do it.

7 primary services: n complete a marketing analysis n develop an advertising plan n prepare a creative strategy n create advertising executions n develop and implement a media plan n handle billing and payments n integrate other marketing communications n complete a marketing analysis n develop an advertising plan n prepare a creative strategy n create advertising executions n develop and implement a media plan n handle billing and payments n integrate other marketing communications

4 functions of full-service agencies n account management n creative n media planning and placement n research

agency organization chart

n liaison between agency and client n responsible for understanding... l the client’s business l the client’s marketing needs l strategy development n representing client point of view within the agency n liaison between agency and client n responsible for understanding... l the client’s business l the client’s marketing needs l strategy development n representing client point of view within the agency account management

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

n responsibility l the creative department is responsible for creating and producing the print and broadcast advertising n strategy is key l good creative work is always guided by a creative strategy that sets forth goals to be accomplished and key message points to be relayed l the creative department is responsible for creating and producing the print and broadcast advertising n strategy is key l good creative work is always guided by a creative strategy that sets forth goals to be accomplished and key message points to be relayed creative department

n executive & group creative directors n creative director n associate creative director n copywriters n art directors n broadcast producers n print production managers n traffic coordinators n executive & group creative directors n creative director n associate creative director n copywriters n art directors n broadcast producers n print production managers n traffic coordinators

media department n The media department has two main functions - planning and buying. n The planning group handles more strategic marketing and media issues. n The buying group handles media negotiations and implementation. n The planning group handles more strategic marketing and media issues. n The buying group handles media negotiations and implementation.

n media director n associate media directors n media supervisors n media planners n media buyers n media analysts n media director n associate media directors n media supervisors n media planners n media buyers n media analysts MediaPlan media department

n mega-agency media departments have now become profit centers n agencies have set up their media departments as free-standing units n many large clients now look at media as a separate service n mega-agency media departments have now become profit centers n agencies have set up their media departments as free-standing units n many large clients now look at media as a separate service big changes in the media department

research department n interpret market environment l gather and analyze research data. l primary and secondary techniques n determine consumer needs/perceptions l understand problems n advise how ads can meet strategic goals l help find solutions n interpret market environment l gather and analyze research data. l primary and secondary techniques n determine consumer needs/perceptions l understand problems n advise how ads can meet strategic goals l help find solutions ResearchReport

n research director n research project managers n research assistants n outside research specialists n research director n research project managers n research assistants n outside research specialists research department ResearchReport

auxiliary agency functions n account planning n strategy/creative review board n office management l human resources l legal services l accounting l recruitment

3 ways agencies make money n commissions l usually 15% of gross costs n fees l usually based on negotiated hourly rate n incentives l still relatively new and problematic l usually based on performance goals n commissions l usually 15% of gross costs n fees l usually based on negotiated hourly rate n incentives l still relatively new and problematic l usually based on performance goals

agency commissions n media commission system l 15% media commission n adjustable commission rates l negotiate to match client budget l sliding scale n markups-production & service l add a percentage markup to costs l 17.65% of net = 15% of gross n media commission system l 15% media commission n adjustable commission rates l negotiate to match client budget l sliding scale n markups-production & service l add a percentage markup to costs l 17.65% of net = 15% of gross

4 types of fee systems n fixed fee (retainer) n cost-plus fee n performance fee n hybrid fee & commission n fixed fee (retainer) n cost-plus fee n performance fee n hybrid fee & commission

incentivesincentives n in theory, a good way to work n get paid based on how well you do, not how much you bill n in practice, difficult to implement n if client makes final decision (instead of agency), how can agency be responsible for final results? n results based on many factors, such as competitive efforts, not just advertising n in theory, a good way to work n get paid based on how well you do, not how much you bill n in practice, difficult to implement n if client makes final decision (instead of agency), how can agency be responsible for final results? n results based on many factors, such as competitive efforts, not just advertising

new business n three primary sources l build existing client’s business l add and sell new IMC services l solicit new accounts n two ongoing problems l “spec” work l teams “walking” with accounts n three primary sources l build existing client’s business l add and sell new IMC services l solicit new accounts n two ongoing problems l “spec” work l teams “walking” with accounts “ The critical objective and role of any ad agency is gaining new business.”

things to think about: n why might you be interested in going into the agency business? n what might keep you from choosing a career in the agency business? n why might you be interested in going into the agency business? n what might keep you from choosing a career in the agency business?