Ad Agency Structure
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Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights res e Advertising Industry June 16, 202 2 Types of Advertisers Ad Agencies Job Functions Structure Compensation Suppliers Media
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Transcript of Ad Agency Structure
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
The Advertising IndustryThe Advertising Industry
April 22, 2023
Types of Advertisers Ad Agencies
Job Functions Structure Compensation
Suppliers Media
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
$Advertisers (Clients)
Suppliers
Advertising Industry Structure
Media
Agencies
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Advertising & Large Companies
Centralized
Decentralized
Efficiency Continuity
In-House Agency
Functional ServicesCreativeMediaResearch
Flexibility Competition among company brands
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Global Advertising
Standardized
Localized
Global brands Efficiency / Recognition
Most companies blend strategies to fit their
unique situations
Based on differences in each country or culture
Relevance / Understanding
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Global expenditures $425 billion
The Worldwide Advertising Industry
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Focus
Time
Resources
Local vs. National Advertisers
National Local
Long-term Short-term
$$$$ $Many Specialists Few Generalists
Building the Brand Place of BusinessMarket Share Sales
Strategy TacticsMarkets Customers
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Product Advertising Institutional Advertising Classified Advertising
Cooperative (Co-op) Advertising Allowances By The Manufacturer Pooling Resources
Government and Social Organizations
Types of Advertising
Local Advertising (Retail)
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
An independent organization of professionals
who provide creative and business services to clients
related to planning, preparing, and placing advertisements.
Account Supervisors
Art Directors
Creative Directors
CopywritersRadio and TV Producers
ResearchersArtists
Technical Staff
Marketing Specialists
Media Buyers Public Relations Specialists
Sales Promotion and Event Planners
Direct-Marketing Specialists
Advertising Agency
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Advertising Agency
Advertising Agency: an independent business, composed of creative and business people, who develop, prepare, and place advertising in advertising media for sellers seeking to find customers for their goods or services
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
How Agencies Developed
The Early Age
(Colonial Times to 1917)Space SalesmenSpace WholesalersThe First Rate DirectoryThe Agency Becomes a Creative Center
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How Agencies Developed (continued)
The No-Rebate Age (1918-1956) Radio Television Electronic Data Processing
The Age of Negotiation (1956-1990) Consent Decrees
The Reengineering Age Integrated Services Interactive Communications
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Full-Service Business-to-Business Creative Boutiques Media-Buying Services Interactive In-House
Types of Advertising Agencies
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Account Services Research and Account Planning Creative and Production Media Planning and Buying Traffic Management Marketing Services
What Do Advertising Agencies Provide?
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PresidentPresident
AccountSupervisorAccount
SupervisorAccount
SupervisorAccount
Supervisor
AccountExecutiveAccount
Executive
AccountExecutiveAccount
Executive
Art / CopyArt / Copy
ProductionProduction
Vice PresidentAccount Services
Vice PresidentAccount Services
Vice PresidentCreativeServices
Vice PresidentCreativeServices
Vice PresidentManagement
Services
Vice PresidentManagement
Services
Vice PresidentMarketingServices
Vice PresidentMarketingServices
MediaMedia
ResearchResearch
AccountingAccounting
PurchasingPurchasing
PersonnelPersonnel
Agency Department System
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Group 2 (Dial Soap)Management
Director
Group 2 (Dial Soap)Management
Director
Group 1 (Coke Classsic)Management
Director
Group 1 (Coke Classsic)Management
Director
Group 3 (Toyota Camry)Management
Director
Group 3 (Toyota Camry)Management
Director
AccountService
AccountService
CreativeDirectorCreativeDirector
MediaPlanning
MediaPlanning
MarketResearch
MarketResearch
Agency Management
Agency Management
Agency Group System
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Commissions Around 15% of airtime fees
Agency Bills Client For
Agency Pays Television
Agency Earns
For Television Air Time
For Television Air Time
Commission (15%)
$1,000,000
$850,000
$150,000
Agency Compensation Plans
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Commissions Around 15% of airtime fees
Markup Charges
Agency Compensation Plans
Production cost + fixed percent Agencies add 17.65% to the cost of outside services
Photographer charges $8,500
The Agency adds $1,500 (17.65%)
Client is charged $10,000 for photography services
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Commissions Around 15% of airtime fees
Markup Charges Production cost + fixed percent
Fee Systems Hourly rates or by project
Agency Compensation Plans
Commissions Around 15% of airtime fees
Markup Charges Production cost + fixed percent
Fee Systems Hourly rates or by project
Incentive Systems Tightly-specified objectives
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Other Advertising Services
This is an example of collateral promotion
material that agencies
produce for clients.
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Other Advertising Services
This ad is a continuation of a concept developed by an ad agency.
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Electronic
Interactive Media
Out-of-Home
Direct Mail
The Media of Advertising
Other Media
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Newspapers – National, State, Local Magazines – Geography and Content
The Media of Advertising
Yellow Pages
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The Media of Advertising
Electronic
Network, Independent and Cable TV Network and Local Radio
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The Media of Advertising
Interactive Media
Online Services Kiosks
CD-ROM Homeshopping Broadcasts
Interactive Programming Internet
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The Media of Advertising
Out-of-Home Transit
Outdoor
Billboards
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The Media of Advertising
Direct Mail Brochures and Catalogs
Direct Mail
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The Media of Advertising
Premiums Point of Purchase Displays Product Placement Event Sponsorship
Other Media
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Summary A full-service agency works on many aspects of a
client’s marketing problems Many agencies are organized into four divisions Some agencies have a domestic network of offices
or affiliates to service their large accounts Global marketing has led agencies to expand
internationally Clients usually pay agencies by commission, fees,
or a combination There are other types of advertising services beside
the traditional advertising agency
