Advertising Agency Analysis

Advertising Agency can be broadly defined as an organization that supports a client to meet its advertising objectives by planning, designing and executing advertisements/ advertising campaigns at a fee or a commission.

The need of an Ad Agency, 1. Too much workload on Brand/Marketing teams of the organization

The Brand Management/ Marketing managers of the organization are equipped with Strategic and operational as well as administrative activities of the Brands/ products where they are not in a position to concentrate with Brand communication/ advertising aspects fully. So the Advertising activities are outsourced.
2. Ability to get the services from the experts in the field

The Ad agencies employ experts in the industry who have experience in carrying out campaigns for different brands in different market. So by hiring an Ad agency, the organization can obtain the expertise of these specialists.
3. Ad agencies have more buying power in the media business

If an organization is to invest in media over a campaign, the budget will be limited depending on the affordability of the organization. However, an Ad agency can buy media from media stations in bulk by accumulation the annual budgets of all its clients. So the value of investment by a single Ad agency is far higher than a single client. As a result the Ad agencies can bargain for greater discounts and more benefits from Media stations and pass it over to all of its clients.
4. One stop shop

Generally, an Ad agency provides a client with a variety of services ranging from creatives development, production of advertisements, media coordination, PR, market research, etc. So a client can access all these services from a single service provider.

Inside an Ad Agency

Key functions 1. Account Management This function involves liaison with the client on its requirement and coordinate with the internal departments in order to provide client satisfaction. This is more of a sales/ client servicing task. Represents Agency to Client and the Client to the Agency.

2. Creative Development This involves brainstorming of a creative idea and design and development of a creative advertising concept. When the intended message is briefed, creative function turns the message into an exciting message which will not just inform but stimulate and persuade the target audience to react in a favourable manner. 3. Audio Visual production When a creative concept is developed, the A/V function coordinates with relevant suppliers/ production houses in development of the advertisements. This involves coordinating with camera crew, photographers, recording studios, makeup/ costumes artists, etc. 4. Media planning and buying When advertisements are produced, the media function is responsible for planning and execution of the media schedules which involves recommending media to the clients, buying media, coordinating with media stations in implementing the media schedule and follow up. Main functions are, media planning, media buying and media follow operations. Key Departments in an Ad Agency Client Servicing Department Carries out the account management function. This department is headed by a Client servicing/Account Director. Employs Account Managers/ Account Executives, etc. Creatives Department Carries out the creative designing and development function and is headed by Creative Director. Employs Copywriters, graphic designers, etc. Media Department Carries out the media planning, buying and media operations and headed by a Media Director. Employs Media planners and Media Buyers. Production/Audio Visual Department Carries out the function of coordination with suppliers of creatives production and creative material ( TV and Radio commercials) maintenance and library. Generally headed by an AV Director. But in Sri Lanka none of the Ad agencies have AV Directors due to the limited scope of the operations. Employs AV Managers, Model Coordinators, etc.

Discussion Should advertising handled in-house or by an Ad agency Some critics argue that advertising should be handled by the employees of the company themselves which is also known as in-house. At the same time, others argue that it is a function which should be outsourced to an Ad agency. There are advantages and disadvantages in both. Handling advertising in-house Advantages 1. Company can have a better control over the Marketing communications aspect of the Organization 2. The time taken from decision to implementation is short, so faster 3. No commission need to be paid to third party, so cheaper 4. Confidentiality of the business strategies is fully assured since they are not disclosed to a third party. 5. An opportunity for the in-house staff to learn and gather experience. Disadvantages 1. 2. 3. 4. There is greater possibility of doing mistakes by the in-house staff Lack of expertise and skills such as creative skills, etc Limited exposure and experience Poor bargaining power in media negotiations depending on the budgets.

Hiring an Ad agency Advantages 1. 2. 3. 4. 5. Greater knowledge and experience One stop shop Ability to use the contacts of the agency to obtain services from the best Global exposure of certain ad agencies will benefit for clients who operate globally Better bargaining power on media negotiations

Disadvantages 1. 2. 3. 4. 5. Lack of knowledge about the clients business Comparatively longer time taken in execution Lack of attention for small clients Expensive to use on certain aspects Risk of confidential information disclosed to outsiders

Key internal factors to consider whether to hire an Ad agency or not 1. Knowledge and capacity of the existing in-house staff 2. Level of company expenditure on advertising 3. Type of service needed ( creative, media handling, research, whole function of marketing)

Factors to consider in choosing an Ad agency Initial screening factors 1. Media knowledge 2. Market experience 3. Creative ability 4. Specialist skills 5. Full service facility Selection factors 1. Knowledge ,experience and expertise 2. How well the clients needs are understood 3. Resources and contacts in the industry 4. Resource allocation ( who will handle the account) 5. Remuneration