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The Icfaian Journal of Management Research, Vol. VIII, No. 6, 200960

P Ammani*

Advertising

Decision-Making Process

The world is profoundly changing in the way products and services are valued,

communicated, bought and delivered. Strong brands elicit loyalty and enhance

market share for the firm. This could be achieved by creating interest for the

product and developing the relevance and emotional connection of the product

with consumers through advertising. Advertising is an incredibly important

communication tool in the hands of firms. A commercial can encapsulate

a brand in a very powerful way. Hence, designing an effective advertisementand offering it through the right media is a challenge faced by the advertisers.

In order to make a successful campaign, advertisers seek professional help

from agencies. In the light of this, a study has been conducted to understand

the decision making process of advertisers and the criteria they consider in

choosing an advertising agency.

* Professor, The Icfai School of Marketing Studies (ISMS), Hyderabad, India.E-mail: [email protected]

IntroductionAdvertising is fascinating and provocative. Advertising creates customer

awareness of the product and builds positive psychological associations that can

enhance the buyer satisfaction. Consumers interest is provoked and sustained

in the product. The purpose of advertising is to make potential buyers respond

more favorably to the firms offering. Advertising provides information to

customers, creates and modifies their desires and provides reasons for preferring

a particular product. Captivating and persuasive advertisements create wants

through passive compulsion, which makes the consumers to buy the product.

Advertising creates demand, and thereby, accelerates the growth in the grossdomestic product. It also helps society by improving competition, lowering prices,

encouraging more product choices, supporting the media and providing

information. Advertising seems to go beyond merely selling products or ideas and

can shape social trends and attitudes in powerful ways. However, advertising

has been accused of harming society on the ground that it creates an

unnecessary hype for the products and also manifests wants for superfluous

products and services (Ammani, 2008).

2009 The Icfai University Press. All Rights Reserved.

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61Advertising Decision-Making Process

The major decisions called for in advertising are: how much should be spent

for overall company advertising; what message and mode of presentation should

be used; what media should be used; how should advertising be phased during

the year; whether the firm should go for outside advertising agency; and what

are the best methods for knowing what advertising company is accomplishing.

Advertising costs depend on creative development time and production elements,such as production quality, multiple size requirements, publication insertions,

photography and illustrations. Well-defined objectives, clear input, communication,

planning and scheduling the campaign are essential to control costs and

accomplishing the tasks on time.

Review of Literature

Alyque Padamsee says, I fear that the sun has set on the fun, thereby implying

that the current trend is that the clients are demanding hard-selling advertising.

This has snapped the lid down on fantasy (Aresh, 1998). Some client firms ask

the agencies to commit their resources and loyalty to the firm for a certain period.

Bovee and Arens (1992) question whether it is ethical to ask an agency to commit

all its resources and loyalty to a single account, particularly when a client spreads

its business among a number of advertising agencies. According to Bovee and

Arens (1989), the account executive is responsible for mustering all the agencys

services for the benefit of the client on one hand, and on the other, for

representing the agencys point of view to the client, the account executive is

often caught in the middle. Bograt (1984) says that, in a competitive economy,

the success of a company often hinges on its ability to master the strategy of

advertising. And the mastery, in turn, depends on the companys ability to

assemble and apply information.

Davies (1994) applied the Analytic Hierarchical Process (AHP) to decide the

relative weights of advertising agency selection criterion in the final stage, but

did not state clearly how the short listing was determined. Oglivy (1983) puts

a premium on the talents of an ad agency to innovate or originate a novel way

to sell a product. An advertising agency is primarily rated on the basis of its

capabilities for creativity. There is ample evidence that the century long

domination in marketing communications by mass media advertising is coming to

an end; marketing budgets are being shifted away from traditional advertising

to behavior-oriented disciplines, like consumer promotions, direct marketing and

direct response advertising. Retailers are gaining strength over manufacturers.

New media technologies are increasing the fragmentation of media usage. Prime

time television, the main channel for mass campaigns, has had its audience

diminish according to a survey conducted by Gronstedt and Thorson (1996) in

the US.

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Purpose and Significance of the Study

The purpose of the study is to understand and describe the decision-making

process of todays advertisers in the context of advertising objectives,

expenditure, budget, types of appeals, media choice, choice of an agency and

client-agency relationships. It is hoped that the study would contribute to

knowledge in the sphere of advertising.

Objectives

The main objectives of the study are:

To delineate the process of advertising in terms of decisions that are

to be taken by the advertisers;

To investigate and report on the advertisers choice; and

To shortlist the significant factors for selecting an advertising agency.

Research Design

The nature of the study was exploratory, descriptive and analytical. Interactions

with eminent academicians and advertisers have given an idea about the

attributes to be considered in understanding the elements of decision making

process of advertisers.

Sample Selection and Size

The sample advertisers were selected from Hyderabad and Secunderabad through

convenience random sampling process. The structured questionnaires were

administered with a specific purpose of identifying the decision making process of

advertisers and prove the importance of selection of an ideal advertising agency.

The questionnaires were sent to 75 advertisers, of whom 58 responded.

Advertising Objectives

The advertisers decision making process begins with contemplating the

objectives of advertising. The objectives of advertising vary from company to

company. They are expressed in terms of communication goals. Most of the

advertising seeks to inform, persuade, and remind its target audience about the

offering of the organization. Building a companys brand image is one of the major

objectives of the advertisers.

Advertising informs the potential customer about a new product or a new use

of technology. Persuasion changes or reinforces an attitude or behavior in one

form or another. The message is sought to be reinformed in the customers minds

by repeated release of the same advertisement. Advertising builds a positive

image of the company that sells the product. The task of advertising, according

to Ogilvy, is to give, a brand a first-class ticket through life.

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Objectives No. of Respondents Percentage

To Inform 25 43.10

To Persuade and Remind 6 10.34

To Build the Companys Image 27 46.55

Table 1: Advertising Objectives of Advertisers

The objectives of companies differ based on the purpose for which they wish

to use the advertising. At one extreme, the purpose of advertising is to induce

direct action, and on the other, is to influence the attitudes of the consumers.

Advertising could be used to encourage information search by the potential

customers to relate a product to their needs and to encourage recall of rewarding

experiences. The data has been gathered to find out the objectives for which

companies advertise (Table 1).

As given in Table 1, 46.55% of the advertisers sought advertising to build theircompanys image and 43.10% of the advertisers wanted to inform. To persuade

and remind, happens to be the least choice with 10.34%. This trend may be due

to the fragmented market and increased competition. This could be interpreted

as: the advertisers believe that the sales of their products depend on knowledge

of the product and the corporate goodwill, rather than on aggressive persuasion.

Methods to Determine Advertising Expenditure

There are no scientific methods which can be employed in appropriation of

advertising fund. However, there are a few approaches, which usually, many

companies follow in determining the amount of advertising fund to be spent during

the year. The approaches that companies usually consider are percentage of sales

method, competitive method or objective and task method or the approach

chosen would be based on the need of the hour. Percentage of sales method

is a ratio related to revenue. It is the percentage of the previous years sales

or estimated sales for the following year or it could be combination of the two.

Generally, an industry norm is used as a percentage figure.

In another method, advertising budget is framed at par with that of the

competitors. A company spends as much as its competitors spend. Theassumption behind this is that the collective thinking of various firms in the

industry cannot be too far from the optimal figure. Advertising objective-and-task

method is a logical method, where the advertising budget is based on establishing

advertising objectives and the tasks to be accomplished, and then determining

the required size of the budget. The respondents are asked to give the method

they usually choose in determining the advertising expenditure (Table 2).

From Table 2, it can be seen that 20.68% of the respondents adopt percentage

of sales method and an equal number of respondents prefer the competitive

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Methods No. of Respondents Percentage

Percentage of Sales Method 12 20.68

Competitive Method 12 20.68

Objective Task Method 23 39.66Need-Based 11 18.97

Table 2: Advertising Expenditure Methods

method. However, the majority of the respondents (39.66%) go in for objective

task method, while 18.97% of them choose any one of the methods depending

on the need of the hour.

Basis for Deciding Advertising Budget

In setting the total budget as well as determining the allocation of expenditure

within the budget, certain factors are taken into consideration. Some of the

factors that are usually considered are the stage in the Product Life Cycle (PLC),

market share and consumer base, competition, and clutter and advertising

frequency. The different stages in the PLC determine the amount to be spent on

advertising, products that are newly introduced into the market are heavily

advertised, compared to those that are already established in the market.

Much of advertising depends on the strategy of the competitors. If the

competitors are advertising heavily, a higher amount would have to be allocated

to neutralize their edge in the market to retain market share. Advertising is also

done to increase the market share and consumer-base. The advertising budget

is also determined based on the average number of times different households

or individuals are reached by a medium in a given period of time. Table 3 presents

the views of the respondents on the subject.

Basis No. of Respondents Percentage

Stages in PLC 13 22.41

Market Share and Consumer Base 14 24.14

Competition and Clutter 5 8.62

Advertisement Frequency 5 8.62

Need-Based 21 36.21

Table 3: Bases for Determining Advertising Budget

Contrary to the belief that basis for deciding advertising budget is competition

and clutter, 24.14% of the respondents said that market share and consumer-

base are the bases for determining advertising budget. This is closely followed

by 22.41% of the respondents determining their budget on the basis of stages

in PLC. Competition and clutter and advertising frequency each with 8.62% are

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far lower. Majority of the respondents (36.21%) opted for need-based, which

means they are indifferent to different bases.

Types of Appeals

Advertising appeals are created for the purpose of activating human needs and

wants, and showing how the advertised brand can satisfy those needs and

wants. The advertiser has to determine the needs at which the advertising

message should be directed. The advertising message should appeal directly or

indirectly to those key needs which influence behavior response. The different

types of appeals usually adopted by the advertisers are rational, sensory, social

and ego satisfaction.

Rational appeals are based on logic and aim at selling the products based on

objective considerations like performance, features or problem solving capacity.

They are directed at the thinking process of the audience. The appeals that are

aimed at the five senses are sensory appeals. Social appeals cater to the needof belongingness. Man is a social creature. He seeks the company of others to

gain some impersonal reward and wants to be a part of national stream. Ego

appeals refer to the personality traits of the consumer, their physical appearance,

sense of humor, intelligence, beauty and status.

The advertisers are asked to which kind of appeals they usually go for. Their

responses are summarized in Table 4.

Types of Appeal No. of Respondents Percentage

Rational 34 58.60

Sensory 21 36.20

Social 2 0.03

Ego Satisfaction 1 0.02

Table 4: Types of Appeals

A majority of 58.6% of the respondents said that the appeals are rational,

whereas 36.2% of them go for sensory appeals according to the survey. Social

and ego satisfaction appeals are not preferred, with only 0.03% of them goingin for the former and 0.02% for the latter.

Media Choice

Media is required to transmit the message about a product or service to its

targeted customers. In the process of transmission, the advertiser tries out

different kinds of media, such as print, television, radio, outdoor, direct mail, point

of purchase, the Internet and mobile phones to attract its customers. Effective

advertising refers to informing the public about the right product at the right time

through the right medium. Therefore, right media selection is the key for the

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Media Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Rank 7

Print 43 52 5 0 0 0 0

TV 46 48 0 0 6 0 0

Outdoor 8 0 43 40 9 0 0

Radio 2 0 0 0 0 98 0

Internet 1 0 15 45 39 0 0

Direct Mail 0 0 37 0 0 2 61

Phone 0 0 0 15 46 0 39

Total 100 100 100 100 100 100 100

Table 5: Media Choice Percentage of Respondents

success of the entire advertising campaign. In order to get the most out of the

amount spent on advertising, it should be directed to the right audience and this

could be achieved through media.

To identify which media is preferred by the respondents, they are asked to

rank different media according to their preference. The responses are presented

in Table 5.

According to the survey, television happened to be the most preferred media

among the respondents, with 46% of them giving rank one, followed by print

media at 43%. Outdoor, radio and internet advertising are preferred by a small

number of respondents, with 8%, 2% and 1% respectively. Direct mails and

telephones are the least sought out media for advertising. There is a greater

preference for television, because it is an extremely creative and flexible medium.

Virtually, any product or service message can be effectively communicated to the

audience. With its mix of color, audio and motion, its impact on the customer is

immense. Print media is also preferred by the respondents, since there is no

literate household where the day does not begin with a newspaper.

Radio has lost its charm and importance after the advent of televisionan

audio visual medium. Therefore, it is the least preferred medium by the advertisers

compared to TV and print. However, with the introduction of FM radio, for which

a large number of consumers have an ear, this medium is likely to regain its

importance.

Outdoor advertising in India is chiefly utilized by sellers of consumer goods,

government, social and charitable organizations, hospitals, commercial houses

and newspapers. Internet advertising could appeal only to a small audience, who

are computer savvy and those who go for e-shopping. As the reach of the Internet

is low, internet advertising is not much preferred.

Thus, it has been seen that television and print media lead the way, followed

by outdoor advertising, radio and the Internet.

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Advertising Agency No. of Respondents Percent

Yes 35 60

No 23 40

Table 6: Choice of Outside Advertising Agency

Choice of Outside Advertising Agency

The advertiser has two clear options. The first is that the entire work of

advertisingplanning, creativity, art and copy writing, media selection and buying

will be undertaken by the in-house advertising cell of the advertiser. The second

option entrusts the entire advertising work to an outside advertising agency.

Table 6 gives the preference of advertisers in this regard.

Options No. of Respondents Percent

Complete Task 13 56.50

Mostly from Free-Lancers 7 30.04

Buying Media Slots and Planning 3 13.00

Table 7: In-House Advertising Options

It has been observed that majority of the respondents (60%) approach the

advertising agencies. Although many advertisers opt to hire outside advertising

agencies, a lesser number of firms prefer an in-house advertising cell, for reasons

of control, responsiveness and saving time and cost.

In-House Advertising Options

Advertisers advertising through their in-house cell have again a number of options.

At one extreme, the in-house cell undertakes the complete advertisement work

from planning to buying to attract its customers. Advertisers may develop their own

copy and just buy media slots. Another extreme situation is advertising manager

buys and coordinates from free-lancers, copy writers, artists, and media planning

and buying. Table 7 presents the in-house advertising options.

It is seen from Table 7 that 56.5% of the respondents make their

advertisements completely in-house, 30.4% of them simply coordinate withfree-lancers for their advertisements. In the case of 13% of them, the in-house

cell does all the work excepting media planning and buying.

Client-Agency Relationship

With the advertising budgets growing fabulously and the competition among the

advertising agencies soaring, the clients have become more demanding and

expecting state-of-the-art services. On the other hand, advertising agencies are

striving to provide excellent services to give value to the clients moneys worth

by employing the best creative teams. Consequently, client-agency relationship

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Nature of Relationship No. of Respondents Percent

Very Strong 20 57.2

Strong 4 11.4

Moderate 11 31.4

Poor 0 0

Very Poor 0 0

Table 8: Client-Agency Relationship

is even more prone to stress and strain than ever before. The relationship ranges

from very strong warm relationship to very poor bickering relationship. The nature

of relationship of the sample firms with their agencies is presented in Table 8.

Majority of the respondents (57.2%) have a very strong relationship, followed

by 31.4% having moderate relationship and the remaining 11.4% have strong

relationship. There are no firms with poor relationship. It is obvious that firms

which could not maintain good relationship, dispense with the service of such

advertising agencies.

Criteria for Selecting Advertising Agency

Since the promotional process determines the success or failure of the marketing

and sales of the product/services, the choice of the right advertising agency is

of great significance. A wrong choice of the advertising agency is not only dearer

but also costs heavily in terms of time and missed opportunities. Advertising firms

are deliberative and screen and select the right agency on the bases of rigorous

selection criteria. The selection criteria include capability for creativity and

simplicity to a host of other factors, such as the agencies track record, size and

image, etc. Table 9 shows the relative importance given to each of the sought

out attributes of the advertising agency.

From Table 9, it is seen that creativity, innovative ideas to attract

customers topped the list with an average rating of 4. The ability to present the

advertisement also goes a long way in the success of an advertisement. This is

evident from the equal rating of 4 given to the criterion, ability to present. These

are closely followed by track records, image of the agency, personal working in

the agency and cost effectiveness, worth with a rating of 3.8. Thus, it can be

said that these factors are also equally important in selection of an agency.

Simplicity, which is the secret of creativity, is given a rating of 3.3, branding

and positioning skills are each given a rating of 3. Personal equation is also

moderately considered. However, all other factors, like size of the agency and

accounts gained and lost, are not given much importance.

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As revealed by the results, advertisers bank on creative capabilities of the

advertising agency in producing an advertisement of excellence. Qualitative

features are stressed upon more than quantitative aspects.

The responses given by 35 respondents for 14 attributes that are mentioned

in Table 9 have been further analyzed by factor analysis to reduce the number

of variables in the research problem to smaller and more manageable numbers

by combining related ones into factors.

Factor Analysis

The output of the factor analysis is obtained by performing principal component

analysis and specifying the rotation. There are two stages in factor analysis,

wherein the objective is to identify how many factors are to be extracted from

the data. As evident from Table 9b, we find that six factors extracted together

account for 74.2% of total variance (information contained in the original 14

variables, Table 9a). Hence, the number of variables are reduced from 14 to 6

underlying factors.

Looking at Table 9d, the attributes mutual understanding and number of

awards have loadings of 0.881 and 0.838 on component 1. This suggests that

factor 1 is a combination of these factors. Table 9c also suggests the same

grouping. This component can be termed as credibility.

Attribute Average Rating

Creativity 4.0

Simplicity 3.3

Track Record 3.8

Accounts Gained and Lost 1.8

Personal Equation 2.6

Presentation Skills 4.0

Size of the Agency 2.4

Image 3.8

Personnel Working in Agency 3.8

Mutual Understanding 3.4

No. of Awards 3.0

Cost Effectiveness 3.8

Accounts Management 2.8

Branding and Positioning Skills 3.0

Table 9: Selection Criteria

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Attributes Initial Extraction

Creativity 1.000 0.821

Simplicity 1.000 0.509

Track Record 1.000 0.697

Accounts Gained and Lost 1.000 0.699

Personal Equation 1.000 0.631

Presentation Skills 1.000 0.837

Size of the Agency 1.000 0.774

Image 1.000 0.901

Personal Working in the Agency 1.000 0.676

Mutual Understanding 1.000 0.805

No. of Awards 1.000 0.747

Cost Effectiveness 1.000 0.771

Accounts Management 1.000 0.764

Branding and Positioning Skills 1.000 0.755

Note: Extraction Method: Principal Component Analysis.

Table 9a: Communalities

1 2.364 16.884 16.884 2.364 16.884 16.884 2.256 16.111 16.111

2 2.063 14.736 31.620 2.063 14.736 31.620 2.021 14.436 30.547

3 2.001 14.292 45.912 2.001 14.292 45.912 1.840 13.140 43.687

4 1.637 11.695 57.607 1.637 11.695 57.607 1.525 10.895 54.581

5 1.272 9.086 66.694 1.272 9.086 66.694 1.501 10.718 65.300

6 1.051 7.510 74.204 1.051 7.510 74.204 1.247 8.904 74.204

7 0.717 5.120 79.324

8 0.710 5.073 84.396

9 0.642 4.587 88.984

10 0.538 3.843 92.826

Table 9b: Total Variance Explained

Comp-

onent

Initial EigenvaluesExtraction Sums of

Squared Loadings

Rotation Sums of

Squared Loadings

Total% of

Variance

Cumula-

tive %Total

% of

Variance

Cumula-

tive %Total

% of

Variance

Cumula-

tive %

(Cont.)

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Table 9b: Total Variance Explained

Comp-

onent

Initial EigenvaluesExtraction Sums of

Squared Loadings

Rotation Sums of

Squared Loadings

Total% of

Variance

Cumula-

tive %Total

% of

Variance

Cumula-

tive %Total

% of

Variance

Cumula-

tive %

11 0.461 3.292 96.118

12 0.281 2.005 98.124

13 0.167 1.194 99.317

14 0.096 0.683 100.000

Note: Extraction Method: Principal Component Analysis.

Table 9c: Component Matrixa

1 2 3 4 5 6

VAR00001 0.161 0.370 0.740 0.002 0.154 0.295

VAR00002 0.494 0.169 0.135 0.314 0.340 0.069

VAR00003 0.168 0.717 0.370 0.128 0.046 0.008

VAR00004 0.053 0.691 0.388 0.231 0.119 0.015

VAR00005 0.373 0.072 0.164 0.580 0.076 0.343

VAR00006 0.263 0.264 0.409 0.324 0.569 0.319

VAR00007 0.148 0.549 0.205 0.516 0.371 0.068

VAR00008 0.181 0.168 0.304 0.591 0.590 0.225

VAR00009 0.609 0.151 0.017 0.461 0.263 0.016

VAR00010 0.865 0.151 0.004 0.182 0.018 0.028

VAR00011 0.788 0.216 0.076 0.094 0.087 0.239

VAR00012 0.237 0.469 0.571 0.340 0.232 0.019

VAR00013 0.021 0.420 0.611 0.027 0.135 0.441

VAR00014 0.068 0.112 0.336 0.202 0.391 0.657

Note: Extraction Method: Principal Component Analysis; a 6 components extracted.

Component

Table 9d: Rotated Component Matrixa

1 2 3 4 5 6

VAR00001 0.048 0.753 0.478 0.136 0.007 0.069

VAR00002 0.416 0.059 0.199 0.413 0.102 0.336

Component

(Cont.)

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Factor 2 is a combination of track record, accounts gained and lost, with

loadings of 0.819 and 0.811 respectively. Table 9c also suggests the same

combination. This factor is termed as performance. As for factor 3, it is evident

that cost-effectiveness and accounts management have the highest loading of

0.75 and 0.829, respectively and it is also reflected in Table 9d. This factor

consisting of above two variables can be termed as efficiency.

Factor 4 consists of the attributes personal equation and ability to present

with the highest loadings of 0.601 and 0.873. This factor could be termed as

relationship.

Factor 5 consists of the attribute size of the agency with a loading of 0.668

and the factor is termed as size. Factor 6 consists of the attribute branding and

positioning skills with a loading of 0.854 and the factor is termed brand.

Thus, it can be said that the significant factors of analysis for choosing an

advertising agency are creativity, performance, efficiency, relationship, size and

brand.

Tenure of Client-Agency Relationship

Advertisers leave one advertising agency and switch over to the other due to

several reasons. The average tenure for a client-agency relationship is 9-10 years

Table 9d: Rotated Component Matrixa

1 2 3 4 5 6

VAR00003 0.033 0.819 0.125 0.039 0.009 0.090

VAR00004 0.032 0.811 0.124 0.156 0.024 0.008

VAR00005 0.099 0.043 0.038 0.601 0.468 0.194

VAR00006 0.000 0.005 0.219 0.873 0.163 0.008

VAR00007 0.140 0.245 0.428 0.248 0.668 0.060

VAR00008 0.105 0.081 0.232 0.164 0.887 0.125

VAR00009 0.724 0.049 0.060 0.213 0.050 0.312

VAR00010 0.881 0.035 0.021 0.150 0.018 0.063

VAR00011 0.838 0.028 0.007 0.081 0.053 0.185

VAR00012 0.170 0.163 0.750 0.000 0.057 0.388

VAR00013 0.062 0.051 0.829 0.141 0.030 0.220

VAR00014 0.034 0.141 0.017 0.066 0.011 0.854

Note: Extraction Method: Principal Component Analysis; Rotation Method: Varimax with Kaiser

Normalization; a Rotation converged in 7 iterations.

Component

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in India. Hence, a question has been posed to the respondents on how often

they change the agency. The results are shown in Table 10.

It can be seen from Table 10 that 80% of the advertisers either change their

agencies sometimes or rarely. More than half of the respondents (51.5%) said

that they change the agencies once in 5-10 years; 28.5% of them said they rarely

change their agencies and 20% change their agencies frequently. This could bebecause the switching costs are quiet high. The table also shows that it is a myth

that the organizations never change their advertising agencies, as it shows 0%

against the column.

Reasons for Changing the Agency

There are various reasons for the client switching over to the other agencies.

Some of the common reasons are: The agency might have been acquired by

international alignments, management and staff changes; product conflicts

because of mergers and take-over of new product interactions; brand failure ordiffering perceptions of agency and the advertiser about an advertising strategy.

Table 11 summarizes the relative importance of reasons for the change of agency.

Tenure No. of Respondents Percentage

0-5 years (Frequently) 7 20.0

5-10 years (Sometimes) 18 51.5

10-15 years (Rarely) 10 28.5

Never Change 0 0.0

Table 10: Tenure of Client-Agency Relationship

A overwhelming majority 80% of the sample firms changed their agency due

to the management changes in the agencies. From this, it could be concluded

that advertisers go to an agency not just by its name or size, but the people

working in it. 8.6% of the respondents changed their agency due to brand failure

and meager 5.7% of the respondents due to international alignment and product

conflicts. It means, by and large client-agency relationship is cordial.

Cause for Change of an Agency No. of Respondents Percentage

International Alignments 02 5.7

Management Changes 28 80.0

Product Conflicts 02 5.7

Disenchantment with Each Other 0 0.0

Brand Failure 03 8.6

Table 11: Reasons for Changing the Agency

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Relative Importance of Key Factors in Agency Selection

The advertisers are asked to compare the five key factors in selecting an

advertising agency based on their preference level of one factor over the other.

Table 12 presents a pair-wise comparison of different factors.

The numbers in each cell represent the percentage of respondents who prefer

the factor given in the row to that of the factor given in the column.

Table 12: Pair-Wise Comparison Matrix of Key Factors

Strategic Planning 14.3 0 57.1 57.1

Media Ability 85.7 0 57.1 14.3

Creativity 100.0 100.0 100.0 100.0

Service Level 42.8 42.8 0 28.6

Cost Consciousness 42.8 85.7 0 71.4

Key

Factors

Strategic

Planning

Media

AbilityCreativity

Service

Level

Cost

Conscious-

ness

With 100% respondents preferring creativity over all the factors, it could be

said that creativity is most expected from the agency. 85.7% of the respondents

preferred media ability over strategic planning, 57.1% preferred it over service

level and 14.3% over cost consciousness.

Strategic planning is more important than service level and cost consciousness

to 57.1% of the respondents. Service level over strategic planning and mediaability is preferred by 42.8% of the respondents. An overwhelming 85.7% of the

respondents are price sensitive as compared to media ability and 71.4% to that

of service level. Thus, though all the key factors are essential, creativity is

considered to be the very essence of advertising.

Sub-Factors of Key Factors of Selection

The key factors which are discussed in the above paragraphs have been

sub-categorized, so as to have a clear idea about which sub-key factor is most

preferred by the advertisers. Table 13 presents the ratings given to differentsub-criterion by the respondents. The respondents have rated them on a 5 point

Likert scale, where 5 represents the highest significance and 1 the least

significance.

The creative work that sells under the criterion creativity is the most significant,

compared to any other factor. Business understanding, media planning and media

buying are given an equal importance with a rating of 4.5 each. The next two

important factors are holistic planning and market research. Advertising awards

is the least significant factor to the advertisers.

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Key Factors Sub-Key Factors Average Rating

Strategic Planning a. Market research 3.0

b. Holistic planning 3.5

c. Business understanding 4.5

Media Ability a. Media planning 4.5

b. Media buying 4.5

Creativity a. Creative work that sells 5.0

b. Advertising awards 1.0

Table 13: Rating of Sub-Key Factors

Generation of New Ideas and Concepts

Advertising agencies are hired for their creativity in generating new ideas and

concepts. How far this capability is demonstrated by the advertising agencies has

been enquired into. In order to know how frequently the new ideas and concepts

provided by the agencies are, the respondents are asked to select the most suitable

alternative according to their view (Table 14).

Frequency No. of Respondents Percentage

Always 0 0

Most of the Times 14 40

Sometimes 14 40

Rarely 7 20

Never 0 0

Table 14: Generation of New Ideas and Concepts

Forty percent of the advertisers said that advertising agencies provided new

ideas most of the time. An equal number of respondents felt that they are

provided new ideas sometimes. Only 20% of the respondents felt that they are

rarely provided with new ideas. This shows that most of the times agencies

support the advertisers by providing them innovative ideas and concepts, and

thus, fulfilling the purpose for which they are engaged.

Autonomy for the Advertising Agency

Companies are demanding more from the agencies and there is always a conflict

between the client and agency regarding the autonomy or freedom given to the

agency. The agencies feel that they are not given full freedom and they are

working under pressure. On the other hand, advertisers feel that they are giving

a free hand to the advertising agencies. Advertisers opinions regarding the

autonomy extended are given in Table 15.

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Majority of the advertisers (94.3%) felt that they are giving moderate

autonomy to the advertising agencies.

Choice of Single or Multiple Agencies

Some of the companies choose more than one agency. For example, they may

choose one agency to make the advertisement and the other for media planning

and buying slots. Table 16 presents the survey results of whether a single agency

or multiple agencies are chosen.

Extent of Autonomy No. of Respondents Percent

Full Autonomy 0 0

Moderate Autonomy 33 94.3

Partial Autonomy 2 5.7

No Autonomy 0 0

Table 15: Autonomy Given to the Agency

According to the survey, majority of the respondents (60%) prefer to go for a

single agency rather than multiple agencies. This may be because they do not want

to run from pillar to post and control costs and time.

Conclusion

To sum up, it can be said that the main objective of advertising agencies is to

build the brand image, closely followed by the objective to inform. As far as the

method to determine advertising budget is concerned, the most preferred method

is objective task method, followed by percentage of sales method and competitive

method. As far as the basis for determining advertising budget is concerned, equal

importance is given to all the factors, i.e., determining the budget is based on

the need. Most of the advertising appeals are rational or sensory. Televisionhappens to be the most preferred media, closely followed by print media. Most

of the advertisers go for advertising agencies. The relationship shared by the

advertisers with agency according to their view is very strong. Creativity and

media ability are rated the highest by the advertisers. Building the brand image,

personal working in the agency, cost-effectiveness are some other factors which

advertisers look for in an agency. Advertisers switch their agency, if at all, for

reasons like, the management changes in the agency. Advertisers opine that they

are provided with new ideas and concepts by their agencies most of the times

and they also give autonomy to them in their sphere of work.

No. of Agencies No. of Respondents Percent

Single 21 60

Multiple 14 40

Table 16: Number of Agencies

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This study has also some limitations. The sample being small relative to the

number of advertisers and the advertising agencies in India, and also due to the

contingent and situational nature of the advertising.

References

1. Ammani P (2008), Advertising Options, Ph.D. Thesis, OU, Hyderabad.

2. Aresh Shirali (1998) What do you Care?, Anniversary Report, A&M.

3. Bovee C L and Arens W F (1989), Contemporary Advertising, 3rd Edition, Richard

D Irwin, Illinois.

4. Bovee C L and Arens W F (1992), Contemporary Advertising, Richard D Irwin,

Illinois.

5. Bograt Leo (1984), Strategy in Advertising, pp. 19-23, Harcourt Brace

Jovanovich, New York.

6. Davies M A P (1994), A Multicriteria Decision Model Application for Managing

Group Decisions, The Journal of the Operational Research Society, Vol. 45,

No. 11, pp. 47-58.

7. Gronstedt A and Thorson E (1996) Five Approaches to Organise an

Integrated Marketing Communication Agency,Journal of Advertising Research,

Vol. 36, March, pp. 48-58.

8. Ogilvy David (1983), Ogilvy on Advertising, Vintage Books.

Reference # 02J-2009-06-05-01

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