1. Strategic Communications Agencies

2. Agencies The key players Types of agencies How agencies charge clients Organization of agencies

3. The Four Players The Clients The Strategic Communication Agencies The Media The Vendors

4. Types of Clients Manufacturers Resellers (retailers) Institutions Individuals

5. The Agencies Independent communications agencies Full service agencies Creative boutiques Digital agencies Specialty shops In-house communication departments

6. Advertising Media Print (newspapers, magazines) Broadcast (television, radio) Outdoor (billboards, transit) Direct response (direct mail, telemarketing) Online marketing Social media Mobile media Miscellaneous

7. The Vendors Freelancers Consultants Production Professionals

8. Types of Agencies The full-service agency Creative boutiques Digital shops Medical agencies Political agencies Minority agencies In-house agencies Media buying services

9. The Full-Service Agency Major staff functions: Research and account planning Account management/client service Creative services Media planning and buying Pubic relations Promotions and event planning Direct response Interactive

11. The Full-Service Agency Other major agency functions: Accounting Legal Services Traffic Production Human resources

12. Services Provided Analysis of marketing and cultural data Formulation of core strategy and tactics Recommendation of creative direction Production of brand messages - Ad/PR Create promotions and databases Placement in print, broadcast & Internet Verification of message placement

13. Top Agencies, Revenue In Millions 1. WPP, London: $16,459 2. Omnicom Group, New York: $14,219 3. Publicis Groupe, Paris $8,494 4. Interpublic Group, New York $6,956 5. Dentsu, Tokyo $6,390 6. Havas, Puteaux, France $2,287 7. Hakuhodo DY Holdings, Tokyo $2,184 8. Epsilon, Irving, Texas $1,223 9. MDC Partners, New York $1,071 10. Experian, New York $947

14. Creative Boutiques Small agencies focus on creative Specialize in producing ads Little staff for research, strategy, media planning, or public relations Sub-contract for creative work from full- service agencies Often have short life spans

15. Digital Shops 52% of CMO’s believe traditional ad agencies are ill-suited to conduct online marketing Specialize in web design, e-mail drops, blogs, peer reviewing, social media, and viral video Less siloed and more nimble about new media Few mid-level managers who are over-specified More open to experimentation and innovation

16. Medical/Political Shops Entirely service specialized clients Specialized knowledge of category Provide full-service functions

17. Minority Agencies Often full-service agencies Specializing in campaigns that target minorities/specialized populations Blacks, Hispanics, Asians, Gay/Lesbian

18. In-house Agencies Owned and supervised by company Reasons for in-house agencies: Savings Specialization Priority service But, minimum staffing of experts and possibility of “group-think”

19. Media Buying Services Original format of ad agencies Sole function is media buying Growing complexity of media buying Buying media in bulk

20. How Agencies are Paid The Commission System The Fee System Incentive-based Systems

21. The Commission System Standard rate: 15% of media buys Trend toward negotiated commission Fierce competition among agencies

22. The Fee System Negotiated hourly fee Media buys billed directly to client Hourly rate rule of thumb: 3 x hourly salary of each employee Employee hourly salary = Salary / Hours worked per year

23. Incentive-based Systems Higher fees for good performance Incentives negotiated in advance Pay per performance system

24. Organization of Agencies Organized around departments Organized around clients Organized around tasks Organized by ownership

25. Organizing Agencies

26. Tradeoffs in Agency Organization

27. Agency Assignment Get in your agencies and decide what structure you want to adopt Greater integration usually results in more coherent campaigns More need to negotiate decisions - share responsibilities for sections Be realistic about level of integration