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. 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.
CONS:
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. 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.
CONS:
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. Inhouse 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. 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.”
CONS:
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: CONS: The work is often fresh and provides a new outlook to an ad campaign 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. 2. 3. 4. Fee-For-Service: Retainer: Commission: Mark-Ups: A per hour fee for actual time billed. A monthly fee based on a pre-determined amount of time. 15% over actual cost of placement Compensation of approximately 20% above actual hard costs.