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1. Agency Business management:
Advertising Agencies aren't blindly investing in divisions to please advertisers and parent firms, or out of fear of being left out of the race. They are now a liberated lot, focusing on areas where there is a real gap in the market or where they have some expertise built over the years.

Ad Agencies: Combining Marketing and Advertising


For example:
Contract Advertising has chosen direct marketing (DM), design and healthcare;
O&M, rural marketing; Leo Burnett, entertainment, telecom and the Net; and Grey, interactive work.

Sometime in the year 2003, ICICI Bank asked iContract - Contract Advertising's direct marketing arm - to do a mailer for a children's growth bond. However, iContract knew that writing to people and coaxing them to invest in bonds would have got the usual one or two per cent response. Instead, it hosted a painting competition on 'What is your dream career', leading 40,000 kids in three cities to draw their dreams.

The parents of 22,000 children then got a letter from ICICI Bank asking them, "Did you know that Aditya (for example) wants to be a pilot?" The letter shared Aditya's painting with his parents and then went on to tell them about the growth bond. A whopping 20 per cent of the parents responded, generating Rs 2.8 crore on a marketing spend of only Rs 6 lakh. The campaign went on to win the Gold Lion at Cannes for direct marketing in 2002.

Many of these Specialist divisions now get invited to pitches for DM or healthcare on their own. On an average, three to five out of 10 non-advertising clients come from outside the agency's advertising portfolio. After years of agonizing, there is some clarity and confidence - at least among the top 15 agencies - that they'll win the non-advertising game. That suits advertisers tired of co-coordinating with an average of five agencies across services. Clients are not looking for Agency to do DM or PR as long as it can be the catalyst.


There is another reason why IMC is likely to click now. "360 degrees will work now because remuneration is under threat. When it was a 15-per cent business, nobody wanted to roll up their sleeves and do anything dirt. There was no point in doing something that involved a lot of hard work at less than half those margins. It needs feet on the street to do 360-degree work. It could mean having five people standing at a petrol pump with the right permissions to push, say, a new brand of mobile phones. A lot of 360-degree work means "understanding the mathematics of a client's business", adds Singh. Till sometime ago agencies did not want to do it.

Almost every agency now makes a 360-degree pitch.
Many get the business because advertisers do not want the headache of co-ordinating with five to10 agencies.
For example, when JWT, which has strong DM and PR arms, does events for advertisers, it outsources them to Wizcraft or others.
At O&M, the agency is just about halfway where it wants to be on 360 degrees. OgilvyOne, set up 16 years ago, and Ogilvy Rural, about a decade back, are the jewels in its non-advertising crown. But its creative strength is already giving O&M more business in these areas - up from 10 per cent of revenues three years ago to 30 per cent now. Some of this growth comes from existing advertisers such as Hutch or IBM. Hutch, for example, worked with O&M on everything from TV, press, PR and website to sponsoring a marathon in Chennai. The other part of growth comes from clients walking in because they think O&M is a hot agency.

Leo Burnett is a good case in point on how the industry has moved
Leo Burnett, growth from non-advertising services rests upon its ability to create 'branded content' in five areas :

1. Cricket,
2. Music,
3. Internet and
4. Telecom.
5. Movies,

Leo Entertainment, for example, combines the agency's core understanding of brands and consumers with films to create mass media solutions with a twist.
Mudra has chosen to focus on:
1. Media (through Optimum Media Solutions or OMS),
2. Digital branding solutions (creating ads or publicity material electronically) and
3. Prime Site (for out-of-home media).
Mudra, hopes to push non-advertising income from 5 to 50 per cent in five years.

New business development
Advertising never had it so good. Back in 1992 when Manmohan Singh set the economy free, the hip and happening advertising industry was a puny Rs 1,150-crore billings business. But by 2004, long after the moaning had begun on the 'relevance' of advertising, billings stood at over Rs 12,000 crore.

Almost all the major ones now get about one-fifth of their revenues from non-advertising services - up from almost nothing three years ago. Agencies are better managed now, and are looking at a growth of 10-12 per cent this year - almost double the 5-7 per cent in the last three years. "We don't see any slowdown in growth now," sighs a contented Colvyn Harris, president, Contract Advertising.


The Rs 130 crore Triton Communications diversified into areas such as media buying and planning, customer relationship management (CRM) and direct marketing, for each of which it is setting up a division. The agency is looking for other avenues of growth for the agency rather than just limiting it to advertising.

Growing with existing clients
The 'Wherever You Go Our Network Follows,' campaign helped add over 2 million subscribers to the Hutch network. McDonald's has seen sales surge within days of the 'What Your Bahana is' campaign. Franklin Templeton's campaign helped catapult it to the No. 1 position in the mutual fund market. Hyundai, Hitachi, Asian Paints, LG, Nokia, ICICI Bank and Fevicol are all part of the increasing list of brands that have good creative advertising beaming at you from television channels, newspapers and magazines making you (and the advertiser) smile.
Today O&M, McCann, Leo Burnett and Lowe among others are at the forefront of a creative renaissance that is helping advertising claw back the respect and position that is rightly an agency's. They are also among the fastest growing agencies.Their honours come not from winning awards but from churning out clutter-breaking, mass-market advertising that is rejuvenating brands across product categories. Sure that's not new.

Scores of creative directors have done it earlier. What is new is that they are doing it with a consistency and on a scale that Indian advertising has never seen before. It is a bit like what Ektaa Kapoor did to soaps - creativity with scale. Coca-Cola got a second lease of life in India thanks to Joshi's 'Thanda Matlab Coca-Cola' campaign.

Prospecting for new businesses
The future of advertising in India, at least for the next five years, is about good old mass media-led, creatively sound advertising. The evidence is in the number.

How agencies gain new clients:
Competition for accounts in the agency business is intense; since most companies have already organized for the advertising function and only a limited number of new businesses require such services each year.In large agencies, most new business results from clients that already have an agency but decide to change their relationships. Thus agencies must constantly search and compete for new clients.

1. Referrals: Many good agencies obtain new clients as a result of referrals from existing clients, media representatives, and even other agencies. These agencies maintain good working relationships with their clients, the media, and outside parties that might provide business to them.

2. Solicitations: One of the more common ways to gain new business is through direct solicitation. In smaller agencies, the president may solicit new accounts. In most large agencies, a new business development group seeks out and establishes contact with new clients. The group is responsible for writing solicitation letters, making cold calls, and following up on leads.


3. Public Relations:
Agencies also seek business through publicity/public relations efforts. They often participate in civic and social groups and work with charitable organizations pro bono ( at cost, without pay) to earn respect in the community. Participation in professional associations such as AAAI and Ad Club can also lead to new contacts.

4. Image and reputation: Perhaps the most effective way an agency can gain new business is through its reputation. Agencies that consistently develop excellent campaigns are often approached by clients. Agencies may enter their work in award competitions or advertise themselves to enhance their image in the marketing community. In some cases the clients themselves may provide valuable testimonials.

5. Pitching or Presentations. A basic goal of the new business development is to receive an invitation from a company to make a presentation. This gives the agency the opportunity to sell itself-to describe its experience, personnel, capabilities, and operating procedures, as well as to demonstrate its previous work.

6. Speculative pitches
"Speculative pitches" — mock ads created by an agency at their own expense in order to attract new clients.
Smart firms are deciding not to wait for clients to invite them to pitch for work – they are going out there to present their credentials. Not only can this speed up the process of winning instructions, but it can also cut out competitors, as well as save the firm the time and costs of going through a potentially more rigorous formal pitch.

But speculative pitching is not always as successful as firms would like. In fact, if anything, the majority is failing. On some occasions, firms are sensing that the failure has set the firm backwards rather than moving closer to winning the work. Many partners also find the process difficult – it smacks so much of what some might see as aggressive selling. On analysis of pitch documents and presentations shows that many firms are not going about their speculative pitches in the most appropriate way. In particular, firms are not tailoring their messages appropriately to each prospective client.

A five-step approach to Speculative pitching
(1) Research the market and target companies;
(2) Telephone call;
(3) The meeting;
(4) The presentation;
(5) Follow up.

Current scenario:
Agency pitches for creative accounts are intensifying by the day, with clients crossing the floor more often. Driven by both better offerings and global realignments, creative advertising accounts worth over Rs 700 crore (Rs 7 billion) changed hands since March 2004.

In the last six months, J Walter Thompson, bagged nearly 32 new accounts. The booty? Rs 185 crore (Rs 1.85 billion). These accounts include Godrej air conditioners, Philips mobile phones, Lake City Corporation, SBI Mutual Fund, HPCL Power, Godrej Security, UTI Mutual Fund and Dr Batra's.
The reasons for this churn:
1."Clients are evaluating their marketing mix more frequently. Communication, being a part of this mix, also comes up for evaluation.
2. Market pressures, unbundling of the media and creative functions and flexible remuneration models are fuelling the churn.
3. Bigger clients tend to be more stable in their relationships with agencies.

Frequent reviews mean more pressure on agencies. Most advertisers now ask for a fee-based remuneration system, as opposed to the earlier 15 per cent commission, which is essentially a cost-plus-compensation model. This allows for greater negotiations.
With advertisers looking for more value for their buck, the pressure on ad agencies is only mounting.
 
1. Agency Business management:
Advertising Agencies aren't blindly investing in divisions to please advertisers and parent firms, or out of fear of being left out of the race. They are now a liberated lot, focusing on areas where there is a real gap in the market or where they have some expertise built over the years.

Ad Agencies: Combining Marketing and Advertising


For example:
Contract Advertising has chosen direct marketing (DM), design and healthcare;
O&M, rural marketing; Leo Burnett, entertainment, telecom and the Net; and Grey, interactive work.

Sometime in the year 2003, ICICI Bank asked iContract - Contract Advertising's direct marketing arm - to do a mailer for a children's growth bond. However, iContract knew that writing to people and coaxing them to invest in bonds would have got the usual one or two per cent response. Instead, it hosted a painting competition on 'What is your dream career', leading 40,000 kids in three cities to draw their dreams.

The parents of 22,000 children then got a letter from ICICI Bank asking them, "Did you know that Aditya (for example) wants to be a pilot?" The letter shared Aditya's painting with his parents and then went on to tell them about the growth bond. A whopping 20 per cent of the parents responded, generating Rs 2.8 crore on a marketing spend of only Rs 6 lakh. The campaign went on to win the Gold Lion at Cannes for direct marketing in 2002.

Many of these Specialist divisions now get invited to pitches for DM or healthcare on their own. On an average, three to five out of 10 non-advertising clients come from outside the agency's advertising portfolio. After years of agonizing, there is some clarity and confidence - at least among the top 15 agencies - that they'll win the non-advertising game. That suits advertisers tired of co-coordinating with an average of five agencies across services. Clients are not looking for Agency to do DM or PR as long as it can be the catalyst.


There is another reason why IMC is likely to click now. "360 degrees will work now because remuneration is under threat. When it was a 15-per cent business, nobody wanted to roll up their sleeves and do anything dirt. There was no point in doing something that involved a lot of hard work at less than half those margins. It needs feet on the street to do 360-degree work. It could mean having five people standing at a petrol pump with the right permissions to push, say, a new brand of mobile phones. A lot of 360-degree work means "understanding the mathematics of a client's business", adds Singh. Till sometime ago agencies did not want to do it.

Almost every agency now makes a 360-degree pitch.
Many get the business because advertisers do not want the headache of co-ordinating with five to10 agencies.
For example, when JWT, which has strong DM and PR arms, does events for advertisers, it outsources them to Wizcraft or others.
At O&M, the agency is just about halfway where it wants to be on 360 degrees. OgilvyOne, set up 16 years ago, and Ogilvy Rural, about a decade back, are the jewels in its non-advertising crown. But its creative strength is already giving O&M more business in these areas - up from 10 per cent of revenues three years ago to 30 per cent now. Some of this growth comes from existing advertisers such as Hutch or IBM. Hutch, for example, worked with O&M on everything from TV, press, PR and website to sponsoring a marathon in Chennai. The other part of growth comes from clients walking in because they think O&M is a hot agency.

Leo Burnett is a good case in point on how the industry has moved
Leo Burnett, growth from non-advertising services rests upon its ability to create 'branded content' in five areas :

1. Cricket,
2. Music,
3. Internet and
4. Telecom.
5. Movies,

Leo Entertainment, for example, combines the agency's core understanding of brands and consumers with films to create mass media solutions with a twist.
Mudra has chosen to focus on:
1. Media (through Optimum Media Solutions or OMS),
2. Digital branding solutions (creating ads or publicity material electronically) and
3. Prime Site (for out-of-home media).
Mudra, hopes to push non-advertising income from 5 to 50 per cent in five years.

New business development
Advertising never had it so good. Back in 1992 when Manmohan Singh set the economy free, the hip and happening advertising industry was a puny Rs 1,150-crore billings business. But by 2004, long after the moaning had begun on the 'relevance' of advertising, billings stood at over Rs 12,000 crore.

Almost all the major ones now get about one-fifth of their revenues from non-advertising services - up from almost nothing three years ago. Agencies are better managed now, and are looking at a growth of 10-12 per cent this year - almost double the 5-7 per cent in the last three years. "We don't see any slowdown in growth now," sighs a contented Colvyn Harris, president, Contract Advertising.


The Rs 130 crore Triton Communications diversified into areas such as media buying and planning, customer relationship management (CRM) and direct marketing, for each of which it is setting up a division. The agency is looking for other avenues of growth for the agency rather than just limiting it to advertising.

Growing with existing clients
The 'Wherever You Go Our Network Follows,' campaign helped add over 2 million subscribers to the Hutch network. McDonald's has seen sales surge within days of the 'What Your Bahana is' campaign. Franklin Templeton's campaign helped catapult it to the No. 1 position in the mutual fund market. Hyundai, Hitachi, Asian Paints, LG, Nokia, ICICI Bank and Fevicol are all part of the increasing list of brands that have good creative advertising beaming at you from television channels, newspapers and magazines making you (and the advertiser) smile.
Today O&M, McCann, Leo Burnett and Lowe among others are at the forefront of a creative renaissance that is helping advertising claw back the respect and position that is rightly an agency's. They are also among the fastest growing agencies.Their honours come not from winning awards but from churning out clutter-breaking, mass-market advertising that is rejuvenating brands across product categories. Sure that's not new.

Scores of creative directors have done it earlier. What is new is that they are doing it with a consistency and on a scale that Indian advertising has never seen before. It is a bit like what Ektaa Kapoor did to soaps - creativity with scale. Coca-Cola got a second lease of life in India thanks to Joshi's 'Thanda Matlab Coca-Cola' campaign.

Prospecting for new businesses
The future of advertising in India, at least for the next five years, is about good old mass media-led, creatively sound advertising. The evidence is in the number.

How agencies gain new clients:
Competition for accounts in the agency business is intense; since most companies have already organized for the advertising function and only a limited number of new businesses require such services each year.In large agencies, most new business results from clients that already have an agency but decide to change their relationships. Thus agencies must constantly search and compete for new clients.

1. Referrals: Many good agencies obtain new clients as a result of referrals from existing clients, media representatives, and even other agencies. These agencies maintain good working relationships with their clients, the media, and outside parties that might provide business to them.

2. Solicitations: One of the more common ways to gain new business is through direct solicitation. In smaller agencies, the president may solicit new accounts. In most large agencies, a new business development group seeks out and establishes contact with new clients. The group is responsible for writing solicitation letters, making cold calls, and following up on leads.


3. Public Relations:
Agencies also seek business through publicity/public relations efforts. They often participate in civic and social groups and work with charitable organizations pro bono ( at cost, without pay) to earn respect in the community. Participation in professional associations such as AAAI and Ad Club can also lead to new contacts.

4. Image and reputation: Perhaps the most effective way an agency can gain new business is through its reputation. Agencies that consistently develop excellent campaigns are often approached by clients. Agencies may enter their work in award competitions or advertise themselves to enhance their image in the marketing community. In some cases the clients themselves may provide valuable testimonials.

5. Pitching or Presentations. A basic goal of the new business development is to receive an invitation from a company to make a presentation. This gives the agency the opportunity to sell itself-to describe its experience, personnel, capabilities, and operating procedures, as well as to demonstrate its previous work.

6. Speculative pitches
"Speculative pitches" — mock ads created by an agency at their own expense in order to attract new clients.
Smart firms are deciding not to wait for clients to invite them to pitch for work – they are going out there to present their credentials. Not only can this speed up the process of winning instructions, but it can also cut out competitors, as well as save the firm the time and costs of going through a potentially more rigorous formal pitch.

But speculative pitching is not always as successful as firms would like. In fact, if anything, the majority is failing. On some occasions, firms are sensing that the failure has set the firm backwards rather than moving closer to winning the work. Many partners also find the process difficult – it smacks so much of what some might see as aggressive selling. On analysis of pitch documents and presentations shows that many firms are not going about their speculative pitches in the most appropriate way. In particular, firms are not tailoring their messages appropriately to each prospective client.

A five-step approach to Speculative pitching
(1) Research the market and target companies;
(2) Telephone call;
(3) The meeting;
(4) The presentation;
(5) Follow up.

Current scenario:
Agency pitches for creative accounts are intensifying by the day, with clients crossing the floor more often. Driven by both better offerings and global realignments, creative advertising accounts worth over Rs 700 crore (Rs 7 billion) changed hands since March 2004.

In the last six months, J Walter Thompson, bagged nearly 32 new accounts. The booty? Rs 185 crore (Rs 1.85 billion). These accounts include Godrej air conditioners, Philips mobile phones, Lake City Corporation, SBI Mutual Fund, HPCL Power, Godrej Security, UTI Mutual Fund and Dr Batra's.
The reasons for this churn:
1."Clients are evaluating their marketing mix more frequently. Communication, being a part of this mix, also comes up for evaluation.
2. Market pressures, unbundling of the media and creative functions and flexible remuneration models are fuelling the churn.
3. Bigger clients tend to be more stable in their relationships with agencies.

Frequent reviews mean more pressure on agencies. Most advertisers now ask for a fee-based remuneration system, as opposed to the earlier 15 per cent commission, which is essentially a cost-plus-compensation model. This allows for greater negotiations.
With advertisers looking for more value for their buck, the pressure on ad agencies is only mounting.

Wow sunanda, great work! I read your whole article and it explained the management system of ad agency very nicely. It would be helpful for all the advertisement professionals. I have also got a document and would like to share it with you. So please download and check it.
 

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