UNIT 2

STRATEGY PLANNING PROCESS IN ADVERTISING

2 Strategy and Planning Process in Advertising

• Advertising Planning process & Strategy :
Introduction to Marketing Plan, Advertising Plan-
Background, situational analysis related to
Advertising issues, Marketing Objectives,
Advertising Objectives, Target Audience, Brand
Positioning (equity, image personality), creative
Strategy, message strategy, media strategy,
Integration of advertising with other communication
tools
• Role of Advertising in Marketing Mix : Product
planning, product brand policy, price, packaging,
distribution, Elements of Promotion, Role of
Advertising in PLC
• Advertising Agencies – Functions – structure – types
- Selection criteria for Advertising agency –
Maintaining Agency–client relationship, Agency
Compensation.
ADVERTISING PLANNING PROCESS & STRATEGY:

An advertising plan aims at providing a flow for the execution of creative

media and execution strategies. An advertisement strategy, hence can
be described as the communication that conveys a brand’s primary
benefits, that is, how it can solve a consumer’s problem / need. The
advertising plan infact, is a natural culmination of the marketing plan
which needs to include a section on analysis, advertising objectives and
strategy. The sequence of advertising strategy should be the following:

Corporate / business goals

Marketing objectives

Advertising objectives

Advertising strategy

Advertising planning

Formulation of advertising program

The advertising objectives for a company are derived from overall

corporate goals and specific business objectives of the company. The
process of goal setting at the corporate level usually extends over a
period of several years and marketing objectives and plans too may
relate to that period.

Introduction to Marketing Plan:

A marketing plan is a thorough blueprint which outlines the overall

marketing efforts of an organization and highlights the steps that will be
undertaken so as to attain its marketing objectives. This plan can have a
lifespan of between one to five years. Like a business plan, a marketing
plan is a significant business document that entails regular review and
revision. Even five-year marketing plans should be revisited periodically
– at least once a year – for the purpose of addressing changes in market
conditions, demand, pricing issues, etc.

Following are a few elements of a successful marketing plan:

i. Strategic Analysis

At the core of the strategic analysis is the existing scenario in which the
company, product or service is operating. Key issues that must be dealt
with comprehensively are:
• Market analysis: What is the market potential of the product or
service?
• Customer analysis: What is the target group(s) in question, and what
is their buying behavior?
• Competitor analysis: What competitors are operating on the market
and how do they operate?
• Competitive advantages: What makes your offer stand out from
others? What is your unique selling point/unique value proposition?

ii. Setting Goals

What goals do you wish to achieve as a company or with your offering?
Here we distinguish between:
• Financial goals: goals easily measurable with “hard” data, e.g. sales
growth, market share or return
• Goals relating to your market and customers: goals that are difficult
to measure using data, e.g. customer satisfaction, capacity for
innovation, the organization’s customer orientation, employee
engagement and satisfaction, winning new customers or corporate
image
3. Choosing a Strategy

A strategy describes the way you will achieve the goals you have already
set and develops a competitive advantage. Porter’s competition matrix
defines three basic strategies:

• Differentiation through quality and service

• Cost leadership by gaining a price advantage
• Specialization in niche markets not previously served

4. Strategy Implementation Program (relating to marketing mix)

Strategy implementation is the most costly step in the marketing

planning process and often requires considerable human resources. The
four cornerstones of a marketing mix are:
• Product policy
• Pricing policy
• Distribution policy
• Communications policy

5. Performance Review

The vital “last” step in a marketing plan is performance review, which

checks the extent to which the marketing instruments are helping to
achieve the goals set:
• Shortcomings in the implementation can be detected early.
• Teams’ performance can be checked and optimized
• In the case of deviations from the set profitability ratios for products,

markets, segments, customers, distribution channels, etc., counter-

measures can be taken or the marketing mix adjusted accordingly

ADVERTISING PLAN:

An advertising plan is a promotion blueprint that, when followed,

provides the direction for companies and businesses to bolster sales,
create awareness in the market, and engage with an entirely new
customer base. An advertising plan will ensure that your company's
money will be spent sensibly spent and will reach all of the proper target
audiences.

The advertising plan should be developed in response to a situation

analysis based on research. Once developed, the plan has to be
implemented as advertising campaign. A typical advertising plan outline
is given below:

a. Situation analysis related to advertising issues: An advertising

situation analysis provides an overview of a company's image in
comparison with similar organizations in the marketplace. A situation
analysis is usually created before an advertising campaign. This piece of
research provides executives with an accurate picture of consumer'
perception of both the company and its competitors. By assessing a
company's strengths and weaknesses, advertisers can focus on issues
and messages that will resonate strongly with their clients' target
audience.
b. Marketing Objectives: They are the group of goals set by a business
when promoting its products or services to potential consumers that
should be achieved within a given time frame. For e.g increasing sales,
generating product awareness, enter new market, target new customers
are few marketing objectives.

c. Advertising Objectives: Your advertising objective is what you want

people to do when they see your ads. For example, if you want to show
your website to people interested in your business, you can create ads
that encourage people to visit your website.
When you create an ad, you first choose your objective. The objective
you choose aligns with your overall business goals
d. Target Audience: Identifying a target audience of consumers is among
the most crucial elements for any business operator to consider. Without
knowing your target market, or whether an audience even exists, you
can't realistically expect your business venture to survive. Business
owners who learn how to identify target audiences of consumers stand
a better chance of convincing lenders to support them. Learning to
distinguish between different audiences makes it easier to determine
what segments of consumers truly support your business and whether
they are going to become more than one-purchase customers.

e. Brand Positioning:
What is the brand positioning, and brand image that the company wants
to project? Copywriters are reminded that their creative work must
reflect the brand’s positioning statement.
f. Creative strategy: Creative strategy generally explains how the
advertising campaign will meet the advertising objectives of the
business. Creative strategy is the strategic approach a company takes in
developing and implementing the steps that will ensure and support the
business growth.

g. Message strategy: it is important for organizations to decide message

strategies that work best for them. Product USPs, Specific benefits
consumers will remember etc are examples of some message strategies.

h. Media strategy: Media strategy is concerned with how messages will

be delivered to consumers. It involves identifying the characteristics of
target audience who should receive messages and defining the media
that will be used for the delivery of the messages.

i. Advertising Budget: Budget is the financial statement of income and

expenditure for a given period of time. Therefore, advertising budget is
also a statement of expenditure on various advertising activities and of
the income generated from advertising in the same period. The size of a
firm’s advertising and promotional budget can vary from amount to
amount. The budget is determined on the basis of the importance of
advertising in business.

j. Implementation & Evaluation: Implementation means execution or

the actual steps the company will take to promote its business. The steps
may include running ads, launching a website or sending direct mail. This
phase makes sure that marketing activities happen in the correct time
and sequence for success.
Evaluation step of a marketing plan focuses on analysing quantitative
and qualitative metrics associated with the implementation and
strategy.

Integration of advertising with other communication tools:

Following are other communication tools apart from advertising:

PERSONAL
SELLING

DIRECT SALES
ADVERTISING PROMOTION
MARKETING

PUBLICITY
/ P.R
Direct Marketing One of the fastest-growing tool for marketing is direct
marketing, in which organizations communicate directly with target
customers to generate a response and/or a transaction. Direct marketing
is much more than direct mail and mail-order catalogs. It involves a
variety of activities, including database management, direct selling,
telemarketing, and direct-response ads through direct mail, the Internet,
and various broadcast and print media.

Sales Promotion: The next variable in the promotional mix is sales

promotion, which is generally defined as those marketing activities that
provide extra value or incentives to the sales force, the distributors, or
the ultimate consumer and can stimulate immediate sales.

Publicity/Public Relations Another important component of an

organization’s promotional mix is publicity/ public relations. Publicity
refers to non-personal communications regarding an organization,
product, service, or idea not directly paid for or run under identified
sponsorship. It usually comes in the form of a news story, editorial, or
announcement about an organization and/or its products and services.
Like advertising, publicity involves non-personal communication to a
mass audience, but unlike advertising, publicity is not directly paid for by
the company.

Personal Selling: This element of an organization’s promotional mix is a

form of person-to-person communication in which a seller attempts to
assist and/or persuade prospective buyers to purchase the company’s
product or service or to act on an idea. Unlike advertising, personal
selling involves direct contact between buyer and seller, either face-to-
face or through some form of telecommunications such as telephone
sales.
Many marketers and advertising agencies are implementing the IMC
approach and adopting total communication solutions to create and
sustain relationships between company and its customers.

ROLE OF ADVERTISING IN MARKETING MIX:

Definition: The marketing mix refers to the set of actions, or tactics, that
a company uses to promote its brand or product in the market. The 4Ps
make up a typical marketing mix - Price, Product, Promotion and Place.
However, nowadays, the marketing mix increasingly includes several
other Ps like Packaging, Positioning, People and even Politics as vital mix
elements.

What are the 4Ps of marketing?

Price: refers to the value that is put for a product. It depends on costs of
production, segment targeted, ability of the market to pay, supply -
demand and a host of other direct and indirect factors. There can be
several types of pricing strategies, each tied in with an overall business
plan. Pricing can also be used a demarcation, to differentiate and
enhance the image of a product.

Product: refers to the item actually being sold. The product must deliver
a minimum level of performance; otherwise even the best work on the
other elements of the marketing mix won't do any good.

Place: refers to the point of sale. In every industry, catching the eye of
the consumer and making it easy for her to buy it is the main aim of a
good distribution or 'place' strategy. Retailers pay a premium for the
right location. In fact, the mantra of a successful retail business is
'location, location, location'.

Promotion: this refers to all the activities undertaken to make the

product or service known to the user and trade. This can include
advertising, word of mouth, press reports, incentives, commissions and
awards to the trade. It can also include consumer schemes, direct
marketing, contests and prizes.

What is the importance of the marketing mix?

All the elements of the marketing mix influence each other. They make
up the business plan for a company and handled right, can give it great
success. But handled wrong and the business could take years to recover.
The marketing mix needs a lot of understanding, market research and
consultation with several people, from users to trade to manufacturing
and several others.

ADVERTISING AND MARKETING MIX:

Advertising affects to a large extent, decision in the above areas in the

following manner:

ADVERTISING AND PRODUCT MIX:

Advertising makes the buyers aware of the product at the time of its
introduction. It informs the buyers about its features and attributes and
benefits that it offers. Advertising facilitates the growth of the product,
and also help it when its sales decline.

Advertising and product planning:

Product planning leads to manufacturing better products and bringing

about improvements in existing ones. Consistent efforts are being made
to improve the quality of the products, increasing their variety and
devising new uses for them. Advertising highlights the superiority of a
firm’s over the competing products and also seeks to enhance
awareness and knowledge of new uses.

Product brand policy:

Advertising decisions are affected by a company’s branding policy. For

e.g. a company may use a family brand name/ an umbrella brand name
etc.. Branding policy of the company gives an option to the company to
advertise all its products in one advertisement or individually advertise
each of its products.

Price:

Price refers to the value that is put for a product. It depends on costs of
production, segment targeted, ability of the market to pay, supply -
demand and a host of other direct and indirect factors. There can be
several types of pricing strategies, each tied in with an overall business
plan. Pricing can also be used a demarcation, to differentiate and
enhance the image of a product.

Advertising highlights the price, price – and – quality relationship,

economical or a premium nature of the product and changes in the
price.

Packaging:

The wrapping material around a consumer item that serves to contain,

identify, describe, protect, display, promote and otherwise make the
product marketable and keep it clean .

Packaging is more than just your product's pretty face. Your package
design may affect everything from breakage rates in shipment to
whether stores will be willing to stock it. For example, "displayability" is
an important concern.

The products also get an advantage of easy recognition by customers if

the advertisements prominently focus on the product pakages. Thus a
consumer can easily recognize a packet lying on a shelf or a retailer from
a distance because its advertisements prominently focus on the package.

Distribution:

Distribution refers to the point of sale. In every industry, catching the eye
of the consumer and making it easy for her to buy it is the main aim of a
good distribution or 'place' strategy. Retailers pay a premium for the
right location. In fact, the mantra of a successful retail business is
'location, location, location'.
The advertisements by retailers showing point of availability may result
in many consumers walking into the stores.

ELEMENTS OF PROMOTION:

▪ Advertising & Personal selling:

Advertising can be defined as the act of drawing the attention of the

target audience, towards a product or service. It is an impersonal, paid
message, delivered to the general public with the sole aim of creating
demand for the product and thus increasing sales. It has a great role to
play in marketing, to make people aware of the product.

Personal Selling, as the name signifies, is a promotional tool, where

companies use sales force, to increase sales of product and services.

advertising and personal selling are very closely related to each other.
Personal selling is called oral advertisement while advertising is called
salesmanship in print.
The difference between the both can be seen as below:

✓ Advertising refers to paid form of communication, which

commercializes product or service, offered by an identified
sponsor, to increase sales. On the other hand, a form of promotion,
wherein the sales personnel sells the product to customers, by
directly visiting them, is known as personal selling.
✓ While advertising is a one-way communication, wherein the
message is transmitted to the customers, personal selling is a two-
way communication, wherein the message is transmitted to
customers, as well as feedback is provided simultaneously.
✓ Advertising is a non-personal form of communication the message
reaches the target audience after it is being aired. On the contrary,
personal selling, as the name suggest involves salesman visit to
customer’s place individually, which is a personal form of
communication.
✓ Advertising uses pull strategy, which draws public attention and
persuades them to buy the product. As against, personal selling
uses push strategy, which induces them to buy the product.
✓ In advertising, the flexibility is missing, as the message is
standardized and cannot be changed according to customers. In
contrast, personal selling uses customized messages.
✓ Advertising uses mass media, like radio, television, hoardings, the
internet, blogs, apps, newspaper, etc. On the flip side, in personal
selling, salesman delivers the message, personally to the target
audience.
✓ Advertising conveys a message to end number of individual in less
time. As against this, personal selling conveys the message to a few
customers only in relatively high time.
✓ There is a lack of feedback in advertising, whereas, in personal
selling, feedback is always present.

Advertising & Sales promotion:

Advertising Defined
Advertising positions a product or service against that of competitors to
convey a brand message to consumers and to enhance its value in the
consumer's eyes. A television commercial for a brand new automobile
emphasizing the car's new features and styling is an example of
advertising.
Sales Promotion Defined
Sales promotions include a variety of strategies designed to offer
purchasers an extra incentive to buy, usually in the short-term. Examples
of sales promotions include cents-off coupons, two-for-the-price-of-one
sales and double coupons at the grocery store, all for a limited period of
time. The following points differentiates between advertising and sales
promotion.
Advertising Sales Promotion
Time Long term Short term

Definition One-way communication of a A Promotion usually involves an

persuasive message by an immediate incentive for a buyer
identified sponsor, whose (intermediate distributor or end
purpose is non-personal consumer). It can also involve
promotion of products/services to disseminating information about a
potential customers. product, product line, brand, or
company.

Price Expensive in most cases Not very expensive in most

cases.

Suitable for Medium to large companies Small to large companies

Sales Assumption that it will lead to Directly related to sales.

sales

Example Giving an advertisement in the Giving free products, coupons

Newspaper or TV about the major etc.
products of a company
 Purpose Brand Building, Continuity, Brand Attract new tries or brand
switch, Switching back switchers, Reward loyal
customers, Increase sales and
repurchase rates.

Result Slowly very Soon

Nature of appeal Advertising is emotional in nature Sales promotions, on the other

to the consumer and the objective is to create an hand, are unemotional in their
enduring brand image. Perfumes, approach. A cents-off coupon for
makeup and jewelery need cereal appeals to the consumer's
imaginative advertising to create rational mind and is a sales
the allure needed to sell these promotion. The consumer weighs
products. the price of one cereal brand
versus others.

Objective Building brand image and Short term sales push.

boosting sales.

Communication One way Process Two way process

Role of advertising in PLC

The product life cycle consists of four major stages: introduction, growth,
maturity & decline.

Advertising and promotion expenditure in the Introduction stage are

very high. It is needed to make people aware of newly introduced
product and to communicate its benefits for prospective buyers’
consideration. A high level of promotion is needed to further build
awareness and induce people to try new product.

Advertising and Promotion strategy in the growth stage depends upon

whether the brand is either the market leader or one of its kind i.e. a “me
too” brand (follower). If the brand is market leader then the advertising
is emphasised as a means of maintaining brand identity and
differentiation. In the latter instance, with a ‘me too’ product,
advertising can be lower because imitator can capitalise on the leader’s
advertising.

Advertising and Promotion strategy in the maturity stage may also differ
depending on whether the brand is managed to create a high brand
loyalty, or low brand loyalty. Brands with high brand loyalty usually will
emphasize advertising to maintain the successful brand image. Brands
with low degree of brand loyalty will usually have to emphasize
promotion as a means of attracting and holding buyers.

Advertising and Promotion strategy in the decline stage of the PLC are
phased out as the manager tries to minimize marketing costs.
Advertising is discontinued. Promotion is however continued at a low
level to the distributors to keep the products in stock.

ADVERTISING AGENCY

An advertising agency is a company that creates and plans when, where

and how an advert will be delivered and presents it to the client. The
advertising agencies are fully independent from their clients. The main
task advertising agencies is to make sure that the clients’ products are
sold effectively. The advertising agencies normally have experts in
certain fields to assist their clients reach their prospective customers in
a simple and easy way. The main clients of advertising agencies include;
non-profit making organizations, corporations, government agencies
and businesses.

Definition:

“An Advertising Agency is an independent organization of creative

people and business people who specialize in developing and preparing
marketing and advertising plans, advertisements and other promotional
tools. Agencies also purchase advertising space and time in various
media on behalf of different advertisers (Clients) to find customers for
their good and services”. - American Association of Advertising Agencies
(AAAA)

Features of an advertising agency:

Following are the features of an ad agency:

• 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 media 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.

Functions of an advertising agency:

Advertising agency is an independent service-rendering organization. It

delivers various services and performs many functions for its clients, who
are advertisers. It is mainly involved in activities like planning, preparing
 and placing of ads in media. It also performs non-advertising functions
for them. It offers them advisory and creative services. It does so to make
a profit.

1. Attracting clients
Advertising agency needs clients (advertisers). Without them, it cannot
survive.
Ad agency always tries to attract clients usually by giving ads in trade
journals. It also seeks their attention by offering them various services.
It offers expert, cheap and quick services. It maintains good relations
with them. It tries to give them full satisfaction. It strives harder to attain
their goodwill and customer-loyalty.

2. Research function
Advertising agency gathers information related to the client's product.
It collects following information about a product under its research
function:
• Features, quality, advantages and limitations of a product,
• Present and future market possibilities,
• Competition in the market,
• Situation in the market,
• Distribution methods,
• Buyers' preferences, so on.
Ad agency analyses (studies) all this collected information properly and
draws conclusions for its research. It helps in planning an advertising
campaign, selecting proper media and creation function.

3. Advertising planning
Advertising agency plans the entire ad campaign of its client. Advertising
planning is a primary function of an ad agency. It is done when its
research function is completed. That is, after analyzing the client's
product, its competitors, market conditions, etc. It is done by experts
 who use their professional experience to make a result-oriented
advertising-plan.
After making the advertising plan, it is shown to the client. If the client
likes and approves it, then the plan is executed (put into action).

4. Creative function
Advertising agency put the advertising-plan into action under its creative
function.
Creation of ads is the most important function of an ad agency.
Generally, it involves activities like:
• Copy writing,
• Drawing photographs,
• Making illustrations, layouts, an effective ad message, etc.
These jobs are done by experts like copy writers, artists, designers, etc.
These people are highly skilled and creative. They make an
advertisement more appealing. Attractive ads help to increase the sales
of the product.
The ad agency must always use fresh ideas for creating ads. It must
neither use old tactics nor copy the ad-campaign of other products.

5. Media selection
Advertising agency helps an advertiser to select a proper media (ad
platform) to promote his advertisement effectively.
Media selection is a highly specialized function of an ad agency. It must
select the most suitable media for its client's ad. It must choose media,
which has a potential to give best results for the lowest cost. It must
select more than one media for the ad. For example, an advertisement
can be put on television, the Internet, newspapers, magazines, etc.
After selecting the media, the ad agency must maintain goods contacts
with the media.

6. Advertising budget
Advertising agency helps an advertiser to prepare his ad budget. It helps
him to use his budget economically and make the best use of it. Without
a proper advertising budget, there is a risk of client's funds getting
wasted or lost. If an advertiser suffers a loss, he may not bring new
projects. As a result, there is a possibility of losing a potential client that
can bring more business to an ad agency.

7. Coordination
Advertising agency brings a good coordination between the advertiser,
itself, media and distributors. This is a very important function. If
coordination is proper, it will increase the sales of the product.

8. Sales promotion
Advertising agency performs sales promotion. It helps an advertiser to
introduce sales promotion measures for the dealers and consumers. This
helps to increase the sales of the product.

9. Marketing research
Advertising agency helps its clients to solve their marketing problems. It
does so by conducting a marketing research for them.

10. Public relations

Advertising agency does the public relations (PR) work for its clients. It
increases the goodwill between its clients and other parties like
consumers, employees, middlemen, shareholders, etc. It also maintains
good relations between the client and media owner.

Types of Advertising Agency

Following are the different types of advertising agencies:

➢ Full service agencies

The full service agencies carry out research, create, plan, produce
advertisements and select media. Other services offered by the full
service agencies include sales training, sales promotion, strategic market
planning, event management, package design, trade shows and public
relations.

E.g. Pressamn Advertising and Marketing Ltd:

Mumbai office: Nariman Point
Clients: Bajaj Finance, Bata India, BSNL, BHEL, CEAT etc

➢ Creative agencies

Creative agencies job is to create the actual advertisements only. The

creative agencies create interesting and imaginative advertising themes
and also produce original and innovative advertisements. A client that
contracts a creative agency will also have to contract another advertising
agency to carry out other administrative functions relating to
advertising.

➢ Specialized agencies

A Specialized agency offers its services within a certain industry such as

real estate, financial, medical and education or a particular function e.g.
public relations, research, marketing and internet. Specialized agencies
therefore concentrate on specific areas only.

➢ In-house agencies

In-house agencies are owned by the advertisers. The In-house agencies

are formed and supervised by the company. They perform all functions
relating to advertising the company’s product as in the case of full service
agencies. Most companies establish the in-house agencies in order to cut
the cost of advertising. A company may use its in house agency only or
may contract an external agency to work together with its in house
agency.
 ➢ Interactive agencies

Interactive agencies are a bit unique from others because of the services
that they offer. They offer services such as web development and web
design, internet advertising-commerce consulting and search engine
marketing. Interactive agencies became very popular before the other
advertising agencies fully adopted the use of internet.

➢ Media buying agencies

A media buying agency is a company that buys television and radio time
and then resells the time to other advertising agencies and advertisers.
Media buying agencies also assist the advertisers to plan the media
strategies. Media buying agencies normally buy a lot of space and time
from the various media stations thus they are given huge amounts of
discounts that enable them sell the television and radio time at low
prices to the small advertising agencies and clients.

E.g. FORECAST (IDEAS FROM THE FUTURE) at Thane is a media buying

agency.

➢ Social media agencies

Social media agencies do product promotion of the clients’ products on

the different social media platforms such as social networking sites,
discussion forums, blogs, microblogs and Q&A sites. The two main
services offered by social media agencies to clients are online reputation
management and social media marketing.

Structure of an advertising agency:

The organizational structure of an advertising agency consists of the

same basic elements, regardless of the firm's size. An account services
team manages client relationships, the creative team develops the
advertisements and media specialists select the media outlets that will
run the ads. A senior management team takes responsibility for the
agency’s business and financial operations.

➢ Agency Management
The senior management team may consist of a chief executive and
finance director in a small agency. A larger agency may have a
management team, including a chief executive and finance director,
together with directors responsible for each of the firm’s departments.
If an agency belongs to a large group of companies, a member of the
management team takes responsibility for relationships with the board
of the holding company.
➢ Account Services department
The account services team deals with clients and coordinates the work
of the agency's creative and media teams. A large agency might have
three levels of account management: account director, account
executive and assistant account executive. Account directors, who
report to the agency’s management team, supervise the work of account
executives and take responsibility for a group of accounts. They may also
maintain a close relationship with the agency’s most important clients.
Account executives and assistant account executives report to account
directors and manage the day-to-day operations on their accounts.
➢ Account Planning department
Account planners research the needs and preferences of the target
market for a product or service. They use their findings to develop an
advertising strategy and prepare a brief for the creative team that's
working on an advertising campaign. In smaller agencies, account
planning may be part of the responsibility of an account executive. Larger
agencies may appoint a specialist as a member of the account
management team.
➢ Media planning department
The media department is responsible for planning where and when
advertisements will appear and buying space or time in newspapers,
magazines, radio, television, digital media and outdoor media, such as
poster sites and billboards. In small agencies, one person may combine
the planning and buying roles. Larger agencies have a media department
headed by a media director who supervises the work of a team of
planners and buyers. The media team may include specialists in print,
broadcast or digital media.
➢ Creative Services
The creative services team consists of copywriters and designers, known
as art directors, who work together to develop concepts for
advertisements. In larger agencies, a creative director manages teams
working on different accounts. Smaller agencies may only appoint a
creative director who works with freelance writers.

Selection criteria for Advertising Agency:

Anybody who wants to sell its product or its service must be aware of the
marketing mix of 4Ps – Product, Place, Price and Promotion. One of the
most essential elements of marketing is Promotion. In order to make
your product popular and known in the eyes of consumer it’s very
important to promote your product efficiently. In regards to promotion,
it’s paramount to choose an effective advertising agency which has both
the expertise as well as experience. If you are looking for something on
the same lines then the following criterion would help you find the right
advertising agency.

1. Years of experience: While selecting an advertising agency, it is

advisable to look into the number of years they have been in the
industry. Not only does experience teach new things but also helps in
recognizing what the client is actually looking for, this helps in saving
both time and money.
2. Where is it located: World is now a global village and distance is no
more a hurdle, however if given a choice, it is always better to look for
an advertising agency which is located locally so that it is easy to
establish an effective communication.

3. Clientele: In order to establish confidence at the first phase, it’s wise

to inquire about the advertising agencies current and past clientele. You
will also be able to find out the kind of services they offer by looking into
their past performances.

4. Past performance: As mentioned above, looking into the advertising

agencies‘ past performance gives you a rough idea about the way they
work and the end result which is delivered, accordingly you can also bid
for price and set a cost structure.

5. Attitude & Approach: The initially stages of communication and

inquiry will provide you a rough idea about the ad agencies‘ attitude.
Since it’s a creative field, therefore it is very important for the ad agency
to be flexible and keep a positive attitude.

6. Techniques and skills: Try and look into their expertise and the
services which they have rendered before. How successful an ad agency
has been in the past does not always mean they would be able to do
justice for you as well. Try and find out the skills they have and their forte
and see whether it would match to your requirements.

7. Cost: Cost and pricing forms a very important part of any marketing
or promotional activities. Make sure you take into consideration the
total expenditure involved as well as arrangements for dispersal of
expenses. It’s better to discuss in advance how both the parties would
like the payment to be, either fixed cost on an annual basis or a monthly
payment on a flexible tenure.
8. Applauds and recognition: If you are looking to play safe then it’s wise
to hire an advertising agency which is already recognized and is known
to be delivering good services, however if you are ready to experiment
then sometimes small fish and new players also deliver quality results.
They might not have medals to display but may prove their expertise.

Maintaining Agency–client 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:

1. Meaningful two-way communication is required to maintain a

friendly client-agency relationship.
2. Both parties should take special efforts to maintain a cordial
relationship.
3. The approach of give-and-take is required to keep relations over a
longer period.

Suggestions for a client and advertising agency to maintain their

relations:
 1. There should be a mutual understanding between client and
agency. Misunderstanding or confusion, if any, between the two
parties, should be resolved quickly through direct talks.
2. The agency should work sincerely and honestly to bring a success
to the client's ad campaign.
3. Both parties should properly follow the terms and conditions of the
contract.
4. Good communication must be there between client and agency.
Hence, regular meetings between them shall be arranged.
5. Both should take necessary efforts to maintain their relations
friendly.

Guidelines for the client to preserve relationship with advertising

agency:

1. Treat the ad agency with courtesy at all times and never hurt its
ego.
2. Provide all possible information about the product to be advertised
and the organisation. A well-informed ad agency will make better
ads.
3. Don't unnecessarily bargain for the fees charged by the ad agency
as this may affect the quality of work.
4. Motivate the agency to do a good impactful work. Its charges such
as media bills, fees and other costs must be paid well in time. The
client should not wait for the ad agency to remind him about the
payment dues.
 5. Don't change the ad agency without a proper reason. If not
satisfied, always first communicate your expectations and then
wait for necessary changes to reflect.
6. The client should approve the proposals submitted by the ad
agency. He must avoid making petty arguments and only highlight
those crucial relevant matters that needs attention.
7. Give sufficient time to the agency to work on and develop an ad
campaign. The client should not pressurize it to work quickly. He
should avoid giving deadlines.
8. Reduce disputes to a minimum.
9. Finalize in advance the charges for a particular ad campaign.

Advice to the advertising agency to maintain good relationship with

client:

1. The advertising agency should do a smart and hard work to bring

success to the client's ad campaign.
2. It should make a good advertising plan and must implement it
efficiently and effectively. However, first it must get the approval
from the client.
3. It is the duty of the account executive of the agency to keep his
customer happy and satisfied.
4. It should not charge client unreasonably high rates.
5. It should not make ads for client's competitor.
6. It should get all the information from the market that will help to
create better ads.
7. Discuss the ad fees with the client in advance to avoid disputes.
 8. Disclose to the client the names of the team members (employees)
that are working on his ad campaign.
9. Inform the client about changes, if any, happening within the
agency.
10. Never hurt client's ego. Agency should always provide timely
services to him and try its best to satisfy him.

So keeping a good client-agency relationship in advertising is crucial to

the success of both parties.

Agency compensation:

1. Retainer fee
A retainer fee was devised as an apt way to remunerate creative
agencies. If you are going to your agency lots of time then it is feasible to
pay them a retainer. This is a fee which is paid in advance/ down
payment, normally monthly, for a work which is specified later. The
amount of fee is calculated and agreed after looking into amount of work
and resource to be used for the specific period Fees is generally
determined on estimated staff costs.
The key to the success of this compensation method is only when the
scope of work and agency costing is set out in detail.
Advantages
1 Since fees is agreed and paid in advance the agency can compute its
costs and required number of personnel more accurately. This helps
agency cash flow forecasts
2. Similarly a client can make budget forecast of Agency cost precisely.
Disadvantages
1. Accuracy of the activities and work to be done is very important
otherwise retainer fee cannot work satisfactorily no matter how
sophisticated it is.
2. Retainer fees are based on the amount of cost and staffing expenses
to be incurred by an agency i.e. it is input based. It is not based on
performance and therefore it can sometimes be less accountable.
3. It is time consuming to negotiate and administer, therefore it creates
an increased overhead cost for both client and agency.
2. Commission fee
This system is perhaps the most common and the oldest way of
remunerating an agency in which an agency is paid a percentage of what
they were able to sell for their client. But recent studies have shown
that now this is not the sole means of remuneration for creative
agencies.
Advantages:
1. It is very simple in the case of mainstream advertising. Commission
rate can also be bargained and adjusted according to the level of service
to be provided.
2. Easy to calculate and administer
3. Quality is the focus on both sides rather than the price of the service.
4. Commission is a purest form of payment by results and yet easy to
comprehend.
Disadvantages:
Since it is based on volume of spend and not on the extent of work. There
is no reflection of agency income or output, which presents a potential
problem for both parties.
3. Project fees is a single project oriented fees it is used as an alternative
form instead of fixed annual fees as in this charges are determined on
an individual project basis, often used in conjunction with retainer fees.
A project fee is suitable for clients who need to hire agency for a special
service in addition to their chief advertising requirements. But this
method has a high price than a retainer fee.

Advantages:

1. Best suited for an additional advertising requirement.

2. It is easy to administer if estimates are given.

3. It represents particular client needs, and provides greater flexibility in

managing overall budgets.

4. Suits an integrated or niche services approach.

Disadvantages:
1 Because of its short-term approach it doesn’t encourage partnership in
the client-agency relationship.

2. If the detailed annual scope of work is not clearly set out at the
beginning of the year Agency faces problems in staffing as compared
with annual agreements

3. Difficult to devise in any performance incentive for the agency as most

PBR is structured for long-term performance.

********