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Strategic communication agencies

Week 3, class 1 -- Feb. 5, 2013

Stacy Forster

on 18 February 2013

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Transcript of Strategic communication agencies

Key players
Types of agencies
How agencies charge clients
Organization of agencies Tradeoffs in agency organization PLAYERS IN
COMMUNICATION Ask Stacy at forster2@wisc.edu
or come by during office hours
10 a.m. on Mondays
5058 Vilas Communication Hall
Or ask David at coppini@wisc.edu Questions? Get in your agencies and decide which structure you want to adopt
Greater integration usually results in more coherent campaigns
More need to negotiate decisions - share responsibilities for sections
Be realistic about level of integration
Due Feb. 12
Get me your agency names Source: Advertising Age, April 30, 2012 Worldwide 2011 revenue
($ millions)
$847 Marketing organization

1. WPP Group (Dublin)
2. Omnicom Group (New York)
3. Publicis Groupe (Paris)
4. Interpublic Group (New York)
5. Dentsu (Tokyo)
6. Havas (Puteaux, France)
7. Hakuhodo DY Holdings (Tokyo)
8. Aegis Group (London)
9. MDC Partners (New York)
10. Epsilon (Plano, Texas) Top 10 Agency companies Manufacturers
Resellers (retailers)
Individuals Clients Role: Hire ad agencies
to help advertise
and sell products Independent communications
Full-service agencies
Creative boutiques
Specialty shops
Minority agencies
Direct response
In-house communication
departments Agencies Independent agencies Print: newspapers, magazines
Broadcast: television, radio
Outdoor: billboards, transit
Direct response: direct mail,
Internet and interactive Media Freelancers
Production professionals Vendors In-house agencies Full-service agencies Major staff functions:
Account planning/management/
client service
Creative service
Media planning
Media buying
Public relations and
promotions and event planning
Direct response
Interactive Other agency functions Accounting
Legal services
Human resources Services offered Analysis of marketing and cultural data
Formulation of core strategy and tactics
Recommendation of creative direction
Production of brand messages - Ads/PR
Create promotions and databases
Placement in print, broadcast and Internet
Verification of message placement (traffic) Creative boutique Usually small, staffed by
writers and artists
Focus on creative execution
Specialize in producing ads
Serve companies directly, or
contracted by full-service agencies Creative boutique: PMH Target branding campaign Challenge: often have short
life span Specialty agencies Only serve specialized clients
Have unique knowledge of category
Provide full-service functions Political
Social media
Minority populations Political agencies Specialty agencies Medical/health Often full-service agencies
Specialize in campaigns that target
minorities or specialized populations
African-Americans, Latinos, Asians, gay/lesbian, youth, seniors Burrell Created the "Black Atlas"
for American Airlines Archrival Creates marketing campaigns
aimed at young audiences Original format of advertising
Sole function is buying media
Opportunities: Growing complexity of media buying in new media environment Media-buying services Owned and supervised by company
Reasons for in-house agencies:
Specialization in the product
Priority service
Challenges: minimum staffing of experts and possibility of “group-think” How agencies are paid Commission system Standard rate: 15% of media buys
Trend toward negotiated commission
Fierce competition among agencies Fee system Negotiated hourly (or monthly) fee
Media buys billed directly to client Incentive-based system Higher fees for good performance
Incentives negotiated in advance
Pay per performance system Commission
Incentives Main advertising
agency Model 1: Consortium Direct marketing
agency PR agency Consumer
agency Package design
agency Retail
agency Model 2: Consortium with
one dominant agency Advertising/PR
agency Consumer
agency PR agency Direct marketing
agency Package design
agency Retail
agency Model 3: Corporation with autonomous units Account
team Media
department Creative
department Direct marketing
department Retail
marketing Consumer
department Package/design
department Research
department Package design
department Strategic
generalists Research
generalists Creative
generalists Media
generalists Media
generalists Research
generalists Model 5: Integrated organization Model 4: Matrix organization Creative
Consumer promotion
Direct marketing Account 1 Account 2 Account 3 Agency organization Strategic
communication agencies Clients of Planet Propaganda Clients of Knupp & Watson & Wallman Source: Advertising Age, April 30, 2012 Worldwide 2011 revenues
($ millions)
$904 Marketing organization

1. Dentsu (Tokyo)
2. McCann Erickson Worldgroup (Interpublic, New York)
3. BBDO (Omnicom, New York)
4. DDB Worldwide (Omnicom, New York)
5. JWT (WPP, New York)
6. TBWA Worldwide (Omnicom, New York)
7. Hakuhodo DY Holdings (Tokyo)
8. Young & Rubicam (WPP, New York)
9. Publicis (New York/Paris)
10. Leo Burnett (Omnicom, Chicago) Top 10 ad agencies Clients
Agencies Four main players Different organizations or teams work on their own areas. One is the main contractor and hires teams of specialists.
Main agency executes traditional advertising and works for integration, but subcontracts everything else. Similar to Model 1, but the main agency in this model manages more of the functions. Depending on its capabilities, the main agency uses outside vendors to supplement a campaign. This is the fully integrated model. Rather than having separate units for each function, the agency is structured on accounts and everyone works together for a client, not department. There is less specialization and more collaboration and works for all-around strong agencies. This is a corporation with autonomous units that are organized by function. Specialists work in separate, autonomous units and report to the account executive, who manages a project. The matrix model is also organized by function and areas of primary responsibility, but it's more decentralized. Units talk to each other, but retain functional divisions and are responsible for an area. This captures an ability to integrate but still develop expertise in a certain area.
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