Meaning:

An advertising agency or ad agency is a service business

dedicated to creating, planning and handling advertising (and
sometimes other forms of promotion) for its clients.

An Advertising Agency or ad agency is a service provider

that works for clients to create an effective and goal oriented
advertising campaign aimed at representing the Company
positively in the eyes of its target customers.
Definition:
According to American Association of Advertising “An
advertising agency is an independent organization of creative
people and business people who specialize in developing and
preparing market plans, advertisements, and other promotional
tools”.
 Advertising Agency

Firm that
(1) creates new promotional ideas,
(2) designs print, radio, television, and internet advertisements,
(3) books advertisement space and time,
(4) plans and conducts advertising campaigns,
(5) commissions research and surveys
(6) provides other such services that help a client in entering and
succeeding in a chosen market.
 Primary services of Advertising agencies

• Complete a marketing analysis

• Develop an advertising plan
• Prepare a creative strategy
• Create advertising executions
• Develop and implement a media plan
• Handle billing and payments
• Integrate other marketing communications
Advertisement agency organizational chart
Functions of advertising agency
A. Research
B. Planning
C. Developing and preparing advertisement copy
D. Getting approval from client
E. Creative service
F. Ad - execution
G. Print and broadcast production
H. Media selection
I. Account Management
J. Accounting
 Types of Advertising agencies

1. Full service agency

2. In house agency
3. A creative boutique
4. Media buying service
5. The La carte agency
6. Special service agency
7. Social media agency
1. Full Service Agencies
Which offers its clients a full range of marketing,
communications and promotions and promotions services
including planning, creating and producing the advertising ,
performing research and selecting media.
a full service agency may also offer non-advertising services
such as strategic market planning, sales promotion, direct
marketing and interactive capabilities, package design, public
relations and publicity.
A agency provides services that are directly related to
advertising such as copywriting, artwork, production of ads, media
planning etc. It also provides such services in respect of pricing,
distribution, packaging, product design etc
2. In house agency
Some companies, in an effort to reduce costs and maintain
greater control over agency activities, have set up their own
advertising agencies internally. An in-house agency is an ad
agency set up, owned and operated by the advertiser. Many
companies use in-house agencies exclusively; others combine in-
house efforts with those of outside agencies.
A major reason for using in-house agency is to reduce
advertising and promotional costs. Companies with very large
advertising budgets pay a substantial amount to outside agencies
in the form of media commissions. With an internal structure,
these commissions go to the in-house ad agency.
An in-house ad agency can also provide related work such as
sales presentations and sales force material, package design, and
public relations at a lower cost than the outside agencies.
Ad agency Advantages Disadvantages
Cost saving Less experience

In house agency More control Less objectivity

Increased coordination Less flexibility

Large advertisers use In-house agencies are: 

• Calvin klein, Avon, Revlon and Benetton

In-house agencies in India are: 

• Levers – Lintas (previously)
• Videocon – Confidence
• Reliance – Mudra (when Mudra started out)
• Fidelity Communications & Advertising - Fidelity Investments
• Content Factory - Coca-Cola
• Yellow Tag Productions - Best Buy
• Yellow Fan Studios - Sprint Communications
• BBC Creative - BBC
3. A creative boutique
A small ad agencies that provide only creative services and have long
been an important part of the advertising industry. These specialised
agencies have creative personnel such as writers and artists on staff.
These are shop agencies that provides only creative functions and not
full-service. The specialized creative functions include copy writing,
artwork and production of ads, they charge a fee or percentage of full
service agencies, and as such most of them convert into a full service
agency or merge with other agencies to provide a wide range of services.
• Examples of creative boutique in India:
• RMG David
• Vyas Gianetti Creatives
• Chalorophyll
An example of a successful creative boutique in India Creative, which
is Mumbai based agency whose clients are Aditya Birla Group, Godfrey
Philips, BBC World, Tata Group, Taj Hotels, The Indian Cricket League etc.
Greenroom Advertising, Mumbai, India – The Print Ad titled Tea was done by
Don’t treat Diabetes to your eyes. Ogilvy & Mather Bangkok advertising
Diabetic Retinopathy is the leading cause of agency for brand: Poly-Brite in
blindness in the working population of the Thailand. It was released in the Jun
world. So, visit your doctor regularly a Household maintenance & pet products
protect your vision Advertising campaign
4. Media buying service/Media specialist companies
Media buying agencies are independent companies that specialize in the
buying of media, particularly radio and television.
The task of purchasing advertising media has grown more complex as specialized
media proliferate, so media buying services have found a niche by specializing in
the analysis and purchase of the advertising time and space. Agencies and clients
generally develop their own media plans and then hire the buying services to
execute them.
Some media buying agencies do help advertisers plan their media strategies.
Because media buying agencies purchase such large amounts of time and space,
they receive large discounts and can save the small ageny’s or client’s money on
media buying. Media buying agencies are paid a fee or commission for their work.

Media specialist companies

• Mindshare
• Initiative Media (LOWE)
• Zenith Media (Bates, Saatchi & Saatchi)
• Optimedia (Publicis)
• Starcom (Leo Burnett)
• Fulcrum (HTA) Normal 0 MicrosoftInternetExplorer4
5. The La carte agency
An a la carte agency will offer some aspects of a campaign such as
media buying, rather like buying items from a menu.
A specialist agency tends to be small and more focused on a specific
aspect of marketing communications and/or a specific market such as
Internet Marketing

Companies:
6. Special Service Agency
There are some agencies who undertake advertising work only in
certain areas. There are agencies that specialize only in financial
services or only in publicity or only in point-of-purchase material etc.
 Criteria for Selection of an Advertising Agency:

For a successful advertising campaign, the choice of a right

advertising agency is matter of prime importance. The choice of a wrong
agency can prove to be very costly.
The selection of an agency needs a logical approach. The suitability,
agency infrastructure, imaginativeness and image of the agency, its
management and rates are the basic factors Which are considered
during the selection of an agency.

The general qualifications for e Section of an advertising agency are as

follows:
A. The experience of an Agency:
The longer an agency has been in business, the more stable it is
expected to be; and stable agencies are more reliable.

B. Agency size and location:

Large-budget advertisers want to go to large agencies because these
agencies have better staff and more facilities. Large budget advertisers
do not like to select small agencies as these are not profitable. Similarly
small advertisers do not select large agencies for fear of insufficient
attention.

C. Product conflicts:
If an agency has already another account with the same or similar
product, then it is not advisable to select that particular agency because
of conflict of interest involved.
D. Financial position of an agency:
If the agency is in a week financial position, then it will spend more
time in solving its own problems than working on the advertisers
campaign. Financial difficulties also indicate the poor planning of the
agency and lack of its stability.

E. Special skills of an agency:

Some agencies specialize in certain areas such as industrial
advertising, legal advertising or medical advertising. It would be useful
to know if the agency specializes in a particular product or it has
specialists who are familiar in the promotion of this particular product.
If the agency has special skills for the promotion of this product, it will
run a successful advertising campaign.
F. Current clients:
Most advertisers are very careful in selecting an agency They usually
see the list of the clients of an agency. An agency with a solid list of
clients would be more desirable. It will also be useful to know how many
new accounts were acquired in the last two or three years and how many
accounts were lost. The reasons for the lost accounts may highlight some
of the weaknesses of the agency.

G. The process of payment:

It should be seen that what is the process of payment in an agency.
The advertiser will have to pay in advance or after the advertising. The
client should have a detailed analysis of the method adopted so that
there is no misunderstanding afterwards.
H. Social media agency
social media agencies specialize in promotion of brands in the
various social media platforms like blogs, social networking sites, Q&A
sites, discussion forums. Micro blogs etc.
Advertising objectives

Introduction-
Objectives are those end-points towards which every activity of an
organization is oriented. Setting the goals or objectives is the
starting point of management.

Definition:
According to Philip Kotler, “The objectives of advertising are to
inform, to persuade and to remind the target audience about the
advertiser’s product.
Types of Advertising Objectives:
Advertising has two main objectives from the advertiser’s point of view:
1. Sales Objectives
2. Communication Objectives
1. Sales Objectives: The ultimate aim of advertising is to sell the product
in the market and to raise the level of present sales. On certain
occasions, the objective of advertisement is to increase retail sale
through off-season or special festival discounts, gift-schemes,
clearance sale etc.

2. Communication objectives: Advertising is a psychological process

which is designed to bring positive change in the behavior of audience
and to induce them to buy.

In other words, one of the major objectives of advertising is to

change person’s attitude in a way that moves him closer to the product or
service being advertised.
a. To increase brand awareness
b. To increase knowledge
c. To create linking
d. To induce preference
3. Specific Objectives:
Factors determining advertising objectives and goal setting

1. Stage in product life cycle

2. Level of competition
3. Nature of product
4. Available finance
5. Marketing objective
6. Market segmentation
7. Dissonance among customers
8. Distribution strategy
What is 'DAGMAR‘

DAGMAR is a marketing approach used to measure the results of an

advertising campaign.
DAGMAR is an acronym that stands for defining advertising goals
for measured advertising results.
DAGMAR seeks to guide consumers through five phases of regarding
the product – unaware, aware, comprehension, conviction and action –
while also setting specific, measurable objectives to determine the
overall success of the campaign.
In 1961, Russel Colley prepared a report for the Association of
National Advertisers titled Defining Advertising Goals
for Measured Advertising Results.
The major thesis of the DAGMAR model is that communications
effects are the logical basis for advertising goals and objectives against
which success or failure should be measured.
 Under the Dagmar approach,, an advertising goal involves a
communication task that is specific and measurable.

Colley proposed that the communication task be based on a hierarchical

model of the communication process with 4 stages:
• Awareness—to create a customer awareness of a brand or company.
• Comprehension—developing an advertising of what the product is
and what it will do for the consumer.
• Conviction—to ensure the customer determines to buy the brand.
• Action—the customer buys the product.
Various budgeting methods
An advertising budget is the money a company is willing to set aside to
accomplish its marketing objectives.

There are two Approaches in Advertising Budgeting:

1. Top Down: Budget is fixed
2. Bottom Up: It is objective & task method

3. Top-Down Approaches
The approaches discussed in this section may be referred as top-down
approaches because a budgetary amount is established and then money is
passed down to the various departments. These budgets are essentially
predetermined and have no theoretical basis.
It includes:
a. The Affordable Method
b. Arbitrary Allocation
c. Percentage of Sales Method
d. Competitive Parity Method
e. Return on Investment Method
1. Top-Down Approaches

a. The Affordable Method: What we have to spare. What's left to spend? This
approach means that the advertising budget will be decided on the basis of
whatever money is left after all other fixed and unavoidable expenses have
been allocated. New entrepreneurs have no other option but to follow this
method when they are short of funds

b. Arbitrary Allocation Method: No system. Seemed like a good idea at the

time. On the basis of what is felt necessary

c. Percentage of Sales Method: Set percentage of sales or amount per unit.

d. Competitive Parity Method: Match competitor or industry average

spending. This is the most controversial method and few executives admit
that they use it while preparing the budget. In this approach an advertiser
bases his budget decision primarily on the expenditures of competitors.

e. Return on Investment Method: Spending is treated as a capital

investment.
2. Bottom Up:
Bottom up budgeting is a type of budgeting that attempts to determine
the underlying costs for each individual department or segment of an
organization and then total up each department

a. Objective and Task Method: Businesses that use the objective and
task method for determining advertising expenses allocate the
marketing budget based on set objectives.

b. Payout Planning:
Payout planning involves fixing of the communications budget on
the basis of the expected revenues that it will obtain in future. This
approach considers communications spending an investment rather
than an expense.