Advertising Business
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Transcript of Advertising Business
![Page 1: Advertising Business](https://reader031.fdocuments.us/reader031/viewer/2022030317/577cced41a28ab9e788e6326/html5/thumbnails/1.jpg)
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The Advertising BusinessThe Advertising BusinessAd Agencies
Roles, Structure & FunctionsIncome
Client Agency Relationship
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The Key Players
• Advertiser (client)
• Agency• Media• Supplier• Audience
• Uses advertising to send out a message about its products
• Initiates the advertising effort by identifying a marketing problem
• Approves audience, plan and budget
• Hires the advertising agency
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The Key Players
• Advertiser (client)
• Agency• Media• Supplier• Audience
• Has strategic and creative expertise, media knowledge, workforce talent, and negotiating abilities– Advertising
department– In-house agency
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The Key Players
• Advertiser (client)
• Agency• Media• Supplier• Audience
• The channels of communication that carry the message to the audience
• Are also companies or huge conglomerates
• Mass media advertising can be cost effective because the costs are spread over the large number of people the ad reaches
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The Key Players
• Advertiser (client)
• Agency• Media• Supplier• Audience
• Assist advertisers, agencies, and the media in creating and placing the ads
• Vendor services are often cheaper than those in-house
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The Key Players
• Advertiser (client)
• Agency• Media• Supplier• Audience
• The desired audience for the advertising message
• Data-gathering technology improves accuracy of information about customers
• Advertisers must recognize the various target audiences they are talking to and know as much about them as possible
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Why an Ad Agency?
• Branding as a concept developed• Brands are assets• Advertising function required specialized
skill sets• Intra-organization bias could be reduced• Outsourcing was viewed as a cheaper
option
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Agencies:Roles
Agencyroles
Develop marketing & ad plans
Develop ads & promotions
Purchase ad space and time
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Structure of a decentralized department
Corporate
Consumer Products Division
Industrial Products Division
International Division
R& D Manufacturing Marketing Marketing Services
Brand Mgr
Ad AgencyBrand MgrAd Agency
Brand Mgr
Ad Agency
Sales Promotions
Package Design
Merchandising
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Structure of an Ad Agency
Agency Head
Client Servicing
Account Planning
Creative Media Studio/
Production
HR Finance
Acc.Dir
Acc. Sup.
Acc. Exec
Art Copy
Planners Buyers
Creative dir.
Traffic
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Functions of different roles
• Account Management• Otherwise called client servicing department• Liaison between the client and the agency• Understand client needs and translate company briefs
into creative briefs• Create advertising opportunities for the agency• Ability to manage tough timelines
Brand Manager Acc. Ex/Mgr Creatives
Studio/ProductionMedia Planner
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Functions of different roles
• Research & Account Planning• Finds out market trends, media trends• Provides insights consumer needs and lifestyles
through primary research• Helps in better connecting the brand to its T.A.• Decides on how the tone and language should
be
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Account Planner’s
research is involved- visual & headline
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Functions of different roles
• Creatives• Ideates and designs ad campaigns by
interpreting Acc. Planners insights and client’s needs
• Develops ideas on the positioning and makes it interesting, true, and simple
• Produce print ads, TVCs, packaging designs, POP designs, direct mailers etc
• Copywriters, art directors, and graphic designers
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Functions of different roles
• Studio/Production• Buying for print ads: type, photos, illustrations,
printers, engravers• Work on approved copy and visuals, scripts,
storyboards, DM kits• Use actors, camera operators, and production
specialists
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Functions of different roles
• Media Planning and Buying• Determine how a client’s message can most
effectively and efficiently reach the T.A.• Building media plans and budget optimization• Tough negotiation and attention to details• In-depth knowledge of T.A. media habits,
geographic market dynamics, and product market potentials
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Agency’s income
• Media Commissions
Ad ratecard price:
Rs.100,000Agencybuys adat 15%
discount:Rs.85,000
Agencybills client
full ad amount:
Rs.100,000
Rs.15,000difference
Is keptBy theagency
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Agency’s income
• Other Commissions• Markups – 17.65% on the invoice from outside
suppliers
Agencybuys
materialsfor
campaign
Materialscost
Rs.8,500
Agencybills for
materials plus a
17.65%markup
Agency bills
Rs.10,000which is
costs plus markup
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Agency’s income
• Fee-commission combination• Basic monthly fee + media commissions• Straight-fee or retainer fee• Charges all services together on hourly or monthly
basis• Incentive system• Compensation depends on campaign’s goal
attainment• Eg: DDB Needham has a grade point scale to
evaluate campaigns
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Agency’s income
• Competency-based system• Followed by Leo Burnett, Lintas, and a few
others, which links agency remuneration to sales figures
• Can be a serious hindrance to brand-building advertising