1. 2-1 Copyright © 2009 Pearson Education Canada CHAPTER 2 The Advertising Industry

2. 2-2 Copyright © 2009 Pearson Education Canada Learning Objectives  Identify the organizations that comprise the advertising industry  Identify and describe the various advertising management systems used by clients  Identify the roles and responsibilities of clients in the advertising development process  Describe the roles and responsibilities of the agency in the advertising development process Continued…

3. 2-3 Copyright © 2009 Pearson Education Canada Learning Objectives (cont.)  Discuss the nature of relationships between clients and agencies  Distinguish among the various types of advertising agencies  Outline the organizational structure of agencies and the functions of agency personnel  Identify the concepts associated with managing a client’s business  Identify the methods of compensating advertising agencies.

4. 2-4 Copyright © 2009 Pearson Education Canada Composition of the Advertising Industry The Canadian advertising industry comprises three primary groups:  Advertisers (the Client)  Advertising Agencies  Media

5. 2-5 Copyright © 2009 Pearson Education Canada Advertisers The Association of Canadian Advertisers (ACA) serves the interests of companies that market and advertise in Canada  Canadian advertisers include:  Manufacturers  Retailers  Service firms  Technology companies  Governments  Non-profit organizations

6. 2-6 Copyright © 2009 Pearson Education Canada Advertising Agencies The Institute of Communications Agencies (ICA) is the national association representing full-service ad agencies.  Service organizations responsible for creating, planning, producing and placing advertising messages for clients.  Most of the larger ad agencies in Canada are subsidiaries of larger American agencies. Continued…

7. 2-7 Copyright © 2009 Pearson Education Canada Advertising Agencies (cont.)  The different types of advertising agencies are:  Full-service (complete range of services)  Specialists (limited services in certain areas of expertise)

8. 2-8 Copyright © 2009 Pearson Education Canada Media The Canadian Media are divided into numerous categories:  Broadcast (radio and TV)  Print (newspaper and magazines)  Out-of-home (transit and outdoor)  Direct-response (direct mail and direct-response TV companies)  Digital (Internet and mobile communications)

9. 2-9 Copyright © 2009 Pearson Education Canada Other Groups in the Advertising Industry  Advertising Support Companies  Media Support Companies  Research and Audience Measurement Companies

10. 2-10 Copyright © 2009 Pearson Education Canada Client – Side Advertising Management  Brand or Category Management  Regional Management  International Management

11. 2-11 Copyright © 2009 Pearson Education Canada Advertising Manager (Client- Side) Describes the individual responsible for advertising in the client organization.  Usually mid-management  Possess analytical, planning, and leadership skills, as well as knowledge and experience in the operation of the advertising industry

12. 2-12 Copyright © 2009 Pearson Education Canada Key Areas of Responsibility - Advertising Manager 1.Advertising Planning and Budgeting 2.Coordinating Advertising with Other Marketing Communications 3.Monitoring the Advertising Program 4.Evaluating the Advertising Program 5.Liaison with Advertising Agency

13. 2-13 Copyright © 2009 Pearson Education Canada Advertising Agency Roles and Responsibilities The services that the advertising agency offers are: 1.Experience and expertise in communications 2.Planning assistance 3.Objectivity in the planning process 4.Active liaising with Clients

14. 2-14 Copyright © 2009 Pearson Education Canada Key to business success depends on:  A healthy and prosperous client-agency relationship  A partnership that encourages open and honest communications  Trust and respect for each other Continued… Client-Agency Relationships

15. 2-15 Copyright © 2009 Pearson Education Canada Client-Agency Relationships (cont.) The connection between client and agency is often very delicate and can be broken for various reasons.  Deteriorating relationships contribute significantly to the amount of account shifting that occur in Canada each year. Continued…

16. 2-16 Copyright © 2009 Pearson Education Canada Client-Agency Relationships (cont.)

17. 2-17 Copyright © 2009 Pearson Education Canada Account Shifting Client-agency relationships sour for a variety of reasons:  Quality of ads or service provided  New communications demands not adequately served  Philosophical differences  Lack of team concept  Client consolidates their business with fewer agencies  Conflict situations

18. 2-18 Copyright © 2009 Pearson Education Canada Types of Advertising Agencies Services required by client determine the type of agency they work with.  Full-service agencies  Creative boutiques  Media-buying services  Other boutiques and communications specialists

19. 2-19 Copyright © 2009 Pearson Education Canada The Full-Service Agency Appeal strongly to advertisers that need a wide variety of services:  Account Management  Creative planning  Creative development and execution  Media planning and placement  Sales promotion  Public relations and direct-response  Interactive communications

20. 2-20 Copyright © 2009 Pearson Education Canada Structure and Management of the Advertising Agency

21. 2-21 Copyright © 2009 Pearson Education Canada Account Management Account Director Account Director Account Supervisor Account Supervisor Account Executive Account Executive

22. 2-22 Copyright © 2009 Pearson Education Canada Creative Department Creative Director Copywriter Art Director  Creative director oversees the team.  Team develops creative concept.

23. 2-23 Copyright © 2009 Pearson Education Canada Media Department Responsible for planning and placement of advertising time and space.  The functions of the media department are:  Media planning  Media buying  Media research Continued…

24. 2-24 Copyright © 2009 Pearson Education Canada Media Department (cont.) Position responsibilities in the media department are:  Media planner  Media buyer  Media supervisor

25. 2-25 Copyright © 2009 Pearson Education Canada Managing the Client’s Business  Agency Teams  Account executive and account supervior  Art director and copywriter  Media planner and media buyer  Competing Accounts  Agency of Record

26. 2-26 Copyright © 2009 Pearson Education Canada Agency Compensation Commission System  Standard Commission Rate (15%)  Reduced Rate Commissions Fee System  Minimum Guarantees  Hourly Rates  Costs Plus Profit Continued…

27. 2-27 Copyright © 2009 Pearson Education Canada Agency Compensation (cont.) Payment by Results  Usually a reduced rate percentage plus incentives for achieving goals  Typical goals may be brand market share, advertising effectiveness and advertising recall