Unit–I:

Introduction: Definition, objectives, Functions and classification of advertising, Advertising

Agency Functions & structure of modern agency, functions of the advertising department
and advertising manager. Client – Agency Relationship (CAR), Selection of agency.
INTRODUCTION
Adverting is only one element of the promotion mix, but it often considered prominent in the
overall marketing mix design. Its high visibility and pervasiveness made it as an important social
and encomia topic in Indian society.
Promotion may be defined as “the co-ordination of all seller initiated efforts to set up channels of
information and persuasion to facilitate the sale of a good or service.” Promotion is most often
intended to be a supporting component in a marketing mix. Promotion decision must be
integrated and coordinated with the rest of the marketing mix, particularly product/brand
decisions, so that it may effectively support an entire marketing mix strategy.
The promotion mix consists of four basic elements.
They are:-
1. Advertising
2. Personal Selling
3. Sales Promotion, and
4. Publicity
1. Advertising is the dissemination of information by non-personal means through paid media
where the source is the sponsoring organization.
2. Personal selling is the dissemination of information by non-personal methods, like face-to-
face, contacts between audience and employees of the sponsoring organization. The source of
information is the sponsoring organization.
3. Sales promotion is the dissemination of information through a wide variety of activities other
than personal selling, advertising and publicity which stimulate consumer purchasing and dealer
effectiveness.
4. Publicity is the disseminating of information by personal or non-personal means and is not
directly paid by the organization and the organization is not the source.
ORIGIN AND DEVELOPMENT OF ADVERTISING
It has been wrongly assumed that the advertising function is of recent origin. Evidences suggest
that the Romans practiced advertising; but the earliest indication of its use in this country dates
back to the Middle Ages, when the use of the surname indicated a man’s occupation. The next
stage in the evolution of advertising was the use of signs as a visual expression of the
tradesman’s function and a means of locating the source of goods. This method is still in
common use.
The seller in primitive times relied upon his loud voice to attract attention and inform consumers
of the availability of his services. If there were many competitors, he relied upon his own
personal magnetism to attract attention to his merchandise. Often it became necessary for him to
resort to persuasion to pinpoint the advantages of his products. Thus, the seller was doing the
complete promotion job himself.
Development of retail stores, made the traders to be more concerned about attracting business.
Informing customers of the availability of supplies was highly important. Some types of outside
promotion were necessary. Signs on stores and in prominent places around the city and notices in
printed matters were sometimes used.
When customers were finally attracted to the store and satisfied with the service at least once,
they were still subjected to competitive influences; therefore, the merchant’s signs and
advertisements reminded customers of the continuing availability of his services. Sometimes
traders would talk to present and former customers in the streets, or join social organizations in
order to have continuing contacts with present and potential customers.
As the markets grew larger and the number of customers increased, the importance of attracting
them also grew. Increasing reliance was placed on advertising methods of informing about the
availability of the products. These advertising methods were more economical in reaching large
numbers of consumers. While these advertising methods were useful for informing and
reminding and reminding, they could not do the whole promotional job. They were used only to
reach each consumer personally. The merchant still used personal persuasion once the customers
were attracted to his store.
The invention of hand press increased the potentialities of advertising. By Shakespeare’s times,
posters had made their appearance, and assumed the function of fostering demand for existing
products. Another important event was the emergence of the pamphlet as an advertising medium.
The early examples of these pamphlets disclose their sponsorship by companies want to generate
goodwill for their activities. The low cost of posters and handbills encouraged a number of
publishers to experiment with other methods.
Purpose of Advertising
Advertising facilitates large-scale marketing. It is a medium of mass communication.
Manufacturers supply information about new products through it. The fact that companies spend
millions of dollars on it through TV, radio, the internet, and newspapers indicate its benefits in
sales promotion.
Advertising is within the scope of a promotion, which is one element in the marketing mix. It is
getting popularity in the present highly competitive and consumer-oriented marketing. All
products old and new, consumer and durable, cheap and costly need extensive advertising for
sales promotion and customer support. Latest communication techniques now are used for
making it more attractive and agreeable.
The main purpose of advertising is to:
1. Give information,
2. Attract attention,
3. Create awareness, and
4. Influence the buying behavior of consumers.
Advertising is crucial in marketing but is also equally important and essential to social, cultural
and political aspects of our lives.
The term ‘Advertising’ originates from the Latin word ‘Advertere’ which means “to turn the
mind towards.”
The dictionary meaning of the term advertising is “to give public notice or to announce
publicity.”
Advertising acts as a marketing vehicle and is useful for drawing the attention of people
(prospects) towards a particular product or service.
Definition of Advertising:
Every day we come across hundreds of advertising messages, which tell us about various
products such as soaps, detergent powder, soft drinks and services such as hotels, insurances
policies etc. Advertising is perhaps the most commonly used tool of promotion by an
organization. It is commonly understood as to communicate about a product or service. But it is
not correct and complete to understand it as so.
Actually, advertising includes all the activities performed by the enterprise to present the goods
and services to the consumer and to motivate them to buy these goods and services. It is non-
personal form of communication, which is paid for by the marketer (sponsor) to promote his
goods and services. The term “advertising” has been defined by many eminent authors as –
According to William J. Stanton, “Advertising consists of all the activities involved in
presenting to a group, a non-personal, oral or visual, openly sponsored message regarding a
product or service or idea, this message is called advertisement, is disseminated through one or
more media and is paid for, by the identified sponsor”.
According to Wheeler, “Advertising is any form of paid non-personal presentation of ideas,
goods and/or services for the purpose of inducing people to buy”.
According to American Marketing Association, “Any paid form of non-personal presentation
and promotion of ideas, goods and services, by an identified sponsor. The medium used are print
broadcast, and direct”.
Thus, advertising can be defined as a paid form of non-personal presentation of product or
service or idea. In developing advertising programme, one must start with the identification of
the needs and wants of the market and must take five major decisions regarding Mission, Money,
Message, Media and Measurement of the advertisement programme as stated by Philip Kotler ‘as
5 M’s of advertising’ in his book Marketing Management.
Basic Features of Advertising:
From the above explanation and definition of the authors, we can say that advertising has
following distinguishing features:
i. Paid Form – It is a paid form of communication i.e. the sponsor has to bear the cost of
communication with the respondents.
ii. Non-Personal – There is no direct face-to-face contact between the prospect and the
advertiser. That is why it is referred as non-personal method of promotion.
iii. Identified Sponsor – Advertising is always undertaken by some identified individual or
company, who makes advertising efforts and also bears the cost of undertaking such effort.
Elements of Advertising:
The elements of advertising are as follows:
i. Preparation or Homework:
Refers to the act of imagining and compiling all the possible advertisements by numerous
mediums, which are as follows:
a. Taking references from the advertisements of competitors
b. Reading books on advertising to collect ideas
ii. Unique Selling Proposition (USP):
It refers to the singular benefits and advantages of a product that creates a favorable impression
in the mind of customers. The advertisements should focus on USP of the product.
iii. Maintaining a Unique Image:
It indicates that an organization should stick to its own image and personality. The organization
should not try to imitate its competitors rather should focus on the betterment of its own product
or service.
iv. Teamwork:
It refers to the collective efforts of advertising specialists of an organization. These specialists
work together towards the success of an advertisement. The collective efforts of specialists
ensure that the product and its important aspects are well explained to customers through the
advertisement.
v. Selecting an Efficient Advertising Medium
It refers to the decisions taken to select the appropriate medium for advertising a product. The
choice of a medium depends on the advertising budget of the organization, type of product, and
targeted market. Few products do not require much explanation, thus, they can be advertised
through a medium, such as radio. In this case, the target market comprises radio listeners who
belong to lower-middle class families.
Few other products may require demonstrations or visual aids, for example, vacuum cleaners and
water purification machines. Such products target middle-class and high-class families and can
be advertised through television.
vi. Retaining the Customers:
It indicates that an organization should not overlook its existing customers while trying to make
new customers. It is important for the organization to keep producing numerous reminder
advertisements to keep its existing customers updated about the existence of the product
Objectives of Advertising:
The objective of advertising is nothing but to sale the product or idea or a service. The real
objective of advertising is to increase awareness among the consumer about the seller’s product.
According to Huigy and Mitchell, “The purpose of advertising is to sell goods, services or ideas
to a large group of prospective purchasers.”
R.S. Davar stated the advertising objective as, “Advertising aims at commencing the procedure,
educating the consumer, supplementing the salesman, connecting the dealer to eliminate the
competitor but above all, it is a link between the producer and the consumer”.
In simple words the following are the main objectives of advertising:
1. Preparing Ground for Sale of New Products:
Whenever a new product is introduced in the market, advertising becomes necessary for
informing potential consumers about the product. In this way, advertising can be used for
preparing ground for sale of new product.
For achieving this objective, various mass media like radio, television and cinema are used by
the advertisers.
2. Increasing Demand for the Product:
Another objective of the advertising is to increase the demand for the product. Advertising helps
in creating a favourable atmosphere for maintain or improving sales of the product. By means of
the advertising prospective customers may be induced to buy a particular product by informing
them about comparative quality price and other attributes of the product. Thus, changing the
habits of the consumers so as to shift from a rival product.
3. Educating the Consumers:
One of the basic objectives of every advertising is to educate the consumer and the users about
the uses and utilities of the product. This helps the consumers and users in making good choice.
4. Building up Brand Image:
Another objective of advertising is to build up brand image and brand loyalty towards the
product. This objective is achieved through constant and repeated advertising about the brand
5. Facing the Competition:
One of the basic objectives of advertising is to help the marketer to face the existing competition
effectively and efficiently. The marketers inform the consumer about the price, quality and
availability of product through advertising.
6. Supplementing the Salesman:
The objective of advertising is also to assist the salesman’s efforts in increasing the sales of the
product. By means of educating customers about the product, advertising reduces the work load
of the salesman for selling the product.

Mathew’s, Buzzell and Frank had given the following objectives of the advertising:
(a) To make an immediate sale
(b) To build primary market.
(c) To introduce a price deal.
(d) To inform about a product.
(e) To build brand recognition or brand insistence.
(f) To help salesmen by building an awareness of a product among retailers.
(g) To create a reputation for services, reliability or research strength.
(h) To increase market share.
(i) To modify existing product appeals and buying motives.
(j) To inform about the availability of new products or features or price.
(k) To increase the frequency of use of a product,
(l) To increase the number or quality of retail outlets,
(m) To build overall company image,
(n) To effect immediate buying action.
(o) To reach new areas or new segments of population within existing areas, and
(p) To develop overseas.
Types of Advertising:
Broadly speaking, advertising can be classified into two broad categories viz. product advertising
and institutional advertising.
Product Advertising:
Product advertising is that advertising whose main purpose is to inform and stimulate the market
about the advertiser’s product or services. This advertising usually promote specific branded
products in such a manner as to make it more desirable in the eyes of prospects than competitor’s
brand.
Product advertising on the basis of action can be further classified as Direct Action Advertising
and Indirect Action Advertising —
(a) Direct-Action Advertising – Direct-action advertising are those advertisements which makes
buyer to take action immediately. For example- Reduction in price during clearance sales.
(b) Indirect-Action Advertising – Indirect-action advertising is done to stimulate demand over a
period of time and increase buyer’s respect towards manufacturer’s brand. Such advertising is a
form of long-range promotion and is designed to create desires in the buyer’s mind.
Product advertising on the basis of demand may be sub-divided into pioneer demand advertising
and selective demand advertising.
(a) Pioneer Demand Advertising is used when a product is first introduced in the market. The
main aim of such advertising is to inform about what the product is, what it does, how it is used
and from where it can be purchased. For example – advertising of motor cars, electronic items
etc., for first time.
(b) Selective advertising is made to meet the selective demand for a particular brand or type of
product such as Ambassador Car. It is also known as competitive advertising as it point out
features and advantages that a consumer get by using it and that may not be available in
competing brand.
Product advertising can be also divided on the basis of product life cycle stage. It can be
informative, persuasive and reminder advertising.
(a) Informative advertising is that advertising which is done for the promotion of the products.
It seeks to develop initial demand for a product. These advertising ads are such that they appeal
to the consumer’s emotions as well as their rational motives. These are used at the introduction
stage of the product life cycle.
{b) Persuasive product advertising is done at growth and maturity stage in the product life
cycle. These advertisements aim at providing competitive advantage over the rivals’ product.
(c) Reminder product advertising aims at reminding the prospects about the features and
benefits of the products. It is generally used at the maturity as well as in decline phase of the
product life cycle. It is also known as retentive advertising.
Functions of Advertising:
For many firms advertising is the dominant element of their promotion mix. It is particularly true
in the case of producers producing convenience goods like – detergent, toilet soaps; soft drinks
etc. However, in recent times the use of advertising is continuously increasing in case of
shopping and speciality goods too, as we see in case of automobiles; home appliances etc. Huge
advertising is done by the marketers to introduce a new product and show its features to the
target audience.
Advertising can also be used to convince the potential buyers that firm’s goods or services are
superior to that of the competitor’s goods or services in terms of quality, quantity or price. It also
creates a brand image in the mind of the customer and make them loyal towards the firms goods
or services.

Advertising generally performs the following functions:

i. Promotion of firm’s goods and services and thereby increasing sales of the firm.
ii. Creating awareness in the potential buyer about the new product.
iii. Creating a favourable public image and thereby brand image in the market.
iv. Mass production facilities and thereby optimum utilization of resource of the firm.
v. Providing supportive roles to other promotional measures.

Benefits of Advertising:
Advertising helps in spreading information about the advertising firm, its products, qualities and
place of availability of its products, and so on. It helps to create a non-personal link between the
advertiser and the receiver of the message.
The significance of advertising has increased in the modern era of large scale production and
tough competition in the market. Advertising is needed not only by the manufacturers and traders
but also for the customers and the society.
1. Benefits to Manufacturers and Traders:
It pays to advertise.
Advertising has become indispensable for the manufacturers and distributors because of the
following advantages:
(i) Advertising helps in introducing new products. A business enterprise can introduce itself and
its products to the public through advertising.
(ii) It can create new taste among the public and stimulate them to purchase the new product
through effective advertisement.
(iii) Advertising assists to increase the sale of existing products by entering into new markets and
attracting new customers.
(iv) Advertising helps to create steady demand of the products. For instance, a drink may be
advertised during summer as a product necessary to fight tiredness caused by heat and during
winter as an essential thing to resist cold.
(v) Advertising help in meeting the forces of competition in the marketplace. If a product is not
advertised continuously, the competitors may snatch its market through increased
advertisements. Therefore, in certain cases, advertising is a necessity to remain in the market and
remind the customer as done by soft drink companies.
(vi) Advertising is used to increase the goodwill of a firm by promising improved quality to the
customers.
(vii) Advertisements increase the morale of the employees of the firm. The salesmen feel happier
because their task becomes easier if the product is advertised and known to the public.
(viii) Advertising facilitates mass production of goods which enables the manufacturer to achieve
lower cost per unit of product. Distribution costs are also lowered when the manufacturer sells
the product directly to the customers. Advertising facilitates direct distribution of the product
through the retailers. Retailers are encouraged to purchase and sell the advertised products.
2. Benefits to Customers:
Advertising offers the following advantages to customers:
(i) Advertising helps the customers to know about the existence of various products and their
prices. They can choose from the various brands to satisfy their wants. Thus, they cannot be
exploited by the sellers.
(ii) Advertising educates the people about new products and their diverse uses.
(iii) Advertising increased the utility of existing products for many people adds to the amount of
satisfaction which they are already enjoying.
(iv) Advertising induces the manufacturers to improve the quality of their products through
research and development. This ensures supply of the products of better quality to the
consumers.
3. Benefits to Society:
The society at large is also benefited because of advertisement:
(i) Advertising provides employment to persons engaged in writing, designing and issuing
advertisements. Increases employment brings additional income with the people which
stimulates more demand. Employment is further generated to meet the increased demand.
(ii) Advertising promotes the standard of living of the people by increasing the variety and
quality in consumption as a result of sustained research and development activities by the
manufacturers.
(iii) Advertising educates the people about the various uses of different products and this
increases their knowledge. Advertising also helps in find customers in the international market
which is essential for earning foreign exchange.
(iv) Advertising sustains the press, and other media. It provides an important source of income to
the press, radio and television network. The customers are also benefited because they get
newspapers and magazines at cheaper rates. The publishers of newspapers and magazines are
benefited because of increased circulation of their publications. Lastly, advertising also
encourages commercial art.

Advertising Agency: Evolution and Types

Developing and implementing an integrated marketing communications programme is usually a
complex and detailed process involving the efforts of many persons. As consumers, we generally
give little thought to the individuals or organisations that create the clever advertisements that
capture our attention or the contests we hope to win.
But for those involved in the marketing process, it is important to understand the nature of the
industry and the structure and functions of the organisations involved.
There are many different techniques and sources that companies use in developing their
advertising programme. Many companies have their own active advertising department which
develop the ad message and select the proper media for its execution.
Other there are full-service advertising agencies which develop the entire advertising programme
from the conception of idea to the evaluation of the message effects, in consultation and co-
operation with the advertiser.
There are special service groups which operate as consultants and who aid either the advertiser,
the agency or the media in the development of ads.
“An ad agency is an independent company set up to render specialised services in advertising in
particular and in marketing in general.”
Previously ad agencies started as space brokers for handling of the advertisements placed in the
Newspapers. Through the years, however, the functions of agency have changed. Their main job
today is not to aid media but to serve advertisers.
When a firm has decided upon a advertising programme as part of its overall promotion mix, it
needs to have a system and an organisation to implement it for the attainment of the desired
objective.
Firms do have an advertising department to manage the advertising function. In some small
firms, there may not be a separate department in the name of advertising but the function is either
looked after by the marketing manager or the chief executive.
The company’s advertising department usually relies on outside experts after the advertising
agency which prepares the advertisement messages, selects appropriate media, and arranges to
release them.
The advertising department of a company has only a limited creative function, primarily a liaison
point in the company for the agency, though it is responsible for the advertisement budget and
supervises the performance of the agency.
An advertising manager has to co-ordinate with the marketing and sales function, so that the
advertising efforts may be fully integrated with the firm’s marketing and sales strategy. He has
also to perform the managerial task of formulating advertising strategy and planning an
advertising programme.
The execution of such programme is managed by this department through the advertising
agency. The agency often assists the advertising manager in programme formulation.
The advertising agency is a group of specialists in the area of advertising who meet the client’s
needs for advertising services. The agency is predominantly communication oriented, though it
solves several problems of marketing and advertising as well. It is a sort of an organisation.
There are several advertising agencies in India and abroad, which take important decisions on
advertising and marketing. They suggest suitable measures popularizing the products of the
clients. Sometimes, advertising agencies become active partners of producers.
They suggest creative boutiques, independent media buying services, research findings. The
advertiser should select an advertising agency on the basis of compatibility, agency size, agency
stability, agency team service, selling attitude, creativity and problem-solving approach. The
advertising agency may be selected as a full- scale agency or part scale agency.

The Evolution of Advertising Agency:

The advertising agency developed around 1840 when some individuals started to work as sales
representatives. They sold space for their client newspapers on a commission basis. Some bought
a set number of pages from the newspaper and sold the space at higher prices to make a profit.
They were called space brokers who believed in price cutting. The space broker stage lasted the
period from 1840 to 1876. There was little emphasis on advertising planning and media schedule
during this period.
In 1875 N.W Ayer offered an open contract to advertisers, J. Walter Thompson set up shop in
Mumbai in 1929 as a part of the UK based agency for eastern operations. It was India’s first
advertising agency. E.J. Peter Fielden headed JWT India for the long 37 years, operating out of a
room in the Taj Mahal Hotel, JWT worket on Dond’s General Motors, 501 soap (TOMCO)
Horlicks, Vaseline, Brown and Poison.
It made its first ad film in 1931 for General Motors, Chevrolet, Kodak, one of its brands, was the
first to advertise on radio. The use of demonstration vans with projector units for Horlicks was
another pioneering move. Advertising commission, which ranged from 10 to 35 per cent (drool,
drool), was brought down to 15 per cent by consensus among all the agencies in the 1960s.
When JWT left a closed and overly nationalist India in the early 1970s, it did not cut off the
connection with H.T.A. Training process and information—sharing continued.
In 1993-94, Khanna convinced employers who owned majority stock in HTA to part with 49 per
cent of it so JWT could come in. The remaining 51 per cent of HTA’S Rs. 4.9 lakh equity pie is
held by senior employees (who cannot sell it, and must relinquish it on leaving).
Advertising Department within the Organization:
Advertising manager and the departmental staff perform two main functions:
(a) Planning the advertising programme and
(b) Maintaining liaison with the advertising agency.
Fig. show that the advertising is a part of the marketing function in a typical firm. The dashed
line to the advertising agency means that it is not really a part of company’s organisational
structure. Nevertheless, the agency is important to the operation of the advertising department.
The advertising manager is responsible for the overall planning of the advertising programme,
including such decisions as which products to advertise, which markets to be reached, and
whether to employ an outside agency or not.

The manager also maintains this programme within the financial and public relations guidelines
set down by corporate management. Corporate management must be advised about advertising
policy decisions, since they may affect the corporate image and sales potential of the company.

The over-all responsibility of the advertising manager can be summarised as follows

Advertising Function: Includes:

1. Making the ad strategy in collaboration.
2. Evaluation of the advertising.
3. Determining the ad efforts.
4. Coordinating with the agency.
5. New developments in advertising.
6. Making the ad budget.

Managerial Functions:
1. Making advertising understandable.
2. Representing the organisation.
3. Goal setting for advertising.
4. Administration in general.
5. Creative thinking with respect to his functions.
6. Participation with higher ups about his function.

Types of Advertising Agencies:

Since advertising agencies can range in size from one or two person operation to large
organisations with over 1,000 employees but the services offered and functions performed will
vary.

There can be following types of advertising agencies:

(a) Full service agency,
(b) In house agency,
(c) A creative Boutique,
(d) Media buying services,
(e) The La carte agency,
(f) Special service agency (Group).

(a) Full-Service Agency:

Full-service agency offers its clients a full range of marketing, communications and promotion
services including planning, creating the advertisement, performing research and selecting
media. A full-service agency may also offer non advertising services such as strategic market
planning, design of sales promotions, sales training and trade show materials, package design
and public relations.
The full- service agency is made up of departments that provides the activities needed to perform
the various advertising functions and serve the client.
Functions of Full-Service Advertising Agency:
The full-service agency performs a complete range of services for the advertiser In addition to
offering all research, creative and media services, the full service agency often becomes involved
in the advertiser’s marketing process. For example, an agency may provide package design, sales
promotion, dealer aids, sales meeting assistance, product testing, sales forecasting, and advice on
distribution and marketing strategy.
The benefits of a full-service agency include attracting and holding the very best talent,
providing numerous services which may require an interrelated approach, and providing an
objective examination of concepts from an outside perspective based on wide spread experience.
Despite the emergence of other types of agencies, it is estimated that the major proportion of
national advertising media expenditure is spent by advertisers who use full-service agencies. The
extent of services offered by an agency generally depends on its size and the way it is organised.
It also depends on the people who make up the agency.

However, most full-service agencies perform the following functions:

(a) Research:
Even prior to the formulation of the plan, an agency must do some research. The scope of
research has expanded so much that, in recent years, independent specialised research
organisations have been created to meet the expanded needs of both marketing and advertising
research.
(b) Planning:
The most important function in agency operation is the development of an advertising plan,
usually prepared in conjunction with the client company. The advertising plan viewed as part of
the overall marketing plan. An essential part of planning is budgeting and the agency usually
provides alternative budget proposals to help the client determine how much should be spent on
advertising.
(c) Creative Services:
One of the earliest additions to the responsibilities of the advertising space sales person was the
writing of copy. Today copy writers frequently work in conjunction with artists in the
preparation of print advertising, and copy writers, art directors, and broadcast producers usually
combine their efforts in preparation of broadcast selling messages.
(d) Print and Broadcast Production:
Print production people are responsible for converting and copy into printing plates used to
produce finished advertisements. Proofs of advertisements are submitted for approval to clients
before final printing plates are made. Print production workers must maintain contacts with
printers, typographers, type setters, and photoengravers.
In the early days of television, broadcast productions were prepared by the advertising agency;
today, shows are more frequently purchased from networks, broadcasting, stations or
independent show producers. However, agency men and women still do the creative work on
both radio and television commercials.
They prepare the story boards and choose (and even design) Props, costumes and scenery. The
actual mechanical production of the commercial may be done by an out-side producer under the
supervision of an agency TV producer.
(e) Media Selection:
One of the areas where the expertise of an advertising agency may be a necessity is media
selection. Media choice involves a knowledge of each medium’s characteristics and its coverage,
as well as an understanding of the target market to be reached.
An agency must select what it considers to be the best medium, must contact the various media,
execute the contracts, and pay media bills. As an aid in the media selection process a number of
advertising agencies have applied computer techniques to the creation of media models.
(f) Account Management:
Since the advertising agency is an organisational unit external to the firm, some continuing and
close contact must be established to promote communication and understanding between the
client and agency. The advertising agency establishes a contact person to maintain this liaison.
In the small agency this function may be performed by the president; the account executive
performs as liaison in a larger agency, and, in some cases, there may be an account group
consisting of several account executives headed by an account supervisor. The contact person
must know the functions and activities of both the agency and client and must be able to interpret
these satisfactorily to both organisations.
(g) Accounting:
Although accounting is of prime importance to all business, it has added significance to an
agency. Since the agency is responsible for payment to media, it becomes particularly important
to keep accurate accounts of billing, to check the appearance of advertisements, and to maintain
records of payments.
(h) Other Services:
In order to provide a total marketing concept, agencies become more involved in promotional
activities that are not strictly advertising. The extent of services required by clients varies,
manufacturers of consumer goods tend to place greater emphasis than industrial goods
manufacturers upon the range of an agency’s service in the selection process.
Some agencies provide merchandising for their clients; that is they create sales promotional
material, aid in dealer co-operative advertising campaigns, execute point of purchase displays,
and help develop contests.
They may also offer expertise in public relations, usually on a fee basis and as an activity some
what separate from their advertising. Some larger agencies may go beyond promotion and
provide such services as sales forecasting, new product planning, and package development.
(b) In-House Agency:
Even though most companies use full-service advertising agencies, an organisation may decide
to establish its own operation for all services of an advertising agency within its own structure.
The in-house agency as its name implies is owned out right by and operated under the direct
supervision of the advertiser.
It performs all the creative and media services provided by the traditional full-service agency. A
major goal in adopting this approach is to reduce the total cost of the advertising.
Merits:
1. It reduces the cost of advertising since the in-house agency is also entitled to the commission
from the media, which normally the outside agency would get & which the advertiser himself
does not get.
2. It ensures tighter control over the agency operations both in terms of cost as well as creativity.
Demerits:
1. Top agency talents are less likely to be attracted into an in-house agency.
2. An in-house agency may be influenced by built in political forces that might turn bias while an
outside agency is more objective in its analysis and evaluation and is less biased.
(c) A Creative Boutique:
It is an agency that provides only creative services. The client may seek outside creative talent
because it believes that an extra creative effort is required or because its own employees do not
have sufficient skill in this regard. Full-service agency often subcontract work to creative
boutiques when they are very busy or want to avoid adding full time employees to their payroll.
Creative boutiques are usually founded by members of the creative departments of full-service
agencies who leave the firm and take with them clients who want to retain their creative talent.
These boutiques usually perform the creative function on a free basis.
(d) Media Buying Service:
There are independent companies specialize in the buying of media, particularly radio and TV
time. Media buying is a niche service and these agencies are specialized in the analysis and
purchase of advertising time & space.
Both agencies and clients utilize their services, usually developing their own media strategies
and using the buying service to execute them. Because media buying services purchase such
large amounts of time and space, they receive large discounts and can save the small agency or
client money or media purchases. Media buying services are paid a fee or commission for their
work.
(e) The La Carte Agency:
Some advertisers prefer to order a la carte rather than using all of an agency’s services. A la carte
services can be purchased from a full service agency or from an individual firm that specializes
only in creative work, media, production, research, or new product development. The two
requirements most frequently obtained by a la carte are creative and media services.
A boutique is typically a service agency used as a creative consultant, specialising in concepts,
strategy development, and execution. Some advertisers employ a boutique to revitalize a tired
advertising campaign or to provide services in specialised media and product categories.
A media buying service works with an advertiser to provide a media plan, offer counseling in the
development of the advertiser’s plan, or provide specialised knowledge of media and usage rates.
Firms that prepare their own advertising frequently find the complexities of media purchase
require the services of a professional.
A la carte services may provide the advertiser with faster response, more objectivity, and more
direct communication which may lead to better results. However, the responsibility for planning
and managing the advertising remains with the advertiser.
(f) Special Service Agency (Group):
Some agencies focus their efforts only in some selected areas and then become specialists in
those areas. There is great multiplicity of firms whose objective is to provide advertisers,
advertising agencies and the advertising media with a host of specialized services.
These firms collectively are called special service groups and they are by far the least known
component of the advertising industry. For example, if an agency is specialising in direct
response advertising either in media or direct mail, knowledge of their availability and function
is vital if the structure of the advertising business is to be fully understood.
Client Agency relationship in Advertising
The client-agency relationship starts when a client appoints an advertising agency for making his
ad. It continues till the ad agency provides satisfactory services to him. Such a relation should
always be cordial. There should be a mutual trust, confidence and understanding between the two
parties. It is so, since, the primary objective of both sides is same, i.e. to make a successful
advertising campaign.
Lack of mutual trust will be harmful to both parties. It is, therefore, necessary to maintain good
relations between the client and ad agency as follows:
1. Meaningful two-way communication is required to maintain a friendly client-agency
relationship.
2. Both parties should take special efforts to maintain a cordial relationship.
3. The approach of give-and-take is required to keep relations over a longer period.
Mentioned below are some significant guidelines (grouped under three categories) to maintain a
cordial client-agency relationship in advertising:
1. There should be a mutual understanding between client and agency. Misunderstanding or
confusion, if any, between the two parties, should be resolved quickly through direct talks.
2. The agency should work sincerely and honestly to bring a success to the client's ad campaign.
3. Both parties should properly follow the terms and conditions of the contract.
4. Good communication must be there between client and agency. Hence, regular meetings
between them shall be arranged.
5. Both should take necessary efforts to maintain their relations friendly.
Guidelines for the client to preserve relationship with advertising
agency:
1. Treat the ad agency with courtesy at all times and never hurt its ego.
2. Provide all possible information about the product to be advertised and the organisation. A
well-informed ad agency will make better ads.
3. Don't unnecessarily bargain for the fees charged by the ad agency as this may affect the
quality of work.
4. Motivate the agency to do a good impactful work. Its charges such as media bills, fees and
other costs must be paid well in time. The client should not wait for the ad agency to remind
him about the payment dues.
5. Don't change the ad agency without a proper reason. If not satisfied, always first
communicate your expectations and then wait for necessary changes to reflect.
6. The client should approve the proposals submitted by the ad agency. He must avoid making
petty arguments and only highlight those crucial relevant matters that needs attention.
7. Give sufficient time to the agency to work on and develop an ad campaign. The client should
not pressurize it to work quickly. He should avoid giving deadlines.
8. Reduce disputes to a minimum.
9. Finalize in advance the charges for a particular ad campaign.
Advice to the advertising agency to maintain good relationship with
client:
1. The advertising agency should do a smart and hard work to bring success to the client's ad
campaign.
2. It should make a good advertising plan and must implement it efficiently and effectively.
However, first it must get the approval from the client.
3. It is the duty of the account executive of the agency to keep his customer happy and satisfied.
4. It should not charge client unreasonably high rates.
5. It should not make ads for client's competitor.
6. It should get all the information from the market that will help to create better ads.
7. Discuss the ad fees with the client in advance to avoid disputes.
8. Disclose to the client the names of the team members (employees) that are working on his ad
campaign.
9. Inform the client about changes, if any, happening within the agency.
10. Never hurt client's ego. Agency should always provide timely services to him and try its best
to satisfy him.
So, keeping a good client-agency relationship in advertising is crucial to the success of both
parties.
Top 10 Advertising Agencies of India
1. DDB Mudra Communications (Doyle Dane Bernbach)
Introduction: It is known as India’s no. one and largest marketing communications services
enterprise. It has expertisation under four disciplines (Media, Outdoor Advertsing, Retail, and
Experiential).
History: It was founded on 25 March 1980 by A. G. Krishnamurthi and its headquarter is
situated in Mumbai.
Sonal Dabral is currently the Chairman and Chief Creative Officer of DDB Mudra Group.
Clients: Linen Club, Aditya Birla Group, Bharat Petroleum, Henkel, ACC Limited, Pepsi,
Colgate, USHA, McDonalds, Reebok, Puma, Peter England, among many others.
2. Grey India
Introduction: Grey India is a part of Grey global group and is among the world’s top marketing
and advertising agencies. They have shown some famous and effective work for some of the
India’s most prestigious clients.
History: It was founded in 1917 by Lawrence Valenstein and has its headquarted in U.S. It has
many subsidary branches named as Grey India, G2, GHG, GCI Group, MediaCom Worldwide,
Alliance, G WHIZ, WING, Grey EMEA, ArcTouch. In India its office is situated in Mumbai
which handle projects in retailing, visualdesign and fixture design.
Clients: Sensodyne, BNatural, Gillette, Dell, Crocin, Indian Air Force, Tic-Tac, Ferrero, Fortis
Healthcare, Pantene, Cadbury Silk, Kinder Joy and many more.
3. Rediffusion (Y&R)
Rediffusion is a part of WPP group which is among the top leading advertising agencies in India.
The company offers various services which includes advertisement, consultancy, web design,
social media, promotion and program setups.
History: Rediffusion was started with a collaborative efforts of the three people, Diwan Arun
Nanda, Ajit Balakrishnan, and Mohammed Khan in 1973. It was created for creating fearless,
bold and passionate work. Rediffusion-Y&R is part of the Young & Rubicam network having
187 offices and 6,500 employees with offices in Mumbai, Delhi, Kolkata, Bangalore, Chennai,
and in Sri Lanka, providing strategic and creative solutions to its clients.
Clients: Tata Motors, ITC Stationery, Eveready, Handard, Ambuja, Emani and many more.
4. McCann-Erickson India Ltd
Introduction: It is one of the highest ranked companies of the advertising agencies in India.
McCann has been awarded the Global Agency of the Year by Adweek thrice. It was also named
as "Global Agency of the Year".
History: It was founded in the year 1902 and 1912 McCann registered the world’s first
advertising trademark ‘Truth Well Told’. McCann has offices in 120 countries spreading a global
network in different parts of the country. They work through creative ideas born at the
intersection of technology solutions, measurable performance and their unique understanding of
people.
Clients- Maybelline, Loris,Spirite, Master card, Cococola, Microsoft and etc
5. Ogilvy & Mather
Introduction: Ogilvy & Mather is a well-known and among the top Advertising companies in
India who works on the principle of 360-degree branding on both local and global scale and has
created a digital dominance for them. This agency works on "We sell or else." These words
sound simple, but are very meaningful to a ad agency. It is the only firm that grabbed network of
the year at Cannes for 3 consecutive years.
History: It was founded in the year 1948 by David Oglivy and has its offices in more than 150
countries worldwide. It operates in 6 cities throughout India and has become one of the leading
advertising agencies in India.
Clients: American Express, IBM, Dove, NASCAR, Philips, Coke Zero, IKEA, UPS, Nationwide
and Tiffany & Co.
Iconic Campaign: Cadbury Dairy Milk,Vodafone, Incredible India, Coco Cola.
6. JWT-India
Introduction: One of the oldest advertisement company and most admired company in India. It
has a widespread integrated network spread in New Delhi, Mumbai, Kolkata, Chennai,
Hyderabad, and Bangalore.
History: It is a leading advertisement company in India which was founded in the year 1896 and
has its corporate office in New York. The company has been operating in more than 90 countries
worldwide and taken over Hindustan Thompson in the year 2002.
Notable Clients: Nestle, Unilever, DTC etc.
Iconic Campaign: Kitkat (Kit into space Campaign), Burger King etc.
7. Triverse Advertising
Introduction: A Gurgaon based popular ad agency which is providing services in brand
architecture and brand design language, social media and advertising.
History: It was founded on 9th may 2008 by Suresh Tiwari. It is classified as Non-Govt
company and is registered under Registrar of Companies, Delhi and is successfully handling the
communication requirements of different sections of National & Regional brands, with insights
for creating a kind of work that are reflected in the international ad agency for which includes
both luxury & mass brands.
Clients: Vardhman, Brijwasi, SMC, Pari India.
8. FCB-Ulka Advertising Ltd
Introduction: FCB-Ulka is consistently maintaining its position in the top 10 Advertising
agencies in India since its inception and is responsible for breaking the stereotype of the ad
agency.
History: Bal Mundkur was founded in 1961 and has its corporate office in Mumbai. FCB-Ulka
has its presence in 92 countries having 150 offices across the world. Last year the agency
celebrated its 50th year of Building Brand Wealth. Presently, FCB Ulka is among the top three
agency groups in India with 53 of its brands as category leaders. Brands that have been built
from scratch and were virtually non-existant when the agency was assigned their business.
Notable clients: Levi’s, Abbot, Amul, HP, Candy Man, Hero, Indian Oil, ITC, Nerolac,
Sunfeast, Tata, Whirlpool, Wipro, Zee etc.
Iconic Campaigns: Pediasure, Amul Women Power, Hero Pleasure & Maestro Edge
8. Chaitra Leo Burnett Pvt Ltd
Introduction: It has been recently rated as among the top 10 advertisement agencies in India
which work on the principle of satisfying people purpose and need.
History: Leo Burnett is advertisement company established in 1992 in Chicago and is operating
in India from their regional offices based at Bangalore, Karnataka. It has over 100 offices located
in different parts of the world.
Clients: P&G, Kellogs, Coco cola, Fiat, Samsung, Altria
Iconic Campaign: Phir ho Ja Shuru (Limca), Solar Powered Smart Lites
9. Madison Communications
Introduction: It is a 28-year-old diversified communication group, with 26 units which are
specialized in different functions of Advertising, Media, Business Analytics, Outdoor,
Activation, Entertainment, Mobile, and Sports.
History: It was founded in March 21, 1988 by Mr. Sam and incorporated its office in Mumbai.
Its first piece of work was shown in Cinthol lime.
Clients: Asian Paints, BJP, Blue Star, Café Coffee Day, Ceat, Godrej, ITC Kellogg’s, Levis
ETC.
10. Dentsu Aegis
Introduction: As the name suggests it is a Japanese PR and advertising agency. The headquarter
of company is located in Tokyo. It was founded as Telegraphic service co Japan Advertising Ltd
by Hoshiro Mitsunaga.
History: It was founded in the year 2003 and its operating offices are based in Bengaluru, with
additional offices in Mumbai, Delhi, Ahmedabad, and Chennai, India. Dentsu Communications
Pvt. Ltd. operates as a subsidiary of Dentsu. It works on the principle of combining creativity
with technology in the campaigns.
Clients: Nissan, TVS, Toyota, Microsoft, MasterCard, Reebok etc.

The Structure of an Advertising Agency

Before you get into the advertising business, you need to know the basic mechanics of how an
advertising agency works. Agencies vary greatly in size and shape, but most follow and tried and
tested structure that works well, whether they employ a dozen people, or several hundred.

In the smaller agencies, some people will perform more than one role; one person may actually
be the entire department. In larger agencies, some of these departments are broken out again for
efficacy. But the fundamentals are the same, and it's because this model was born out of
necessity, and it works.
Account Services

The account service department comprises account executives, account managers, and account
directors, and is responsible for liaising with the agency's many clients. This department is the
link between the many departments within the agency and the clients who pay the bills. In the
past they were referred to as "the suits," and there have been many battles between the account
services department and the creative department. But as most creatives know, a good account
services team is essential to a good advertising campaign.

A solid creative brief is one of the main duties of account services.

Account Planning

This department combines research with strategic thinking. Often a mix of researchers and
account managers, the account planning department provides consumer insights, strategic
direction, research, focus groups and assists helps keep advertising campaigns on target and on
brand. Chris Cowpe described account planning as "…the discipline that brings the consumer
into the process of developing advertising. To be truly effective, advertising must be both
distinctive and relevant, and planning helps on both counts."

Creative

This is the engine of any advertising agency. It's the lifeblood of the business because
the creative department is responsible for the product. And an ad agency is only as good as the
ads the creative department puts out. The roles within the creative department are many and
varied, and usually include:

 Copywriters
 Art Directors
 Designers
 Production Artists
 Web Designers
 Associate Creative Directors
 Creative Director(s)

In many agencies, copywriters and art directors are paired up, working as teams. They will also
bring in the talents of other designers and production artists as and when the job requires it.
Sometimes, traffic is handled by a position within the creative department, although that is
usually part of the production department. Everyone within creative services reports to the
Creative Director. It is his or her role to steer the creative product, making sure it is on brand, on
brief, and on time.

Finance and Accounts

Money. At the end of the day, that's what ad agencies want. And it's what their clients want, too.
At the center of all the money coming into, and going out of, the agency is the finance and
accounts department. This department is responsible for handling payment of salaries, benefits,
vendor costs, travel, day-to-day business costs and everything else you'd expect from doing
business. It's been said that approximately 70 percent of an ad agency's income pays salary and
benefits to employees. However, this figure varies depending on the size and success of the
agency in question.

Media Buying

It is the function of the media buying department to procure the advertising time and/or space
required for a successful advertising campaign. This includes TV and radio time, outdoor
(billboards, posters, guerrilla), magazine and newspaper insertions, internet banners and
takeovers, and, well, anywhere else an ad can be placed for a fee. This usually involves close
collaboration with the creative department who came up with the initial ideas, as well as the
client and the kind of exposure they want.

This department is usually steered by a media director.

Production

Ideas are just ideas until they're made real. This is the job of the production department. During
the creative process, the production department will be consulted to talk about the feasibility of
executing certain ideas. Once the ad is sold to the client, the creative and account teams will
collaborate with production to get the campaign produced on budget. This can be anything from
getting original photography or illustration produced, working with printers, hiring typographers
and TV directors, and a myriad of other disciplines needed to get an ad campaign published.

Production also works closely with the media department, who will supply the specs and
deadlines for the jobs.

Human Resources and Facilities

Most businesses, whether they're related to advertising or not, will have an HR department. This
is the department responsible for the nuts and bolts of hiring and firing employees, dealing with
state and federal employment laws, monitoring vacation and sick time, and the overall wellbeing
of the staff. They are often rolled in with the facilities department, which is responsible for
building maintenance, and keeping everything in the office working, safe, and up to code.

Research

Larger agencies will rely heavily on their own research department to provide a wealth of data on
current and future clients. This is the department responsible for focus groups and testing,
analyzing and interpreting data, and helping the creative and account teams focus on new market
trends.

Online Development
Once relegated to a designer who knew a bit of coding, this is a fast-growing department and
deals with everything from website and mobile design, to apps and interactive experiences. This
department may have its own creative director that specializes in web and online design,
including UX, and will have a staff that could rival the size and strength of the creative
department.

IT (Information Technology)

The I.T. department is no longer just a couple of nerds in a basement (thank you The IT Crowd).
It can be a huge department, especially in agencies that have a large creative presence. Most I.T.
companies in advertising agencies will specialize more in Mac than PC, as most creative
departments run on Apple products.

Traffic

In small to mid-sized agencies, traffic is rolled up into the production department. It is the job of
traffic to get each and every job through the various stages of account management, creative
development, media buying and production in a set timeframe. Traffic will also ensure that work
flows through the agency smoothly, preventing jams that may overwhelm creative teams and
lead to very long hours, missed deadlines and problematic client relationships. Traffic keeps the
agency's heart beating.

Functions of advertising agency

Advertising agency is an independent service-rendering organization. It delivers various services

and performs many functions for its clients, who are advertisers. It is mainly involved in
activities like planning, preparing and placing of ads in media. It also performs non-advertising
functions for them. It offers them advisory and creative services. It does so to make a profit.

Following image depicts the major functions of advertising agency.

Eleven main functions of ad agency are as follows:

1. Attracting clients,
2. Research function,
3. Advertising planning,
4. Creative function,
5. Media selection,
6. Advertising budget,
7. Coordination,
8. Sales promotion,
9. Marketing research,
10. Non-advertising functions, and
11. Public relations.

Now let's discuss above main functions of an advertising agency.

1. Attracting clients

Advertising agency needs clients (advertisers). Without them, it cannot survive.

Ad agency always tries to attract clients usually by giving ads in trade journals. It also seeks their
attention by offering them various services. It offers expert, cheap and quick services. It
maintains good relations with them. It tries to give them full satisfaction. It strives harder to
attain their goodwill and customer-loyalty.

2. Research function

Advertising agency gathers information related to the client's product.

It collects following information about a product under its research function:

 Features, quality, advantages and limitations of a product,

 Present and future market possibilities,
 Competition in the market,
 Situation in the market,
 Distribution methods,
 Buyers' preferences, so on.

Ad agency analyses (studies) all this collected information properly and draws conclusions for its
research. It helps in planning an advertising campaign, selecting proper media and creation
function.

3. Advertising planning

Advertising agency plans the entire ad campaign of its client.

Advertising planning is a primary function of an ad agency. It is done when its research function
is completed. That is, after analyzing the client's product, its competitors, market conditions, etc.
It is done by experts who use their professional experience to make a result-oriented advertising-
plan.

After making the advertising plan, it is shown to the client. If the client likes and approves it,
then the plan is executed (put into action).

4. Creative function

Advertising agency put the advertising-plan into action under its creative function.

Creation of ads is the most important function of an ad agency. Generally, it involves activities
like:

 Copy writing,
  Drawing photographs,
 Making illustrations, layouts, an effective ad message, etc.

These jobs are done by experts like copy writers, artists, designers, etc. These people are highly
skilled and creative. They make an advertisement more appealing. Attractive ads help to increase
the sales of the product.

The ad agency must always use fresh ideas for creating ads. It must neither use old tactics nor
copy the ad-campaign of other products.

5. Media selection

Advertising agency helps an advertiser to select a proper media (ad platform) to promote his
advertisement effectively.

Media selection is a highly specialized function of an ad agency. It must select the most suitable
media for its client's ad. It must choose media, which has a potential to give best results for the
lowest cost. It must select more than one media for the ad. For example, an advertisement can be
put on television, the Internet, newspapers, magazines, etc.

After selecting the media, the ad agency must maintain goods contacts with the media.

6. Advertising budget

Advertising agency helps an advertiser to prepare his ad budget. It helps him to use his budget
economically and make the best use of it.

Without a proper advertising budget, there is a risk of client's funds getting wasted or lost. If an
advertiser suffers a loss, he may not bring new projects. As a result, there is a possibility of
losing a potential client that can bring more business to an ad agency.

7. Coordination

Advertising agency brings a good coordination between the advertiser, itself, media and
distributors. This is a very important function. If coordination is proper, it will increase the sales
of the product.

8. Sales promotion

Advertising agency performs sales promotion. It helps an advertiser to introduce sales promotion
measures for the dealers and consumers. This helps to increase the sales of the product.

9. Marketing research

Advertising agency helps its clients to solve their marketing problems. It does so by conducting a
marketing research for them.
10. Non-advertising functions

Advertising agency also performs many non-advertising functions:

 It fixes the prices of the product,

 It determines the discounts,
 It designs the product,
 It also designs its package, trade marks, labels, etc.

These non-advertising services help an advertiser to increase its sales.

11. Public relations

Advertising agency does the public relations (PR) work for its clients. It increases the goodwill
between its clients and other parties like consumers, employees, middlemen, shareholders, etc. It
also maintains good relations between the client and media owner.