Advertising and Marketing Process: The Role of Ad Agencies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin KSR Business School/KSRCAS Dr. K V Kannan M.B.A., M.F.T. Ph.D. Senior Lecturer KSR Business School K.S.R. College of Arts & Science Tiruchengode

Ad Agency © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin KSR Business School/KSRCAS An agency that designs advertisement to call public attention to its clients

Advertising Department Under Centralized System © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin President Production Finance Marketing Research and Develop- ment Human Resources Advertising Marketing Research Sales Product Planning KSR Business School/KSRCAS

Decentralized System © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin ProductionFinance Sales Brand Manager Ad agency Brand Manager Ad agency Product Management Sales Promotion Package Design Advertising Department Marketing Research Marketing Services MarketingResearch and Development Human Resources Corporate KSR Business School/KSRCAS

In-house Agency © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin KSR Business School/KSRCAS An in-house agency is a group of advertising specialists that operates its own profit centre and handles all the advertising work for its primary client – the company with which it is affiliated. Sometimes, in-house agencies may also handle outside work.

Planning advertising Producing advertising Performing research Selecting media Sales promotion and training Strategic market planning Trade show materials Package design Account Management Creative Services Media Planning and Buying Account Planning/Research Strategic market planning Sales promotion and training Road show materials Package design Full-Services Agencies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Full Range of Marketing Communication and Promotion Services Non-Advertising Services Public relations and publicity KSR Business School/KSRCAS

Typical Full-Service Agency Organization © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Writers Art Directors TV Produciton Print Production VP Creative Services Account Executive Account Supervision VP Account Services MediaResearch Sales Promotion VP Marketing Services PersonnelAccountingFinance Office Management VP Management and Finance President Board of Directors KSR Business School/KSRCAS

Specialized Agencies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin KSR Business School/KSRCAS Planning advertising Producing advertising Specialize in certain functions Target specific audience Cover specific industries Do not follow traditional full- service agency approach

Minority Agencies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin KSR Business School/KSRCAS Target at the minorities prevailing in a country/area

The Role of Creative Boutiques © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Creative Boutiques Provide Only Creative Services Full-Service Agencies May Subcontract With Creative Boutiques Provide Only Creative Services Full-Service Agencies May Subcontract With Creative Boutiques There may not be any staff for media, research or strategic planning There may not be any staff for media, research or strategic planning KSR Business School/KSRCAS

Coca Cola’s in-house boutique created this popular spot © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin KSR Business School/KSRCAS

Specialize in Buying Media, Especially Broadcast Time Agencies and Clients Develop Media Strategy Specialize in Buying Media Media Buying Can Be Specialized © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Media Buying Services Media Buying Organizations Implement the Strategy and Buy Time and Space KSR Business School/KSRCAS

Virtual Agencies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin KSR Business School/KSRCAS Specialize in Buying Media, Especially Broadcast Time Agencies and Clients Develop Media Strategy May not have conventional offices Operates as a group of freelancers and is paid accordingly Virtual Agencies They work at home or in their cars or at their clients’ offices

Data Base Management Data Base Management Research Media Services Media Planning and Buying Creative Development and Production Account Management How Agencies are Organized © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Organisation of Ad Agencies Account Planning and Research KSR Business School/KSRCAS

Commissions Method Commissions Method Cost-Plus Agreements Cost-Plus Agreements Fee Arrangements Fee Arrangements Incentive-Based Payment Incentive-Based Payment Commissions Method Commissions Method Cost-Plus Agreements Cost-Plus Agreements Fee Arrangements Fee Arrangements Methods of Agency Compensation © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Compensation Methods Compensation Methods KSR Business School/KSRCAS

Referrals How Agencies Gain Clients © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Sometimes cold calls Sometimes cold calls Presentations Image, Reputation KSR Business School/KSRCAS

? © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin KSR Business School/KSRCAS