Ad Agency

What's an Ad Agency?

An Ad Agency is a firm or a company involved in providing services related to advertising to its clients (advertisers). 

Ad agencies are located world wide are continuously providing services like 

1.  Conducting Market Research to understand the most appropriate way to communicate.

2.  Planning an ad campaign right from designing to testing so as to have a smooth flow of work.

3.  Preparation of ad budget as per the needs of the client depending on various factors such as type of the product, type of the media, targeted audience, level of intellect, innovation and technology used in making of an advertisement. 

4.  Preparation of alternative advertising content which can be displayed to the targeted audience.

5.  Testing the effectiveness of an advertisement using various parameters to understand the impact of the advertisement.

6.  Conducting advertising campaign in various parts of the world through various media sources.

7.  Acquiring space in various media for display of advertisements.

8.  Reviewing advertisements for flaws and designing strategic suggestions for improvements like high reach and better turnover.

Know more about Ad Agency!

1. Creation of IDEA: For an advertising campaign to be effective, the content has to be creative. And creativity is possible only when you research and put some pressure on brains. Dedicated members in an ad agency work day night to come up with innovative thoughts that can take an ad campaign to the next level. Eg. Advertisements of Pidlite Fevicol are always loaded with creativity and it's pretty impressive.

2. SYNC: To be precise, beyond teamwork, what matters more is proper coordination and updated connection between every team working on an ad project. And that happens in an ad agency. An ad report cannot be finalized and sent to the Client by the Ad Agency's Account Executive Team without coordinating the Creative Team, Media Team, Production Team and others involved in the project.

3. Creative Pitch!!: Really? Ahh... Pitch Please..??: So, you must be wondering what's that? Well, an Ad Agency gets money only when they make Clients. What Clients need is quality, professionalism and commitment towards their advertising work so that they can make good  business in the market. Hence Pitching. That process where most experienced and talented executives of the Ad Agency approach the Client with what they have got. Obviously, it's all about convincing the potential Client and only then you're grabbing some business. In practicality, this is the first interaction between the Ad Agency and the Client just like a typical Bridegroom going to see a Bride at her place. And the Bride is to decide if she wants to marry him or reject. That was too practical, but hope you got the concept! 

4. Making and Managing Clients: You just saw how an Ad Agency pitches (convinces) a Company to handover their advertising projects to them. And that's how they make Clients. Each Client is handled by a dedicated Account Executive who is in charge of updating the Client about every progress in the work. Believe or not! Handling Clients isn't so easy all.

5. You will be the BEST only when you do the BEST!: No doubt, the Ad Agency has to be super dedicated towards their Client's needs enabling transparency of work. With this, rises trust and strong relations with the Client and that's an asset for the Ad Agency.

6. Yes, money matters!: An Ad Agency gets its remuneration by way of fees and commission. Fees for the professional services provided by them and commission for being a mediator between the Client and the media company where the advertisement content is displayed. Eg. Let's consider McCann Ad Agency is providing services to HUL for promoting advertisements of Boost on Star Media. Here, McCann Ad Agency will arrange for media space on Star Media in their various channels and will charge commission @ 15% from HUL.

  8. Relationships: Today's kids may understand this word very well but here, the context is professional. A healthy professional relationship has to be maintained by the Ad Agency so that the Clients can be retained over a long period of time. Factors such as regular interaction, updates about the project, genuine work, loyalty, appropriate fees and commission, legal evidence wherever required and many other points facilitate towards a healthy professional relationship between the Ad Agency and the Client. 

Features of an Ad Agency

1. Highly Specialized: Ad Agencies are too good and well equipped with providing services such as marketing campaigns, developing social strategies, website development, pay per click scheme, content creation, search engine optimization, search engine marketing, etc.

2. Expert Staff: An Agency always make sure that the best talent is recruited for the right work. The employees working in an Ad Agency are well trained to meet their goals. All what's matters is passion and enthusiasm.

3. Links Advertisers and Media: An Ad Agency is that organization which links an advertiser with a media company so that the most appropriate content can be displayed in the most sensible media.

4. Cost Effective: An Ad Agency deserves revenue for the worth of work of it does for its Client. In fact, it's the work of the Ad Agency due to which the Clients get a tremendous platform to market their products.

5. Serve Client Needs: Ad Agency is 100% service oriented as they are always engaged in serving Client needs. 

6. Research Function: An Ad Agency has to always involve itself into high level market research so as to understand what kind of prior art has been done and what new the Ad Agency can do for it's Client. Research is also done to understand market needs and targeting accordingly.

7. Ad Planning and Budgeting: Planning an entire advertising campaign and appropriating perfect budget is another key role of an Ad Agency. Ad Planning including media planning requires a lot of strategy to be applied considering the budgeted amount. 

8. Appropriate Media Selection: Based on the kind of the product along with the kind of audience targeted, selecting the most appropriate media becomes the most important task. A lot of pre analytical study is required for selecting the right media for the right product for the right audience at the right place and at the right time.  

9. Creative Function: Creative ads create higher impact on the audience just because of its attention grabbing power. No doubt, an ad can be as simple because what matters is the message / information about the product or service to be communicated. But yes, creativity in an advertising tend to create an impression and top of mind awareness in the minds of the viewers and that's going to help the company to make business. 

10. Content Management: An Ad Agency is responsible for not only for creating content but also for managing the same. Content can be the written text (copy), illustrations, jpegs, logos, designs, clips, audio notes, etc. Content management is the right usage of the above content in making the best message to stimulate the viewers to think about the product. 

11. Feedback Survey: Another duty of the Ad Agency stands at conducting feedback and conducting survey so as to figure out the effectiveness of the campaign and think for improvements if needed.

Structure of an Ad Agency

Account Management: Account managers are the ones who serve as the liaison between the client and the agency. In simple words, they are the client advocate located within the agency. Account managers also facilitate client strategic guidance in coordination with other departments and personnel. Account managers need to be natural problem solvers, relationship builders, analytical thinkers and proficient communicators. It's generally the account services team's responsibility to translate the client's creative brief to the agency team. Can have various designations like Account Coordinator, Account Planner, Project Manager, Account  Executive, Account Director, Relationship Manager, etc.

Business Development: Business Development team is the one responsible to crack new deals and retain the existing ones. Its their work which brings revenue to an ad agency by way of clients. People here are effective communicators and strategic presenters who hold a high knowledge about the Ad Agency's potential. Can have various designations such as Marketing Manager, Business Development Officer, Chief Marketing Officer, etc.  

Creative Team: This is the team which is in charge of carrying of effective operations of making of content to be delivered to the masses. Right from designing a website to branding and developing content to drop the product the in the markets require the efforts of the Creative Team. They work in coordination with the client so that things can be delivered as per their demand. The Creative Team need to look upon things from the Client's perspective and give the most likeable content. Involves various positions such as 

- Arts Director: The one who is responsible for creating the visual appearance for an ad campaign by defining the style of visualization (overall creative content) for newspapers, magazines, product packaging, etc. 

- Copywriter and Editors: The one who develops written content to be used in an ad campaign which requires quality creative writing skills. 

- Designer and Illustrators: The one who frame and designs ad layout or pictures so that content can be well presented and explained. Requires high amount of artistic skills. 

- Content Developer / Producer: The one who develops script and image based content to be uploaded on the website. It can be user experience, interview report, blogs and even stories.

- Web Designer: The one who works on the appearance, layout , compatibility of a website in coordination with the Content Developer for content input.

- Creative Traffic Manager: The one who is responsible for managing the flow of work and ensure that ads are completed on time for dropping in the market, either by way of publishing or broadcasting or uploading.

Media and Planning: Media team is the one taking charge of visibility and execution of a client’s advertising campaign. This can include planning and arranging the most appropriate media based on the client's strategy and budget. Media team looks after arrangement of resources and space for radio, TV advertisements, billboards, hoardings, newspaper editions, magazine features, influencers and digital takeovers. Members on the media team are strategic planners, creative thinkers, effective communicators and posses deep knowledge  and understanding of applied media, market, industry, and latest trends. They work very closely with the creative team as both their task fits in the same jar. Various positions include Media Strategist, Media Director, Media Research Director, Digital Marketing Head, etc.

Research Team: Research team is a group of surveyors who are in-charge of making study so as to get clear understanding of a projected action. Research Team may conduct product, services, competition, competitors, consumer behavior, trends, market, brand, media or market survey to understand the most effective and efficient way of getting the ad campaigning work done. Various positions include Research Analyst, Market Research Director, etc. 

Production Team: This team is highly responsible for setting schedules with various other outsider agency. They coordinate with printers, arrange photo shoots and hire directors and artists for making video based commercials. In short, they handle an ad agency's logistics.

Operations: This team can be generalized into Accounting, Finance, HR and Logistics. Accounting for maintaining day to day costs and income. Finance for strategies related to management of fund received from the investors. HR to recruit the best talent and manage them from all aspects. Logistics for coordination with every Media and Production Team for making necessary arrangement of resources.

IT and Digitals Team: The team responsible for undertaking web based tasks and facilitate solution for technology troubleshoot. They take up tasks right from coding to designing and developing websites and apps along with Digital Marketing and SEO. Positions can be Digital Head, IT Executive, Search Engine Optimizer, Digital Marketing Director, etc. 

Ad Agency Types

Ad Agencies are of various types depending on their nature of operations. Some are huge, some are small, some are independent, some are in-built, some are local, some are global, some are general, some are specific and the list goes on. We will discuss about various types of ad agencies operating right from local to global level serving various brands like Aditya Brla Group, Radisson, Tanishq, Levis, Cafe Coffee Day, ICICI Bank, HDFC Bank and many more.

The list goes as follows:

1. In House Agency: Organizations undertaking all of their advertising projects themselves (in-house) without involvement of an external ad agency.

• It is undertaken mainly by companies with huge marketing and advertising budget.

• The thumb rule is setting up  an internal advertising agency within the company.

• Crates self dependency and unlimited services.

• Better work and full understanding about the company and it's brands by the employees involved in the in house team.

• Cost control and savings, as there is no liability towards an external ad agency.

• Exposed to limited skills compared to what exist in the market.

• High expense for managing an entire team.

2. Full Service Agency: A external or in-house ad agency offering complete and integrated services, instead of specializing in only one area of advertising is called Full service Ad Agency. Provides varied advertising and marketing services like  strategic planning, production, creativity and innovations, as well as interactive marketing services via the internet. Involves freelancers in their work. Provides strategic planning, production, media purchasing, creativity, branding, web marketing, innovations, interactive marketing services as well as result tracking. Can be modular or in-house agency. Eg. Jellyfish Digital Marketing Agency (USA), Group M (USA), JWT (USA), WPP (UK), DDB Mudra Group (India)

3. Special Service Agency: An ad agency specialized in specific campaigns like social cause, finance, sports, entertainment, movie promo, etc. Eg. Wasserman Media Group, Newport Sports Management, KMG Sports, etc.

4. Creative Boutiques: A creative boutique is similar to special service ad agencies but involved in providing artistic services. They mainly undertake creative functions like illustration, layout, copy, photographs, vfx, animation, etc. Many of such firms appoint freelancers under contractual agreement for carrying out such designing work. 

5. Modular Agencies: A modular agency is a version of small ad agency firm which is engaged only in specific work of their expertise and domain. They carry out only a part of the advertising work like research, data collection, content creation and management. 

6. Mega Ad Agency: These are huge companies with tremendous chain across nations working for clients from various industries. They have worldwide subsidiaries with regional offices all across the globe and provide maximum services to their clients. Eg. Kantar Group, WPP, Ogilvy and Mather, Mindshare, etc.

7. Global Ad Agencies: Agencies operating at global level mainly working on international brands. They cater multinational companies operating in various nations selling same product. They create worldwide exposure as per research, demand and supply. Eg. WPP, Publicis Groupe, Dentsu, Omnicom, etc.

8. Other Agencies: There are many other ad agencies who provide services related to digital marketing and optimizing, social media advertising, handling public relations, etc. 

Ad Agency Selection Criteria

One of the most strategic task for an organization is to select the most appropriate Ad Agency for their advertising campaign. This selection depends on several factors and needs of the advertising company along with analyzing strengths and weaknesses of the Ad Agency. Discussed below are some of the crucial points considered by an advertising company while selecting an Ad Agency. We will understand the 4C strategy to be followed by an advertising company before selecting an Ad Agency.

1. Capabilities: Every Ad Agency has it's own capacity. An advertising company should never fail to gauge the capacity and capabilities of an Ad Agency to whom they plan to give the contract. 

Size - Size of the Ad Agency plays an important role while handing over an ad contract by the advertising company. Bigger the company, bigger can be expectations by the advertising company and hence, ad campaign contract can be handed over.

Experience - Past work experience of the Ad Agency should also be considered before handing over the contract. Things like effectiveness, results & outcomes and impact must be seen so that a stern decision can be taken by the advertising company. 

Location - The place where the Ad Agency is located also makes a lot of sense while selecting them. Agencies located geographically close tend to offer personal and close touch because of regular staff interaction and PRs. This helps to keep up strong bond between the advertiser and the Ad Agency.

Self Promotion - Above all, the way how the Ad Agency portray itself to the advertiser also influence the selection process. The advertising company team should shoot as much questions possible so as to see how promptly the Ad Agency answers. 

2. Chemistry: Chemistry here refers to relationship / bonding. A good relationship is a derivative of several actions and reactions and between the agency and the client. 

Strong Client Bonding - There should be a projection of strong client bonding so as to consider the Ad Agency as a support pillar. This can identified the way how the agency responds to problems and queries of the advertising company.

Output of Question and Answer Sessions - Responses given by the Ad Agency during the question answer session also plays a important role to take call whether to hand over contract. Quick and prompt answers means the Ad Agency is well prepared, knowledgeable and serious about the project.

Existing Clients - Existing clients of the Ad Agency should also be screened so as to determine any rival company being served by them. Such scenarios may cause suspicion and insecurity in the minds of the potential client company about maintaining secrecy. 

3. Creativity: Here comes the most important point to consider an Ag Agency worth handing over ad contract. Creativity during the pitching itself makes it clear about how skilled and presentable the agency is so as to pursue audience.

Special Skills - Special skills can be technical skills and artistic skills that forms a very vital part in making an ad campaign. These skills can be seen from the past projects of the Ad Agency.

Innovation - Creativity exists where there is innovation. An agency will high innovation in making ads can be given a high preference over others. 

Strategy Implementation - An agency with a better strategy formulation and implementation should be given opportunity to take up ad project. Quality and well researched strategy always gives better and projected output.

4. Commercial Arrangements: Arrangement of resources that can be made by an Ad Agency also makes a high sense while deciding upon giving contract. Better arrangements makes the work go more smoother.

Remuneration - Remuneration includes, professional fees, agency commission, technical and administration charges and even performance based remuneration. There should be a proper mechanism of charge for the work performed and should not be extremely above standard level.  

Resource Utilization - The Ad Agency must be a god utilizer of al the resources available within its organization and outside. It can physical resources, human resources, financial resources including time and devotion. 

Payment Process - Payment process should be simple and ordered so as to make it easy for the client company to settle all the payments. 

Support Services - Support and relation management services provided by the Ad Agency should be strong so as to provide the satisfied client services. This can be a logic point in selection of an Ad Agency. 

Agency Compensation

Ad agencies can be compensated in several ways, depending on the nature of the services they provide and the terms of their agreements with clients. Here are some common methods of compensation for ad agencies:

• Commission-Based: Historically, ad agencies often received a commission based on the media spend of their clients. This means they would earn a percentage (typically around 15%) of the total media budget that the client allocated for advertising. However, this model has become less common in recent years.

• Fee-Based: Many ad agencies now charge clients a fee for their services, rather than relying on commissions. This fee can be based on a variety of factors, such as the scope of work, the complexity of the campaign, and the agency's level of expertise. Fees can be structured as monthly retainers, project-based fees, or hourly rates.

• Performance-Based: Some agencies may opt for performance-based compensation models where their earnings are tied to specific performance metrics or key performance indicators (KPIs) agreed upon with the client. This approach aligns the agency's success with the client's business outcomes.

• Project-Based: Agencies can also be compensated on a project-by-project basis. In this model, the agency agrees on a fixed fee for a specific project, such as creating a marketing campaign or designing a website. Project-based pricing is often used for one-time or short-term projects.

• Equity or Profit-Sharing: In certain cases, especially with startups and new businesses, ad agencies may accept equity in the client's company or a share of the profits generated from the advertising efforts. This arrangement allows the agency to have a vested interest in the client's success.

• Barter or Trade Agreements: In some cases, agencies may accept goods or services in exchange for their advertising services. This is known as a barter or trade agreement, where the agency receives compensation in the form of products or services rather than cash.

• Bonus and Incentive Structures: Agencies may negotiate bonus or incentive structures as part of their compensation agreements. These bonuses can be tied to achieving specific milestones or exceeding performance targets.

• Licensing and Royalties: In situations where agencies create intellectual property, such as jingles, logos, or characters, they may receive licensing fees or royalties when these assets are used in advertising campaigns.

• Media Discounts and Rebates: Some agencies negotiate media discounts and rebates with media vendors and pass these savings on to their clients. In some cases, agencies may also receive rebates from media vendors, which can be a source of additional revenue.

The specific compensation model used can vary widely depending on the agency's specialization, the client's needs, and the industry in which they operate. It's important for both the agency and the client to have a clear and mutually agreed-upon compensation structure outlined in a formal contract to avoid any misunderstandings or disputes.