Chapter 5 The Advertising Agency, Media Services, and Other Services

1. Chapter 5 The Advertising Agency, Media Services, and Other Services

2. Objectives_1 Understand • The agency • The history of the agency business • The full-service agency • Global advertising agencies

3. Objectives_2 Understand • Agency and client relationships • Forms of agency compensation • Other advertising services

4. Agency Challenge

5. Advertising Red Books: Directory of Agencies • Company name • Annual billings • Company address • Breakdown of billings by media • New accounts • Key personnel • Number of employees • Branch offices • Specializations

6. How Agencies Developed The Early Age The No-Rebate Age The Age of Negotiation The Reengineering Age Media and the Digital Age

7. Space salesman Space wholesalers First rate directory Shift to creative center Agency-client relationship Curtis No-Rebating rule Standard commissions AAAA founded The Early Age (Colonial Times to 1917)

8. American Association of Advertising Agencies founded 1917

9. The No-Rebate Age (1918 to 1956) • Radio • Television • Electronic Data Processing

10. The Age of Negotiation (1956 to 1990) • Consent decrees stopped no-rebating provisions • 15% commissions remained but total compensation became an issue

11. The Reengineering Age (1990 to 2000) • Mergers created giant communication • Integrated services became a buzz phrase • Advertising • Public relations • Package design • Web design • Sponsorship • And more….

12. Media and the Digital Age (Since 2000) • Agency holding companies • Media services agencies • Global clients • Interactive agencies

13. The Full Service Agency A full-service agency is one that handles planning, creation, production, and placement of advertising (and other aspects of IMC) for its clients.

14. The Agency Process for New Clients Diagnosing the Marketing and Brand Strategy Setting Objectives and Developing Strategy Creating the Communication Notify Trade of Forthcoming Campaign Billing and Payments

15. Creating the Communication • The Media Plan • The Total Plan • Evaluation Plan

16. Exhibit 5.4 Organizational Structure

17. Exhibit 5.5 Typical Team Responsibilities

18. Jay Chiat on Agency Reengineering… “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.”

19. Evolution of agencies Specialization Size Competing accounts Client-agency relationship length Agency of record Multiple offices Global representation Agency networks Agency Life

20. JWT’s Global Agency Network

21. Coca-Cola Creates a Global Dialogue

22. Mega-Agency Holding Companies Interpublic’s network includes 33 full-service advertising agencies from 87 agencies in the communications and marketing industries.

23. Omnicom Group WPP Group Interpublic Group Publicis Groupe Dentsu Top 5 Mega Conglomerates

24. Other Advertising Services • Talent and production agencies creating creative • Independent creative services • A la carte agencies • In-house agency • Rolodex agency • Media buying services • In-house media services

25. Exhibit 5.10 Created by Broyhill’s In-House Agency

26. Forms of Agency Compensation • Media commissions • Production commissions or markups • Fee arrangements • Performance fees

27. Other Services Research Barter Managing integration

28. For Discussion • What is a full-service agency? • Explain the organization of a global agency network. • What is an agency of record?