THE ROLE OF THE ADVERTISING AGENCY OR DEPARTMENT

Advertising agencies create most advertisements and are the core of the advertising industry. Some companies, however, have their own advertising departments which function much like an agency. The development, production, and placement of a single ad can be a timeconsuming process involving a large number of people with a variety of business and creative skills. Advertising agencies not only create the advertisements but also pay for the cost of placing the ad in a newspaper or magazine or on television or radio. A large advertising agency or department may employ hundreds or thousands of people, including advertising and marketing specialists, designers, writers known as copywriters, artists, economists, psychologists, researchers, media analysts, product testers, librarians, accountants and bookkeepers, and mathematicians.
A typical advertising agency is divided into a number of departments, such as account service, research, media planning and buying, the creative department, and production. A multinational advertising agency with clients that spend hundreds of millions of dollars on advertising may employ as many as 8,000 people worldwide and up to 900 people in a major office. A local agency with clients that spend about $15 million a year on advertising may employ only about 25 people.

Advertising agencies make money in a variety of ways. When the agency uses the clients advertising budget to buy time for an ad on the radio or on television or when it buys space for an ad in a newspaper or magazine, the media outlet allows the agency to keep 15 percent of the cost of the space or the time as a commission. The 15 percent commission has become an advertising industry standard and usually accounts for the largest portion of the agencys income. Agencies also charge clients for the cost of producing the ads. Increasingly, agencies are charging clients a straight

monthly or hourly fee for all of their services or are combining a fee with some kind of commission. Agencies have turned to this approach because clients are asking them to address a range of marketing issues rather than just producing ads. The fee arrangement pays for the time devoted to these larger marketing issues. Once a company selects an agency, the agency assigns an account executive to act as liaison between it and the client. The account executive manages all of the services conducted on behalf of the client and coordinates the team assigned to the client's business. The account executive directs the preparation of the advertising strategy, which includes deciding how and to whom the product or service will be presented. The account executive also assigns priorities, oversees the budget, reviews and approves all recommendations before they are taken to the client, and makes sure that the agency meets all deadlines.

The Functions of Advertising Departments

Research Advertising agencies employ research for both strategic and evaluative purposes. Strategic research enables the agency to better understand how consumers use a product or service and how they regard the product or service. Strategic research also determines the types of people most likely to buy the product. That group of people is called the target market. Advertisers have limited budgets so knowing who is most likely to buy a particular product helps them spend their advertising budget more efficiently. Evaluative research is used after

the advertising has run and seeks to determine how well consumers remember the advertising message and how persuasive it was. Evaluative research is expensive, and as a result, many advertisers do not employ it. Instead, they try to measure the advertising's effectiveness by analyzing sales results.
Agencies use both qualitative and quantitative research methods. Agencies employ qualitative research to gain an initial understanding of the marketing situation. This research method uses open-ended questions that allow consumers to explain their values, beliefs, and behaviors at length. One of the most common qualitative research techniques is the focus group in which a moderator leads a small group of consumers in a candid discussion of a particular product category, service, or marketing situation.

Agencies use quantitative research to determine a final course of action. This type of research uses close-ended questions in which answers are selected from a set list. This enables the researcher to determine the exact percentage of people who answered yes or no to a question or the exact percentage choosing answer a, b, or c. One of the most common quantitative research techniques is the survey in which researchers use a questionnaire to gain information from a large group of people, called a sample. Statistical studies show that if the sample is large enough, about 1,000 people, and is representative of a particular group (for example, working mothers who buy disposable diapers), then the findings from the sample are considered true, or statistically valid, and can be extended to the entire group of consumers in that category. The findings provided by quantitative research are therefore conclusive in a way that qualitative research cannot be.

Media Buying
Once the target audience has been identified, an agency's media department determines the most effective way of delivering the message to that target. The media planner is the person who decides which media will be used. The media planner must consider three factors: (1) the number of people to be exposed to the message, known as the reach, (2) the number of times each person needs to be exposed to the message in order to remember it, known as the frequency, and (3) the costs.

The media planner wants to reach the largest possible percentage of the target audience. To accomplish that goal, the media planner must employ the media that have audiences closely resembling the target audience. If the target is very broad, such as the national market for medium-priced automobiles, the media planner will probably select network television, which has a broad reach. If the target is more narrow and specialized, then the media that reach a more specialized audience, such as magazines, would be selected. Moreover, since not all members of the narrow target audience read the same magazines, the media planner might employ a range of magazines to reach a larger percentage of the intended consumer. Creative Work Once the types of media have been determined, the agency's creative department develops the presentation of the ads. The principal figures in the creative department are the copywriter and the art director. The copywriter is the person who writes the advertising message. The art director is the person who oversees the design of the ad. The copywriter and the art director work together to find creative ways to deliver the message that research found would have the greatest appeal to the target audience. The creative team begins by familiarizing itself with the product and the research. Often the creative team will "kick around ideas" or brainstorm, a process in which one idea is allowed to stimulate another without reaching a decision about whether any of the ideas are valid. Such free association often leads to unexpected approaches that might never have resulted from more logical thinking. Once the brainstorming has produced a wide range of ideas, the team then evaluates the various proposals and selects the best to present to the client. For example, if the team selects an idea for a television commercial, they present the idea to the client as a storyboard. The storyboard consists of a sequence of drawings indicating how the TV commercial's story or action will unfold. Or the team may design print ads for the client as layouts in which the various

elementsthe headline, photograph or illustration, and body copywill appear as intended for publication in a magazine or newspaper. Print ads and television commercials use a variety of techniques to deliver their messages. Testimonials and endorsements can lend both prestige and credibility to a product. Seeing an athletic superstar, for example, endorse a particular brand of athletic shoe makes the brand seem more prestigious and suggests that it must be good because a professional uses it. Superiority is also often demonstrated through product comparisonsfor example, by showing that one brand of paper towels absorbs more spilled liquid than another or that in consumer taste tests one beverage is preferred over another. But because more and more competing products are virtually identical to one another, advertisers frequently use image advertising to distinguish their products. Image advertising surrounds the product with a "halo of positive associations" by using the same character or theme year after year. Most advertising appeals to peoples emotions, particularly the emotional needs for love and belonging, prestige and self-esteem. Manufacturers of luxury and fashion products, for example, frequently appeal to the desire for esteem and prestige.

Production Art directors and copywriters create the concepts behind the ads, but they do not literally make the advertising. Making the ads is the job of the production department. In print advertising, the art director works with the print production manager to hire a photographer or illustrator and then supervises the work. Once the photograph has been taken or the illustration completed, the image is scanned into a computer and placed in the proper position. The art director also selects typefaces for the headline and body copy and then, using the computer, correctly positions the headline and body copy. Once all the elements are in place, the computer file is sent to the newspaper or magazine in which the ad will run. The publication then prints the ad directly from the computer file.

After a client approves a television storyboard, the creative team works with the broadcast producer to hire a director for the commercial. In consultation with the agency and the client, the director selects the actors who will appear in the commercial. The director also hires the crew, including the camera and sound people who will film and record the commercial. After the commercial has been filmed, the creative team works with an editor to put the commercial's various scenes together. When that task is completed, the copywriter and art director supervise the addition of music and sound effects. Once the ad is completed, numerous videotape copies called dubs are made. A dub is then sent to each television station that will air the commercial.