TYPES OF ADVERTISING AGENCIES

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TYPES OF ADVERTISING AGENCIES Powered By Docstoc
					TYPES OF ADVERTISING AGENCIES

Full Service Agencies

A full-service agency offers their clients a full range of marketing, communications, and
promotion services, including planning, creating and producing the advertising; performing the
research; and selecting the media. A full service agency may also offer non-advertising services
such as strategic market planning; production of sales promotion, sales training and trade show
materials.

PROS:          This type of agency is able to provide turn-key operations as they have access to a
               wide variety of creative people and other services.

CONS:          They can lack the desired control by the advertiser and there is also the possibility
               that the agency may not fully understand the company, or the product and services
               that are being advertised. They can be closed-minded and if they aren’t
               constantly looking for fresh ideas, creativity can be lost.

Specialty Agencies

A specialty agency is one that either works within a particular industry such as:
    Medical
    Real Estate
    Education
    Financial

A specialty agency is one that can also work for a particular function such as:
    Internet
    Public Relations
    Marketing
    Research

PROS:          This type of agency is an expert in their particular area and therefore understands
               perfectly what works and what does not.

CONS:          They also may work too independently and therefore the advertiser feels out of
               the loop, creating an undesirable working environment. Also, ideas can become
               stale if you do not understand the consumer as someone with many interests.

In-House Agencies

Some companies in an effort to reduce costs and maintain greater control over agency activities
have set up their own advertising agencies within their own organizations. This type of agency
is set up, owned and operated by the advertiser. Large companies almost always have in-house
agencies and it is common for them to then out source certain projects to retain a certain
“freshness” for campaigns and special projects.
PROS:         A major reason for using an in-house agency is to reduce advertising and
              promotion costs; therefore, there is more control on behalf of the advertiser. In-
              house agencies also have a better understanding of the product and are aware of
              the goals and objectives of the company as most likely there is also a public
              relations and marketing department within the organization.

CONS:         Disadvantages are there is less flexibility, less objectivity and less experience.
              Workers may be “bias”, or too close to the project and over time campaigns can
              become “stale.”

Creative Boutiques

This type of agency provides only creative services which is the creation and execution of
advertisements. Full service agencies often subcontract work to creative boutiques when they
are busy and do not want to hire a full time staff member. In-house agencies and specialty
agencies use these services they want a new “fresh” approach to an ad campaign.

PROS:         The work is often fresh and provides a new outlook to an ad campaign

CONS:         They are not part of the overall advertising process and therefore may miss the
              mark of what the advertiser is looking for. Two-way communication is
              imperative in this process.

Media Buying Agencies

Media-Buying agencies are independent companies that specialize in the buying of media,
particularly radio and television time. The task of purchasing media has grown more complex
as media opportunities have expanded; therefore, these types of agencies have found a niche by
specializing in the analysis and purchase of advertising time and space. Advertising agencies, in
this case, develop their own media strategies and hire media buying agencies to execute them.
Because these agencies purchase space in large quantities, they receive discounts and can save
the small agency or client money on media purchase.


COMPENSATION

Advertising agencies of all kinds are compensated in four ways:

   1.   Fee-For-Service:     A per hour fee for actual time billed.
   2.   Retainer:            A monthly fee based on a pre-determined amount of time.
   3.   Commission:          15% over actual cost of placement
   4.   Mark-Ups:            Compensation of approximately 20% above actual hard costs.