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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