92 Media Advertising

Unit 4: Advertising Agency Structure & Functions

Notes
Structure
4.1 Introduction
4.2 Concept of Advertising Agencies
4.3 Ad Agency-role, Types, Structure & Functions
4.4 The Advertisers; Client –agency Relationship
4.5 Criteria to Select an Ad Agency
4.6 Summary
4.7 Check Your Progress
4.8 Questions and Exercises
4.9 Key Terms
4.10 Further Readings

Objectives
After studying this unit, you should be able to:
 Discuss the concept of advertising agencies
 Know about ad agency-role, types, structure & functions
 Explain about the advertisers; client –agency relationship
 Discuss the criteria to select an ad agency

4.1 Introduction
"Advertising justifies its existence when used in the public interest - it is much too
powerful a tool to use solely for commercial purposes." – (David Ogilvy)
The above definitions bring forth the following features of advertising agencies:
 It is an independent organization.
 It comprises of creative people.
 Its assists the client organizations in developing marketing plans.
 It prepares advertisements for the clients.
 It designs and executes various promotional tools for the clients.
 It helps in acquiring advertising space and time for the clients in various advertising
medias conveniently and economically.
 It helps create demand for the products and services of the clients.
 It does not have a commercial use alone, but it also helps in developing public
relations for the client organizations.
The above features give clear indication to the rationale behind hiring of advertising
agencies by so many advertisers. Such agencies focus on seeking and retaining
consumer attention, enhance brand visibility and acceptability for products and services
advertised and bring business for the advertiser’s organization.

4.2 Concept of Advertising Agencies

An advertising agency, often referred to as a creative agency, is a business dedicated
to creating, planning, and handling advertising and sometimes other forms of promotion

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and marketing for its clients. An ad agency is generally independent from the client; it
may be an internal department or agency that provides an outside point of view to the
effort of selling the client's products or services, or an outside firm. An agency can also Notes
handle overall marketing and branding strategies promotions for its clients, which may
include sales as well.
Typical ad agency clients include businesses and corporations, on-profit
organizations and private agencies. Agencies may be hired to produce television
commercials, radio commercials, online advertising, out-of-home advertising, mobile
marketing, and AR advertising, as part of an advertising campaign.

History
The first acknowledged advertising agency was William Taylor in 1786. Another early
agency, started by James 'Jem' White in 1800 at Fleet Street, London, eventually
evolved into White Bull Holmes, a recruitment advertising agency, that went out of
business in the late 1980s. In 1812 George Reynell, an officer at the London Gazette,
set up another of the early advertising agencies, also in London. This remained a family
business until 1993, as 'Reynell & Son,' and is now part of the TMP Worldwide agency
(UK and Ireland) under the brand TMP Reynell. Another early agency that traded until
recently, was founded by Charles Barker, and the firm he established traded as
'Barkers' until 2009 when it went into Administration.
Volney B. Palmer opened the first American advertising agency, in Philadelphia in
1850. This agency placed ads produced by its clients in various newspapers.
In 1856 Mathew Brady created the first modern advertisement when he placed an
ad in the New York Herald paper offering to produce "photographs, ambrotypes and
daguerreotypes." His ads were the first whose typeface and fonts were distinct from the
text of the publication and from that of other advertisements. At that time all newspaper
ads were set in agate and only agate. His use of larger distinctive fonts caused a
sensation. Later that same year Robert E. Bonner ran the first full-page ad in a
newspaper.
In 1864, William James Carlton began selling advertising space in religious
magazines. In 1869, Francis Ayer, at the age of 20, created the first full service
advertising agency in Philadelphia, called N.W. Ayer & Son. It was the oldest
advertising agency in America, and dissolved in 2002. James Walter Thompson joined
Carlton's firm in 1868. Thompson rapidly became their best salesman, purchasing the
company in 1877 and renaming it the James Walter Thompson Company. Realizing
that he could sell more space if the company provided the service of developing content
for advertisers, Thompson hired writers and artists to form the first known Creative
Department in an advertising agency. He is credited as the "father of modern magazine
advertising" in the US.

Global advertising agency

Globalization of advertising originates in earlier days of the twentieth century. American
advertising agencies began as the process of opening overseas offices before the two
World Wars and accelerated their globalization throughout the latter part of the
twentieth century.
McCann Erickson, an agency established in New York City in 1902, opened its first
European offices by 1927. It was followed up with offices opening in South America in
1935 and in Australia in 1959.
Companies such as J. Walter Thompson adopted a strategy to expand in order to
provide the advertising services wherever clients operated.
In the 1960s and 1970s, English agencies began to realize the overseas
opportunities associated with globalization. Expanding overseas gives potential to wider
markets. Saatchi & Saatchi, perhaps one of the most iconic English agencies was

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founded in 1970 and rapidly developed a global network of offices on the back of
relationships with clients such as British Airways and Toyota.
Notes
Client relationships
Studies show that successful advertising agencies tend to have a shared sense of
purpose with their clients through collaboration. This includes a common set of client
objectives where agencies feel a shared sense of ownership of the strategic process.
Successful advertisements start with clients building a good relationship with the
agencies and work together to figure out what their objectives are. Clients must trust the
agencies to do their jobs correctly and accordingly with the resources they have
provided. Breakdowns in relationships were more likely to occur when agencies felt
undermined, subjugated or even feel they don’t have an equal status. Traditionally
advertising agencies tend to be in a position to take the lead on projects but results are
best when there is a more collaborative relationship.
Stronger collaboration happens in situations where a personal chemistry has been
established between both parties. Finding out similar likes and dislikes, points of view
and even hobbies and passions. Personal chemistry builds with the length of the client
relationship, frequency of meetings, and how far mutual respect goes between parties.
This was one trait that advertising agencies were perceived to not always have. It was
suggested that on occasions media planners and researchers were more closely
involved in the project because of their personal relationships with their clients.
Successful strategic planning is best when both parties are involved due to the bond
between sides by understanding each other's views and mindset.
Involved advertising account planners are seen to contribute towards successful
agency client collaboration. Planners of advertising agencies tend to be capable of
creating a very powerful, trusting relationship with their clients because they were seen
as intellectual prowess, seniority and have empathy in the creative process.

Agencies
All advertising agencies are called that because they are acting as agents for their
principals which were the media. They were then, and are now, paid by the media to
sell advertising space to clients. Originally, in the 18th century, and the first half of the
19th, advertising agencies made all of their income from commissions paid by the
media for selling space to the client.
Although it is still the case that the majority of their income comes from the media,
in the middle of the 19th century, agencies began to offer additional services which they
sold directly to the client. Services such as writing the text of the advertisement.

Creativity
Agencies believe that there is only one rule for advertising to be effective "it has to be
creative". It is not just the sense of how it is visually presented, filmed, or worded but
most agencies should be very innovative in terms of how they plan to pass on the
message to consumers. Success comes when agencies are able to be creative enough
to break through the targets mindset and ignite a brand relationship. Advertising
agencies can either play it safe and risk losing the marketing war or can try to
constantly come up with fresh ideas.
Use of creativity by agencies is "unexpected" because so much advertising today is
expected. This will capture the attention of audiences, therefore the message is more
likely to get through. There have been many advertisements that have surprised
audiences because it was not normal for them to see that in an advertisement of that
nature. The best use of creativity is when the agencies make consumers think about the
product or brand. The type of creativity is distinctive communication which is breaking
through the clutter.

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Advertising effects
People don't buy products, they buy benefits. Mere product benefits can be the same Notes
across multiple products, so then how does a consumer chose one product over the
other? In a marketplace increasingly full of parity products, consumers buy into the
advertising. The more persuasive and charmingly put forth proposition, generally wins
the consumers' attention and share of wallet. Agency practitioners strongly believe that
when audiences are exposed to ads it causes changes in human cognition, emotions,
and behavior. An account manager of twenty-two years of experience in the industry
says that people wouldn’t want to be in the advertising business if they didn’t believe
that it worked, therefore you will not find anyone in an advertising agency questioning
whether or not advertising works.
First effect is making audiences stop and look at the ad generating attention. Once
attention is gained, ads are next thought to lead to brand awareness. Establishing brand
awareness is a key component of an advertisement's effectiveness. Practitioners
believe that advertising will lead to changes in attitudes towards a brand, referring to the
concept of attitude by different labels such as "opinions", "judgments", "perception",
"persuasion", "brand image", "interest in the brand". Advertising can create change in
both emotional and rational based attitudes. It is believed that a good advertisement
includes both components.

4.3 Ad Agency-role, Types, Structure & Functions

Advertising Agency is just like a tailor. It creates the ads, plans how, when and where it
should be delivered and hands it over to the client. Advertising agencies are mostly not
dependent on any organizations.
These agencies take all the efforts for selling the product of the clients. They have a
group of people expert in their particular fields, thus helping the companies or
organizations to reach their target customer in an easy and simple way.
The first Advertising Agency was William Taylor in 1786 followed by James “Jem”
White in 1800 in London and Rendell & Son in 1812.

Role of Advertising Agencies

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. Full service Agencies
 Large size agencies.

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 Deals with all stages of advertisement.
 Different expert people for different departments.
Notes
 Starts work from gathering data and analyzing and ends on payment of bills to
the media people.
2. Interactive Agencies: Modernized modes of communication are used.
 Uses online advertisements, sending personal messages on mobile phones,
etc.
 The ads 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.

4.4 The Advertisers; Client –agency Relationship

The client-agency relationship starts when a client appoints an advertising agency for
making his ad. It continues till the ad agency provides satisfactory services to him. Such
a relation should always be cordial. There should be a mutual trust, confidence and
understanding between the two parties. It is so, since, the primary objective of both
sides is same, i.e. to make a successful advertising campaign.
Lack of mutual trust will be harmful to both parties. It is, therefore, necessary to
maintain good relations between the client and ad agency as follows:
 Meaningful two-way communication is required to maintain a friendly client-agency
relationship.
 Both parties should take special efforts to maintain a cordial relationship.
The approach of give-and-take is required to keep relations over a longer period.
Mentioned below are some significant guidelines (grouped under three categories)
to maintain a cordial client-agency relationship in advertising:

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