1. Evalution and growth of advertising advertising

2. the first advertising agents 1843 volney palmer 1843 volney palmer agent for media, not advertisers agent for media, not advertisers 1864 - george p. rowell 1864 - george p. rowell “the johnny appleseed of advertising” Rowell’s American Newspaper Directory space wholesaler shared his “secret” 1888 - “Printer’s Ink”

3. founded in 1864 by francis w. ayer, 20 founded in 1864 by francis w. ayer, 20 the first advertising agency “& son” made the business seem more established worked for advertiser slogan - “keeping everlastingly at it brings success.” n.w. ayer & son

4. 4 full-service agency functions: today, “full-service” agencies provide the following: today, “full-service” agencies provide the following: account management creative media planning and media placement (media buying)‏ research many adding “below the line” services - PR, sales promotion, Interactive

5. India agency business today over $36 billion in media billings ( www.mccannerickson.com)‏ over $36 billion in media billings ( www.mccannerickson.com)‏ over 5,000 agencies over 5,000 agencies over 143,000 people employed over 143,000 people employed MUMBAI and DELHI dominate MUMBAI and DELHI dominate

6. agency billing by city/state CityBillings in Millions New York$61,264.4 Chicago 17,739.9 Los Angeles 10,545.6 Detroit 7,946.3 Minneapolis 6,087.2 San Francisco 5,101.9 Boston 3,993.7 Dallas 3,234.8 Atlanta 2,620.9 Philadelphia 2,379.6 (Source (Source: Ad Age, 2001 )‏

7. major types of agency: mega-agency groups mega-agency groups independent agencies independent agencies national, regional, and local national, regional, and local specialized/niche agencies specialized/niche agencies agency service suppliers agency service suppliers media buying, creative services media buying, creative services

8. mega-agency groups prompted by mergers and client globalization prompted by mergers and client globalization financial pressures financial pressures martin sorrell, chairman WPP service multinational accounts subsidiaries provide “IMC” (integrated marketing communication) services

9. 5 top mega-agency groups: 1997

10. 5 top mega-agency groups: 1999

11. 5 top mega-agency groups: 2000

12. 5 top mega-agency groups: 2006 Omnicom Group$8.62 billion WPP Group 6.76 billion Interpublic (IPG) 5.86 billion Publicis 4.41 billion (Including Leo Burnett)‏ Dentsu (Japan) 2.55 billion Havas Advertising 1.88 billion

13. 5 top mega-agency groups: Source: Ad Age 2007 Together, the five international mega- agencies are now 75% of worldwide billings

14. mega-agency pros & cons positives: positives: larger talent pool larger talent pool negotiating clout negotiating clout financial rewards financial rewards account security account security competitive edge competitive edge strong partnerships strong partnerships more services more services international link international link negatives: negatives: people vs. profit people vs. profit creativity vs. size creativity vs. size conflict of interests conflict of interests people business people business

15. national, regional & local these are independent agencies these are independent agencies there are now fewer national agencies which are not part of mega-agency groups there are now fewer national agencies which are not part of mega-agency groups regional and local agencies work with smaller clients who are usually located nearby regional and local agencies work with smaller clients who are usually located nearby

16. 1top U.S. ad agencies 1. J. Walter Thompson 2. Leo Burnett Worldwide 3. 3. McCann-Erickson Worldwide 4. BBDO Worldwide 5. Grey Advertising 6. DDB Worldwide 7. 7. Ogilvy & Mather Worldwide 8. FCB Worldwide 9. Y&R Advertising 10. Publicis Worldwide

17. specialized/niche agencies industry specialists industry specialists ethnic agencies ethnic agencies

18. specialized/niche agencies industry specialists industry specialists ethnic agencies ethnic agencies internet agencies

19. specialized/niche agencies industry specialists industry specialists ethnic agencies ethnic agencies internet agencies business-to-business agencies creative boutiques and design houses

20. other suppliers provide “unbundled” services provide “unbundled” services one part of what an agency does one part of what an agency does media buying services media buying services freelancers & consultants freelancers & consultants production companies production companies in-house or “house” agencies in-house or “house” agencies agencies owned by clients agencies owned by clients

21. in-house agencies advantages & disadvantages advantages & disadvantages from the gap’s “house agency”

22. in-house agencies advantages & disadvantages advantages & disadvantages from the gap’s “house agency” familiarity specialization fast service cost savings confidentiality

23. in-house agencies advantages & disadvantages advantages & disadvantages familiarity familiarity specialization specialization fast service fast service cost savings cost savings confidentiality confidentiality objectivity resources fresh ideas extra cost and overhead

24. 2 primary roles of agencies idea generation idea generation brand-building brand-building

25. idea generation manufacture ideas manufacture ideas ideas are lifeblood of the agency create intellectual capital create and sell different kinds of ideas marketing strategies promotional opportunities even new product ideas...

26. brand-building “The agency’s purpose is to create and direct communication about a product or service so that the brand is perceived to have a unique value or brand personality.” “The agency’s purpose is to create and direct communication about a product or service so that the brand is perceived to have a unique value or brand personality.” Let’s look at some examples... Let’s look at some examples...

27. brand-building Marlboro Marlboro Leo Burnett Leo Burnett

28. brand-building McDonald’s McDonald’s DDB Needham DDB Needham

29. brand-building Pepsi Pepsi BBDO BBDO

30. brand-building Nike Nike Wieden + Kennedy Wieden + Kennedy

31. brand-building American Express American Express Ogilvy & Mather Ogilvy & Mather

32. brand-building Apple Apple Chiat/Day Chiat/Day

33. brand-building more and more, agencies are being involved in all areas of marketers’ brand-building activities more and more, agencies are being involved in all areas of marketers’ brand-building activities today, it’s more than advertising today, it’s more than advertising it’s integrated marketing communications (IMC)‏ it’s integrated marketing communications (IMC)‏ means integration

34. integrated marketing communication more and more, agencies are becoming the integrators of the whole range of brand-building activities... more and more, agencies are becoming the integrators of the whole range of brand-building activities... “done right, IMC is the planning and implementation of the various communications disciplines as a single, overall communications system -- making all the channels work.”

35. integrated marketing communication advertising public relations direct response sales promotion personal selling the imc promotion mix

36. what agencies do. structure & organization and how they’re organized to do it.

37. 7 primary services: complete a marketing analysis complete a marketing analysis develop an advertising plan develop an advertising plan prepare a creative strategy prepare a creative strategy create advertising executions create advertising executions develop and implement a media plan develop and implement a media plan handle billing and payments handle billing and payments integrate other marketing communications integrate other marketing communications

38. 4 functions of full-service agencies account management creative media planning and placement research

39. agency organization chart

40. liaison between agency and client liaison between agency and client responsible for understanding... responsible for understanding... the client’s business the client’s business the client’s marketing needs the client’s marketing needs strategy development strategy development representing client point of view within the agency representing client point of view within the agency account management

41. account management director account management director management supervisor management supervisor account supervisors account supervisors account executives account executives assistant account execs assistant account execs account coordinators account coordinators traffic traffic account management

42. responsibility responsibility the creative department is responsible for creating and producing the print and broadcast advertising strategy is key good creative work is always guided by a creative strategy that sets forth goals to be accomplished and key message points to be relayed creative department

43. executive & group creative directors executive & group creative directors creative director creative director associate creative director associate creative director copywriters copywriters art directors art directors broadcast producers broadcast producers print production managers print production managers traffic coordinators traffic coordinators

44. media department The media department has two main functions - planning and buying. The media department has two main functions - planning and buying. The planning group handles more strategic marketing and media issues. The buying group handles media negotiations and implementation.

45. media director media director associate media directors associate media directors media supervisors media supervisors media planners media planners media buyers media buyers media analysts media analysts MediaPlan media department

46. mega-agency media departments have now become profit centers mega-agency media departments have now become profit centers agencies have set up their media departments as free-standing units agencies have set up their media departments as free-standing units many large clients now look at media as a separate service many large clients now look at media as a separate service big changes in the media department

47. research department interpret market environment interpret market environment gather and analyze research data. gather and analyze research data. primary and secondary techniques primary and secondary techniques determine consumer needs/perceptions determine consumer needs/perceptions understand problems understand problems advise how ads can meet strategic goals advise how ads can meet strategic goals help find solutions help find solutions ResearchReport

48. research director research director research project managers research project managers research assistants research assistants outside research specialists outside research specialists research department ResearchReport

49. auxiliary agency functions account planning account planning strategy/creative review board strategy/creative review board office management office management human resources human resources legal services legal services accounting accounting recruitment recruitment

50. 3 ways agencies make money commissions commissions usually 15% of gross costs usually 15% of gross costs fees fees usually based on negotiated hourly rate usually based on negotiated hourly rate incentives incentives still relatively new and problematic still relatively new and problematic usually based on performance goals usually based on performance goals

51. agency commissions media commission system media commission system 15% media commission 15% media commission adjustable commission rates adjustable commission rates negotiate to match client budget negotiate to match client budget sliding scale sliding scale markups-production & service markups-production & service add a percentage markup to costs add a percentage markup to costs 17.65% of net = 15% of gross 17.65% of net = 15% of gross

52. 4 types of fee systems fixed fee (retainer)‏ fixed fee (retainer)‏ cost-plus fee cost-plus fee performance fee performance fee hybrid fee & commission hybrid fee & commission

53. incentives in theory, a good way to work in theory, a good way to work get paid based on how well you do, not how much you bill get paid based on how well you do, not how much you bill in practice, difficult to implement in practice, difficult to implement if client makes final decision (instead of agency), how can agency be responsible for final results? if client makes final decision (instead of agency), how can agency be responsible for final results? results based on many factors, such as competitive efforts, not just advertising results based on many factors, such as competitive efforts, not just advertising

54. new business three primary sources three primary sources build existing client’s business build existing client’s business add and sell new IMC services add and sell new IMC services solicit new accounts solicit new accounts two ongoing problems two ongoing problems “spec” work “spec” work teams “walking” with accounts teams “walking” with accounts “ The critical objective and role of any ad agency is gaining new business.”

55. beyond 2000 advertising agency trends advertising agency trends

56. agency trends clutter, overload, “overchoice” clutter, overload, “overchoice” increased media options increased media options increasing audience fragmentation increasing audience fragmentation more messages everywhere more messages everywhere doing more with less doing more with less economic pressures, “downsizing” economic pressures, “downsizing” ongoing client budget pressures ongoing client budget pressures managing size managing size more mergers and mega-agencies more mergers and mega-agencies

57. agency trends managing technology managing technology interactive marketing interactive marketing e-mail, web sites e-mail, web sites improving internal systems improving internal systems account planning account planning re-engineering agency organization re-engineering agency organization improving delivery of imc services improving delivery of imc services

58. as long as marketers need ideas to build their brands, they’re going to need in conclusion... advertising agencies

60. questions & discussion why might you be interested in going into the agency business? why might you be interested in going into the agency business? what might keep you from choosing a career in the agency business? what might keep you from choosing a career in the agency business?