Advertising Agencies- organization, Compensation, Client Agency Relationship
The Organizational 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.
(i) 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.
(ii) Account Services
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.
(iii) Account Planning
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.
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.
(v) 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.
Larger agencies have a production department responsible for managing advertising campaigns. They set schedules and manage campaign budgets, coordinating the work of the creative and media departments. The production team also interacts with external suppliers working on advertising campaigns, such as printers, photographers and video production companies. In smaller agencies, account executives or creative directors take responsibility for project management.
ADVERTISING AGENCY COMPENSATION
An agency received a commission from the media for advertisement placed by the agency. This commission cover the agency’s copywriting and account service charges among others. There are two basic forms of advertising agency compensation:
- Media Commission
- Fee based compensation
- Media Commissions
The traditional media commission system is fairly straightforward. The agency buys time (in case of electronic media) and space (in case of print media) in the media for the advertiser and charges the advertiser the full cost of that time or space. This is known as the net cost. The agency then adds a commission of 15%. When the commission and net cost are added together, the sum is called the gross cost.
The advantage for the advertiser is that it receives the media time or space at a lower rate than if it dealt directly with the media.
However if the advertiser demands frequent changes in the advertising copy, that involved increased production cost, then the agency may have to absorb those costs and they do not make money in the process.
- Fee based Compensation
In this system it is decided in advance that how much the agency will receive for the year for working on a particular account. The fee is usually based on the time involved in producing the advertising campaign. This system is considered fairer to both side for two reasons:
- It does not reward agency for spending more money in the media.
- It doesn’t let the advertiser make unjust production demands on the agency without extra payment.
The main drawback is that the agency do not receive any more compensation if the campaign is highly successful. It is also expensive for advertiser because of long time involved.
CLIENT AGENCY RELATIONSHIP
Relationship management is one of the most important useful tip for any client-agency relation. Agencies play a vital role for their clients to communicate with their audience. Thus client — agency relationship must be strong. Agencies carry forward the client’s vision to their target audience. Sales and marketing depends on the performance of agencies.
Agencies are the right hand of their client if you are smart enough you can get the most from them.
(i) Agency Share Your Goals
Hiring the right agency for your company is a far sighted decision. It benefits you on a long run. After contract, agencies study your business. They build strong understanding about your business its goal and target audience. After going into the depth of your business they set their goals according to the need of business. Being transparent to the client, agency go through all the W’s of the company i.e who they are? What they do? Why they do? How it will benefit the customers? They retain your company and work hard to take your business on a larger scale as in the end client’s success will be agency’s success.
(ii) Update Strategies According to the Trend
Agencies are more updated than the clients in terms of technology and marketing trends. They know about SEO tools. Have knowledge about how to capture large number of audience keeping trends in mind. Agency’s first priority is not to take their hands away from target audience. They discuss and mold all the marketing plans according to the trends. Agencies put in efforts to keep their clients updated. They explore and suggest the best that could suit the client.
(iii) Team Work
Agency knows every bit of their clients and they honestly suggest what is best for the client. They meet, discuss and plan all the strategies, keeping clients goals in mind. When two of them i.e. Client and Agency discuss all the pros and cons of every strategy it end up with multiple plans. If you want to work smart, work as a team. Agencies work day and night with brand managers or marketing managers of the company and come up with new result oriented goals.
If client — agency relation is strong. You can ask as much as you can from your agency. Agencies freely discuss about the marketing plans. It creates a healthy trust worthy work relation between the two. Keeping relationship outside the work also helps in bringing more motivation towards work and agency becomes as active as their client.
Relationship building takes time but it is essential for both agency and client. Agencies highlight the problem of target audience and attract them by providing solutions. They make different strategies to bring more and more business. Strong relation between client and agency result in flourishing the business on top. In the end what counts is how much you have spent on agency and if they are doing justice with every penny you have spent.