Strat Comm Agencies

Strategic Communications

Agencies

AgenciesThe key playersTypes of agenciesHow agencies charge clientsOrganization of agencies

The Four Players

The ClientsThe Strategic Communication AgenciesThe MediaThe Vendors

Types of Clients

ManufacturersResellers (retailers)Institutions Individuals

The Agencies

Independent communications agenciesFull service agenciesCreative boutiquesSpecialty shops

In-house communication departments

Advertising MediaPrint (newspapers, magazines)Broadcast (television, radio)Outdoor (billboards, transit)Direct response (direct mail, telemarketing)Internet and InteractiveMiscellaneous

The Vendors

FreelancersConsultantsProduction Professionals

Types of AgenciesThe full-service agencyCreative boutiquesMedical agenciesPolitical agenciesMinority agenciesIn-house agenciesMedia buying services

The Full-Service AgencyMajor staff functions:Research and account planningAccount management/client serviceCreative servicesMedia planning and buyingPubic relationsPromotions and event planningDirect response Interactive

The Full-Service AgencyOther major agency functions:AccountingLegal ServicesTrafficProductionHuman resources

Services ProvidedAnalysis of marketing and cultural dataFormulation of core strategy and tacticsRecommendation of creative directionProduction of brand messages - Ad/PRCreate promotions and databasesPlacement in print, broadcast & InternetVerification of message placement

Creative BoutiquesSmall agencies focus on creativeSpecialize in producing adsLittle staff for research, strategy, media planning, or public relationsSub-contract for creative work from full-service agenciesOften have short life spans

Medical/Political ShopsEntirely service specialized clientsSpecialized knowledge of categoryProvide full-service functions

Minority AgenciesOften full-service agenciesSpecializing in campaigns that target minorities/specialized populationsBlacks, Hispanics, Asians, Gay/Lesbian

In-house AgenciesOwned and supervised by companyReasons for in-house agencies:SavingsSpecializationPriority serviceBut, minimum staffing of experts and

possibility of “group-think”

Media Buying ServicesOriginal format of ad agenciesSole function is media buyingGrowing complexity of media buyingBuying media in bulk

How Agencies are PaidThe Commission SystemThe Fee SystemIncentive-based Systems

The Commission SystemStandard rate: 15% of media buysTrend toward negotiated commissionFierce competition among agencies

The Fee SystemNegotiated hourly feeMedia buys billed directly to clientHourly rate rule of thumb:3 x hourly salary of each employee

Employee hourly salary =Salary / Hours worked per year

Incentive-based SystemsHigher fees for good performanceIncentives negotiated in advancePay per performance system

Organization of AgenciesOrganized around departmentsOrganized around clientsOrganized around tasksOrganized by ownership

Organizing Agencies

Tradeoffs in Agency Organization

Agency AssignmentGet in your agencies and decide what structure you want to adoptGreater integration usually results in more

coherent campaignsMore need to negotiate decisions - share

responsibilities for sectionsBe realistic about level of integration