An Advertising Agency is an independent organisation that provides one or more specialized advertising and promotion related services to assist companies in developing, preparing and executing their advertising and other promotion programme.
Goal of an Advertising agency
“Clients advertising leads to greater profits in the long run than without the agency”
Functions of an Advertising agency
Planning, creating and producing the advertisements
Strategic marketing planning
Events, trade shows
Complete market analysis
Develop an advertising plan
Prepare a creative strategy
Create advertising executions
Handling billing and payments
Integrate other marketing communications
Advertising Agency Structure
(i) Departmental system – Departments are grouped around functions and as per the need, specific department is called upon to serve the client. It provides employees the opportunity to develop expertise in servicing difference types of clients.
(ii) Group system – Individuals are drawn from different functional areas and work as a group to serve a particular client. Each group is headed by an account executive. Employees become knowledgeable about a particular client which facilitates continuity in servicing
Full Service Advertising Agencies
They are large size agencies which offer their clients a full range of services in the area of marketing, communication and promotion.
A Full Service Agency provides the following facilities to a client :
The Creative Department is responsible for creation and execution of advertisements
Copy writers are creative specialist responsible for creation of ideas, headlines, body
Art department – Decides how the advertisement should look and prepare a layout or story board.
Production department – Responsible for production of the advertisement
Traffic department – Responsible for coordination of all the phases of production and ensuring that they meet media deadlines
An account executive acts as liaison between client and company.
He is responsible for strategy development
He is responsible for understanding client’s business and needs
He represent clients point of view to the agency and vice versa
Research department – To gather, interpret and analyse data for a situation.
Media department – To develop a media plan to reach the target audience in a cost effective manner
Management and Finance
Perform Functions of :
Advertising Agency Compensation
The Compensation System of an advertising agency may take the following three forms –
(i) Commission – The agency is paid fixed commission from the media on any advertising space or time purchased for the advertiser (15%) outdoor media (16.66%).
(ii) Negotiated Fee – The agency and client negotiate some type of fee system or cost plus arrangement. It may be :
(a) Fixed fee method – Monthly fee based on the work being done
(b)Cost plus system – A Fee based on cost of work + mutual agreed margin or profit
(C)Incentive based system – The agency gets compensated on the basis of their performance criteria may be sales/market share/quality as agreed by the advertiser. Get compensated through media commission, fees, bonus etc.
(iii) Percentage charges – A mark up of percentage charges for various services from outside providers. Range – (17.65% – 20%)
Factors Affecting Agency Selection
Suitability – Type, Location, Connections, Policies
Facilities and Services provided
Past Record and Clientele
Reputation – Popularity and Promptness of service
Management – Conservative or Dynamic
Size of the Agency and Fees charged
How do Agencies get Clients
Competition – Unsatisfied clients of competitors
Referrals – Word of mouth
Presentations – Good presentations from creative team
Client Agency Relationship
Reasons Why Agency lose Clients
Unrealistic client demands
Conflict of interest due to mergers
Change in client`s strategy
Decline in sales of a client company
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