BASICS OF ADVERTISING UNIAN Chapter-1 MEDIA AG! IES Media agencies advise companies on how and where to advertise, and on how to present a positive picture of themselves to the public. Primary services"inelude advertising, public relations and other forms of media management. Media agencies were first launched with their main focus being the transaction of media space more efficiently than the mainstream advertising agencies, which, had previously managed the process of media buying. A media ageney, ensures that a marketing message appeals to consumers, appears in the right place, at the right time and that the advertiser pays the best possible price. There are cases, mainly within the large conglomerates, where both media and creative agencies are housed under one roof, howeVer their P&L usually remains separate. Role of a media agenc A media agency (or medidiplanner) is tesponsible for the strategic recommendation of media activity for your campaign. Working from Your brief the planning process involves analysing the audience objectives and balancing the reach, frequency and costs of media options to deliver adetailed media plan that maximises advertising exposure and impact. Planning should demonstrate a coordinated approach to different media and illustrate the thinking behind the’ proposed approach. Media planners work closely with advertising agencies to ensure the client's advertising budget is well spent, as well as adhering to the overall campaign strategy. 1. Creating an advertise on the basis of information gathered about product 2. Doing research on the company and the product and reactions of the customers. 3. Planning for type of media to be used, when and where to be used, and for how much time to be used.4. Taking the feedbacks from the clients as well as the customers and then deciding the further line of action All companies can do this work by themselves. They can make ads, print or advertise them on televisions or other media places; they can manage the accounts also. Then why do they need advertising agencies? The reasons behind hiring the advertising agencies by the companies are: = The agencies are expert in this field. They have a team of different people for different functions like copywriters, art directors, planners, etc. + The agencies make optimum use of these people; their experience and their knowledge. * They work with an objective and are very professionals, = Hiring them leads in saving the costs up to some extent. There are basically 5 types of advertising agencies 1. Pull service Agencies Large size agencies. Deals with all stages of advertisement. Different expert people for different departments. Starts work from gathering data and analyzing and ends on payment of bills to the media people. 2. Interactive Agencies Modemiized modes of communication are used. Uses online advertisements, sending personal messages on mobile phones, etc. Theads produced are very interactive, having very new concepts, and very innovative. 3. Creative Boutiques Very creative and innovative ads. No other function is performed other than creating actual ads Small sized agencies with their own copywriters, directors, and creative people.4. Media Buying Agencies * Buys place for advertise and sells it to the advertisers, * Sells time in which advertisement will be placed. * Schedules slots at different television channels and radio stations. * Finally supervises or checks whether the ad has been telecasted at opted time and place or not. 5. In-House Agencies = As good as the full service agencies, * Big organization prefers these type of agencies which are in built and work only for them, These agencies work as per the requirements of the organizations. There are some specialized agencies which work for some special advertisements, These types of agencies need people of special knowledge in that field. For example, advertisements showing social messages, finance advertisements, medicine related ads, etc. AD AGENCY STRUCTURE & FUNCTIONS, The advertising ageney carry out the activity;on behalf of their elient against remuneration called fees. They conduct miitket researeh, consumer research, product research ete. They advice the’manufacturer on product design or package design, pricing of product channels of distribution. Besides, they advice on the market condition from time to time. Advertising agency conduet the production activities of visualization, layout, illustration, etc, They also,help in the selection of proper media and the frequency at which the advertisement should be presented. ines, copy Thus, the advertising agency relieves the burden of the trader or manufacturer of the responsibility of advertising, production and distribution, Definition: ‘The American Association of Advertising Agencies (AAAA) defines an advertising agency as: “An independent business organization, composed of creative and business people, whodevelop, repair and place advertisements in advertising media for sellers secking to find customers for their goods and services”. SERVICE RENDERED BY AN AD AGENCY. The main function of advertising agency is to see that its client's advertising leads to greater profits in the long run. The ageney thus plans, prepares and places with advertising with the objectiv . The main functions of a full-service advertising agency‘are as follows: Selection of Clients : The first and the foremost funetion of an advertising agency is to contact and select clients who are desirous of advertising their products, services or anything which they want to sell. ‘The preference [Link] and choosing the clients is given to those firms which have sound values, able management, efficient operative products and services. The financial position, size and nature of business, efficient management and operative products etc. must be giyen due weight. Media Selection: Media Selection is anothér»major function of the advertising, agency. In making a media sélection Several factors such as cost, circulation, population which it serves, audiences, nature of the product, types of customers and above all needs of the clients should be kept in mind. Advertising Planning: The third as Well as the major function of advertising agency is the advertising planning for its licnts. For this purpose, the advertising agency requires. detailed knowledge Of the firm’s products, its advertising history, market conditions, channel of distribution, knowledge of competitors products and their advertising techniques, field to be covered, nature and type of consumers ete. Next planning job is to decide about the advertising medium in which the advertisement is to appear. The advertising message must be adapted to the medium in which it is to appear. Creative Function: The creative function starts when the planning function ends. It includes the preparation of an advertising copy, layout, illustration, photographs, advertising messages, theme of advertisement etc. These functions are performed by a varied group of creative people including writers, designers, artists, producers, photographers and graphic art specialists employed by the advertising agency.5. Research Funetion: It is the fifth major function of an advertising agency. It supports the decisions taken in the media and creative areas, In this connection the advertising agency gathers and analyzes actual information about the product, extent of market, competitors” strategies and buyers” habits etc. that may help the creative personnel to make the advertising copy more attractive and effective 6. Approval of the Client: As soon as the advertising copies etc. are prepared, the next function of the advertising agency is to show the copy to his client and obtain his approval. In case if any changes are suggested by thepclient, the same may be incorporated and thus the final approval should be taken from theéelient. 7. Marketing Funetion: The advertising agency algo performs marketing functions such as selecting target consumers, designing products and packages, developing channels of distribution strategy, determining prices and rate of useful advice to its clients with regard to the natureand trend of the market conditions. Accordingly, the client produces goods keeping in his mind the prevailing ‘ount ete It gives conditions in the market. 8. Evaluation Function: Simply drafting advertising copy and handing over the same to the media is not endtigh. The next:major fiinction of the advertising agency is to have aan exhaustive evaluation of the advertising effets for the benefit of his client. In case of uny deficiency, necessiry suggestions should be given and the same be made effective after approval of the elieat. 9. Coordination Function: The last) but not the least important function of the advertising ageney is to establish effective coordination with client's sales force and distribution network to ensure the long running success of the advertising campaign. Each time the advertising agency contacts the client regarding advertising media to be used and the number of times the advertisement is to be repeated after giving effect to changes, ify, as suggested by the advertiser. AGENCY SELECTION CRITERION Following are some points to be taken in account while selecting the advertising agency: 1. Suitability: The advertising agency which suits the requirement of manufacturer or trader is selected depending upon the type of advertisement, location of agency, credit policies, etc. Normally, an agency which is located near the advertisers place isselected. This helps in approaching the agency. Secondly, the size of agency in terms of personnel, projects, and services provided is considered. Thirdly, the connections and relations with the various media, Fourthly, the policies like conservative policy, outgoing policies cte. are taken into account. Finally, the advertising also considers whether the agency has competitors account or not, 2. Fag sand Services Provided: Some agencies have modern facilities of photography, typesetting, printing, filming ete. The agencies which provide maximum services with minimum costing preferred. 3. Imagination: Imaginations and creativ skills of the personneljof ager y are duly considered. Creativity in photography, layout, copy writing, media etc. creates an identity and unique for the products and services of the advertiser, 4. Past Record: Past records of the agency in terms of number of clients, effectiveness, credit reputation ete. helps in selecting the agenéy, The advertiser enquires about the agency's time liners, punctuality, past record helps to. show whether the agency is reliable or not. 5. Reputation: The reputation, of the advertising agency helps in selection. The popularity of the agency depends upon time liners, successful presentation, good relations, prompt services etc 6. Management: Proper selection of advertising agency depends on the ownership and ‘management and their pol which influence the selection. 7. Rates! Charged: The advertiser considers the rates charged by the agency. Normally, jeS Their poticies may be either conservati c or dynamic the rates depend on reputation, facilities provided techniques adopted ete. Therefore, an advertiser will select such agency which will provide facility according to his requirement and which suits its budget. 8, Size of the Agency: The size of the advertising agency must be considered. The larger the size, the more it is preferred, however, at times, small is beautiful because a small agency may give more attention to its client's work. AGENCY ACCREDITATION The principle of accreditation by the Indian Newspaper Society, Doordarshan and All India Radio, cnsures professional status to ad Agencies, Accredited agencies enjoy credit from themedia owners. They pass this benefit to their clients who also enjoy credit facilities. Moreover such agencies have to follow the eode of ethies laid down by the media owners, This ensures that the client gets a minimum standard of the Ad Campaign. The granting of accreditation to an agency means that the agency has fulfilled the following criteria: The agency has fulfilled the minimum business limits with Doordarshan / AIR and the Indian Newspapers Society. b) The agency has proved its creditworthiness during the period of its provisional accreditation status, The agency has adhered to the rules of accreditation as specified by the m AGENCY CLIENT RELATIONSHIP. Agency client relationship must be that of mutual trust and»confidence. The perfect relationship results in optimum advertising effectiveness at @reasonable cost and reasonable compensation for the agency. It is charactétized by eontinuds and complete two way communication between [Link] the two orgatizations in an atmosphere of mutual trust, Interdependency of the advertiser and the agency helps in creating effective advertising as part of the company’s marketing effort. What the clients have todo? : a) Treat the ageney with colirtesy at alltimes. 'b) Provide all possible,information about the product that is to be advertised and about ‘the organization. This facilitates the agency to do their job much better. ¢) Notunnecessarily bargain for the fees charged by the agency. d) Motivate the agency to do a good work. Agency charges such as media bills, fees and other costs mist be paid well in time. In no way the client should wait for the agency to remind of payment. q Not change the agency for the sake of change. £) Approve the proposals submitted by the agency. The client should not argue for the sake of arguing. 8) Give sufficient time to the agency to develop a good advertising campaign, The client should not put the agency unnecessarily in deadline crisis. 1 Reduce disputes to a minimum.i) Finalize well in advance the charges for a particular plan or campaign. i) Update the ag serve the client better. ey with any information from his side that would help the ageney to Yet, whenever something goes wrong, the brunt of criticism comes on the ageney and many times the relationship terminates. Many a times, there is a change just for the sake of change. Advertisers prefer an agency that is currently popular in the market, such as the Lintas and the Everest in India, Sometimes the agency itself voluntarily resigns from an account on some ground or the other. There may be different puritans, opinions, thoughts, ete., or the agency may want to accept another competitive account. Usually an agency keeps on abando years. It may also resign when a client becomes 6ver-bearitig. May creative people in the 1g consistently losing accounts, i. those advertisers who make losses over the field of advertising do not like to be simply dictated by their clients about their own professional work. If things go too far, Such clients may be abandoned. However, [Link] is not a healthy practice as it puts both the parties to a loss, But under the unavoidable circumstances, there may be no other alternative but to turnover foo another client. ORGANISATION STRUCTURE OF AN ADVERTISING AGENCY The organization structure differs from agency to agency depending upon functions performed atid, size of the! business)”Because of the highly personalized mature of the adveitising agency business, it is difficult to say which type of organizational structure would be suitable for it, Many agencies are organized according to the personal preferences of the management. Most large and medium sized ageneies followed one of the two systems, the group system and the departmental system and some combine them. a) Group System: Under this system the writers, artist, media planners, buyers and other specialists are assigned to a group of accounts. All are under the general direction of an account executive or group head. b) Departmental Syste ‘grouped in the same department. For instance, all writers in the copy department, all Under the departmental system, same types of specialists are artists in the art department and so on.‘Organization and Working of an Advertising Agency: Since advertising agency is an independent business organization, it may be in the form of a sole proprietorship, partnership or Joint Stock Company form of organization. However, an advertising agency of reasonable size may naturally adopt the Joint Stock Company form of organization, In such a case, it may have a Board of Directors under the Managing Director. Under the Board of Directors we may have General Manager and the General Manager may have a number of Departmental Managers under his control. ‘The number of Departmental Managers will vary from one advertising agency to another advertisiig, agency as per the nature and size of business. The organizational structure of'a large sized or reasonably sized Departments of an Advertising Agency The organization of an advertising ageney may be divided in vatious departments entrusted xd function to be)performed. undéfeach departmental manager who is specialized in the task allotted to him. The main departments of a large sized or reasonably with a spe sized advertising agency are a8 follows: a) Contact Department: Contact department works under a senior executive officer ‘known as the departmental manager. The main function of this department is to contact the new clients 6mthe one hand and maintain the existing clients on the other ‘hand. [Link] of contact men works under him. They function as the liaison people between the agency and the client. The contact men represent the agency when in the advertiser's office; they study the advertiser's need and inform the various departments what is required by the respective clients. b) Art Department; This department is headed by the art manager who is assisted by artists, layout men and visualizes. A visuali is a person who prepares the rough layout of the advertisement which is later developed into a comprehensive layout. The art department is responsible for the physical appearance of the advertisement for preparing layouts, illustrations, photos and for specifying the types to be used.° d) ) 8) h) Media Department: This is a very important department which works under the supervision and control of a media manager. This department is entrusted with the work of selection of media for the advertiser according to the needs, directions and budget of the client ‘Mechanical Production Department: It is also a very important department which ¢ remains in constant touch with different me works under the control of a technical manager. The main function of this department is to look after block-making, printing, proof-reading and such other technical jobs. Copy Department: This department is headed by a copy manager and is duly assisted by a number of copy-writers. This department is eoncemed with the preparation of a copy for all advertisements. Copy-Writing requires flair and fluency of language, imagination and a method of representation. The department works closely with the art, research and accounts departments. It is also an important department. Research Department: In case of large sized advertising agencies a separate research department is established under the supervision and control of a research manager, The research manager is assisted by a numberof analysts, investigators, marketing assistants, statistical elerks and librarians ete, The main function of this department is to study markets, Medias and other subjects of interest to the advertising agency. It helps better advertising for¢lients. Radio and T. Production Department: In case the advertising agency provides advertisements on the radio and television, it would have a separate department for this purpose. This department Works under the supervision and control of a manager who is duly assisted by a number of assistants, musical consultants, script-writers ete. Finance Department: The main function of finance department is to arrange and control finance, Thus this department is responsible for maintaining proper accounts, billing and gollection of dues from the clients, verifying whether the advertisement in the different media actually appeared on the days it was scheduled, if so whether correctly, and whether the text was properly printed and also looking after all the routine matters relating to accounting, recording ete. Merchandising Department: In case of large sized advertising agency, a separate merchandising department is established under the supervision and control of a merchandising manager which is specialist in displays, exhibits and preparation of various advertising aids,dD Public Relation Department: In case of a large sized advertising agency, a separate public relation department is established under the supervision and control of a public relation officer - manager. The main function of this department is to establish and maintain contact and mutual understanding between the organization and the public. It performs a liaison work between the clients and the various sections of the publie - customers, employees and shareholders etc. METHODS OF REMUNERATING AN ADVERTISING AGENCY The method of remunerating the advertising agency has been a subject of much discussion now-a-days at almost all the meetings of advertising ageney associat and advertisement clubs. There are basically the following three methods of remunerating an adyertising-agency in practice in our country: a) b) ‘Commission Method: This is the oldest and most common method of remunerating an advertising agency, Under this tethod thé advertising agency has a fixed commission by the media Owners onthe advertising bill for the advertising space bought by the respéetive advertising agency, The fixed rate of commission is 15% in India as well as in U.S.A. Though the rate of commission varies from media to media and from country to county but the rate of 15% is almost universal. For example, an advertising ageney places a full page Advertisement in a magazine at an agreed charge of Rs. 50,000. The magazine will Bill the agency for Rs. 50,000 less 1 42.500 net. The advertising agency will bill the advertiser for Rs. $0,000 (cost of advertisement charged by the media). Thus the difference of Rs. 7,500 will be treated ue, Rss as the'femuneration of the advertising agency. Generally, a cash discount @ Rs. 2° also offered by the media for prompt payment within a stated period, This cash discount is tsually passed on to the advertiser on similar terms by the advertising agency. The general criticism of this method is that the advertising agency is always tempted to recommend expensive media in order to draw a higher remuneration. Fee System: The fee system came into effect following a controversy between the advertiser and the advertising agency. The former argued that 15% commis jon was too high a rate, whereas the agency took the stand that it was un remunerative in view of many services rendered to the client by the advertising agency. Under fee system, the agency payment consists only the service charges which are to be computed on thebasis of cost plus system. Under the system a certain fixed percentage ({lat rate) on cost may be charged from the client as fee to be paid to the ageney along with the bill, TI enables the advertising agency to make fair profits on services rendered by it and, in turn, the advertiser pays for what he gets - nothing more and nothing less. The fee system is generally used in radio and television advertising ©) Service Charges: Under this method, service charges are added to the cost of materials and services bought by the advertising agency for the client in art work, photography, typography, plates et ‘one of the above methods of compensation or a combination OPthe fee-and-media- Normally, it is cost plus 15%, In actual practice commission plan or a method by which commission granted by the media are credited against profession fee, is used. When new product adver ing is involved, the advertising agencies are remunerated on a speial fee basis. CHANGING ADVERTISING AGENCY OR CLI] ‘T TURNOVER ‘When an advertiser leaves one advertising agency, and shifts to another, this practice is termed as client tumover. Highly frequent rate of client tumover results in great loss to advertisers. When an ageney ig\changed the advertiser Suffers on two counts, on having to do away with the old agency and another with theinew one. It is very much like an employer suffering financial and other kinds of losses on account of high ,,rate of labor turnover in his enterprise. Productivity: is the tiain factor Of loss of the employer as well advertiser. Just as the old émplyee’s expetienée with ofganization is an important factor in policy decisions and implementation, Similarly the old agency's experience in advertising the company’s product lines{is a total loss in ease of tumover to another agency. The old agency must have already collectéd considerable data about the company’s produet, the market, the nature and the extent of competition the consumers and host of other subjects. Such a mass of information and data cannot be casily transferred to the new agency. Researchers have identified as many as forty factors that influence the sale of a product, advertising being one of them, When an advertiser leaves one advertising agency and switches over to another, it is known as changing of advertising agency” or yclient turnover", The tendency to change advertising agencies now and then is most common amongst many advertisers. This may result in a reduction of the effectiveness of their advertising campaign.‘The main reason for changing the advertising agencies may be summarized as under: a) Dis b) The advertiser is interested in new criteria with which the present agency is not familiar. itisfaction to the advertiser from the services of the advertising agency. ©) The elient and agency perceive the advertisement strategy in a drastically different ‘manner. d) Change for the sake of change. ©) Lack of coordination between the top executives of the client and the agency. 1) Loss of confidence. g) Staff changes also lead to change of advertising ageney. h) Perceived unreasonable of the other party. ’) Politics and nepotism also result in change 6fadvertising agency. Changing of advertising agency is not always fruitful, The Joss might be more as compared to gain on account of the change. In the first the Advertiser, the nature of the products and'the competitive situation that exists, The first sar the new ageny has to digest the problems of year of change may be referred t)as the study year Thus change of agency amounts to leaving one which is quite familiar withthe advertiser's problems and going to a stranger at least as far as the advertiser is concemed. In case ofany dissatisfaction with the existing agency, it is better to find out and discuss it with the top management team of the agency so that the misunderstanding) if any, maybe removed and also to give a chance to the agency for improving its services, The selé@tion of an advertising agency should be made carefully so as to avoid’ @ Subsequent change. 11 should be kept in mind that the agency advertiser relationship is like the physieian-patient or the lawyer client relationship. The patient pays fee to the physician whether he gets relief or not. The lawyer too takes fe. respective of the judgment in [Link]. However, in both the cases they perform their duties faithfully and therefore why mak@ a change? This fact should be given due weight while taking any decision to change the adverti ing agency.CAREER OPTIONS IN ADVERTISING Advertising is an important profession and advertising industry provides enormous opportunities for career development. The advertising industry consists of the advertising, agencies, the advertisers, the media and the ancillary services. Each of these active participants in advertising provides challenging career options to the students to build up career in this fast developing industry. a) Advertising Agencies: An advertising agency is a teanwof professional advertisers appointed by client to plan, produce, and place advertising campaign on the behalf of client. The total number of advertising agencies in India is believed)to be around- 4,000, including studios and non-aceredited set-ups, The accredited ageneles or those with partial accreditation account for $50,‘The number of new advertising agencies especially one-man or owner-manager type ad agencies are increasing at a faster rate, This is because advertising business provides ample scope for growth and development. Advertising is most" suited profession) for strongly motivated individuals, who have high degree of convictionand belief to make their Endeavour a success whatever may be the odds, Advertising agency has grown by leap and bound and now they account for billing over Rs. 2000 crores per annum. They are constantly in need of talented and creative staff in their following functional departments: b) Account Executive: The word),,Account™ in advertising terminology means .,Client™ and an Account Executive is the [Link] the agency staff responsible for handlin; particular client. He @pproache® different potential clients for seeking new business for the ad agency which he represents. He is the main link between the agency and the clientAccount executive is an important career option in ad agency. He explores the possibilities to book new business by approaching new clients. Successful account executives afe promoted up to the positions of Account Director. ©) Copywriter: Copywriting is an art and the persons with good communication skills stand a fair chance to be copywriters. They contribute to the theme of an advertisement. In most ad agencies, there are creative teams headed by either a copywriter or a visualizer. A good copy can be destroyed if the words are badly set. Equally, unwise choice of typefaces, sizes and weights can destroy the layout. Creation of an effective copy for the client establishes them as copywriter. It is the jobof the copywriter to conceive advertising themes of copy flat forms, and to write the wording, including heading headlines and slogans. 4) Visualisers: Visualisers are those artists who translate the imaginations of the copywriter on the paper. Visualiser’s help shaping an effective and the visualisers usually have professional degree in fine art or commercial art. It is not essential for good visualiser to have professional degree or diploma, Visualizing and layout is an important career option. €) Creative Department: Creative department is the key department in an ad agency. It is in this department that the idea or theme behind the advertising campaign is born and the complete advertising plan is executed. Creative Director is, the head of creative department. The department comprises of visualisers, creative)artists and copywriters and their duty is to createl/advertisements. The creative director coordinates the copy-writing and designing. 1) Production Department: Production department also provides good opportunities for career building. The production department can be divided into two sections: one section is responsible for the mechanical preparation of the advertisement or the printed material, and the other for the administration of the detail work. The mechanical production section has many people to deal even technically with block- makers, printers, photogtaphers, DTP operators in designing print outs, Many production departments also biindle the job in different Languages and need people to assist the advertising job g) Art Department: The approved layout pass into the hands of artists to prepare finished drawings for reproduction. Art department is in the charge of an Art Director and itis his duty to co-rdinate the work to select the correct type of treatment so as to prepare the visuals and then the final art-work. h) Free Laneers: These are professionals who work in dependently and have a suecessfitl track record. They are copywriter, jingle singers, radio announcers, artists, visualizers, technical writers, etc. Thus, advertising can be an exciting and rewarding career, provided those in this profession understand the full social implication of advertising and their responsibilities to the profession,