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advertising agencies
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the first advertising agents
1843 volney palmer
agent for media, not advertisers
1864 - george p. rowell
thejohnny appleseedof advertising
Rowells American
Newspaper Directo ryspace wholesaler
shared his secret
1888 - Printers Ink
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founded in 1864 by
francis w. ayer, 20
the first advertising agency
& son made the
business seem more
established
worked for advertiserslogan - keeping
everlast in gly at it
brings success.
n.w. ayer & son
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4 full-service agency functions:
today,full-service agenciesprovide the following:
account management
creativemedia planning and media
placement (media buying)
research
many adding below the lineservices - PR, sales promotion,Interactive
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major types of agency:
mega-agency groups
independent agencies
national, regional, and local
specialized/niche agencies
agency service suppliersmedia buying, creative services
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mega-agency groups
prompted by mergers and
client globalization
financial pressures
service multinational
accounts
subsidiaries provide
IMC (integrated marketing
communication) services
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Some mega-agency groups:
OmniCom Group $4.15 billion
WPP Group $3.64 billion
Interpublic Group $3.38 billion
Dentsu (Japan) $1.98 billionYoung & Rubicam $1.49 billion
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mega-agency groups:
WPP Group(including Y&R)
$6.69 billion
Omnicom Group 5.74 billion
Interpublic Group $5.08 billion
Havas $2.39 billion
Publicis(including Saatchi)
$2.17 billion
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mega-agency pros & cons
positives: larger talent pool
negotiating clout financial rewards
account security
competitive edge strong partnerships
more services
international link
negatives: people vs. profit
creativity vs. size conflict of
interests
people business
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national, regional & local
these areindependent agencies
there are nowfewer national
agencies which are not part of
mega-agency groups
regionaland local agencies workwith smaller clients who are usually
located nearby
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Famous ad agencies
1. J. Walter Thompson
2. Leo Burnett Worldwide
3. McCann-Erickson Worldwide
4. BBDO Worldwide
5. Grey Advertising
6. DDB Worldwide
7. Ogilvy & Mather Worldwide8. FCB Worldwide
9. Y&R Advertising
10. Publicis Worldwide
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specialized/niche agencies
industry specialists
ethnic agencies
internet agencies
business-to-business agencies
creative boutiques anddesign houses
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other suppliers
provide unbundled services
one part of what an agency does
media buying servicesfreelancers & consultants
production companies
in-house or house agencies
agencies owned by clients
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in-house agencies
advantages&disadvantages
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in-house agencies
advantages&disadvantagesfamiliarity
specializationfast service
cost savings
confidentiality
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2 primary roles of agencies
idea generation
brand-building
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idea generation
manufacture ideas
ideas are lifeblood of the agency
create intellectual capitalcreate and sell different
kinds of ideas
marketing strategies
promotional opportunities
even new product ideas...
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brand-building
The agencys purpose is to create
and directcommunication about a
product or service so that the brandis perceived to have a unique
value or brand personality.
Lets look at some examples...
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brand-building
Marlboro
Leo Burnett
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brand-building
McDonalds
DDB Needham
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brand-building
Pepsi
BBDO
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brand-building
Nike
Wieden + Kennedy
QuickTime an d a
Sorenson Video 3 decompressorare needed to see this picture.
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brand-building
American Express
Ogilvy & Mather
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brand-building
Apple
Chiat/Day
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brand-building
more and more, agencies are being
involved inall areas of marketersbrand-building activities
today, its more thanadvertising
itsintegrated marketing
communications (IMC)
means integration
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integrated marketing communication
advertising
public relationsdirect response
sales promotion
personal selling
the imc promotion mix
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what agencies do.
structure & organization
and how theyre organized
to do it.
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7 primary services:
complete amarketing analysis
develop anadvertising plan
prepare acreative strategy create advertising executions
develop and implement amedia plan
handle billingand payments
integrate other marketing
communications
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4 functions of full-service agencies
account management
creative
media planning and placement
research
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agency organization chart
Traffic
Production ProductionBroadcast Analysts
Other Marke ting
CommunicationsServices
[PR, e tc.]
Asst. Account
Executive
Account
Executive
Management
Supe rvisor
Account Mgmt.
Director
Copy Spvr. &
Copywriters
Art Supervisor
& Art Directors
Creative
Group:
Associate
Creative
Director
Creative
Exec CD
Rese arch
Assistants
Project
Managers
Rese arch
Director
Media
Planner
Media
Buyer
Media
Supe rvisor
Associate
Media
Director
Media Dept.
Director
Strate gy
Review Board[Managment
Committee]
Office Management
[Personnel,Accounting,
Legal, etc.]
Pre sident
[COO]
Board of
Directors
[Chairman/CEO]
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account management
director
management supervisor account supervisors
account executives
assistant account execs account coordinators
trafficTraffic
Asst. Account
Executive
Account
Coordinator
Account
Executive
Account
Supervisor
Management.
Supervisor
Account Mgmt.
Director
account management
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responsibility
the creative department is responsible
for creating and producing the print and
broadcast advertising
strategy is key
good creative work is always guided by a
creative strategy that sets forthgoals tobe accomplishedand key message
points to be relayed
creative department
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creative department
executive & group creativedirectors
creative director
associate creative director
copywriters
art directors
broadcast producers
print production managers
traffic coordinatorsPrint
Traffic
ProductionBroadcastProduction
Copy Spvr. &Copywriters
Art Supervisor& Art Directors
CreativeGroup:
Associate
CreativeDirector (ACD)
CreativeDirector (CD)
Executive
CreativeDirector (ECD)
StrategyReview
Board
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media department
The media departmenthas two main
functions - planningand buying.
The planning grouphandles morestrategic marketing and media issues.
The buying grouphandles media
negotiations and implementation.
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media director
associate media directors
media supervisors
media planners
media buyers
media analystsAnalysts
Media
Planner
Media
Buyer
Media
Supervisor
Associate
MediaDirector
Media
Director
MediaPlan
media department
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mega-agency media departments
have now becomeprofit centers agencies have set up their media
departments asfree-standing units
many large clients now look at mediaas aseparate service
big changes in the
media department
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research department
interpret market environment gather and analyze research data.
primary and secondary techniques
determine consumer needs/perceptions
understand problems
advise how ads can meetstrategic goals
help find solutions
ResearchReport
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research director
research project managers
research assistants
outside researchspecialists
research department
ResearchSuppliers
Outside
Research
Assistants
ProjectManagers
Research
Director
Research
Report
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auxiliary agency functions
account planning
strategy/creative review board
office management
human resources
legal servicesaccounting
recruitment
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3 ways agencies make money
commissions
usually 15% of gross costs
feesusually based on negotiated hourly rate
incentives
still relatively new and problematic
usually based on performance goals
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agency commissions
media commission system
15% media commission
adjustable commission ratesnegotiate to match client budget
sliding scale
markups-production & serviceadd a percentage markup to costs
17.65% of net = 15% of gross
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4 types of fee systems
fixed fee (retainer)
cost-plus fee
performance fee
hybrid fee &
commission
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beyond 2000
advertising
agency trends
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agency trends
clutter, overload, overchoice
increasedmedia options
increasing audience fragmentation
more messages everywhere
doing more with less
economic pressures, downsizing
ongoing client budget pressures managing sizemore mergersand mega-agencies
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agency trends
managingtechnology
interactive marketing
e-mail, web sites
improving internal systems
account planning
re-engineeringagency organization
improving delivery ofimc services
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as long as marketers need
ideasto build their brands,theyre going to need
in conclusion...
advertising agencies
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