Strategic Communications

Agencies

Agencies

The key players

Types of agencies

How agencies charge clients

Organization of agencies

The Four Players

The Clients

The Strategic Communication Agencies

The Media

The Vendors

Types of Clients

Manufacturers

Resellers (retailers)

Institutions

Individuals

The Agencies

Independent communications agenciesFull service agenciesCreative boutiquesDigital agenciesSpecialty shops

In-house communication departments

Advertising Media

Print (newspapers, magazines)

Broadcast (television, radio)

Outdoor (billboards, transit)

Direct response (direct mail, telemarketing)

Online marketing

Social media

Mobile media

Miscellaneous

The Vendors

Freelancers

Consultants

Production Professionals

Types of Agencies

The full-service agency

Creative boutiques

Digital shops

Medical agencies

Political agencies

Minority agencies

In-house agencies

Media buying services

The Full-Service AgencyMajor staff functions:Research and account planningAccount management/client serviceCreative servicesMedia planning and buyingPubic relationsPromotions and event planningDirect response Interactive

The Full-Service Agency

Other major agency functions:AccountingLegal ServicesTrafficProductionHuman resources

Services ProvidedAnalysis of marketing and cultural data

Formulation of core strategy and tactics

Recommendation of creative direction

Production of brand messages - Ad/PR

Create promotions and databases

Placement in print, broadcast & Internet

Verification of message placement

Top Agencies, Revenue In Millions• 1. WPP, London: $16,459• 2. Omnicom Group, New York: $14,219• 3. Publicis Groupe, Paris $8,494• 4. Interpublic Group, New York $6,956• 5. Dentsu, Tokyo $6,390• 6. Havas, Puteaux, France $2,287• 7. Hakuhodo DY Holdings, Tokyo $2,184• 8. Epsilon, Irving, Texas $1,223• 9. MDC Partners, New York $1,071• 10. Experian, New York $947

Creative Boutiques

Small agencies focus on creative

Specialize in producing ads

Little staff for research, strategy, media planning, or public relations

Sub-contract for creative work from full-service agencies

Often have short life spans

Digital Shops

52% of CMO’s believe traditional ad agencies are ill-suited to conduct online marketing

Specialize in web design, e-mail drops, blogs, peer reviewing, social media, and viral video

Less siloed and more nimble about new media Few mid-level managers who are over-specified

More open to experimentation and innovation

Medical/Political Shops

Entirely service specialized clients

Specialized knowledge of category

Provide full-service functions

Minority AgenciesOften full-service agencies

Specializing in campaigns that target minorities/specialized populationsBlacks, Hispanics, Asians, Gay/Lesbian

In-house AgenciesOwned and supervised by company

Reasons for in-house agencies:SavingsSpecializationPriority serviceBut, minimum staffing of experts and

possibility of “group-think”

Media Buying ServicesOriginal format of ad agencies

Sole function is media buying

Growing complexity of media buying

Buying media in bulk

How Agencies are Paid

The Commission System

The Fee System

Incentive-based Systems

The Commission SystemStandard rate: 15% of media buys

Trend toward negotiated commission

Fierce competition among agencies

The Fee SystemNegotiated hourly fee

Media buys billed directly to client

Hourly rate rule of thumb:3 x hourly salary of each employee

Employee hourly salary =Salary / Hours worked per year

Incentive-based SystemsHigher fees for good performance

Incentives negotiated in advance

Pay per performance system

Organization of AgenciesOrganized around departments

Organized around clients

Organized around tasks

Organized by ownership

Organizing Agencies

Tradeoffs in Agency Organization

Agency Assignment

Get in your agencies and decide what structure you want to adoptGreater integration usually results in more

coherent campaignsMore need to negotiate decisions - share

responsibilities for sectionsBe realistic about level of integration