Functioning of

Advertising Agency
Prakash Mudaliar
Pranay Parikh
Jignesh Prajapati
Bhaumik Kadia
Anand Brambhatt
 Preface

 Who is the Advertiser?

 What is an Advertising Agency?
 Role of an Advertising Agency.
 Which are the Advertising/Media Tools?
 Functions of an Advertising agency.
 What are research suppliers?
 How agencies get clients?
 What are the strengths and weaknesses of the agency?
 Who is the advertiser?
• It is the core institution of the field of advertising management

• Small and large-scale advertisers can be distinguished according to the

degree to which they use the facilitating institutions. At times small
advertisers for budgetary reasons use only parts of the system for e.g,
retail clients like say CANMART, etc.

• Advertisers differ according to the markets they serve, the goods and
services they produce, and the media they use. In the private sector,
advertisers can be distinguished according to whether they are
predominantly consumer, industrial or retail advertisers
 What is an advertising
agency?
• It is an independent organisation of creative people and business
people who specialise in developing and preparing advertising plans,
advertisements, and other promotional tools.
• The agency purchases advertising space and time in
various media on behalf of different advertisers.
Role of Advertising Agency

Advertising is a large and highly competitive industry occupying a
very important position in most developing and developed
economies. With a plethora of brands on offer, the need to inform,
persuade and convince the customer is becoming increasingly
important.

And this is where the tools of Advertising and Advertising Agencies
that use this tool step in!

A number of Businesses, Corporations, Government Organizations
and Non Profit set-ups hire advertising agencies to advertise their
products, brands and services to present and prospective customers.
 Various Functions of
Advertising Agency

Brand Management

Corporate Communictions

Multimedia/ Website Development /Animation

3D Product Modelling

Outdoor Publicity

Sales & promotion

Studio/Printing
 Various Functions of
Advertising Agency

Media

Documentary Films

CD Presentations

Event Management
 Advertising/Media Tools

Print Media

Television Media

Radio

Internet

Direct Marketing

Outdoor

Events & Exhibitions
 Brand Management

The brand is nothing but how is the company, product or service is
perceived.

The agency creates the brand identity and image distinctiveness.
 Corporate Communication

Any company big or small, needs Communication Materials at every
stage of it’s selling process.

It’s all about informing your target segment about your offerings or
establishing conviction that your solutions are what the prospects
want to buy.

Ex: Corporate brochures, Corporate Stationery, company profile,
product brochure or leaflet, POP material so on and so forth….
 Multimedia/Animation/
Website Development

The agency can lift the clients business into internet age by
developing & maintaining a website.

It reinforce the company's corporate image & gives an interactive web
presence.
3D Modeling/Outdoor Publicity

Transforming an item or concept into an easily viewable 3D object!

Using of advanced technology in the industry to generate models and
animations.

Visual representation of product or concept reinforces the verbal
explanations and enables complex theories or objects to be easily
clarified for increased understanding.

Having the ability to create a 3D model and animation of any concept
or product for business.

Outdoor advertising, executed effectively, has a way of grabbing
consumers attention and smacking them between the eyes with your
message.
 Sales & Promotions

This includes the direct sales and other direct promotions like kiosk
selling, sampling etc.

It gives the designs that not only create the right impression for
clients and visitors but also secure more sales leads and giving a real
presence in the market.
 Media (Planning & Buying)

The department which decides how much client money to be spend
on a campaign/across media.

Negotiating the best rates for the client and trying to cut the cost of
the campaign and giving the best output for the same.
 Event Management

From conceptualization to execution, with adequate and expert
manpower, agency organize any kind of events like product launches,
seminars, conferences, entertainment events, road shows, corporate
gatherings etc.

Its an important marketing tool in the hands of many companies to
attract the maximum audiences in the country like ours where film
stars, and sports are worshiped.
 Departments

Client Servicing/Account Planning

Creative Department

Media Department

Others
 AD Agency

Core Functions Non Core Functions

Client Servicing
Studio Operations
Account Planning

Productions
Creative
(Print/Television/
(Art & Copy) Radio/Outdoor)

Media
HR
(Planning & Buying)

Finance
Legal Administration
 Market Research Account
Head of the Agency
Planning

Creative Department Client Servicing Media Department

Art Copy Buying Planning

Client

Outsourcing Outsource Research

Production Creative Media Agencies
 Client Servicing/
Account Planning

Client service executive is representative within the agency who
understands the client’s mktg strategy and convert it to an appropriate
advertising strategy. (sometime overlooks consumer needs)

So account planner keeps consumer in focus and helps in the
development of appropriate advertising campaign.

With merging of two capabilities there is beginning of outstanding
advertising campaign.

Client Service Executive----------------- >Dr/VP Client Service

Account Planner--------------------------- >Dr/VP Account Planning

Nowadays known as “Brand Communication specialists”.
 Advertising Operations

Media Creative

Client Servicing

The Client
 Creative Department

The team duo responsible for the creative output in form of print ad,
radio jingle, television commercials etc, namely the artist &
copywriter.

These two individuals work in a team on the campaign as the written
and art element of the ad to be sync with each other for maximum
impact.

Copy Writer
Creative Director

Artist
 Media Department

The media department in an ad agency consist of media planner &
buyer, are tough negotiator to get good rates from media.

They are responsible for deciding how much money should the client
spend on a campaign and across what media.

In today competitive market there is plethora of digitized media data.

Media Planner/Media Buyer ------------- > Media Director/VP Media

Prominent media houses in country are Group M, Madison Media,
Carat, Starcom and Optimum Media Solutions.
 Which are the research
suppliers?
• ABC (Audit Bureau of Circulation) certifies circulations of
newspapers/magazines/agency faqs

• IMRB, IMRS, ORG-MARG - Research Agencies

• NRS, IRS provides readership for various dailies/magazines

• TAM provides rating points to various TV programmes while ADEX

provides monitoring reports of various TV spots in the programme
 Studio Operations

It is responsible to convert the output of creative department into a
print ready format.

Due to digitisation studio department has considerably shrunk in size.

Some of the studio work include ad shooting, photo shooting,
location finalizing, model selection, radio jingles etc.
 Production
(Print/Television/Radio/Outdoor)

It is generally not a in-house facilities.

Mostly the works are outsourced and the production department does
the coordination work with the outside suppliers for this work.

The production department is normally run by a production manager
with needed couple of assistants depending upon the need.
 HR Department

The department looks after the recruitment, induction, training &
development, performance appraisal & compensation of the agencies
employees.

Advertising is essentially a business of people having great creativity
& innovation.

So the defy with HR is how to keep them motivated & thriving
always.
 Finance/
Legal & Administration

The finance, legal & administration function is the department that
keeps the agency afloat when major clients defaults on payments.

Its role is very often undermined in the ad agencies.
 Agency Commission
• In case of media releases the agency earns 15% commission which is
inbuilt in the media rates.

• While to create a magazine ad or any literature, the agency buys type,

photography, illustrations and variety of other services or materials
from outside suppliers.

• The agency pays a set fee and adds a markup to the client’s bill –
typically 17.65 percent. When adding 17.65 percent to an invoice, the
amount added becomes 15% of the new total.

Rs. 85 + 17.65% = Rs. 100

Rs. 100 – 15% = Rs. 85

 Agency Commission

The main source of revenue is the commission at 15% on the media
releases done by the agency in addition to creative fee based on a rate
card & outsourced production jobs.

Nowadays its either form of a retainer ship on a monthly basis or a
flat fee for a project.

Incentive System, is a new type of agency compensation. Here, the
agency earns more if the campaign attains specific, agreed-on goals.

In the current market scenario agencies have began to feel pressure,
because clients demanding more for less, leading to the restructuring
within the agencies.
 What are its strengths &
weaknesses?
• Creative reputations matter a great deal in any agency’s selection. In
the survey conducted by a research centre in the year 1984 following
attributes of the agency were identified as most important: 1)
Creativity 2) Servicing 3) Media 4) Top management 5) Marketing
and 6) Research.

• From the above attributes, it was concluded that creative talent and
knowing the client business and the quality of people were the most
necessary strengths.

• Not knowing the client business, inadequate cost estimating, lack of

creativity, poor account executives, and misrepresentation are the
weak spots.
 How agencies get the
clients?
• Referrals:
Most good agencies get clients by referral – from existing clients,
friends, or even other agencies. Media representatives can also refer
local advertisers to an agency they have a good relationship with.

• Soliciting for New Business:

Some agencies take aggressive stance and pitch for new clients by way
of cold calling.

• Reputation and Community Relations:

The best source for new business is a good reputation.
 Bodies Governing
Advertising Agency
There are professional bodies that represent the advertiser, the
advertising agency and the media. The names of these representative
bodies are

– The Indian Society of Advertisers (ISA)

– The Advertising Agencies Association of India (AAAI)
– The Indian Newspaper Society (INS)
 Agency Evaluation

The core competence of an advertising agency is primarily the ability
to meet the requirements of the client in terms of answering three
fundamental question.
What to say?
How to say? When & Where to Say?

Creative Media
Advertising
Strategy Strategy strategy
 Agency Evaluation

The successful measure of the advertising strategy would be to
identify through tracking studies, the perceptual maps of various
brands & their effect on purchase behavior.

The creative strategy essentially involves arriving at a creative work
which appeals to the target segment & creates, awareness, interest,
desire & ultimately purchase of the brand.

The media strategy essentially involves arriving at an optimum media
plan, which delivers the maximum mileage by getting best media
rates for the client.
 Agency Evaluation

The client evaluates the ad agency by following criteria.

Understanding of product strategy.

Any experience in handling product category.

Reputation of the team that is going to handle the business.

Overall reputation of the agency.

Financial status.

Kinds of financial terms.
 Summary

The ad agencies are ranked/survived on parameters like client
servicing, creative ability, account planning ability, 360 degree
capability, partnering with client, investment in employees,
innovation & thought, leadership & business development ability.

The advertising agency of today is very different from the advertising
agency of yesterday and the advertising agency of tomorrow will be
very different from the advertising agency of today.