JOMC 170 Advertising Agencies 05AdAgencies.ppt the first advertising agents n 1843 Volney Palmer l agent for media, not advertisers n 1864 - George P

JOMC 170JOMC 170JOMC 170JOMC 170

Advertising Advertising AgenciesAgencies

05AdAgencies.ppt05AdAgencies.ppt

Advertising Advertising AgenciesAgencies

05AdAgencies.ppt05AdAgencies.ppt

the first advertising agentsthe first advertising agentsthe first advertising agentsthe first advertising agents

1843 Volney Palmer1843 Volney Palmer agent for agent for mediamedia, not advertisers, not advertisers

1864 - George P. Rowell1864 - George P. Rowell

1843 Volney Palmer1843 Volney Palmer agent for agent for mediamedia, not advertisers, not advertisers

1864 - George P. Rowell1864 - George P. Rowell “ “the johnny appleseed the johnny appleseed

of advertising”of advertising” Rowell’s American Rowell’s American

Newspaper DirectoryNewspaper Directory space wholesaler space wholesaler shared his “secret”shared his “secret” 1888 - 1888 - “Printer’s Ink”“Printer’s Ink”

“ “the johnny appleseed the johnny appleseed of advertising”of advertising”

Rowell’s American Rowell’s American Newspaper DirectoryNewspaper Directory

space wholesaler space wholesaler shared his “secret”shared his “secret” 1888 - 1888 - “Printer’s Ink”“Printer’s Ink”

founded in 1864 by founded in 1864 by Francis W. Ayer, 20Francis W. Ayer, 20

founded in 1864 by founded in 1864 by Francis W. Ayer, 20Francis W. Ayer, 20

the first advertising agencythe first advertising agencythe first advertising agencythe first advertising agency

“ “& son” made the & son” made the business seem more business seem more establishedestablished

worked for worked for advertiseradvertiser slogan - slogan - “keeping “keeping

everlastingly at it brings everlastingly at it brings success.”success.”

“ “& son” made the & son” made the business seem more business seem more establishedestablished

worked for worked for advertiseradvertiser slogan - slogan - “keeping “keeping

everlastingly at it brings everlastingly at it brings success.”success.”

N.W. Ayer N.W. Ayer & Son& Son N.W. Ayer N.W. Ayer & Son& Son

4 full-service agency functions:4 full-service agency functions:4 full-service agency functions:4 full-service agency functions:

today,today, “full-service” agencies “full-service” agencies provide the followingprovide the following::

today,today, “full-service” agencies “full-service” agencies provide the followingprovide the following:: account managementaccount management creativecreative media planning and media media planning and media

placement (media buying)placement (media buying) research research

account managementaccount management creativecreative media planning and media media planning and media

placement (media buying)placement (media buying) research research

many adding many adding “below the line”“below the line” services - services - PR, sales promotion, InteractivePR, sales promotion, Interactive

many adding many adding “below the line”“below the line” services - services - PR, sales promotion, InteractivePR, sales promotion, Interactive

U.S. agency business todayU.S. agency business todayU.S. agency business todayU.S. agency business today

over $285.1 billion in media over $285.1 billion in media billings billings (2006 (2006 www.mccann.comwww.mccann.com))

over 5,000 agenciesover 5,000 agencies over 243,000 people employedover 243,000 people employed New York and Chicago dominateNew York and Chicago dominate

over $285.1 billion in media over $285.1 billion in media billings billings (2006 (2006 www.mccann.comwww.mccann.com))

over 5,000 agenciesover 5,000 agencies over 243,000 people employedover 243,000 people employed New York and Chicago dominateNew York and Chicago dominate

agency billing by city/stateagency billing by city/stateagency billing by city/stateagency billing by city/state

CityCity Billings in MillionsBillings in MillionsNew YorkNew York $61,264.4$61,264.4ChicagoChicago 17,739.9 17,739.9Los AngelesLos Angeles 10,545.6 10,545.6DetroitDetroit 7,946.3 7,946.3MinneapolisMinneapolis 6,087.2 6,087.2San FranciscoSan Francisco 5,101.9 5,101.9BostonBoston 3,993.7 3,993.7DallasDallas 3,234.8 3,234.8AtlantaAtlanta 2,620.9 2,620.9PhiladelphiaPhiladelphia 2,379.6 2,379.6

(Source(Source: Ad Age, 2001 )

CityCity Billings in MillionsBillings in MillionsNew YorkNew York $61,264.4$61,264.4ChicagoChicago 17,739.9 17,739.9Los AngelesLos Angeles 10,545.6 10,545.6DetroitDetroit 7,946.3 7,946.3MinneapolisMinneapolis 6,087.2 6,087.2San FranciscoSan Francisco 5,101.9 5,101.9BostonBoston 3,993.7 3,993.7DallasDallas 3,234.8 3,234.8AtlantaAtlanta 2,620.9 2,620.9PhiladelphiaPhiladelphia 2,379.6 2,379.6

(Source(Source: Ad Age, 2001 )

major types of agency:major types of agency:major types of agency:major types of agency: mega-agency groupsmega-agency groups independent agenciesindependent agencies

national, regional, and local national, regional, and local

specialized/niche agenciesspecialized/niche agencies agency service suppliersagency service suppliers

media buying, creative servicesmedia buying, creative services

mega-agency groupsmega-agency groups independent agenciesindependent agencies

national, regional, and local national, regional, and local

specialized/niche agenciesspecialized/niche agencies agency service suppliersagency service suppliers

media buying, creative servicesmedia buying, creative services

mega-agency groupsmega-agency groupsmega-agency groupsmega-agency groups

prompted by mergers and prompted by mergers and client globalizationclient globalization

financial pressures financial pressures

prompted by mergers and prompted by mergers and client globalizationclient globalization

financial pressures financial pressures

martin sorrell,chairman WPP

service multinational service multinational accountsaccounts

subsidiaries provide subsidiaries provide “IMC” (integrated marketing “IMC” (integrated marketing communication) services communication) services

service multinational service multinational accountsaccounts

subsidiaries provide subsidiaries provide “IMC” (integrated marketing “IMC” (integrated marketing communication) services communication) services

5 top mega-agency groups:5 top mega-agency groups:5 top mega-agency groups:5 top mega-agency groups:

OmniCom Group $4.15 billion

WPP Group $3.64 billion

Interpublic Group $3.38 billion

Dentsu (Japan) $1.98 billion

Young & Rubicam $1.49 billion

1997199719971997


WPP Group(including Y&R)

$6.69 billion

Omnicom Group 5.74 billion


Havas $2.39 billion

Publicis(including Saatchi)

$2.17 billion

1999199919991999


WPP Group(including Y&R)

$7.9 billion

Omnicom Group $6.9 billion


Dentsu $3.1 billion

Havas $2.76 billion

2000200020002000


2003200320032003

Omnicom GroupOmnicom Group $8.62 billion$8.62 billionWPP Group WPP Group 6.76 billion 6.76 billionInterpublic (IPG)Interpublic (IPG) 5.86 billionPublicis Publicis 4.41 billion 4.41 billion

(Including Leo Burnett)(Including Leo Burnett)

Dentsu (Japan)Dentsu (Japan) 2.55 billion 2.55 billionHavas AdvertisingHavas Advertising 1.88 billion 1.88 billion


2005200520052005

Omnicom GroupOmnicom Group $10.48 billion$10.48 billionWPP GroupWPP Group

(with Grey) (with Grey) 10.03 billion 10.03 billionInterpublic Interpublic 6.27 billionPublicis Publicis 5.11 billion 5.11 billionDentsu (Japan)Dentsu (Japan) 2.89 billion 2.89 billionHavas AdvertisingHavas Advertising 1.81 billion 1.81 billion


Source: Ad Age 2004Source: Ad Age 2004Source: Ad Age 2004Source: Ad Age 2004

Together, the five international mega-Together, the five international mega-agencies are now 75% of worldwide agencies are now 75% of worldwide billingsbillings

18%18%17%17%

25%25%

6%6%

18%18%

16%16%

OmnicomWPPIPGPublicisOtherHavas

mega-agency pros & consmega-agency pros & consmega-agency pros & consmega-agency pros & cons

positives:positives: larger talent poollarger talent pool negotiating cloutnegotiating clout financial rewardsfinancial rewards account securityaccount security competitive edgecompetitive edge strong partnershipsstrong partnerships more servicesmore services international linkinternational link

positives:positives: larger talent poollarger talent pool negotiating cloutnegotiating clout financial rewardsfinancial rewards account securityaccount security competitive edgecompetitive edge strong partnershipsstrong partnerships more servicesmore services international linkinternational link

negatives:negatives: people vs. profitpeople vs. profit creativity vs. sizecreativity vs. size conflict of conflict of

interestsinterests people businesspeople business

negatives:negatives: people vs. profitpeople vs. profit creativity vs. sizecreativity vs. size conflict of conflict of

interestsinterests people businesspeople business

national, regional & localnational, regional & localnational, regional & localnational, regional & local

these arethese are independent agencies independent agencies

there are nowthere are now fewer national agencies fewer national agencies which are not part of mega-agency groupswhich are not part of mega-agency groups

regionalregional and and local agencies local agencies work with work with smaller clients who are usually located nearbysmaller clients who are usually located nearby

these arethese are independent agencies independent agencies

there are nowthere are now fewer national agencies fewer national agencies which are not part of mega-agency groupswhich are not part of mega-agency groups

regionalregional and and local agencies local agencies work with work with smaller clients who are usually located nearbysmaller clients who are usually located nearby

1010 top U.S. ad agenciestop U.S. ad agencies1010 top U.S. ad agenciestop U.S. ad agencies

Top independent U.S. agenciesTop independent U.S. agenciesTop independent U.S. agenciesTop independent U.S. agencies

specialized/niche agenciesspecialized/niche agenciesspecialized/niche agenciesspecialized/niche agencies

industry specialistsindustry specialists industry specialistsindustry specialists


industry specialistsindustry specialists ethnic agenciesethnic agencies




industry specialistsindustry specialists ethnic agenciesethnic agencies internet agencies internet agencies internet agencies internet agencies



industry specialistsindustry specialists ethnic agenciesethnic agencies internet agenciesinternet agencies internet agenciesinternet agencies

business-to-business agenciesbusiness-to-business agencies business-to-business agenciesbusiness-to-business agencies creative boutiques and creative boutiques and

design housesdesign houses

creative boutiques and creative boutiques and design housesdesign houses

other suppliersother suppliersother suppliersother suppliers provide “unbundled” servicesprovide “unbundled” services

one part of what an agency doesone part of what an agency does

media buying servicesmedia buying services freelancers & consultantsfreelancers & consultants production companies production companies in-house or “house” agenciesin-house or “house” agencies

agencies owned by clients agencies owned by clients

provide “unbundled” servicesprovide “unbundled” services one part of what an agency doesone part of what an agency does

media buying servicesmedia buying services freelancers & consultantsfreelancers & consultants production companies production companies in-house or “house” agenciesin-house or “house” agencies

agencies owned by clients agencies owned by clients

in-house agenciesin-house agenciesin-house agenciesin-house agencies advantagesadvantages && disadvantagesdisadvantages advantagesadvantages && disadvantagesdisadvantages

from the gap’sfrom the gap’s““house agency”house agency”from the gap’sfrom the gap’s

““house agency”house agency”

in-house agenciesin-house agenciesin-house agenciesin-house agencies advantagesadvantages && disadvantagesdisadvantages advantagesadvantages && disadvantagesdisadvantages

from the gap’sfrom the gap’s““house agency”house agency”from the gap’sfrom the gap’s

““house agency”house agency”

familiarityfamiliarity specializationspecialization fast servicefast service cost savingscost savings confidentialityconfidentiality


in-house agenciesin-house agenciesin-house agenciesin-house agencies advantagesadvantages && disadvantagesdisadvantages


advantagesadvantages && disadvantagesdisadvantages familiarityfamiliarity specializationspecialization fast servicefast service cost savingscost savings confidentialityconfidentiality

objectivityobjectivity resourcesresources fresh ideasfresh ideas extra cost and extra cost and

overheadoverhead

objectivityobjectivity resourcesresources fresh ideasfresh ideas extra cost and extra cost and

overheadoverhead

2 primary roles of agencies2 primary roles of agencies2 primary roles of agencies2 primary roles of agencies

idea generationidea generation brand-buildingbrand-building

idea generationidea generation brand-buildingbrand-building

idea generationidea generationidea generationidea generation manufacture ideasmanufacture ideas manufacture ideasmanufacture ideas

ideas are lifeblood of the agencyideas are lifeblood of the agency

create intellectual capitalcreate intellectual capital create and sell different create and sell different

kinds of ideaskinds of ideas marketing strategiesmarketing strategies promotional opportunitiespromotional opportunities even new product ideas...even new product ideas...

ideas are lifeblood of the agencyideas are lifeblood of the agency

create intellectual capitalcreate intellectual capital create and sell different create and sell different

kinds of ideaskinds of ideas marketing strategiesmarketing strategies promotional opportunitiespromotional opportunities even new product ideas...even new product ideas...

brand-buildingbrand-buildingbrand-buildingbrand-building

““The agency’s purpose is to The agency’s purpose is to createcreate and and directdirect communication about a communication about a product or service product or service so that the brand so that the brand is perceived to have a unique is perceived to have a unique value or brand personality.”value or brand personality.”

Let’s look at some examples...Let’s look at some examples...

““The agency’s purpose is to The agency’s purpose is to createcreate and and directdirect communication about a communication about a product or service product or service so that the brand so that the brand is perceived to have a unique is perceived to have a unique value or brand personality.”value or brand personality.”

Let’s look at some examples...Let’s look at some examples...


MarlboroMarlboro Leo Burnett Leo Burnett

MarlboroMarlboro Leo Burnett Leo Burnett


McDonald’sMcDonald’s DDB Needham DDB Needham

McDonald’sMcDonald’s DDB Needham DDB Needham


PepsiPepsi BBDO BBDO

PepsiPepsi BBDO BBDO


NikeNike Wieden + Kennedy Wieden + Kennedy

NikeNike Wieden + Kennedy Wieden + Kennedy


American ExpressAmerican Express Ogilvy & Mather Ogilvy & Mather

American ExpressAmerican Express Ogilvy & Mather Ogilvy & Mather


AppleApple Chiat/DayChiat/Day

AppleApple Chiat/DayChiat/Day


more and more, agencies are being more and more, agencies are being involved ininvolved in all areasall areas of marketers’of marketers’ brand-building activitiesbrand-building activities

today, it’s more thantoday, it’s more than advertisingadvertising it’sit’s integrated marketing integrated marketing

communicationscommunications (IMC) (IMC)

more and more, agencies are being more and more, agencies are being involved ininvolved in all areasall areas of marketers’of marketers’ brand-building activitiesbrand-building activities

today, it’s more thantoday, it’s more than advertisingadvertising it’sit’s integrated marketing integrated marketing

communicationscommunications (IMC) (IMC)

means means integrationintegrationmeans means integrationintegration

integrated marketing communicationintegrated marketing communicationintegrated marketing communicationintegrated marketing communication

more and more, more and more, agencies are agencies are becoming the becoming the integratorsintegrators of the of the whole range of whole range of brand-building brand-building activities... activities...

more and more, more and more, agencies are agencies are becoming the becoming the integratorsintegrators of the of the whole range of whole range of brand-building brand-building activities... activities...

““done right,done right, IMC IMC is theis the planningplanning and and implementation implementation of the of the various various communications communications disciplinesdisciplines as a single, as a single, overall communications overall communications system --system -- making all making all the channels work.”the channels work.”

““done right,done right, IMC IMC is theis the planningplanning and and implementation implementation of the of the various various communications communications disciplinesdisciplines as a single, as a single, overall communications overall communications system --system -- making all making all the channels work.”the channels work.”

integrated marketing communicationintegrated marketing communicationintegrated marketing communicationintegrated marketing communication

advertising advertising public relationspublic relations direct response direct response sales promotionsales promotion personal sellingpersonal selling

advertising advertising public relationspublic relations direct response direct response sales promotionsales promotion personal sellingpersonal selling

the imc promotion mixthe imc promotion mix the imc promotion mixthe imc promotion mix

what agencies do.what agencies do.what agencies do.what agencies do.

structure & organizationstructure & organizationstructure & organizationstructure & organization

and how they’re organizedand how they’re organizedand how they’re organizedand how they’re organizedto do it.to do it.to do it.to do it.

7 primary services:7 primary services:7 primary services:7 primary services:

complete acomplete a marketing analysis marketing analysis develop andevelop an advertising plan advertising plan prepare aprepare a creative strategy creative strategy create create advertising executionsadvertising executions develop and implement adevelop and implement a media plan media plan handle handle billingbilling and and paymentspayments integrate integrate other marketing communicationsother marketing communications

complete acomplete a marketing analysis marketing analysis develop andevelop an advertising plan advertising plan prepare aprepare a creative strategy creative strategy create create advertising executionsadvertising executions develop and implement adevelop and implement a media plan media plan handle handle billingbilling and and paymentspayments integrate integrate other marketing communicationsother marketing communications

4 functions of full-service agencies4 functions of full-service agencies

account managementaccount management creativecreative media planning and placementmedia planning and placement researchresearch

agency organization chartagency organization chartagency organization chartagency organization chart

Print

Traffic

Production ProductionBroadcast Analysts

Other MarketingCommunications

Services[PR, etc.]

Asst. AccountExecutive

AccountExecutive

ManagementSupervisor

Account Mgmt.Director

Copy Spvr. &Copywriters

Art Supervisor& Art Directors

CreativeGroup:

AssociateCreativeDirector

CreativeExec CD

ResearchAssistants

ProjectManagers

ResearchDirector

MediaPlanner

MediaBuyer

MediaSupervisor

AssociateMedia

Director

Media Dept.Director

StrategyReview Board[ManagmentCommittee]

Office Management[Personnel,Accounting,Legal, etc.]

President[COO]

Board ofDirectors

[Chairman/CEO]

liaison between agency and client liaison between agency and client responsible for understanding... responsible for understanding...

the client’s businessthe client’s business the client’s marketing needsthe client’s marketing needs strategy developmentstrategy development

representing client point of view representing client point of view within the agencywithin the agency

liaison between agency and client liaison between agency and client responsible for understanding... responsible for understanding...

the client’s businessthe client’s business the client’s marketing needsthe client’s marketing needs strategy developmentstrategy development

representing client point of view representing client point of view within the agencywithin the agency

account management account management account management account management

account management directoraccount management director management supervisormanagement supervisor account supervisorsaccount supervisors account executivesaccount executives assistant account execsassistant account execs account coordinators account coordinators traffictraffic

account management directoraccount management director management supervisormanagement supervisor account supervisorsaccount supervisors account executivesaccount executives assistant account execsassistant account execs account coordinators account coordinators traffictraffic

Traffic

Asst. AccountExecutive

AccountCoordinator

AccountExecutive

AccountSupervisor

Management.Supervisor

Account Mgmt.Director

account management account management account management account management

responsibilityresponsibility responsibilityresponsibility the creative department the creative department is responsible is responsible

for creating and producing the print and for creating and producing the print and broadcast advertisingbroadcast advertising

strategy is keystrategy is key good creative work good creative work is always guided by ais always guided by a

creative strategy creative strategy that sets forththat sets forth goals to goals to be accomplishedbe accomplished and and key message key message points points to be relayedto be relayed

the creative department the creative department is responsible is responsible for creating and producing the print and for creating and producing the print and broadcast advertisingbroadcast advertising

strategy is keystrategy is key good creative work good creative work is always guided by ais always guided by a

creative strategy creative strategy that sets forththat sets forth goals to goals to be accomplishedbe accomplished and and key message key message points points to be relayedto be relayed

creative departmentcreative departmentcreative departmentcreative department

creative departmentcreative departmentcreative departmentcreative department

executive & group creative executive & group creative directors directors

creative directorcreative director associate creative directorassociate creative director copywriterscopywriters art directorsart directors broadcast producersbroadcast producers print production managersprint production managers traffic coordinatorstraffic coordinators

executive & group creative executive & group creative directors directors

creative directorcreative director associate creative directorassociate creative director copywriterscopywriters art directorsart directors broadcast producersbroadcast producers print production managersprint production managers traffic coordinatorstraffic coordinatorsPrint

Traffic

ProductionBroadcast

Production

Copy Spvr. &Copywriters

Art Supervisor& Art Directors

CreativeGroup:

AssociateCreative

Director (ACD)

CreativeDirector (CD)

ExecutiveCreative

Director (ECD)

StrategyReviewBoard

media departmentmedia departmentmedia departmentmedia department

The The media departmentmedia department has two main has two main functions - functions - planningplanning and and buying.buying.

The The media departmentmedia department has two main has two main functions - functions - planningplanning and and buying.buying.

The planning groupThe planning group handles more handles more strategic marketing and media issues. strategic marketing and media issues.

The buying groupThe buying group handles media handles media negotiations and implementation.negotiations and implementation.

The planning groupThe planning group handles more handles more strategic marketing and media issues. strategic marketing and media issues.

The buying groupThe buying group handles media handles media negotiations and implementation.negotiations and implementation.

media directormedia director

associate media directorsassociate media directors

media supervisorsmedia supervisors

media plannersmedia planners

media buyersmedia buyers

media analystsmedia analysts

media directormedia director

associate media directorsassociate media directors

media supervisorsmedia supervisors

media plannersmedia planners

media buyersmedia buyers

media analystsmedia analysts

Analysts

MediaPlanner

MediaBuyer

MediaSupervisor

AssociateMedia

Director

MediaDirector

MediaMediaPlanPlan

media departmentmedia departmentmedia departmentmedia department

mega-agency media departments mega-agency media departments have now becomehave now become profit centersprofit centers

agencies have set up their media agencies have set up their media departments asdepartments as free-standing unitsfree-standing units

many large clients now look at media many large clients now look at media as aas a separate serviceseparate service

mega-agency media departments mega-agency media departments have now becomehave now become profit centersprofit centers

agencies have set up their media agencies have set up their media departments asdepartments as free-standing unitsfree-standing units

many large clients now look at media many large clients now look at media as aas a separate serviceseparate service

big changes in thebig changes in thebig changes in thebig changes in themedia departmentmedia departmentmedia departmentmedia department

research departmentresearch departmentresearch departmentresearch department

interpret market environmentinterpret market environment gather and analyze research data. gather and analyze research data. primary and secondary techniquesprimary and secondary techniques

determine consumer needs/perceptionsdetermine consumer needs/perceptions understand problemsunderstand problems

advise how ads can meet advise how ads can meet strategic goalsstrategic goals

help find solutionshelp find solutions

interpret market environmentinterpret market environment gather and analyze research data. gather and analyze research data. primary and secondary techniquesprimary and secondary techniques

determine consumer needs/perceptionsdetermine consumer needs/perceptions understand problemsunderstand problems

advise how ads can meet advise how ads can meet strategic goalsstrategic goals

help find solutionshelp find solutionsResearchResearch

ReportReport

research directorresearch director research project managersresearch project managers research assistantsresearch assistants outside research outside research specialistsspecialists

research directorresearch director research project managersresearch project managers research assistantsresearch assistants outside research outside research specialistsspecialists

research departmentresearch departmentresearch departmentresearch department

ResearchSuppliers

Outside

ResearchAssistants

ProjectManagers

ResearchDirector

ResearchResearchReportReport

auxiliary agency functionsauxiliary agency functionsauxiliary agency functionsauxiliary agency functions

account planningaccount planning strategy/creative review boardstrategy/creative review board office managementoffice management

human resourceshuman resources legal serviceslegal services accountingaccounting recruitmentrecruitment

account planningaccount planning strategy/creative review boardstrategy/creative review board office managementoffice management

human resourceshuman resources legal serviceslegal services accountingaccounting recruitmentrecruitment

3 ways agencies make money3 ways agencies make money3 ways agencies make money3 ways agencies make money

commissionscommissions usually 15% of gross costsusually 15% of gross costs

feesfees usually based on negotiated hourly rateusually based on negotiated hourly rate

incentivesincentives still relatively new and problematicstill relatively new and problematic usually based on performance goalsusually based on performance goals

commissionscommissions usually 15% of gross costsusually 15% of gross costs

feesfees usually based on negotiated hourly rateusually based on negotiated hourly rate

incentivesincentives still relatively new and problematicstill relatively new and problematic usually based on performance goalsusually based on performance goals

agency commissionsagency commissionsagency commissionsagency commissions

media commission systemmedia commission system 15% media commission15% media commission

adjustable commission ratesadjustable commission rates negotiate to match client budgetnegotiate to match client budget sliding scalesliding scale

markups-production & servicemarkups-production & service add a percentage markup to costsadd a percentage markup to costs 17.65% of net = 15% of gross17.65% of net = 15% of gross

media commission systemmedia commission system 15% media commission15% media commission

adjustable commission ratesadjustable commission rates negotiate to match client budgetnegotiate to match client budget sliding scalesliding scale

markups-production & servicemarkups-production & service add a percentage markup to costsadd a percentage markup to costs 17.65% of net = 15% of gross17.65% of net = 15% of gross

4 types of fee systems4 types of fee systems4 types of fee systems4 types of fee systems

fixed fee (retainer)fixed fee (retainer) cost-plus feecost-plus fee performance feeperformance fee hybrid fee & hybrid fee &

commissioncommission

fixed fee (retainer)fixed fee (retainer) cost-plus feecost-plus fee performance feeperformance fee hybrid fee & hybrid fee &

commissioncommission

incentivesincentivesincentivesincentives

in theory, a good way to workin theory, a good way to work get paid based on how well you do, not get paid based on how well you do, not

how much you billhow much you bill in practice, difficult to implementin practice, difficult to implement if client makes final decision (instead of if client makes final decision (instead of

agency), how can agency be responsible agency), how can agency be responsible for final results?for final results?

results based on many factors, such as results based on many factors, such as competitive efforts, not just advertisingcompetitive efforts, not just advertising

in theory, a good way to workin theory, a good way to work get paid based on how well you do, not get paid based on how well you do, not

how much you billhow much you bill in practice, difficult to implementin practice, difficult to implement if client makes final decision (instead of if client makes final decision (instead of

agency), how can agency be responsible agency), how can agency be responsible for final results?for final results?

results based on many factors, such as results based on many factors, such as competitive efforts, not just advertisingcompetitive efforts, not just advertising

new businessnew businessnew businessnew business

three primary sourcesthree primary sources build existing client’s businessbuild existing client’s business add and sell new IMC servicesadd and sell new IMC services solicit new accountssolicit new accounts

two ongoing problemstwo ongoing problems “ “spec” workspec” work teams “walking” with accountsteams “walking” with accounts

three primary sourcesthree primary sources build existing client’s businessbuild existing client’s business add and sell new IMC servicesadd and sell new IMC services solicit new accountssolicit new accounts

two ongoing problemstwo ongoing problems “ “spec” workspec” work teams “walking” with accountsteams “walking” with accounts

““The critical objective and role The critical objective and role of any ad agency is gaining new of any ad agency is gaining new

business.”business.”

““The critical objective and role The critical objective and role of any ad agency is gaining new of any ad agency is gaining new

business.”business.”

beyond 2007beyond 2007beyond 2007beyond 2007

advertising advertising agency trendsagency trends

advertising advertising agency trendsagency trends

agency trendsagency trendsagency trendsagency trends clutter, overloadclutter, overload, , “overchoice”“overchoice”

increasedincreased media options media options increasing increasing audience fragmentationaudience fragmentation more messages more messages everywhereeverywhere

doing more with lessdoing more with less economic pressures, economic pressures, “downsizing”“downsizing” ongoing ongoing client budget pressuresclient budget pressures

managing sizemanaging size more more mergersmergers and and mega-agenciesmega-agencies

clutter, overloadclutter, overload, , “overchoice”“overchoice” increasedincreased media options media options increasing increasing audience fragmentationaudience fragmentation more messages more messages everywhereeverywhere

doing more with lessdoing more with less economic pressures, economic pressures, “downsizing”“downsizing” ongoing ongoing client budget pressuresclient budget pressures

managing sizemanaging size more more mergersmergers and and mega-agenciesmega-agencies

agency trendsagency trendsagency trendsagency trends managingmanaging technology technology

interactive marketinginteractive marketing e-mail, web sitese-mail, web sites

improving improving internal systems internal systems account planning account planning re-engineeringre-engineering agency organization agency organization improving delivery ofimproving delivery of imc services imc services

managingmanaging technology technology interactive marketinginteractive marketing e-mail, web sitese-mail, web sites

improving improving internal systems internal systems account planning account planning re-engineeringre-engineering agency organization agency organization improving delivery ofimproving delivery of imc services imc services

as long as marketers need as long as marketers need ideasideas to build their to build their brands,brands, they’re going to needthey’re going to need

as long as marketers need as long as marketers need ideasideas to build their to build their brands,brands, they’re going to needthey’re going to need

in conclusion...in conclusion...in conclusion...in conclusion...

advertising agenciesadvertising agenciesadvertising agenciesadvertising agencies

Documents

JOMC 170 Advertising Agencies 05AdAgencies.ppt the first advertising agents n 1843 Volney Palmer l agent for media, not advertisers n 1864 - George P