Study on Global Advertising

Part THREE
Managing
the Advertising
Chapter 5
The Advertising Agency, Media
Services, and Other Services
A
dvertising agencies create most national
and international advertising. The agency
role and relationships are changing. After
reading this chapter, you will understand:
chapter objectives
1. the agency
2. the history of the agency business
3. the full-service agency
4. global advertising agencies
5. agency and client relationships
6. forms of agency compensation
7. other advertising services
159
Agencies are pressured today to lead the way in communication through all the
new channels and to react in the marketer’s interest in figuring out how to deal with
the new control that consumers have, especially the Connected Generation. This
group covers a huge blanket of people (those from ages 9 to 41) linked by attitude
and is empowered with the new tools and highly networked technology that have
reshaped them from the inside out. And they are reshaping marketing. And agen-
cies are being asked by their clients, “How do we connect with these multitasking
creatures?” And everyone is trying to figure this out.
The self-description of Santa Monica’s Ignited Minds speaks to many of the
issues faced by today’s agencies.
Ignited Minds is not an advertising agency.
We’re not in the business of creating advertising.We are in the business of making
our clients part of the cultural dialogue and the collective consciousness.
The means by which we accomplish this can take any form—from a two-dollar
T-shirt to a million dollar TV spot. It could be a web site, an event, a reality show, a
contest, a stunt, a store, a documentary, or anything else you can dream up. And each
is equally important. In that sense, we are more of an idea studio than an ad agency.
And Jeff Hicks, president of Crispin Porter?Bogusk, says, “Everything Crispin does
for a client is with an eye toward gaining media attention for the brand, which is
why it insists that clients break down corporate silos separating advertising, public
relations, and other units. The agency turns away clients that don’t give it access to
every part of a company.
1
Crispin Porter?Bogusky’s description of advertising is:
Most people think in terms of magazines, television commercials and bill-
boards. We think it’s anything that makes our clients famous. That is our job.
160 PART I I I Managing the Advertising
And we make creative content that makes that happen. Then we think of ways to
distribute that creative content. It may be through an online film, an event on
the street, a book or something we can’t imagine yet.
To us, it’s all advertising.
OK, agencies don’t publicly agree on what advertising covers today. Some of
us believe more in the Crispin view, that anything created for a client comes
under the umbrella of advertising. It isn’t worth arguing about. We’re talking
about delivering marketing communication for clients in many forms. Despite
these arguments and pressures, agencies continue to be the most significant
companies in the development of advertising and marketing, not only in the
United States but globally. During a time when every business is being rein-
vented, agencies are grappling with a number of issues: media proliferation and
fragmentation, compensation, client loyalty, short-term pressures on the bot-
tom line, lean structures, use of talent, reorganization, and how to make inte-
grated communication really work the way it was envisioned. And, yes, the new
consumer is yet another issue.
The changes in corporations have pressured agencies to become stronger
partners in reaching advertisers’ marketing and sales goals. Agencies have under-
gone their own reengineering, adapting to the environment in which they operate
and to the clients they serve. Not only have agencies changed their structures, but
also many have gobbled up specialty firms such as health care, online, mail-order,
interactive, and promotion companies and other units involved in integrated
communication. Make no mistake about it—it’s not business as usual. Roles and
relationships are changing. “We’ve been here before,” says Keith Reinhard, chair-
man emeritus of DDB Worldwide, of the challenges presented to the advertising
industry by new technologies like the Internet. “You have to focus on human
beings. You can’t forget that you’re trying to reach someone who has age-old
desires to be noticed, admired, and loved.”
2
THE AGENCY
An advertising agency, as defined by the American Association of Advertising
Agencies, is an independent business, composed of creative and business people,
who develop, prepare, and place advertising in advertising media for sellers seeking
to find customers for their goods or services.
According to the U.S. Census Bureau, there are more than 10,000 agencies in
operation in this country. The LexisNexis Red Book of Advertising Agencies (also
known as the “Agency Red Book”) lists over 5,000 agency profiles, including full-
service agencies, house agencies, media-buying services, sales promotion agen-
cies, cyberagencies, and public relations firms. The Adweek Agency Directory lists
more than 6,000 agencies, public-relations firms, and media-buying services, plus
26,000 personnel listings. There are about 2,000 agencies listed in the New York
Yellow Pages alone. Unfortunately, there isn’t a single printed or online directory
listing every agency throughout the country.
The majority of agencies are small one- to ten-person shops (we talk about size
and services later in this chapter). You will see advertisements for many specialized
products and services throughout this text—from consumer, industrial products,
and services to pro-bono causes—in which the agency had to become an expert in
marketing as well as writing the advertisement.
Chapter 5 The Advertising Agency, Media Services, and Other Services 161
EXHIBIT 5.1
Mizuno “Baggage”
Advertisement
Agencies are known
for their creative
communication.
Courtesy of Huey?Partners,
Atlanta.
HOW AGENCIES DEVELOPED
Before we discuss present-day agencies further, let us take a look at how advertising
agencies got started and how they developed into worldwide organizations that
play such a prominent role in the marketing and advertising process.
The Early Age (Colonial Times to 1917)
It is not generally known that the first Americans to act as advertising agents were
colonial postmasters:
In many localities advertisements for Colonial papers might be left at the
post offices. William Bradford, publisher of the first Colonial weekly in
New York, made an arrangement with Richard Nichols, postmaster in
1727, whereby the latter accepted advertisements for the New York Gazette
at regular rates.
3
162 PART I I I Managing the Advertising
Space Salesmen Volney B. Palmer is the first person known to have worked on a
commission basis. In the 1840s, he solicited advertisements for newspapers that
had difficulty getting out-of-town advertising. Palmer contacted publishers and
offered to get them business for a 50 percent commission, but he often settled for
less. There was no such thing as a rate card in those days. A first demand for $500 by
the papers might have been reduced, before the bargain was struck, to $50. (Today,
we call that negotiation.) Palmer opened offices in Philadelphia, New York, and
Boston. Soon there were more agents, offering various deals.
Space Wholesalers During the 1850s in Philadelphia, George P. Rowell bought
large blocks of space for cash (most welcome) from publishers at very low rates, less
agents’ commissions. He would sell the space in small “squares”—one column
wide—at his own retail rate. Rowell next contracted with 100 newspapers to buy
one column of space a month and sold the space in his total list at a fixed rate per
line for the whole list: “an inch of space a month in one hundred papers for one
hundred dollars.” Selling by list became widespread. Each wholesaler’s list was his
private stock in trade. (This was the original media package deal.)
The First Rate Directory In 1869, Rowell shocked the advertising world by publish-
ing a directory of newspapers with their card rates and his own estimates of their
circulation. Other agents accused him of giving away their trade secrets; publishers
howled, too, because his estimates of circulation were lower than their claims.
Nevertheless, Rowell persisted in offering advertisers an estimate of space costs
based on those published rates for whatever markets they wanted. This was the
beginning of the media estimate.
The Agency Becomes a Creative Center In the early 1870s, writer Charles Austin
Bates began writing advertisements and selling his services to whoever wanted them,
whether advertisers or agents. Among his employees were Earnest Elmo Calkins and
Ralph Holden, who in the 1890s founded their own agency, famous for 50 years under
the name of Calkins and Holden. These men did more than write advertisements.
They brought together planning, copy, and art, showing the way to combine all three
into effective advertising. Not only was their agency one of the most successful agen-
cies for half a century, but also the influence of their work helped to establish the
advertising agency as the creative center for advertising ideas. Many of the names on
the list of firms advertising in 1890 (see Chapter 1) are still familiar today; their
longevity can be attributed to the effectiveness of that generation of agency people
who developed the new power of advertising agency services. The business had
changed from one of salesmen going out to sell advertising space to one of agencies
that created the plan, the ideas, the copy, and the artwork; produced the plates; and
then placed the advertising in publications from which they received a commission.
To this day, the unique contribution to business for which agencies are most
respected is their ability to create effective advertisements.
Agency-Client Relationship Established In 1875, Francis Ayer established N. W.
Ayer & Son (one of the larger advertising agencies today). Ayer proposed to bill
advertisers for what he actually paid the publishers (that is, the rate paid the pub-
lisher less the commission), adding a fixed charge in lieu of a commission. In
exchange, advertisers would agree to place all their advertising through Ayer’s
agents. This innovation established the relationship of advertisers as clients of
agencies rather than as customers who might give their business to various sales-
people, never knowing whether they were paying the best price.
The Curtis No-Rebating Rule In 1891, the Curtis Publishing Company announced
that it would pay commissions to agencies only if they agreed to collect the full
Chapter 5 The Advertising Agency, Media Services, and Other Services 163
price from advertisers, a rule later adopted by the Magazine Publishers of America.
This was the forerunner of no-rebating agreements, which were an important part
of the agency business for more than 50 years. (Agency commissions, however,
ranged from 10 to 25 percent in both magazines and newspapers.)
Standard Commissions for Recognized Agencies Established In 1917, newspaper
publishers, through their associations, set 15 percent as the standard agency com-
mission, a percentage that remains in effect for all media to this day (except local
advertising, for which the media deal directly with the stores and pay no commis-
sion). The commission would be granted, however, only to agencies that the pub-
lishers’ associations “recognized.” One of the important conditions for recognition
was an agency’s agreement to charge the client the full rate (no rebating). Other cri-
teria for recognition were that the agency must have business to place, must have
shown competence in handling advertising, and must be financially sound. These
three conditions are still in effect. Anyone may claim to be an agency, but only
agencies that are recognized are allowed to charge a commission.
Today’s agencies still receive commissions from the media for space they buy
for clients. However, artwork and the cost of production are generally billed by the
agency to the advertiser, plus a service charge—usually 17.65 percent of the net,
which is equivalent to 15 percent of the gross. By preagreement, a charge is made
for other services.
The American Association of Advertising Agencies Founded in 1917, the
American Association of Advertising Agencies (sometimes known as AAAA or
4As), is the national trade association representing the advertising agency business
in the United States. Its membership produces approximately 75 percent of the
total advertising volume placed by agencies nationwide. Although virtually all of
the large, multinational agencies are members of the AAAA, more than 60 percent
of its membership bill less than $10 million per year. It is a management-oriented
association that offers its members the broadest possible services, expertise, and
information regarding the advertising agency business. The typical AAAA agency
has been a member for more than 20 years.
The No-Rebate Age (1918–1956)
The events of this era that left their mark on today’s agency world are summa-
rized here.
Radio One of the main events of 1925 was the notorious Scopes trial, and the main
advent was radio. They did a lot for each other. Radio dramatized evolution-on-trial
in Tennessee; it brought the issue of teaching scientific evolution home to
Americans, and it brought people closer to their radios. Tuning in to radio soon
became a major part of American life, especially during the Great Depression and
World War II. Radio established itself as a prime news vehicle. It also gave advertis-
ing a vital new medium and helped pull agencies through those troubled years. A
number of agencies handled the entire production of a radio program as well as its
commercials. By 1942, agencies were billing more for radio advertising ($188 mil-
lion) than they were for newspaper advertising ($144 million). The radio boom
lasted until television came along.
Television Television became popular after 1952, when nationwide network broad-
casts began. Between 1950 and 1956, television was the fastest-growing medium. It
became the major medium for many agencies. National advertisers spent more on
television than they did on any other medium. Television expenditures grew from
$171 million in 1950 to $1,225 million in 1956.
American Association
of Advertising Agencies
(AAAA, 4As)
The national organization
of advertising agencies.
market than we do. Our job is to pay attention and make
sure that they don’t get caught up in too much “inside-out”
thinking.
We will NOT do everything we’re told. We will make it our
responsibility to bring them ideas they didn’t ask for and to
keep solving problems in new and different ways.
We will argue for what we believe in, but we won’t be
jerks about it. There are enough jerks in the world already.
Kleppner Viewpoint 5.1
John Robertson
Founder, Co-Creative Director, VitroRobertson, San Diego
Taking Responsibility
W
e believe that when a group of people get
together and decide to open an advertis-
ing agency, that decision carries with it a
group of responsibilities.
The agencies that, over the long term, neglect those
responsibilities will struggle and make foolish compro-
mises and allow their creative product to erode until those
agencies themselves erode.
The agencies that never lose sight of those responsibil-
ities and that try to live up to them every day are the agen-
cies that will be respected and do outstanding work and
will prosper in even the most competitive of environments.
At least that’s our theory. Here are the responsibilities
we try to live up to.
Our Responsibilities to Consumers
We have a responsibility to show them a good time. They
have better things to do than to pay attention to advertis-
ing messages. We’ll reward them for their time by making it
an interesting, entertaining experience.
We have a responsibility to tell them what they want or
need to know. We won’t be all style and no substance. We
won’t waste their time.
We will be nice. We won’t be obnoxious, rude, or inap-
propriate in our advertising. If they like the advertising,
they’ll like the company. And, if they like the company,
they’ll want to do business with it.
Our Responsibilities to Clients
We will listen. Carefully. We will never forget that they know
a lot more about their business, their customers, and their
John Robertson
164
Electronic Data Processing The computer entered advertising through the account-
ing department. By 1956, the computer was already changing the lives of the media
department, the marketing department, and the research department—all having
grown in competence with the increasing number of syndicated research services.
Agencies prided themselves on their research knowledge and were spending hun-
dreds of thousands of dollars for research every year to service their clients better.
Business was good, and American consumers were attaining a better standard
of living than they had ever previously enjoyed. The period from 1950 to 1956
proved to be the beginning of the biggest boom advertising ever had. Total expendi-
tures jumped from $4.5 billion in 1950 to $9.9 billion in 1956. More than 60 percent
of this spending was national advertising placed by advertising agencies. And the
agency business was good, too.
The Age of Negotiation (1956–1990)
Consent Decrees In 1956, a change occurred in the advertiser-agency relationship.
The U.S. Department of Justice held that the no-rebating provision between media
165
associations and agencies limited the ability to negotiate between buyer and seller and, therefore,
was in restraint of trade and in violation of antitrust laws. Consent decrees to stop no-rebating
provisions were entered into by all media associations on behalf of their members.
Although the Justice Department’s ruling in no way affected the 15 percent that commission
agencies were accustomed to getting from the media, it opened the way to review the total com-
pensation an agency should receive for its services, with the 15 percent commission a basic part
of the negotiations. Later we look at the effects this has had on the agency-client relationship.
The Reengineering Age (1990–2000)
Mergers During the 1980s, many corporations had merged, creating giant corporations. To be
more competitive, agencies followed suit, many merging because of financial pressures to serve
larger clients.
Integrated Services The decade of the 1990s was about agencies reevaluating how they oper-
ate. Integrated services has been a buzzword relating to efforts to coordinate a client’s entire
marketing mix, including public relations, promotion, direct marketing, package design, and
In addition to being nice to the consumer, we will be nice to
them, too.
We think they deserve our full attention and our best
thinking.
Perhaps most importantly, we’ll respect their product
and their brand. We’ll treat it very carefully, because we
know how much it’s worth.
When we went into business more than 10 years ago,
this was what we believed in. And we still do today. ? ? ?
EXHIBIT 5.2
Who is Yamaha WaveRunner trying to reach with this ad?
Courtesy of VitroRobertson, Inc., Yamaha Watercraft, and Robert Holland, photographer.
166 PART I I I Managing the Advertising
so on. Some agencies have expanded their communication services to clients by
expanding departments or buying or creating subsidiary companies that enable
them to offer sales promotion, public relations, direct marketing, logo and pack-
aging design, and even television programming. One of the reasons is financial—
clients have been moving dollars from advertising to promotion, and clients
want their communications integrated. Agencies are trying to change to supply
those needs.
Media and the Digital Age (Since 2000)
Agency holding companies created mega-media buying and planning agencies
(also called media services agencies) that became profit centers to attract global
clients in an effort to become more efficient and cost-effective. As a result, many
clients unbundled their media from their agencies and gave them to a single-media
agency to buy and place. Interactive agencies have risen in importance as clients
have attempted to deal with the mobile, Web, iPod, blog, BlackBerry, consumer-
generated advertising world.
THE FULL-SERVICE AGENCY
In the simplest terms, the full-service agency offers clients all the services neces-
sary to handle the total advertising function—planning, creation, production,
placement, and evaluation. Many have expanded this to include the management
of all integrated marketing communications through a variety of disciplines—
advertising, promotion, direct marketing, public relations, and so forth—with a
tight strategic marketing focus so that the brand image is reinforced every time the
consumer is exposed to a communication.
Almost everyone has taken to heart clients’ needs to change the way they do
business, which, of course, means that agencies have to change their model to
survive. This typical attitude was reflected in a recent website-redesign message
from Luckie Advertising’s agency, which said:
Rethink everything. . . . Stay tuned for the most radical agency
transformation in the history of radical agency transformations.
The large agencies, especially, need a new concept of the role and responsi-
bilities to meet the demands of their large clients. A new mission will demand a
different organization. Some agencies have undergone a restructuring or reengi-
neering in recent years, more than once. Small agencies are loving it, because
they can adjust more quickly than the large agencies and this becomes a selling
point.
Most agencies believe that brand building is impossible without creative, per-
suasive advertising, which is with few exceptions the most potent component in
the marketing communication mix. Despite the restructuring, most marketers will
find familiar unit names in most agency restructuring: account management, cre-
ative, media, research or account planning, and administration. But many of these
agencies have changed how they operationalize the work. It still isn’t brain surgery,
but it does require a managed process.
Today, there isn’t a universal agency structure model, because agencies have
clients with specific needs. One structure doesn’t fit all. That said, let’s take a look at
the functions full-service agencies perform. When a new account or a new product
is assigned to a full-service agency, work on it will generally proceed along the fol-
lowing lines.
full-service agency
An agency that handles
planning, creation,
production, and placement
of advertising for
advertising clients. May
also handle sales
promotion and other
related services as needed
by client.
Chapter 5 The Advertising Agency, Media Services, and Other Services 167
Diagnosing the Marketing and Brand Strategy
The process begins with the collection of all that you know about the product cate-
gory, the brand, and its competitors. Research or brand planning takes the lead,
looking at consumer attitudes to develop penetrating insights into the prospects
and defining the brand’s core: Who are the prime prospects? Where are they? What
are their demographics and psychographic characteristics? How does the product
fit into their lifestyles? How do they regard this type of product, this particular
brand, and competitive products? What one benefit do consumers seek from this
product and this particular brand? In what distinctive way can the product solve
the prime prospects’ problems? What media will best reach your market? What will
it take to reach this audience? Some advertising agencies use their research capa-
bility to attract clients. An agency self-advertisement said, “. . . It’s understandable
that when you advertise, you tend to do it from your own perspective . . . we don’t
promote who you think you want to be. We explore through research who con-
sumers will let you become. Then we apply that knowledge to the most important
part of any communication plan, the ad itself.” Exhibit 5.3 shows a highly targeted
advertisement. There is little question as to the target.
Setting Objectives and Developing Strategy
Using the answers to the questions asked in the previous section, a strategy is for-
mulated that positions the product in relation to the prime-prospect customer
and emphasizes the attribute that will appeal to the prime prospect. Account
management is responsible for leading this phase. Here, you define what is to be
accomplished strategically, such as intensifying brand imagery and recapturing
EXHIBIT 5.3
Reed & Barton
advertisements target
prospects.
Courtesy of Blattner Brunner,
Pittsburgh, Atlanta, Washington.
168 PART I I I Managing the Advertising
prior users, and plan how to carry it out. These strategic dialogues involve teams
of account, creative, media, and research people.
Creating the Communication
Once the overall strategy is determined, you decide on the creative strategy, write
copy, and prepare rough layouts and storyboards. In advertising, the creative
impulse is always disciplined—an imaginative and persuasive expression of the
selling strategy and the character of the brand.
The Media Plan Large clients may have separated the media function to a separate
media service agency. In this event, both the creative and media agencies have to col-
laborate indeveloping the media plan. Either way, youdefine media strategy, checking
objectives to ensure that they parallel your marketing objectives. Then you select
media. All traditional and nontraditional options are explored, the goal being to avoid
mere execution and add value instead. Media schedules are prepared with costs. At
this stage, youseek tocoordinate all elements of the marketing communicationmix to
ensure maximumexposure. The choice of media leads the process by developing an
environment that multiplies the impact of the creative team. This step may be imple-
mented by the agency or by anindependent media agency or buying service.
The Total Plan You present roughs of the copy, layouts, and production costs, along
with the media schedules and costs—all leading to the total cost.
Evaluation Plan The evaluation step in this process is both the end and the begin-
ning. It is the moment of reckoning for the creative work, based on the objectives
set in the beginning, and provides the evidence needed to refine and advance
future efforts. As such, it is an accountable system.
Notify Trade of Forthcoming Campaign
For many product categories, you would inform dealers and retailers of the cam-
paign details early enough so that they can get ready to take advantage of the adver-
tising campaign.
Billing and Payments
When advertisements are run, you take care of billing the client and paying the bills
to the media and production vendors. As an example of the billing procedure, let us
say that through your agency an advertiser has ordered an advertisement in Leisure
Gourmet magazine for one page costing $10,000. When the advertisement appears,
the bill your agency gets fromthe publisher will read something like this:
1 page, August Leisure Gourmet magazine $10,000
Agency commission @15%(cash discount omitted for convenience) 1,500
Balance Due $8,500
Your agency will then bill the advertiser for $10,000, retain the $1,500 as compensa-
tion, and pay the publisher $8,500.
The agency commission applies only to the cost of space or time. In addition,
as mentioned earlier, your agency will send the advertiser a bill for production costs
for such items as the following:
finished artwork reproduction prints/films
typography (typesetting) recording studios
photography broadcast production
printing collateral
Chapter 5 The Advertising Agency, Media Services, and Other Services 169
Board of Directors
President
Vice President
Creative
Services
Writers,
Art Directors
Fashion
TV
Production
Traffic
Account
Executive
Personnel
Account
Supervision
Accounting Research
Print
Production
Media
Sales
Promotion
Office
Management
Finance
Vice President
Account
Services
Vice President
Marketing
Services
Vice President
Management
and Finance
EXHIBIT 5.4
Organization of a Typical
Full-Service Agency
The items are billed at actual cost plus a service charge, usually 17.65 percent
(which is equivalent to 15 percent of the net).
THE TRADITIONAL AGENCY ORGANIZATION
In this section, we first examine the traditional approach to the full-service agency
structure, and then we look at the reengineering of this process.
Advertising agencies come in all sizes and shapes. The largest employ hundreds
of people and bill thousands of millions of dollars every year. The smallest are one-
or two-person operations (usually a creative person and an account manager). As
they grow, they generally must add to their organizational structure to handle all
the functions of a full-service agency.
All agencies do not structure themselves in exactly the same manner. For dis-
cussion purposes, we have chosen a typical traditional organizational structure
under the command of major executives: the vice presidents of (1) the creative
department, (2) account services, (3) marketing services, and (4) management and
finance (see Exhibit 5.4). We discuss briefly how each department is organized.
Creative Department
KenRoman, former chairmanof Ogilvy &Mather Worldwide, says, “Agencies are gen-
erally hired on the basis of their creative abilities—the promise that they can create
campaigns that will build business for the client.” Every agency that exists is con-
cerned with creating good advertising.
4
Yet, only a small number of agencies are
known for their creative work. Later, in Chapter 16, Frank Compton takes a look at
defining the requirements to creating more than fundamentally basic advertise-
ments. Inalmost every agency, the agency creative director is almost a mythical, often
legendary creature positioned near the top of the agency totempole. The creative
director is considered to be responsible for the care and feeding of its most prized
possession—the creative product. Today, more than ever before, success is measured
Chair,
CEO
Strategy
Overall
Direction
Quality
Control
Managing
the Business
Day to Day
Management
Creation/
Production
of Advertising
Implementation
of Plans
Senior VP,
Management
Supervisor
VP,
Account
Supervisor
Senior VP
Senior VP,
Planning
Executive VP,
Creative
Director
Creative
Team
VP,
Creative
Services
Broadcast
Production
Print
Production
Traffic
Senior
Account
Executive
EXHIBIT 5.5
Typical Team
Responsibilities
In some agencies, the
account planner works
directly with creative to
provide consumer
insights and research.
170 PART I I I Managing the Advertising
by the client’s results. The creative director is expected to have an opinion on every-
thing Interactive to promotion to public relations. In addition to den mother,
psychologist, cheerleader, arbiter of taste, basketball coach, teamplayer, historian,
jack-of-all-trades, showman, social convener, architect, designer, and Renaissance
person, today’s more evolved species is also required to be a strategist, businessper-
son, planner, financier, and new-product developer. Bill Westbrook, ontaking over as
creative head of Fallon McElligott, stressed the importance of strategy: “If it’s not a
great strategy, it isn’t a great campaign.” Lee Chow, chairmanandchief creative officer
of TBWA/Chiat Day, says, “Managing an integrated campaign is different fromdoing
just ads, as creative directors we’ve become joinedat the hipwithaccount planners.”
5
At first, all writers and artists will work right under one creative director; but as
the business grows, various creative directors will take over the writing and art
activities of different brands. A traffic department will be set up to keep the work
flowing on schedule.
The print production director and the television manager also report to the
creative director, who is ultimately responsible for the finished product—
advertisements and commercials.
Account Services
The vice president in charge of account services is responsible for the relationship
between the agency and the client and is indeed a person of two worlds: the client’s
business and advertising (see Exhibit 5.5). This vice president must be knowledge-
able about the client’s business, profit goals, marketing problems, and advertising
objectives. He or she is responsible for helping to formulate the basic advertising
strategy recommended by the agency, for seeing that the proposed advertising pre-
pared by the agency is on target, and for presenting the total proposal—media
schedules, budget, and rough advertisements or storyboards—to the client for
approval. Then comes the task of making sure that the agency produces the work to
the client’s satisfaction.
Once the client approves the job, it is my responsibility
to get the final product out the door. If the job is a print ad,
I make sure the ad meets the publications specs (size,
color, bleed, etc.) and then send the ad to the publication
in the format they request. If the job is a radio or TV ad, I
send the spot(s) along with traffic instructions to the sta-
tion. Traffic instructions are all information the station
needs about how and when to run spots. After the ad has
been sent to the station or publication, I file a copy of the
finished product in the agency archive.
Every day in an advertising agency is different. The year
begins with planning meetings to decide the direction of
the campaign. This involves a lot of strategic thinking.
Once the campaign direction is decided, there is produc-
tion time for all pieces of the campaign. After the campaign
pieces are completed, they must all be sent out to the
media outlets. Once the campaign is out and running, it’s
about time to start planning the next campaign. ? ? ?
Kleppner Viewpoint 5.2
Alana Stephenson
Account Services, The Johnson Group, Chattanooga
A day in the life of an Account Executive
A
t my agency, our account service
department is divided into Account
Executives and Project Managers. The
Account Executive is the main client
contact and handles presenting agency ideas to the client
and client ideas to the agency. The Project Manager is the
internal communicator for the client. Each client has an
Account Executive and a Project Manager assigned to
them. This way, each client has at least 2 contacts within
the agency and should always be able to reach someone. I
am a Project Manager.
As a Project Manager, my job is to make sure that the
client’s needs are being met within the agency. I keep up
with due dates and make sure that jobs travel through the
appropriate channels before being sent out of the office.
When the client or the agency has an idea for a project,
my first action is to open a job in our system for that proj-
ect. Jobs are assigned a number, which is how it is refer-
enced internally and how the project is archived. After a job
is opened, I arrange a meeting with everyone who will work
on the job. This includes the Account Executive, Creative
Director, Art Director, Production Artist and Production
Manager. The purpose of this meeting is to determine the
direction we will take and to leave the meeting with every-
one knowing what they need to do. We call this our down-
load meeting.
After the download, work begins on a job. My role is to
make sure that the time spent on the job is within the
amount of time we estimated. When the creative depart-
ment has the job to a point where it is ready to show the
client, we first have an internal review. This gathers the
people from the original download together again and we
reexamine to make sure we are on target with our concept.
Once everyone from the agency is on board, the Account
Executive presents the job to the client.
Once the client has seen the job they may suggest
changes or give feedback. This feedback is brought back to
the creative department and any revisions are made and
resubmitted to the client.
171
Alana Stephenson
As the business grows and takes on many clients, an account supervisor will
appoint account executives to serve as the individual contacts with the various
accounts. Account executives must be skillful at both communications and follow-
up. Their biggest contribution is keeping the agency ahead of its client’s needs. But
the account supervisor will continue the overall review of account handling, main-
taining contacts with a counterpart at the client’s office.
172 PART I I I Managing the Advertising
Marketing Services
The vice president in charge of marketing services is responsible for media plan-
ning and buying (if the creative agency handles media), for research, and for sales
promotion. The media director is responsible for the philosophy and planning of
the use of media, for the selection of specific media, and for buying space and time.
As the agency grows, there will be a staff of media buyers, grouped according to
media (print, television, or radio or Interactive), accounts, or territory. The media
staff will include an estimating department and an ordering department, as well as
a department to handle residual payments due to performers. The media head
may use independent media services, especially in the purchase of television and
radio time.
The research director (or planning director) will help define marketing and
copy goals. Agencies usually use outside research organizations for fieldwork, but
in some agencies, research and media planning are coordinated under one person.
The division of work among the executives may vary with the agency.
The promotion director takes care of premiums, coupons, event marketings,
and all types of promotions.
Management and Finance
Like all businesses, an advertising agency needs an administrative head to take
charge of financial and accounting control, office management, and personnel
(including trainees).
THE CONTINUING EVOLUTION OF THE AGENCY
Decades ago, clients sought the agency powerhouse talents of Leo Burnett, Bill
Bernbach, David Ogilvy, Rosser Reeves, Howard Gossage, and Mary Wells. This was
followed by agencies that were less driven by famous individuals and more often
driven by a collection of bright talent. There has always been some sort of agency
evolution taking place. In the 1980s, agencies followed the trend of clients and they
merged and restructured to be more financially competitive. The 1990s brought a
major agency reengineering as agencies changed to better serve the integrated and
Web needs of clients, and some no longer called themselves “advertising agencies.”
Peter Arnell, chairman of Arnell Group, says “The term ad agency needs a true and
sincere facelift.” He does complicate it by defining his agency as a “brand-ideation
and experience-marketing company specializing in integrated branding, strategy
and communication solutions.”
6
For example, J. Walter Thompson says it is a “brand communication company.”
It is now simply called JWT. The result is an integrated company with a number of
companion companies offering marketing expertise beyond traditional advertising
and marketing. In early 2005, it held a funeral around the world at its many offices.
In Paris, the staff lit a bonfire made of old campaigns. In Tokyo, its founder
Commodore J. Walter Thompson received a mock burial at sea to symbolize that
the advertising agency was dead!
Traditionally, agencies were trusted partners in the stewardship of the brand.
They would be key in developing products, serving as marketing and media experts
and visionaries. Today, most major corporate marketing departments have the abil-
ity to manage these functions. Many agencies feel they are treated more like
vendor–order takers than partners as clients seek solutions from any place, once
the exclusive territory of agencies.
Under the traditional structure, an account person met regularly with creatives
to discuss strategy and advertising copy, or with media people to review schedul-
Chapter 5 The Advertising Agency, Media Services, and Other Services 173
ing, or separately with the public-relations person. Rarely did everyone meet
together. In most reengineered operations the key people on the team meet on a
regular basis so that everyone knows what is going on in every aspect of the
account. For example, key people meet every Monday morning to reviewthe week’s
work—and meet again when necessary. This means the sales-promotion person
knows about the public-relations work, and the art director knows about media
planning, and everyone knows about the Interactive film. If necessary, the client
participates in the review. In theory, a client could call anyone on the teamto get an
answer.
A few years ago, Jay Chiat, a pioneer in agency reengineering, said:
We believe the hierarchical structure [of the traditional agency], if not
obsolete at present, is on its way. The traditional pyramid is about
personal power and focuses on how to run a business. Most of the
decisions are about the organization’s needs—fiscal and administrative
issues. An agency is a service organization whose sole existence depends
on satisfying client needs.
7
In traditional agencies, senior managers spend 15 to 20 percent of their time on
client business. In reengineered agencies, they spend about 60 percent of their time
in the trenches working on client business. Middle managers in reengineered agen-
cies act as coaches, team leaders, and quality-control managers. One of the signifi-
cant changes is that creative staff, account managers, and media planners must
work together as a team—a team of people working together to rapidly solve prob-
lems. Most agency reengineers say their teams consist of eight to twelve people,
although some use teams of about twenty people. Most agencies’ reengineered
structure is somewhat similar to traditional structure. It is how business works that
is different. People don’t do their thing in isolation; they approach problem solving
together. The team concept often helps younger people because it allows them to
work side by side with senior people.
As with any new management trend, traditional agencies will copy and modify
those reengineering structures that have beensuccessful to meet their specific needs.
There is little doubt that the agency structure inthe future will not be a copy of today’s.
Specialty Agencies
Most advertising agencies are primarily general consumer agencies. However,
some agencies primarily specialize in certain kinds of business. Some examples
are: business-to-business (B2B) accounts, health care (Grey Healthcare, Cline
Davis, Euro RSCG Life), entertainment, or tourism; and other business special-
ties like Maximum Design & Advertising (Exhibit 5.6), which specializes in real
estate marketing. Then you have the multicultural agencies: the Asian market,
the African American market, the Hispanic market, and other groups such as the
Arab market. And a big growth area includes Interactive agencies (Euro RSCG 4D,
Grey Digital, Ogilvy Interactive, Avenue A/Razorfish). Each of these operate
pretty much as any other agency, but their expertise is more narrow than reach-
ing all consumers.
Agency Size
Some agencies are run by one or two people, others by hundreds or thousands.
There has always been an argument that large agencies offer more services and
expensive star talent. The negative is that they generally charge more and aren’t
very flexible because of their size. Small agencies promote that small-
to-medium clients can be serviced by the agency’s senior management and
creative.
174 PART I I I Managing the Advertising
Brad Majors, former president of Socoh Marketing who has worked for agen-
cies of all sizes in senior positions, offers these thoughts about size of agency:
? Large/public agencies will, more than ever, be confined to large, multinational
accounts. It will be nearly impossible for them to profitably service smaller
clients. And since there will continue to be large multinational clients (with
growth primarily from the acquisitions of smaller competitors’ brands), there
should be room for the larger agencies to profitably handle them.
? Medium-size agencies, which have been the greatest source of creativity histor-
ically, will exist but will remain in the state of flux we see today. As they grow,
they will have the resources to hire strong talent. Much of this talent, without
the cumbrances of public ownership, will continue to produce provocative
work. As the work is noticed and clients and prospects become more interested,
these medium-size agencies will become attractive to larger agencies as an
acquisition target. As the principals of the agency age, an immediate cash-rich
buyout may seem more attractive than a deal with the next generation of the
agency’s management. Thus, the newly acquired agency will not be medium
size any longer but will become only a part of the larger whole. Once acquired, it
will be important for it to remain in the niche prescribed for it by the parent
agency.
EXHIBIT 5.6
Maximum specializes in
real estate development
advertising.
Courtesy of © 2006 Maximum
Design. Used with permission.
Chapter 5 The Advertising Agency, Media Services, and Other Services 175
? Interestingly, smaller agencies not only will exist but also will thrive, if
managed prudently. Historically, small agencies have either fared very well
or gone under. To some extent, small agency success has been determined
by how strong the agency’s financial management was. Managing cash flow
and accounts receivables has been a critical issue for most small agencies
and it will continue to be so. But given the instability expected in medium-
size agencies, there should be great opportunities for smaller agencies that
combine a marketing-driven creative product with sound financial
management.
COMPETING ACCOUNTS
The client-agency relationship is a professional one. It may involve new product
strategies, new promotions, sales data, profit or loss information, and new mar-
keting strategies—information that is sensitive and confidential. As a result,
most clients will not approve of an agency’s handling companies or products in
direct competition; Coca-Cola isn’t going to allow its agencies to handle Pepsi
products. In some cases, agencies will handle accounts for the same type of
product or service if they do not compete directly—for example, banks that do
not compete in the same market. Many agency-client conflicts result from merg-
ers in which one merger partner handles an account for a product that competes
with a product being handled by the other merger partner. When agencies con-
sider merging, the first question is, “Will any of our accounts conflict?” There are
a number of large national agencies with independent offices around the coun-
try that hope clients will not view the same type of account in another office as a
conflict.
CLIENT-AGENCY RELATIONSHIP LENGTH
Clients generally retain agencies as long as the relationship seems to be working.
However, most contracts allow for a 90-day cancellation by either party if the rela-
tionship goes sour. At the same time, agencies can resign an account if they differ
with the client’s goals and the account isn’t profitable. American Association of
Advertising Agencies research has indicated that the average tenure of client-
agency relationships has declined from 7.2 years to 5 years since 1984. Yet today,
some clients have been with their agencies for decades. For example, GE (1920),
Hormel Foods (1931), and DaimlerChrysler (1926) have been clients of BBDO
Worldwide for many years.
AGENCY OF RECORD
The agency-of-record relationship offers marketers an advertising team to work
solely on their brand, creating a stable teamof experts in that particular industry.
Global agencies claim they are capable of providing multiple services to a client,
which enables marketers to respond quickly to changes in the global business
environment.
8
In some instances, large advertisers may employ a number of agencies to
handle their advertising for various divisions and products. To coordinate the
total media buy and the programming of products in a network buy, the adver-
tiser will appoint one agency as the agency of record. This lead agency will make
176 PART I I I Managing the Advertising
Advantage Point
Huey+Partners
A
dvertising agencies, like brands, need a clear and distinguishable
point of difference. With that in mind, Ron Huey and partner, Joe
Paprocki, opened the doors of their Atlanta agency in 1997. Their
distinguishable point of difference? Very simply: Creative work that sets their
clients’ brands apart and grows their business. It was that sole focus on crafting
emotionally-compelling, arresting creative work that moved Ad Age’s Creativity
to name them one of the country’s “Top 20
Agencies to Watch” in 2000. Over their first four
years, the agency’s work was recognized with
over 300 ADDY awards—more than any other
Atlanta agency in that time. In the Fall of 2004,
Communication Arts featured the agency in an
8-page profile—one of only four agencies
worldwide to be featured that year.
What’s the secret behind their success?
Agency founder, Ron Huey, explains that he
took the best of what he’d learned at some of
the country’s most-acclaimed shops including
The Martin Agency and Team One Advertising
where Ron’s creative work for Lexus helped
establish the brand as the number one luxury
automobile in America. However, unlike larger
shops, Huey?Partners is able to deliver that
level of big brand and big agency experience to
their clients in a much leaner, more responsive
agency model.
Today, Huey?Partners continues their stead-
fast belief that creativity is the key to setting
brands apart. Its an approach that has yielded
great results for their clients. In the agency’s
five-year relationship with Mizuno USA, the
client has seen their market share in golf irons
literally double. Thanks, in part, to a quirky,
untraditional advertising campaign that recog-
nizes the passion golfers share for the game.
Meanwhile, other clients such as Hitachi Power
Tools, WeatherBug, The Daily Report and
Russell Athletic have also reaped the benefits of
Huey?Partners’ dedication to a singular mis-
sion: the work. ? ? ?
Courtesy of Huey+Partners.
Chapter 5 The Advertising Agency, Media Services, and Other Services 177
the corporate contracts under which other agencies will issue their orders, keep a
record of all the advertising placed, and communicate management’s decisions
on the allotment of time and space in a schedule. For this service, the other agen-
cies pay a small part of their commissions (usually 15 percent of 15 percent is
negotiated) to the agency of record.
AGENCY MULTIPLE OFFICES
Many major agencies have offices in cities throughout the United States.
McCann-Erickson is typical, with major offices in New York; Los Angeles; San
Francisco; and Birmingham, Michigan. JWT USA operates major agencies in
Atlanta, Chicago, Detroit, and Houston, with its headquarters in New York. It also
has a number of JWT Specialized Communication offices in a number of other
cities, as well as other offices throughout the world. BBDO has regional head-
quarters in Atlanta, Chicago, Detroit, Miami, Minneapolis, San Francisco, and
Los Angeles, in addition to its New York worldwide headquarters. For the most
part, each office functions as an autonomous agency that serves different clients
and is able to draw on the talents and services of the other offices. As a rule, these
offices don’t normally work on the same project for the same client. Whereas the
parent organizations are busily marketing themselves as global networks, each
local office fiercely tries to protect its unique culture. Recently, BBDO’s chairman
says, “It’s no secret that BBDO in Los Angeles is our best agency in terms of print
creative. Why shouldn’t we make that expertise available to clients from other
offices?”
9
It may be said that because each office handles different kinds of
accounts, each office has different specialties that could be leveraged on behalf
of all clients. But, as a general rule, each office works primarily on its own
accounts.
Keep in mind that the large media services agencies also have multiple offices
in many of the same cities.
GLOBAL AGENCIES AND GLOBAL MARKETS
Globalization has become a necessary part of business and advertising. The
demands on marketers to survive in a global economy place pressures on large-
and medium-size agencies to become global partners. Companies and agencies
need to learn cultural and market patterns to understand consumers from a global
perspective. Someone trying to sell burgers, fries, and soft drinks outside of the
United States may think there is no competition because there are no other burger
outlets. The local version of fast food may not include hamburgers at all; the real
competition may be a rice shop or a tacqueria. Unless marketers understand com-
peting sources for that same dollar, they won’t be successful.
10
Many small- to medium-size agencies that don’t have the resources for interna-
tional offices have made affiliations with agencies or independent agency networks
throughout the world to service clients and give advice. If you’re a Jacksonville
agency without foreign offices, you might turn to one of the independent network
agencies in Hong Kong for help marketing in Hong Kong. If an agency doesn’t have
the resources (offices or network) to help clients engage in international marketing,
then the client is likely to turn to agencies that do have the resources and knowl-
edge, or the client may seek a local agency in the country where it is doing business.
Major agencies have been global in nature for many decades to service their clients’
international needs.
178 PART I I I Managing the Advertising
JWTopenedits first office outside the UnitedStates in1891 inLondon. It nowhas
315 offices in ninety countries. Following is a list of its non–North American offices.
JWT Global Agency Network
Latin America Asia Pacific Europe Africa Middle East
Argentina Australia Austria Ghana Egypt
Bolivia Bangladesh Belgium Ivory Coast Israel
Brazil China Bosnia- Kenya Jordan
Colombia Hong Kong Herzegovina Mozambique Kuwait
Costa Rica India Bulgaria South Africa Lebanon
Dominican Indonesia Croatia Morocco
Republic Japan Czech Republic Saudi Arabia
Ecuador Korea Denmark Syria
El Salvador Malaysia Estonia UAE
Guatemala Nepal Finland
Honduras New Zealand France
Mexico Pakistan Germany
Nicaragua Philippines Greece
Panama Singapore Hungary
Paraguay Sri Lanka Ireland
Peru Taiwan Italy
Puerto Rico Thailand Latvia
Uruguay Vietnam Macedonia
Venezuela Netherlands
Norway
Poland
Portugal
Romania
Russia
Slovenia
Spain
Switzerland
Turkey
Ukraine
United Kingdom
Yugoslavia
JWT Worldwide has had a system to manage a client’s global business that
includes the following:
1. Global teams. JWT can help clients achieve their communications objectives
virtually anywhere in the world.
2. Director-in-charge system. JWT uses an account director, who is the director-in-
charge (DIC) on a global scale. These people operate as heads of an “agency
within the agency,” working with all offices to service global clients. The DICs
work closely with their regional directors, local office CEOs, and account direc-
tors in each country to make sure the agency’s network comes together seam-
lessly to execute a multinational advertiser’s global communications efforts to
build its business.
3. Regional directors. JWT regional directors have the responsibility for a specific
group of countries. The CEOs of JWT’s offices in that region report to the
regional director.
4. Global directors. Each worldwide client is represented by a global business
director, who sits on the JWT worldwide executive group. The DIC reports to
the global business director, whose role is to ensure that the full resources of
the JWT global network are brought to bear in servicing multinational
accounts.
Chapter 5 The Advertising Agency, Media Services, and Other Services 179
EXHIBIT 5.7
Megapass
The Korean Telecom
advertisement’s banner
says, “Congratulations
Megapass! Investment
from foreign
customers!” The bottom
copy says, “Thank you
for contracts! Three
million customers!
Megapass Summer
special event.”
Courtesy of Korean Telecom and
Chang Hwan Shin.
WWP, the parent of JWT, sponsors BrandZ, a research study that interviews
some 70,000 people around the world. This study asks consumers questions in fifty
categories to understand how consumers view 3,500 brands. These insights are
available to JWT clients.
Most global agencies have similar operations to JWT. For instance, DDB has 206
offices in ninety-six countries. BBDO has 316 offices in seventy-seven countries.
Sometimes agency offices are opened in a country because a client wants to do
business there.
In Chapter 23, we deal extensively with international operations.
Global Ad Centers
The leading international advertising cities ranked in terms of local advertising
billings are New York and Tokyo—fighting neck and neck for world leadership. Other
major advertising centers include London, Paris, Chicago, Los Angeles, Detroit, San
Francisco, Minneapolis, Frankfurt, São Paulo, Düsseldorf, Madrid, and Seoul. Almost
every country has an advertising agency center. Exhibit 5.7 shows a Korean utility
advertisement. For U.S. agencies, setting up a foreign office can be very complex. Each
country is a different market, with its own language, buying habits, ways of living,
mores, business methods, marketing traditions, and laws. So instead of trying to orga-
nize new agencies with American personnel, most U.S. agencies purchase a majority
180 PART I I I Managing the Advertising
or minority interest in a successful foreign agency. Key members of the international
offices regularly meet for intensive seminars on the philosophy and operation of the
agency and share success stories. Remember, good marketing ideas can come from
any place. The United States doesn’t have a lock on great ideas.
Global Marketing
Companies are continually attempting to become more globally integrated.
Sometimes these efforts don’t work as smoothly as the company wishes. As with U.S.
advertising, success often stems from a product or positioning that is relevant to con-
sumer needs, which often vary by culture. Although cultures and habits vary, people’s
emotions are remarkably similar. People are very much alike in their attitudes regard-
ing love, hate, fear, greed, envy, joy, patriotism, material comforts, and family. Ogilvy
& Mather has found that strategies can and do move worldwide, but it is usually best
to create advertising locally from a worldwide plan and strategy to maintain the
desired brand image. If there is a local reason to vary strategy, it should be worked out
in advance. For smaller companies, the promise of global branding has been a
bumpy road. Global players face a common problem—virtually every global strategy
now has a full complement of strong multinational and regional competitors. The
promise of managing marketing from a single headquarters hasn’t worked the way it
was planned.
11
Jerry Judge, former CEO of Lowe Worldwide, says, “There really isn’t
much global marketing. There are companies that market globally.” According to Ken
Kaess of DDB Worldwide, “The benefit is consistency of product image or message,
which is particularly true of service marketers like American Express, McDonald’s, or
Exxon Mobil. They have the same core values around the world.”
12
It is only logical that multinational clients want their agencies to know how to
develop great advertising campaigns that can run across all the principal markets of
the world. As the world gets smaller, there needs to be brand consistency so people
don’t get confused as they move from market [country] to market.
13
The result of this
need is pressure on U.S. agencies to produce, place, and research global advertising.
Global Production Efficiencies
Cost efficiencies in production of global advertising motivate advertisers to seek a
single world execution for advertising concepts. A single execution also helps
build the same global brand equity. However, “every international brand starts
out as a successful local brand . . . reproduced many times.”
14
Being a global
advertiser and having one global campaign sound easy. But it is not. Despite
being a global advertiser for many decades, Coca-Cola didn’t launch its first
global advertising campaign until 1992 with all the advertisements being similar
in each country. Exhibit 5.8 shows an advertisement developed by Coca-Cola
Company–Japan.
A brand and its advertising must be presented in relevant and meaningful ways
in the context of local environments, or consumers won’t care. As many experi-
enced multinational marketers know, for any given brand, advertising that elicits
the same response from consumers across borders matters much more than run-
ning the same advertising across borders. That may mean using the same brand
concept or advertising concept and similar production format across borders, but
the executions need to be customized to local markets so the consumers can relate
to and empathize with the advertising. Simply translating American advertise-
ments into foreign languages has proved dangerous. Perdue’s (Chicken) Spanish
translation of “It takes a tough man to make a tender chicken,” actually said, “It
takes a sexually excited man to make a chick affectionate.” Language can be a bar-
rier; for example, “Come alive with the Pepsi Generation” translated in Chinese as
“Pepsi brings your ancestors back from the grave.”
Chapter 5 The Advertising Agency, Media Services, and Other Services 181
EXHIBIT 5.8
Coca-Cola (Japan) Co.
Ltd. tries to create a
dialogue with young
consumers in an
attempt to develop a
lasting relationship
between the brand and
the reader.
Courtesy of Coca-Cola (Japan)
Company, Limited.
AGENCY NETWORKS
Many small- and medium-size agencies that have working agreements with each
other to help with information gathering from different markets and sharing are
called agency networks. Usually there is only one network member in each market
or region. Agency networks provide information and financial skills to enhance
agency operations.
The Mega-Agency Holding Companies
Marion Harper set out his holding company vision for Interpublic Group of compa-
nies in 1960. He understood that once an agency reached a certain size, account
conflicts hindered the agency’s growth. His solution was to create an organization
that would own individual agencies that could handle competing brands. Each of
these agencies would operate freely and independently. The definition still holds
true today, by and large, but not quite as Harper envisioned. There are still account
conflict problems. And how is the integration of these agency brands working? Do
clients really prefer one-stop shopping? Some of the holding companies are selling
integrated services to a number of clients successfully.
15
Mega-agency holding companies have huge networks of their agencies and
support companies around the world to serve clients. The modern version of the
mega-agency holding company started in 1986 when a small London agency,
Saatchi & Saatchi PLC, systematically grew over a 2-year period to become a mega-
agency network with capitalized billings of more than $13.5 billion. Not a bad
growth pattern. As a result, it became the world’s largest advertising organization
for a brief period and truly changed global advertising. Today, the largest organiza-
tions are Dentsu (Tokyo), WWP Group (London), Omnicom Group (New York), and
Publicis Groupe (Paris). These and other mega-agency organizations own many
advertising agencies and marketing service companies throughout the world.
Some of the holdings of the Omnicom Group, founded in 1986, are listed in the
Advantage Point on page 182.
182
Advantage Point
Omnicom Group
F
ounded in 1986, Omnicom Group is a strategic holding company that
manages a portfolio of global market leaders. Omnicom companies
operate in the disciplines of advertising, marketing services, specialty
communications, interactive/digital media, and media buying services. Omnicom
Group includes:
Omnicom’s Three Global Advertising Brands
BBDO Worldwide, New York
DDB Worldwide, New York
TBWA Worldwide, New York
Leading U.S.-Based National Advertising Agencies
Arnell Group, New York
Element 79 Partners, Chicago
Goodby, Silverstein & Partners, San Francisco
GSD&M, Austin
Martin|Williams, Minneapolis
Merkley Newman Harty|Partners, New York
Zimmerman Partners, Fort Lauderdale
Omnicom Media Group (OMG)
? OMD Worldwide. This is one of the largest media communications companies in
the world. It was initially formed out of the media departments of three of
Omnicom’s global advertising agencies: BBDO, DDB, and TBWA. OMD is head-
quartered in New York, with more than 140 offices in eighty countries.
? PHD Network. This London-based media firm has long been a leading media
services company in the United Kingdom and North America that is widely rec-
ognized for its pioneering and innovative work for clients.
? Prometheus Media Services. This firm was spun off of OMD in 2005 and has
quickly become a market leader with strength in ROI and accountable media.
Headquartered in Chicago, Prometheus also has offices in New York and London.
Diversified Agency Services (DAS)
DAS consists of a global enterprise of more than 160 companies, which operate
through more than 700 offices in seventy-one countries. They provide marketing
services in direct marketing/consultancy, public relations, promotional market-
ing, and specialty communications. DAS companies operate through a combina-
tion of networks and regional organizations. They serve international and local
clients. A few examples follow:
? Public Relations/Public Affairs DAS includes three of the top seven public rela-
tions firms in the world—Fleishman-Hillard, Ketchum, and Porter Novelli—as
well as specialist agencies including Brodeur Worldwide, Clark & Weinstock,
Gavin Anderson & Company, and Cone.
? Specialty Communications DAS has built an influential global health-care fran-
chise, of which six health-care communications companies are ranked in the
top twenty-five. DAS also includes Bernard Hodes Group and the premier busi-
ness, corporate, and financial advertising agency, Doremus.
183
Following are some other business categories and Omincom brands that serve
them:
Customer Relationship Management
Branding/Consultants/Design
AvreaFoster
Design Forum
Hall & Partners
Hornall Anderson Design Works
Interbrand
Direct Marketing/Relationship Marketing
Direct Partners
FSA Communications
Rapp Collins Worldwide
Targetbase
Entertainment, Event & Sports Marketing
AWE
Davie Brown Entertainment
Horrow Sports Ventures
Kaleidoscope
Radiate Sports & Entertainment Group
Serino Coyne Inc.
Field/Channel Marketing
CPM
Creative Channel Services
National In-Store
U.S. Marketing & Promotions
Interactive Services
AGENCY.COM
Critical Mass
EVB
Organic
Nonprofit Marketing
Changing Our World
Grizzard Communications Group
Promotional Marketing
Alcone Marketing Group
TIC TOC
TracyLocke
Retail Marketing
Gotocustomer Services
Research
M/A/R/C Research
Point Of Sale/Merchandising
Integrated Merchandising Systems
Source: © Omnicom Group, Inc., 2007. ? ? ?
Mega agencies claim several advantages to their clients other than sheer size.
Among the most important are a greater reservoir of talent and an ability to shift
portions of accounts from one agency to another without going through the time-
consuming, and often confusing, agency review. (Several Omnicom clients
switched brand assignments from one of their national agencies to another, keep-
ing the business in the family.) There are also some disadvantages for clients, the
most important of which is conflicts with competing accounts.
Size, in itself, doesn’t have significant advantages or disadvantages in developing
the advertisments themselves. All agencies—large or small—consist of small units or
teams that work on an assigned account or group of accounts. The ability of the team
and the dedication to creative and professional excellence are dictated by the talent
and innovative abilities of individuals, not the size of their company. Obviously, size
and structure of an agency will attract or repel clients, depending on what level and
quality of services they are seeking. The agency business is simply mirroring business
in general by diversifying, economizing, and becoming more efficient and profitable.
Publicis Groupe Chairman-CEO Maurice Levy recently changed the holding-
company-as-superagency model to give its agency networks a distinct identity.
“Each has its own individual character that is not artificial,” he said. Mr. Levy
described the Leo Burnett network as the agency strongly associated to heartland
American brands such as McDonald’s Corp. and the U.S. Army, whereas Saatchi
has an edgier British origin and is known as an ideas company. Publicis is differen-
tiated by its French origin and strong integrated approach to communication.
16
Despite using agency holding companies, not all advertisers think they are per-
fect partners. Executives have complained that agency holding companies are
“flabby” organizations that have become “more revenue models than consumer-
solution models.”
17
OTHER ADVERTISING SERVICES
New services are continually springing up in competition with advertising agen-
cies. Each new service is designed to serve clients’ needs a little differently. This
competition has impacted agency structure and operations. Today, we’re seeing a
lot of innovation related to gaming, mobile, and Interactive services.
Talent and Production Agencies Creating Creative
A relatively new resource for clients is the melding of talent sources to develop
advertising concepts. Creative Artists Agency (CAA), a production and talent agency
involving entertainment stars, writers, directors, and others, made inroads with
Coca-Cola in 1991 as a working partner with Coca-Cola’s advertising agencies, in
some cases independently developing advertising concepts and commercials. A
number of other talent agencies have had working agreements with marketers and
their advertising agencies to provide creative and talent services. Later, Coca-Cola
returned the creative duties primarily to a new agency. CAA restructured and is
responsible for bringing Coca-Cola and Fox network together with the producer of
American Idol. As a result, the soft drink got aboard the show’s first season. “The
receptivity to American Idol was far more overwhelming than we expected,” said
David Raines, vice president of integrated communications at Coca-Cola. “It facili-
tated social connection, access to behind-the-scenes. It was fun, relevant and some-
what organic—it didn’t feel forced. It provided branded experience rather than
brand exposure.”
18
Some industry insiders believe such talent agency relationships
can add another dimension to the advertising agency and client resources.
Agency-holding company WPP’s Mediaedge bought a stake in The Leverage
Group, an entertainment company. Omnicom Group bought Davie Brown enter-
tainment consultancy, and other agency-holding companies are including more
Hollywood assets to offer clients.
184 PART I I I Managing the Advertising
Chapter 5 The Advertising Agency, Media Services, and Other Services 185
Independent Creative Services
Some advertisers seek top creative talent on a freelance, per-job basis. Many cre-
ative people do freelance work in their off hours. Some make it a full-time job and
open their own creative shop or creative boutique. In general, the creative boutique
has no media department, no researchers, and no account executives. Its purpose
is strictly to develop creative ideas for its clients.
À La Carte Agency
There are agencies that offer for a fee just the part of their services that advertisers
want. The à la carte arrangement is used mostly for creative services and for media
planning and placement. Many agencies have spun off their media departments
into independent divisions to seek clients interested only in media handling.
Handling only the media portion of an account typically brings commissions that
range from 3 to 5 percent.
In-House Agency
When advertisers found that all the services an agency could offer could be pur-
chased on a piecemeal basis, they began setting up their own internal agencies,
referred to as in-house agencies. The in-house agency can employ a creative service
to originate advertising for a fee or markup. It can buy the space or time itself or
employ a media-buying service to buy time or space and place the advertisements.
As a rule, the in-house agency is an administrative center that gathers and directs
varying outside services for its operation and has a minimum staff.
Folks, Inc., an Atlanta restaurant company, had an agency. Then it created an in-
house agency, whichdevelopedall creative concepts, copy, layout ideas, radioscripts,
and so forth. It primarily used art studios and graphic design services to produce the
finished art and used broadcast production companies for its broadcasts. It brought
all print media in-house anduseda media-buying service toplace its broadcast buys.
It also developed all direct mail, store marketing, public relations, and promotion.
Later, it found a need for strategic marketing services and hired Cole Henderson &
Drake advertising toassist instrategic development for one of its restaurant concepts.
The agency then created advertisements, produced advertising, and bought media.
When the agency contract expired, the company turned to its former marketing
director Sheri Bevil, nowCEOof Lane Bevil?Partners, for its marketing communica-
tion. Exhibit 5.9 is a promotional advertisement for Folks Southern Kitchen.
When Tom Lentz came to head Broyhill Furniture’s marketing, he soon found
that this account wasn’t big enough to demand major attention fromlarger national
agencies, and the turnover of personnel in small- to medium-size agencies often
made it difficult to work with knowledgeable people. He constantly had to educate
account people about the furniture business. Broyhill solved its problemby building
a strong in-house agency (see Exhibit 5.10). In-house agencies are generally created
to save money or give advertisers more control over every aspect of their business.
Many industrial companies have highly technical products that constantly undergo
technological changes and advances; it may well be more efficient to have in-house
technical people prepare advertisements. When the companies place their adver-
tisements, they use their in-house agency or a media-buying service.
Rolodex Agency
An agency run by several advertising specialists, usually account and/or creative peo-
ple, that has no basic staff is called a Rolodex agency. It hires specialists—in marketing,
media planning, creative strategy, writing, and art direction, for example—who work
on a project basis. The concept is similar to hiring freelance creative people to execute
advertisements, except that the experts are hired as needed. The Rolodex agency claims
to be able to give advertisers expertise that small full-service agencies cannot match.
in-house agency
An arrangement whereby
the advertiser handles the
total agency function by
buying individually, on a fee
basis, the needed services
(for example, creative,
media services, and
placement) under the
direction of an assigned
advertising director.
186 PART I I I Managing the Advertising
EXHIBIT 5.9
This Folks Southern
Kitchen branding
advertisement is
different from its typical
retail price
advertisement.
Courtesy of Folks and Lane
Bevil?Partners.
Media-Buying Services
There have been major changes in how advertisers handle their media since the
mid-1990s. As all the new media developed, everyone had to be more creative in
developing plans to meet the consumer’s changing media habits. Some major
advertisers chose to unbundle media or give their media buys to independent
media-buying services or new media agencies to try to gain buying efficiencies. At
the same time, some agencies reinvented their media operations to remain com-
petitive with the growing number of media-buying services and to develop their
media operations as a stand-alone profit center.
Many of the large agencies have made their media services independent of
other agency services to better compete. Remember, for example, Omnicom’s
major national agencies BBDO, DDB, and TBWA. Each of these had its own media-
planning and buying department for its clients. The holding company, Omnicom,
pulled together the media departments into a single, more-efficient, separate com-
pany called Omnicom Media Group (OMD is one of the Media Services Agencies).
Being huge, it has more negotiating clout and resources.
JWT and Ogilvy, two global agencies owned by the same parent WPP, followed
the trend of creating joint media alliances and formed MindShare, a mega-media
Chapter 5 The Advertising Agency, Media Services, and Other Services 187
EXHIBIT 5.10
This was created by
Broyhill’s in-house
agency.
Courtesy of Broyhill Furniture
Industries.
planning and buying agency to serve advertisers better. Both the OmnicomMedia
agency and WPP’s media agency are free to seek clients that want to consolidate
their media regardless of who handles their creative. “It is simply big business.”
In order to be more efficient and deal with this new terrain, many agencies are
spinning off their media departments into separate profit centers. However, there is
now talk among some agencies of rebundling media back within the agency. Some
executives are concerned that media and creative aren’t working together effi-
ciently as separate companies. Remember, we said everyone is reinventing them-
selves to better serve client needs.
The original reasons for creating separate media companies included the fol-
lowing: media agencies are stronger, with better resources to explore new areas
within media; second, the fragmentation of target audiences and media vehicles
has made media more important than ever before; third, a media company has the
potential to be a major profit center. If the agency loses the creative responsibilities
of a client, the media agency could continue serving the client because it is sepa-
rate. Finally, the reciprocal action allows media agencies to acquire accounts that
work with other parent agencies for their creative work.
19
One of the reasons for the
consolidation is the fact that mega-advertisers have consolidated their multiple
accounts to obtain better rates in their media buying.
188 PART I I I Managing the Advertising
Coca-Cola, as in the case of many large corporations, shifted its U.S. media plan-
ning and buying to a single media agency. Coca-Cola’s domestic media buying and
planning hadbeenhandledpreviously by Universal McCannandStarcomMediaVest.
The accounts were worth about $350 million. Coca-Cola said the changes were
spurred by an ongoing integration of Coca-Cola’s three big North American units:
Coca-Cola North America, Coca-Cola Fountain, and Minute Maid. Keep in mind that
many smaller agencies still have their media departments within the agency walls.
In-House Media Services
A few large advertisers have taken the media-buying function in-house so they will
have more control over the buying operation. It is more likely that advertisers will
keep a seasoned media consultant on staff to ride herd on their agency or media
service’s performance.
FORMS OF AGENCY COMPENSATION
Historically, agency compensation has been fairly standardized since the 1930s. An
agency received a commission from the media for advertising placed by the agency.
The commission would cover the agency’s copywriting and account services charges.
This method of compensation has been unsatisfactory during recent years due to the
changing nature of business. The straight 15 percent remains in theory, but in most
instances there are fixed commissions less than 15 percent (most large advertisers
have negotiated a rate closer to 10 percent), sliding scales based on client expendi-
tures, flat-fee arrangements agreed on by clients and agency, performance-based
systems, and labor-based fee-plus-profit arrangements. Crispin Porter?Bogusky
negotiated stock from clients in return for work. In other words, compensation
arrangements now take many forms. Despite this change, there are only two basic
forms of advertising agency compensation: commissions and fees.
? Media commissions. The traditional 15 percent commission remains a form of
agency income, especially for modestly budgeted accounts. Clients and agency
may agree to a relationship in which the rate is fixed at less than 15 percent.
This generally applies to large-budget accounts—the larger the budget, the
lower the rate for the agency. With a sliding-scale commission agreement, the
agency receives a fixed commission based on a certain expenditure. After that
level of spending, the commission is reduced (there may be a 14 percent com-
mission for the first $20 million spent by the client and a 7 percent commission
on the next $15 million). Media payment is complicated by the independent
media agency arrangements, but most of these negotiated contracts are similar
to the foregoing. The combinations are endless.
? Production commissions or markups. As indicated earlier, agencies subcontract
productionwork (all outside purchases suchas type, photography, or illustrators)
and charge the client the cost plus a commission—17.65 percent is the norm(see
Exhibit 5.11). The RainDrop Man collector’s edition twelve-page promotion
comic was created by the McRae Communications agency, not an outside firm.
? Fee arrangements. At times, the 15 percent commission is not enough for agen-
cies to make a fair profit. For example, it may cost an agency more to serve a
small client than a large one. The agency and client may negotiate a fee
arrangement. In some cases, it is a commission plus a fee. There are a number
of options: A cost-based fee includes the agency’s cost for servicing the account
plus a markup; a cost-plus fee covers the agency cost and a fixed profit; a fixed
fee is an agreed-upon payment based on the type of work being done (for
example, copywriting at hourly fixed rates, artwork charges based on the salary
of the involved personnel); and a sliding fee is based on a number of agreed-
Chapter 5 The Advertising Agency, Media Services, and Other Services 189
upon parameters. Again, there are many possibilities based on agency and
client needs.
? Performance fees. A predetermined performance goal may determine the com-
pensation fee. For example, advertisingt-recall scores, unit sales, or market
share may determine the level of compensation. If the agency meets the goals,
compensation may be at the 15 percent level; if it exceeds them, a bonus could
give the agency a 20 percent level. If it fails to meet the goals, compensation
could be much less than 15 percent.
In 2002, the American Association of Advertising Agencies and the Association
of National Advertisers, Inc., released a joint position paper outlining a set of guide-
lines covering compensation agreements between agencies and advertisers. The
Guidelines for Effective Advertiser/Agency Compensation Agreements is divided
into two sections: “Guiding Principles” and “Best and Worst Practices.”
Many marketers have replaced the traditional commission system of paying
media commissions with performance-based compensation. Agency payments are
calculated on predetermined, measurable goals like growth in sales, increasing
awareness of a brand, or gaining broad distribution for a new product. In some
EXHIBIT 5.11
This unique housewrap
product was promoted
with a twelve-page
comic.
Courtesy of McRae Communication
and Green Guard.
190 PART I I I Managing the Advertising
agreements, compensation is determined by sales objectives, with agencies being
paid more if a brand’s sales increase and less if sales decline. All Coca-Cola agencies
are on fees plus bonuses. This payment system allows the agencies not to worry if
Coca-Cola cuts its advertising budget; it is designed to give the agency the best
return on investment it can get. An example of a commission plus a fee is described
in the following agency contract copy:
Internal creative services provided by [agency] shall be applied against the
monthly agency fee at the prevailing hourly rates [as distinguished from
services bought outside our organization]. Such services include preparation
of print, radio, television production, storyboards, special comprehensive
layouts, booklets, catalogues, direct mail, sales representations,
extraordinary research, package design, collateral materials, etc.
barter
Acquisition of broadcast
time by an advertiser or an
agency in exchange for
operating capital or
merchandise. No cash is
involved.
Agency Function Hourly Rates
Creative director $175
Copywriter 120
Art director 120
Production supervisor 95
Computer design 150
Type and composition 130
Computer artwork 130
Research/planning 130
Most agencies aim for a 20 percent profit on each account to cover personnel
and overhead costs plus a profit. The president of Campbell Mithun Esty says,
“There’s a broad acceptance among clients that it’s in their best interest that their
account be profitable for their agency. The smarter client understands that’s what
gets it the best people on their account. That’s what gets it the best service.”
20
An advertising management consultant suggests that the key flaw of compensa-
tion based on the price of traditional media is the lack of a consistent relationship
between income generated and the cost of providing services required by the clients.
This will continue to be a problemas new media techniques are developed. He sug-
gests that agencies align their compensation with their roles as salespeople, not buy-
ers of media, and link agency profit goals to agreed-upon performance standards.
21
OTHER SERVICES
Barter
One way for an advertiser or agency to buy media below the rate card price, espe-
cially in radio or television, is barter. Some agency-holding companies own barter
companies as part of their integrated offerings to clients. The Atlanta Convention
and Visitors Bureau (ACVB) bartered for commercial time from television and
broadcast stations to advertise the city’s accommodations, restaurants, and attrac-
tions. Its agency offered hotel rooms, tickets to local attractions, and meals at
Atlanta area restaurants. The ACVB was able to turn a $165,000 budget into
$1.5 million in promotions. A typical prize would be a 3-day trip to Atlanta for a
family of four with tickets to four attractions; according to Bill Howard of the ACVB,
more than 900 packages were offered in exchange for airtime.
22
Barter houses often become brokers or wholesalers of broadcast time. They
build inventories of time accumulated in various barter deals. These inventories are
called time banks, which are made available to advertisers or agencies seeking to
stretch their broadcast dollars.
One of the drawbacks of barter is that the weaker stations in a market are more
apt to use it the most. Some stations will not accept barter business from advertis-
Chapter 5 The Advertising Agency, Media Services, and Other Services 191
ers already on the air in the market. Generally, the airtime is poor time, although it
is generally a good value at the low rate paid.
Research Services
The advertiser, the agency, or an independent research firm can conduct any
needed original research. Large agencies may have substantial in-house research
departments. In some, the research title has been replaced by the account planner.
Account planning has a crucial role during strategy development, driving it fromthe
consumer’s point of view. The account planners are responsible for all research,
including quantitative research (usage and attitude studies, tracking studies, adver-
tisement testing, and sales data) as well as qualitative research (talking face-to-face
to their target). On the other hand, many smaller agencies offer little in-house
research staffing, although many agencies have moved to add account planners.
In addition to the syndicated research previously discussed, which regularly
reports the latest findings on buyers of a product—who and where they are; how
they live and buy; and what media they read, watch, and listen to—these research
companies offer many custom-made research reports to advertisers and their
agencies, answering their questions about their own products and advertising.
Studies cover such subjects as technology use, advertising effectiveness, advertis-
ing testing, customer satisfaction, concept and product testing, premium or pack-
age design testing, image and positioning, brand equity measurement, market
segmentation, strategic research, media preferences, purchasing patterns, and
similar problems affecting product and advertising decisions.
A fascinating variety of techniques is available to gather such information,
including consumer field surveys (using personal or telephone interviews or self-
administered questionnaires), focus groups, consumer panels, continuous tracking
studies, cable testing of commercials, image studies, electronic questionnaires,
opinion surveys, shopping center intercepts, and media-mix tests. (Research tech-
niques are discussed in Chapter 15.) Regardless of the technique used in collecting
data for a research report, its real value lies in the creative interpretation and use
made of its findings.
Managing Integrated Brands
A brand needs a single architect, someone who will implement and coordinate a
cohesive strategy across multiple media and markets. According to David Aaker, the
advertising agency is often a strong candidate for this role.
23
It regularly develops
brand strategy and gains insights due to exposure to different brand contexts. An
advertising agency inherently provides a strong link between strategy and executions
because both functions are housed under the same roof. Strategy development in an
agency is more likely to include issues of implementation. On the downside, many
agencies still have a bias toward media advertising, and their experience at managing
event sponsorships, direct marketing, or interactive advertising may be limited.
The challenge for today’s agency is to be able to develop an integrated program
that accesses and employs a wide range of communication vehicles. There are sev-
eral approaches to managing this.
Agency Conglomerate Many agencies have approached the integrated communi-
cation program by acquiring companies with complementary capabilities. The
usual mix includes promotions, corporate design, Interactive, direct marketing,
marketing research, package design, public relations, trade shows, and even event
marketing. The hope is that advertisers will buy one-stop coordinated communica-
tions. The general consensus is that this approach doesn’t work well because the
units that make up the conglomerate often don’t blend well with each other and are
rivals for the advertiser’s budget, and each unit within the conglomerate isn’t neces-
sarily best suited to solve the problem at hand.
192
the fringe of counterculture. “I’m no one’s puppet,”
you’ll say, adjusting your clunky, black-frame glasses
and sporting your brand-new “Don’t Mess with Texas”
ringer tee from Urban Outfitters. Spend 20 minutes
making sure your hair looks like it’s never been
combed.
Desk/Office
Account: Fill your workspace with pictures of your family
and children. If you are not married or do not have chil-
dren, how about several framed pictures of your dog?
Yeah, that’s not pathetic at all.
Creative: Ensure your desk is completely free of impedi-
ments to creativity like folders, paper clips or Post-it
Notes. Cover its surface in a chaotic jumble of action fig-
ures, magic 8 balls, snow globes, liquor bottles, obscure
French design magazines, and unopened “Final Notice”
bills. This will help you be creative.
Note: Jason Kreher spent his first two years at EuroRSCG MVBMS Partners as
an account executive on the Intel business and then subsequently transitioned
to a junior copywriter position on brands such as Intel, Volvo, Evian, and New
Balance. He is currently considering another switch and wants to become a high
school principal. ? ? ?
Kleppner Viewpoint 5.3
Jason Kreher
Account Guy/Creative Guy, EURO RSCG MVBMS Partners/New York
How to Be an Account Person/How to Be a Creative Person
Y
ou know the steps to becoming either an
account person or a creative person, but
what do you need to know once you get
there? This simple primer gets to the
core of the most important aspects of your new career in
advertising.
Word Choice
Account: This is very easy. You need only use these crucial
seven phrases: synergies, value-add, testing results,
out-of-the-box, closing the loop, holistic branding, client
POV. Mix and match! All you need are a few linking verbs
and you’re ready to go.
Creative: If you are a writer, remember this rule of thumb:
Copywriting is a showcase for your vocabulary, nothing
more. A good tip is to write copy, and then use the the-
saurus on your computer to change every word to its
longer, more cumbersome synonym. Remember to sigh
dramatically when the account people ask you to
change it back.
Note: If you are an art director, don’t worry about words.
Just pick the prettiest colors and stay within the lines.
Wardrobe
Account
? Male: Variety is the order of the day for the well-
dressed account man. Make sure to have a col-
orful spectrum of oxford button-ups, from off-
white to bone to ecru and everything in
between. Spice up your khaki collection with an
occasional pleat. And never forget—the icon on
your breast pocket makes the man. The little
polo player or the tiny alligator? Choose care-
fully, young friends.
? Female: Break out the Banana Republic credit
cards, ladies! Your all-black, business-casual attire
should exude confidence, style, and a willingness
to compromise everything you believe in for a sin-
gle nod of approval from the client. And remem-
ber—the higher the heel on your shoe, the more
respect you will command. It’s that simple.
Creative: Be you male, female, or “curious,” tight, ironic
T-shirts are crucial in communicating your status on
Jason Kreher
Chapter 5 The Advertising Agency, Media Services, and Other Services 193
In-House Generalist Agency Another option is to expand the agency’s capabilities
to include such functions as promotions and public relations. Brand teams span-
ning communication vehicles can then deal with the coordination issue. Hal Riney
& Partners exemplified this approach with its set of promotional programs
designed for Saturn. Riney was named guardian of the Saturn brand and created
advertisements, promotions, and a website and even helped design a retail con-
cept. This approach works if the agency has the talent to handle the new services or
has the clients or revenues to support such a diverse staff.
Service Cluster A service-cluster team is a group of people drawn together from all
the agency affiliate organizations. Strategically, the cluster’s purpose is to service
client needs, and the cluster has the flexibility to change with the needs of the
client. A key characteristic of the service-cluster team is that it focuses on creating
ideas rather than advertisements.
Communication Integrator In this approach, the agency draws from sources out-
side the agency and integrates these services for the brands.
Brand Strategy In-House
Many advertisers choose not to rely on the agency at all for managing brand strat-
egy. Their view may be that agencies may be great at creating advertisements, but
brand strategy may be better planned by the brand-management team. If outside
help is needed, their view may be that the agency may not be the best source—
particularly if it has limited research resources. Some clients have found it benefi-
cial to employ a team of specialized communication firms, each of which is the best
in what it does. The advertiser may develop specialized expertise—including
research, media buying, and strategy consulting.
SUMMARY
2
The advertising agency is in a period of transition. It is being reevaluated and
reengineered to be more responsive to clients’ needs.
A full-service agency works on many aspects of a client’s marketing problems:
strategy, creative response, media planning, and trade campaigns. Many agencies
are organized into four divisions: account services, marketing services, creative ser-
vices, and management and finance. Some agencies have a domestic network of
offices or affiliates to service their large accounts better. The growing importance of
global marketing to some clients has led agencies to expand internationally. Clients
usually pay agencies by commission, fees, or a combination of the two.
Other types of advertising services beside the traditional advertising agency
include in-house agencies, à la carte agencies, creative boutiques, Rolodex agen-
cies, and media-buying services. Agencies usually cannot and will not handle two
accounts that compete in the same market.
REVIEW
2
1. What is a full-service agency?
2. Give an example of a global agency network.
3. What is an agency of record?

doc_458592088.pdf