Monash University Organisation for advertising The Advertising Agency n History‘then’ n Constraints ‘now n Developments ‘future’

Monash University History ‘then’ n USA 1841 Volney B Palmer n space saleman n (Print) Media commission system - initially variable between media n Creative advice for free n Foundation for stable, familiar & enduring structures

Monash University Media Commission systems n Evolved differently with country size and media pattern n US & UK – commission only for large clients (10% for main media, minor media to 15 %) n Australia and small countries – commission (10%) plus service fee (1 to 7%)

Monash University Traditional agency income sources – letter of terms n Media commission n Service fee, if agreed n Commission and/or fee on production charges, research bought through agency, others as agreed

Monash University Constraints ‘now’ n In Australia, media commission dismantled since 3 February 1997, after a 2 year debate n division between industry players n Pressure for accountability from clients n Profitability of agencies no longer underwritten by Accreditation system n Now subject to negotiating skills!

Monash University Common agency remuneration pattern now n Small base fee, to cover “set-up” n People-based hourly/daily fees, based on costs of creatives, planners, account management, etc n Incidentals – travel, communication, etc n Provision for audit

Monash University Common media shop remuneration n Mainly a small percent of media spend n Covers planning and buying and management n Incidentals n Co-ordination fees if representing client in discussions with creatives Some expect media shops may take over aspects of agency role

Monash University Developments ‘future’ n Integration - marketing communication elements integrated via n communication solutions agencies n clients managing the integration of unbundled services n Clients vary in their desires and their skills n Structures emerging to accommodate absence of commission and IMC

Monash University Different patterns of agency/client relationships n Limited to advertising n the agency plays a minimal role in other communication & marketing functions n A single agency may play different roles with different clients n Advertising plus selected services n apart from advertising (creative & media) the agency is invited to provide additional integrated communication services such as producing POS material or direct marketing, but not for marketing planning

Monash University Different patterns of agency/client relationships n Marketing counsel n the agency’s advice in marketing functions other than communication is sought and considered n Marketing partnership n advertiser takes the lead in developing the marketing strategy and plans, but in a close relationship with the agency who shares responsibility

Monash University Different patterns of agency/client relationships n Marketing leadership n the agency develops the marketing plans and provides a full spectrum of marketing support services n research n distribution supplementation n etc

Monash University Agency structure (full service) Traditional New business development Production Creative Media Account handling Research & Planning Finance Agency Board

Monash University Departments comprise of: n Production and supervision of production n Print, TV facilitation, Multimedia, Traffic n Creative n Creative teams, usually Copywriter & Art director working together n Media n Planners, Buyers n Account Management n Account Directors, Managers n Research & Planning n Strategy planners

Monash University Organising the Advertising (client): Structures and Functions n Western culture - atomistic & specialised n Specific activities = functions n Silos or chimneys n Accounting function = control

Monash University Functional structures worked well for single product, limited channel organisations but now: n expanding product lines n retail and direct options n complex media options

Monash University Solution: Revised brand management structures n coordination of sales & marketing n Focus is markets, not products Changes in marketing communication mix n Growth of sales promotion, direct marketing and PR n Transfer of information technology

Monash University Marketing Communication Structures (Schultz) n Communication Manager or “Czar” Structure n Market Team Design Structure but PRODUCT not CUSTOMER focussed therefore need some ‘outside-in’ thinking

Monash University Agency Issues n New Business n Selection of good potential clients n Pitch (credentials, speculative, strategic, creative) n Costs (money, time, benefits, client contribution) n Organisation (people, budget) n Mergers n Profitability

Monash University Credentials Pitch n Alternative 1 n Introduction to team n Establish rapport n Case studies - strategic/media n Testimonials n Show reel - creative n Way of doing business (esp remuneration) n Why you want business n Questions

Monash University Credentials Pitch n Alternative 2 n Pre-pitch background (rapport + knowledge) n 3 or 4 key points re agency views relevant to client n Dialogue on points n Expand on questions from client with smorgasbord of pre-prepared material

Monash University Likely success in future?? n Alternative 2 YES because 30% agency, 70% client n Alternative 1, NO because 95% agency, 5% client