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Monash University
Organisation for advertising
The Advertising Agency
History ‘then’ Constraints ‘now Developments ‘future’
Monash University
History ‘then’ USA 1841 Volney B Palmer
space saleman (Print) Media commission system -
initially variable between media Creative advice for free Foundation for stable, familiar &
enduring structures
Monash University
Media Commission systems Evolved differently with country size and
media pattern US & UK – commission only for large
clients (10% for main media, minor media to 15 %)
Australia and small countries – commission (10%) plus service fee (1 to 7%)
Monash University
Traditional agency income sources – letter of terms Media commission Service fee, if agreed Commission and/or fee on production
charges, research bought through agency, others as agreed
Monash University
Constraints ‘now’ In Australia, media commission
dismantled since 3 February 1997, after a 2 year debate division between industry players
Pressure for accountability from clients Profitability of agencies no longer
underwritten by Accreditation system Now subject to negotiating skills!
Monash University
Common agency remuneration pattern now Small base fee, to cover “set-up” People-based hourly/daily fees, based
on costs of creatives, planners, account management, etc
Incidentals – travel, communication, etc Provision for audit
Monash University
Common media shop remuneration Mainly a small percent of media spend
Covers planning and buying and management
Incidentals Co-ordination fees if representing client in
discussions with creatives
Some expect media shops may take over aspects of agency role
Monash University
Developments ‘future’ Integration - marketing communication
elements integrated via communication solutions agencies clients managing the integration of
unbundled services Clients vary in their desires and their skills
Structures emerging to accommodate absence of commission and IMC
Monash University
Different patterns of agency/client relationships Limited to advertising
the agency plays a minimal role in other communication & marketing functions
A single agency may play different roles with different clients
Advertising plus selected services apart from advertising (creative & media) the
agency is invited to provide additional integrated communication services such as producing POS material or direct marketing, but not for marketing planning
Monash University
Different patterns of agency/client relationships Marketing counsel
the agency’s advice in marketing functions other than communication is sought and considered
Marketing partnership advertiser takes the lead in developing the
marketing strategy and plans, but in a close relationship with the agency who shares responsibility
Monash University
Different patterns of agency/client relationships Marketing leadership
the agency develops the marketing plans and provides a full spectrum of marketing support services
research distribution supplementation etc
Monash University
Agency structure (full service)Traditional
New businessdevelopment
Production
Creative
MediaAccounthandling
Research& Planning
Finance
Agency Board
Monash University
Departments comprise of: Production and supervision of production
Print, TV facilitation, Multimedia, Traffic Creative
Creative teams, usually Copywriter & Art director working together
Media Planners, Buyers
Account Management Account Directors, Managers
Research & Planning Strategy planners
Monash University
Organising the Advertising (client): Structures and Functions
Western culture - atomistic & specialised
Specific activities = functions Silos or chimneys Accounting function = control
Monash University
Functional structures worked well for single product, limited channel organisationsbut now: expanding product lines retail and direct options complex media options
Monash University
Solution: Revised brand management structures
coordination of sales & marketing Focus is markets, not products
Changes in marketing communication mix
Growth of sales promotion, direct marketing and PR
Transfer of information technology
Monash University
Marketing Communication Structures (Schultz)
Communication Manager or “Czar” Structure
Market Team Design Structure
but PRODUCT not CUSTOMER focussed therefore need some ‘outside-in’ thinking
Monash University
Agency Issues New Business
Selection of good potential clients Pitch (credentials, speculative, strategic,
creative) Costs (money, time, benefits, client
contribution) Organisation (people, budget)
Mergers Profitability
Monash University
Credentials Pitch Alternative 1
Introduction to team Establish rapport Case studies - strategic/media Testimonials Show reel - creative Way of doing business (esp remuneration) Why you want business Questions
Monash University
Credentials Pitch Alternative 2
Pre-pitch background (rapport + knowledge) 3 or 4 key points re agency views relevant
to client Dialogue on points Expand on questions from client with
smorgasbord of pre-prepared material