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Ad Agencies
Ad Agencies
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Define the main types of ad agencies
Discuss clients and revenue
Explain what people do in ad agencies
Debate pros and cons of in-house agencies
Describe industry changes
Explain how suppliers and the media help
Today’s Objectives
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Advertisers (Clients)
Agencies
Media
Suppliers
Organizations in Advertising
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Definition of an Ad Agency
An independent organization of creative people and businesspeople who specialize in developing and preparing marketing and advertising plans, advertisements, and other promotional tools. Agencies also purchase advertising space and time in various media on behalf of different advertisers (clients) to find customers for their goods and services.
- American Association of Advertising Agencies (AAAA)
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Agencyroles
Develop marketing & ad plans
Develop ads & promotions
Purchase ad space and time
Definition of an Ad Agency
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Reach
Full-Service
SpecialtyBoutiques
Media Buyers
Interactive
Consumer
Business-to-Business (B2B)
Local National
Regional International
Types of Ad Agencies
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Full-Service Ad AgenciesCan handle all communication and promotion for clients.
Advertising Services:• Ad planning• Creative approach• Producing ads• Performing research• Selecting, buying media
Non-Advertising Services: • Packaging• Public relations• Sales promotion materials• Annual reports• Trade-show exhibits• Interactive media
Source: ultraentertainment.com
Source: creativerge.com
Source: advertisingftw.tumblr.com
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General Consumer Full-Service AgencyFocus on clients whose goods are purchased, used primarily by consumers.
Example: McCann-Erickson (international agency, subsidiary of Interpublic Group, offices in more than 130 countries)
Source: adpulp.com
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Source: hello.eboy.com
One of McCann-Erickson’s biggest global clients, Coca-Cola
(Ad from Belfast, Ireland)
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Source: adverbox.com
McCann-Erickson ad for Ferrari: Milan, Italy
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Source: effie.org
McCann-Erickson ad for U.S. Army, sponsor of 2009 National HALO 3 Championship
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Business-to-Business Agencies
Focus on clients whose goods are purchased, used primarily by businesses.
Example: Proteus B2B Marketing headquartered in Grand Rapids, MI
Sou
rce
: de
wys
mfg
.co
m
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Source: bostonbranding.com
An ad for Dow Chemical aimed at reaching businesses in the resin market
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Boutique Ad Agencies
Source: thecoca-colacompany.com
http://www.youtube.com/watch?v=SfIbBNuORHU
Creative Artists Agency (CAA), a Hollywood talent agency, created the Coca-Cola polar bears in 1993.
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Types of Ad Agencies
Source: clioawards.com
Media buyers: purchase and package media time & space for clients (agencies & direct customers).
Interactive agencies: specialize in internet, digital market.
https://www.prioritymail.com/simulator.asp
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Accountmanagement
Research & account planning
Creative concepts
Trafficcontrol
Media buying & planning
Production
Other services
Admin
The People of Ad Agencies
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Accountmanagement
Research & account planning
The People of Ad Agencies
Agency team that acts as liaison between clients & internal departments.
Account executive: responsible both for managing all the agency's services for the benefit of the client and for representing the agency's point of view to the client.
Account planning: A hybrid discipline that bridges the gap between traditional research, account management, and creative direction whereby agency people represent the view of the consumer in order to better define and plan the client's advertising program.
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Creative concepts
Media buying & planning
The People of Ad Agencies
Media planning: The process that directs advertising messages to the right people in the right place (media) at the right time.
A creative director leads a team made up of a copywriter and an art director who determine the verbal and visual elements of an ad campaign.
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Production
The People of Ad Agencies
Production: The department in an advertising agency that is responsible for managing the steps that transform creative concepts into finished advertisements and collateral materials. Often work with suppliers to buy type, photos, illustrations, enlist broadcast directors, producers, etc.
The traffic department coordinates all ad production to ensure client and media deadlines are met.
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Agencies might also offer other services, such as these sales promotion materials, to be used by Honda dealerships on-site.
The People of Ad Agencies
Other services
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A Case Study
An oldie, but a goodie. Lowes-Lintas develops a television commercial in 1989 for the brand-new Acuvue disposable contact lens by Johnson & Johnson.
http://www.aef.com/on_campus/classroom/educational_materials/1751
Source: tjoos.com
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Guess Who…
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Guess Who…
Account Executive
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Guess Who…
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Guess Who…
Researcher
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Guess Who…
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Guess Who…
The Client
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Guess Who…
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Guess Who…
Creative Director
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Guess Who…
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Guess Who…
Producer of the commercial (supplier)
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Guess Who…
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Guess Who…
Director of the commercial (supplier)
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Media commissions
Full page print ad
at rate-card price:
$100,000
Agencybuys adat 15%
discount:$85,000
Agencybills client
full ad amount:
$100,000
$15,000difference
is keptby theagency
How ad agencies are paid
3-35
Media commissions Markups
Agencybuys
materialsfor
campaign
Materialscost
$85,000
Agencybills for
materials plus a
17.65%markup
Agency bills $100,000which is
costs plus markup
How ad agencies are paid
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Media commissions Markups Fees
Fee /commissioncombination
Straight-fee(retainer)method
Incentive system
How ad agencies are paid
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Pros
May save money
Allows tighter control
May permit greater attention to the brand
Lower creative quality
Less experience and talent
Loss of objectivity
Cons
In-house ad agencies
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As good as an independent agency?
You decide.
In-house ad agencies
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Referrals
Presentations
Community relations& networking
Soliciting fornew business
How agencies reach & attract new clients
Ad Agencies’ Clients
3-40
Art studios &web designers
Art studios &web designers
Printers &related specialists
Printers &related specialists
Film & videohouses
Film & videohouses
Researchcompanies
Researchcompanies
Suppliers
Design and produce artwork for ads and web sites.
Produce brochures, sales promotion kits, point-of-purchase displays, etc.
Specialize in film, video production or both.
Help agencies with consumer data to formulate campaigns.
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Out-of-home
Digitalinteractive
Electronic
Direct mail
Other media
Media
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Industry consolidation:
Decline of the commission system, because:
Changes resulting from new media:
Current Trends
• Began in 1990’s• Influenced by globalization• Conglomerates cover the spectrum
of specialties, media
• The Big 4: Omnicom, Interpublic Group, WPP, Publicis
• Trend of boutique agencies against mass production, control of groups
• Reward only commissionable media • Focus on budget instead of strategy
• The volume and segmentation of new media have proven challenging for legacy companies
• More than the internet. Also mobile, gaming, video iPods, tablets, GPS, satellite television & radio, podcasts, social media, etc.
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Rank Agency / Group Annual Billings
1 WPP $13.60 billion
2 Omnicom Group $13.36 billion
3 Interpublic Group of Cos. $ 6.96 billion
4 Publicis Group $ 6.90 billion
5 Dentsu $ 3.30 billion
6 Aegis Group $ 2.49 billion
7 Havas $ 2.31 billion
8 Hakuhodu DY Holdings $ 1.56 billion
9 MDC Partners $ 584.6 million
10 Asatsu-DK $ 503.4 million
Top Agencies, 2009
Source: AdAge.com
WPP includes JWT, Ogilvy, Young & Rubicam
Omnicom includes BBDO, DDB Worldwide, GSD&M and Zimmerman
Interpublic Group includes McCann-Erickson, Lowe + Partners Worldwide
Publicis Group includes Leo Burnett, Saatchi & Saatchi, Razorfish
