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25 Cards in this Set
- Front
- Back
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Key Players in Advtg Industry |
1. Client 2. Agency 3. Media 4. Collateral Services Specialist - Provide support services for creating the ads |
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Decisions to use an ad agency |
- size - resources - nature of product and industry - company goals -company traditions |
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What does an ad agency offer
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-Independent/ Objective - Works for advertiser - Saves client money ( research, media, creative) - specialized talent ( create brand value) |
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What kind of information does Redbook provide? |
Profile of different ad agencies
- standard directory of agencies and advertisers |
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How many agencies are listed in Redbook? |
10,000 agencies 15,000 advertisers |
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What are the hot advertising regions? |
- Ny -Boston - Chicago - Los Angeles - San Francisco - Minneapolis - NO Atl ( atl has the best ad schools-SCAD, creative circus)
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Degree of Concentration in Ad Industry |
Top 4 holding corporations= 60% of US ad revenue |
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Why is ad agency concentrated? |
Economies of scale in media and research,mergers are a way to grow in a mature market, offer collateral services, expand internationally, and attract top talent |
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Why is ad agencies fragmented? |
diseconomies of scale in creative, few barriers to entry, offer more personalized service, stay clear to market to spot emerging trends, service small/niche clients
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Reasons for low profit margin in ad industry |
because it is labor intensive and its traditionally locked into commission.labor salaries consume 60% of agency revenues. office space is 2nd.
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Measures of Productivity |
Billings- total avg cost billed to client on annual basis excluding discounts
Gross Revenue- includes revenues from fees and commissions, a more accurate reflection |
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How to calculate media and production commissions |
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Disadvantages of commission system
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Amount of work doesn't equal reward nor does quality of work. can't guarantee either will produce a product your client will want.your reward lies in the cost of the media being used. (more inclined to use TV as medium) |
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advantages of commission system
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History: it's been used for so long.Ease of use. |
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Alternatives to commission system |
product commission or markup (17.5%), fee arrangements, performance fee or incentive compensation based on how well ad performs, brand reaches sales goal, brand awareness).(some can be used in tandem. commission + performance fee)
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Types of ad agencies |
1. Full Service 2. A la Carte -Creative boutique - media buying service 3. In-house 4. Hybrid - Storefront - Rolodex |
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Function of a full service agency? |
Account management MBA - Creative - Research - Media Liaison b/t client and agency Account Planning -merging of acct mgmt and research |
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acct planning
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- merging of acct mgmt and research ( qualitative0 |
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Pros of in house agency |
- control over spending - fast turnaround - confidential info - client knows market better |
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Cons of in house agency |
- Lack of objectivity - lack of expertise - working relationship b/t client and agency - cost of media - lost of competitive edge |
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Agency Organization -- department vs. team |
-re-engineers the ad agency -grouped by accounts. everyone working on an account works together. -can have clashing of creative vs biz types |
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Functions of avtg. manager |
- planning and budgeting - coordinating mktg mix - liaison - monitoring advertising - hiring and firing agencies |
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How to select an ad agency? |
1. Develop an advtg account profile
2. establish min. criteria 3. detailed agency survey ( advtg. agency questionnaire) 4. speculative presentations - pitch the account |
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Reasons why agencies and clients break up |
- most relationships last 3yrs - ineffective creative - conflict of interest ( due to mergers) - lack of attention - relationship problems - 10% of accounts change hands each year |
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Industry Trends |
- consolidation/mergers - globalization - accountability/budget - fragmentation - consumer control/interactivity - media technologies/ new ways to shop and buy - media clutter |
