Advertising Industry

The advertising industry consists of three principal groups:

(a) Sponsors;

(b) Media; and

(c) Advertising agencies or advertising departments.

Advertising agencies are of two basic types, viz., Independent; and House.

• An independent agency is a business that is free to compete for and select its clients.

• A house agency is owned by its major client. A house agency is not completely free to serve other clients. The advertising department an integral part of the organization it serves.

The advertising agency provides for the client a minimum of:

• Media information, such as the availability of time and space ;
• Creative skills, such as “campaign planning” and “appeal planning” and
• Research capabilities, such as providing brand preference data.

What is an Advertising Agency?

An advertising agency is an independent organization set up to render specialized services in advertising in particular and in marketing in general. Advertising agencies started as space brokers for the handling of the advertisements placed in newspapers. Over the years, the function of the agencies has changed. Their main job today is not to aid media but to serve advertisers.

Working with Advertising Agency

Some organization does not employ advertising agencies because they may be eligible for the media discount. Others feel that they can accomplish the advertising objectives more effectively than the agencies themselves. These marketers often employ their own advertising specialists. Various organizations use captive agencies that work primarily or solely for the organization.

Those organizations which do employ agencies are well-advised to establish a strong working relationship with them. It is especially important that the marketer fully inform the agency personnel of his marketing strategy and advertising objectives.

Advantage of Using Agencies

1. The marketer gains a number of benefits by employing agencies. An agency generally has an invaluable experience in dealing with various advertising and marketing issues.
2. The lessons which agency learned in working with other clients are useful inputs for the marketer.
3. An agency may employ specialists in the various areas of preparation and implementation of advertising plans and strategies.
4. The personnel are not members of the marketer’s management team. They bring objective and unbiased viewpoints to the solution of advertising and other marketing problems.
5. The discounts that the media offer to agencies are also available to advertisers. This is a strong stimulus to them to use an agency, for the media cost is not much affected thereby.
6. The company normally does not have as many types of specialists as a large or medium-sized advertising agency has because an agency can spread the costs or its staff over many clients. It can do more for the same amount of money.
7. The company can also get an objective, outside viewpoint from an agency, assuming that the agency representatives are not acting as “Yes man” in order to keep the advertiser’s account.
8. A related point is that the company can benefit from the agency’s experience with many other products and clients.
9. Another advantage is that agency feels a greater pressure than the company’s own department to produce effective results. The relations between an agency and a client are very easy to terminate; but it is difficult to get rid of an ineffective advertising department.
10. The manner in which agencies are compensated, the use of an agency may not cost the advertiser a single paisa.