Advertising Agencies

Related Terms: Marketing

Advertising agencies are full-service businesses able to manage every aspect of an advertising campaign. They vary widely in size and scope and cater to different kinds of customers. Some agencies have only one or two major clients whose accounts they manage. Others have hundreds of clients spread throughout the country or the world serviced from many field offices. In general, an advertising agency will be able to manage an account, provide creative services, and purchase media access for a client.

STRUCTURE OF ADVERTISING AGENCIES

An agency, depending on its size, will likely have different departments which work on the separate aspects of an account. An account manager or the account planning department will coordinate the work of these departments to ensure that all the client's needs are met. The departments within a full-service agency will typically include:

Research

The research department will be able to provide clients with some details about the prospective audience of the final advertising campaign as well as information about the market for the product being advertised. This should include specific market research which leads to a very focused ad campaign, with advertising directed to the ideal target audience.

Creative Services

Advertising agencies employ experts in many creative fields that provide quality, professional services. Copywriters provide the text for print ads, and scripts for television or radio advertising. Graphic designers are responsible for the presentation of print ads, and the art department is responsible for providing the necessary images for whatever format advertisement is decided upon. Most advertising agencies also have a technical staff with expertise in web design and implementing an online advertising campaign. Some agencies have in-house photographers and printers; others regularly employ the services of contractors.

The individuals involved in creative services are responsible for developing the advertising platform, which sets the theme and tone of the ad campaign. The advertising platform should draw upon specific, positive features of the product advertised and extrapolate the benefits the consumer could expect to receive as a result of using the product. The campaign, through the development of this platform, should prove to be eye-catching, memorable, and in some way unique. The ads consumers remember stand out from the rest; it is the advertising agency's (and specifically the creative services department's) responsibility to provide this quality for clients.

The final advertising provided by an agency should be fully developed and polished. Television commercials should be produced with professionalism. Print ads should be attractive, informational, and attention-getting. Radio spots should be focused and of high audio quality. Online ads should be well placed and drive traffic to the clients own web site or a site through which the client's products or services are offered.

Media Buying

An important function of the agency (and a major source of its revenues) is the placement of the ad in various media. The activity is aimed at achieving the largest targeted audience at the lowest cost. The research conducted by the agency will inform any media-buying decisions.

An agency will be able to negotiate the terms of any contracts made for placing ads in any of various media. A full-service agency will deal confidently with television, radio, newspapers, magazines, and on the World Wide Web. Some agencies are also branching into direct mail marketing and point of purchase incentives. Another area in which agencies will look for ad placements is in the local yellow pages, on outdoor advertising locations which can include billboards, and commercial signs on public buses, subways or trains.

The media-buying staff draws on its experience and research. Some factors to be considered in the development of the media plan include:

Cost Per Thousand: This refers to the cost of an advertisement per one thousand potential customers reached. Media-buyers use this method to compare the various media avenues they must choose between. For example, television ads are considerably more expensive than newspaper ads, but they also reach many more people. Cost per thousand is a straightforward way to evaluate how to best spend advertising dollars: if a newspaper ad costs $100 and potentially reaches 2,000 customers, the cost per thousand is $50. If a television ad costs $1,000 to produce and place in suitable television spots and reaches a potential of 40,000 viewers, the cost per thousand is only $25.

Cost Per Click and Click: Through Rate Media Buying are new measurement methods used in assessing the cost of accessing potential customers on the Internet. Agreements are often made today under which a company places a small ad on another entity's web site. There is often no fee for placing this ad; rather a fee is assessed only if and when the visitor to the host site clicks on the ad. Sophisticated systems are used to track the number of clicks an ad generates and the owner of the ad is charged on a weekly, monthly, or quarterly basis for resulting service of forwarding potential clients. The fees are based on a prearranged cost per click basis. This also referred to by many as a pay-per-click agreement. Unlike the more widely applicable cost per thousand figure, cost per click measurements are only useful in assessing online ad campaign activity levels.

Reach: This term is used when discussing the scope of an advertisement. The reach of an ad is the number of households which can safely be assumed will be affected by the client's message. This is usually expressed as a percentage of total households. For example, if there are 1,000 households in a town and 200 receive the daily paper, the reach of a well-placed newspaper ad could be expressed as 20 percent: one-fifth of the households in the community can be expected to see the advertisement.