Compensation for the agency is usually figured in one of two ways (or a combination of the two). The traditional method is for the agency to retain a commission on all dollars spent on media. The commission is generally 15 percent, although this is open to negotiation, depending on the amount placed (the percentage may go down when media billings are substantial). The other method of payment is a fee to the agency independent of media billings. This is common when extensive research and creative work are done on a product but little media placement is actually done by the agency, as is often the case when a client wishes to introduce a new product into the market.
Departments of an Advertising Agency
The specialization of activities within an advertising agency depends on the size of the company. In smaller agencies one person may handle many diverse activities: An account representative may manage the account as well as purchase media space, write copy, or direct the technical production of a newspaper ad.
In large, full-service agencies, employees specialize in one of the following areas: research, media, business affairs, the creative area, or account management. Each provides different career opportunities. Account management is the most common area for people with business degrees. Since the account manager's job is to coordinate activities and information with other departments, we discuss account management last.
The research department (1) provides information to aid in the creation of advertising, (2) tests advertising's communication effectiveness, and (3) tracks advertising's effect on consumer purchasing behavior.
In order to obtain relevant information, research-both qualitative and quantitative-is designed and carried out. Qualitative research often comprises in-depth consumer interviews, focus groups (groups of consumers brought together to discuss a product), and small-scale pilot studies. This type of research is valuable to a degree in learning what consumers think about products, but cannot be generalized to all consumers because of the small number of respondents. Quantitative research involves larger samples, follows rigorous research and statistical methods, and is intended to allow the application of results to relevant consumer groups. Through the testing and monitoring of large groups, the researcher learns about consumers' attitudes and buying habits.
The first step in advertising research is strategic research. Strategic research investigates what consumers think about a product, what motivates a purchase, what is viewed as negative or positive in a product, etc. With this information, a "creative strategy" can be developed.
The second aspect of advertising research is communication testing or copy testing, which determines how well an advertisement, produced according to a creative strategy, communicates to consumers. A commercial is tested to determine whether it persuades a consumer to purchase the product, or whether it raises any doubts, believability problems, or negative reactions.
The third part of advertising research is advertising awareness tracking. Is an ad or campaign being remembered by consumers over time? Is the ad cutting through media clutter? This can be determined by measuring consumers' ability to recognize key copy points from an advertisement. In a similar way, consumers' attitudes about a product can be traced to see if the advertising is affecting what consumers think.
The media department develops media plans, which indicate when a product is to be advertised and in which medium (i.e., television, radio, magazines, newspapers, billboards, etc.), how much this costs, and what demographic groups are most likely to see or hear the advertisement. The media planner must assure clients that they are getting the most from their media dollars-that the right medium is being used, at the right intervals, at the right time of day, and that the right people are being addressed. Media can be a highly technical field, and a skilled media person has to be knowledgeable about the intricacies of all media and in touch with recent developments.
As a planner, you would develop media plans to fit the specification determined by the client and advertising account management. Generally, the target audience and basic media objectives (what the advertiser hopes to achieve through the advertising media selected) are determined jointly by the client and agency account representatives. With these guidelines you would set a "media strategy." You would investigate what media would best serve the needs of the client within the allotted budget. If the television or radio medium is to be used, you must decide which "daypart" should be utilized to reach the target group most efficiently. You must constantly be aware of the viewing, listening, and reading habits of all demographic groups to effectively determine media time placement.
Once a media plan is developed and then approved by the client, the department must implement it. Media buyers enter the marketplace to buy appropriate media time and space. (Some agencies provide only media planning and contract with outside media-buying companies to do the actual purchasing.) As a buyer, you would negotiate prices for your clients' plan within predetermined cost guidelines. After purchases are made, surveillance is necessary to ensure that proper media mix is executed. The media planner must be prepared to adapt to changes in media budgets on very short notice and to know how to cancel media space already ordered or to plan for and purchase additional media space.
The business affairs department has responsibilities in three general areas: (1) traffic, (2) talent and residuals, and (3) legal issues. In small agencies a few people, or even one, may handle all three functions, while a large agency will utilize many people, each with expertise in a facet of business affairs.
The traffic side of the department is responsible for ensuring that advertising materials get to the proper media on time. For instance, the traffic person is responsible for seeing that a video or film copy of a television commercial gets to the proper station on time with instructions for broadcast during the designated program. This procedure can become complicated when the product is currently showing multiple commercials (called a "rotation") on local stations across the nation. When in addition an advertising campaign calls for utilization of many different media types, the traffic person has to coordinate all elements for each medium and deliver them to their destinations on time.
The talent and residuals section of the business affairs department administers payment to the talent: for example, actors in television and radio commercials. Residuals are fees paid to performers in television and radio commercials. Based on information forwarded by the media department-how many times a commercial is run, when it is run, and in how many markets-the talent administrator determines and pays residual fees.
The legal section of business affairs obtains clearance for advertisements. For example, before a television commercial can be shown on any major network, it must be approved and given network clearance. Usually a commercial is shown to the networks at early "storyboard" stages of its development to avoid a situation where the stations refuse to show an already produced commercial.
The creative department does what advertising agencies are famous for-creating ads. Creative staff is responsible for the content of what is finally seen, read, or heard by the public, from a cola commercial on television to a whiskey ad on a billboard to a coupon in the newspaper. It is the glamorous side of the profession, and provides the image of the free-spirited writer or artist jetting from California where a soft-drink commercial has just been filmed on the beach to a New York photography session for a cosmetic ad with elegant models.
However, while creative people do supervise the filming of commercials and attend photography sessions, this is only one part of the job. The preparation of a finished magazine ad or television commercial is a long, often frustrating process. As a creative professional, you will have to successfully translate the creative strategy-which has been developed by research, account management, and the client based on consumer research and marketing data-into persuasive consumer language. To do this, you must understand how marketers talk and what consumers hear. You must be able to defend your creative opinions, and at the same time be flexible and adaptable. Rarely is a creative idea presented, sold, and produced exactly as first conceptualized. You must accommodate to-or change-both the account representative's and client's opinions.
The basic unit of the creative department is a creative team comprising one or two copywriters, whose main responsibility is to write scripts and printed copy, and one or two art directors, responsible for visual conception and rendering. The Copywriters and Art Directors work together to execute the idea. When the assignment is presented to the creative team, the account representative, copywriter, and art director discuss the creative strategy. A full understanding of the strategy and objectives involved in the project must exist, or there will be a substantial risk that the work will be off strategy, and hence of little value.
After the strategy has been discussed, the team considers some initial ideas. From there the art director develops a visual translation of each conceptual idea, and the copywriter creates a script. The result is a "storyboard," a board with sketches and copy showing the concept as a possible television commercial.
The rough storyboard is shown to the account representatives before presentation to the client. If there is disagreement, it is discussed by the creative team and account representative and resolved to the satisfaction of both. The boards are then colored to make them as attractive as possible, and readied for presentation.
If the client disagrees with the conceptual translation of the strategy, the creative team starts over. If all goes well, the client will probably agree with the concept and have some suggestions for the visual component and the copy.
The presentation-revision-representation process can continue back and forth between agency and client several times before final approval is obtained. Once approved by the client and cleared by the medium-in this case the television networks-the production phase of the creative process begins.
The production of a television commercial translates creative concepts into the commercial. Large advertising agencies generally have a production staff with experts in the fields of film, radio, and print production. These people possess the technical knowledge to make a storyboard into a commercial. A producer is assigned to a creative project to complete the job once it has been approved by the client.
The producer reviews the storyboard with the creative team and recommends an array of outside film production companies to make the commercial. (Most commercial production is done by an outside production house rather than by the agency itself.) The producer requests bids on the job, with the lowest-priced house generally being awarded the assignment, pending approval by the client.
Once the job is assigned, a preproduction meeting is arranged among the production house, the agency's production and creative teams and account representative, and the client. Casting, set location, costumes, props, camera angles, timing, and music arc discussed and settled. Shortly thereafter, the commercial is filmed. The same group of people who attended the preproduction meeting generally attends the shooting (though a location shooting may limit the group's size because of travel costs). After the commercial has been shot, editing begins-again with agency personnel supervising an outside supplier's work. The edited version is shown to the account representative and then to the client. Upon approval, a final "answer print" is made and production of the commercial is completed. Quantity prints are made, shipped to the television stations, and the commercial is ready for airing.
The account management department coordinates and supervises the work done by the agency and maintains the primary contact with the client. All work is generated, approved, and presented by account management personnel, although they do not actually write, render, or produce the advertising; rather, they are the managers of the agency. Due to the complexity of developing, producing, and distributing ads, the responsibilities of and required skills for account management are diverse. First, as an account manager you would need to understand advertising thoroughly: What it is, how it works, its potential, its weaknesses, and the role it plays in marketing. Second, you must know how advertisements are made. Third, you must know how to get things done. This involves knowing how to organize work and motivate people.
Advertising agencies comprise separate departments working in specialized areas-only when all elements come together is successful advertising produced. Account management acts as liaison among departments. Since no single department can successfully deliver an ad on its own, it is the account manager who must bring it together.