Stages in client agency relationship

Chapter 4 The Scope of Advertising: From Local to Global

William F. Arens Michael F. Weigold Christian Arens

Lecture Objectives

Describe stages in agency/client relationship

Define the main types of ad agencies

Discuss how agencies get clients, make money

Explain what people do in ad agencies

Describe factors that affect agency/client relationship

Describe what advertisers do and detail org structure

Identify the various groups in advertising and their relationships

Explain how the media and suppliers help

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

2

The Advertising Industry: Organizations

Advertisers

Agencies

Media

Suppliers

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

3

The Advertising Industry: People

Sales personnel

Researchers

Accountants

Managers

Most often employed by agencies:

Computer scientists

Writers

Artists

Musicians

Photographers

Performers

Attorneys

Cinematographers

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

4

Advertisers: Local

Directed to customers in the same geographic area

Specialty businesses

Government and nonprofits

Franchisees and dealers

Sellers of branded merchandise

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

5

Advertisers: Local

Typical structure of small advertisers with high volumes of work

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

6

Regular price-line, sale, or clearance

Types of Local Advertising

Create favorable image, increase awareness, foster goodwill

Recruit employees, offer services, sell merchandise

Classified

Institutional

Product

Ads can be created locally using local experts or

ads can be created cooperatively

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

7

Advertisers: Cooperative

Vertical Co-op

Horizontal Co-op

Firms in the same business or part of town advertise jointly

National brand association

Manufacturer provides complete ad & shares costs

Professional quality ads

Expands advertising budget

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

8

Advertisers: Regional and National

Regional: one or several states

National: several regions or entire country

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

9

Advertisers: Regional and National

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

10

Centralized Department Structure

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

11

Decentralized Department Structure

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

12

Transnational Advertising Structure

Divisions are responsible for their own product lines, marketing, and profits

Each division has an advertising department to coordinate sales and promotion across brands

The corporate advertising department provides information and guidance

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

13

Global Advertising Strategy

Assumption that product use and needs are universal

Standardized approach in all countries

Extensive research to ensure ad is basic and universal

Appeal to basic human emotions and interests

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

14

Media Around the World

McDonald’s honors an Islamic observance

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

15

Roles of Ad Agencies

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

16

Ad Agency

Independent

Business staff; creative staff

Contracts for media space and time

Client oriented

Understands global marketing

Agencies: Types

Specialty

Boutiques

Media Buyers

Interactive

Range of Services

Consumer

BTB

Reach

Local

National

Regional

Global

International

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

17

Agencies: People

Account Research and Planning

Traffic Management

Administration

Account Management

Other Services

Advertising Production

Media Planning and Buying

Creative Concepts

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

18

Ad Agency Structure

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Agencies: Compensation

Ad rate

card

price:

$100,000

Agency

buys ad

at 15%

discount:

$85,000

Agency

bills client

full ad

amount:

$100,000

Agency keeps $15,000

difference

Media Commissions

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

20

Agencies: Compensation

Markups

Agency

buys

materials

for

campaign

Materials

cost

$85,000

Agency

bills for materials plus a

17.65%

markup

Agency bills $100,000

(cost plus markup)

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

21

Agencies: Compensation

Fees

Fee-commission combination

Straight-fee (retainer) method

Incentive system

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

22

Agencies: In-House

Pros

May save money

Allows tighter control

May allow greater

attention to the brand

Lower creative quality

Less experience

and talent

Loss of objectivity

Cons

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

23

Agencies: Client Relationships

Referrals

Presentations

Community relations and networking

Solicitation

Finding and Attracting New Clients

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

24

Client-Agency Relationship Stages

Development

Pre- relationship

Termination

Maintenance

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

25

Client/Agency Relationship Factors

Communication

Conduct

Chemistry

Changes

The Four Cs

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

26

Suppliers

Art studios and web designers

Printers and related specialists

Film and video houses

Research companies

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

27

Media

Out-of-home

Digital interactive

Electronic

Print

Direct mail

Other

Social

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.