What Does an Advertising Agency Do?

It is easy to say that an advertising agency makes advertisements, and let it go at that. Some advertisers seem to have this view. For example, the director of sales and marketing for one large airline, in briefing several prospective agencies who were soliciting his account, said:

Look, we're just about the same as our competitors. We fly the same planes. Our pilots are just as experienced. We recruit and train our stewardesses in exactly the same ways. Our reservation systems are just like theirs. Our prices are usually competitive. And we treat our customers at our terminals just as they do. Don't waste your time trying to find a difference. Just go out and make some ads and bring them back. If I like your ads, you get the business; and if I don't like them, you don't.

However, most advertisers understand that when they hire an agency, they are entering into a two-sided relationship. They also understand that the more they put into the relationship, the better their advertising is likely to be. Given this insight, it is important to understand what an advertising agency does and how its work relates to the total process of creating successful advertisements. This knowledge will also tend to clarify the advertiser's role in the advertising process.

One of the truisms of the advertising agency business is that no two advertising agencies are exactly alike, nor do any two agencies provide exactly the same services to their clients.

Some agencies develop a particular character because of either the special skills of their principals and key employees or the unique needs of their clients. Most agencies acquire specific personalities as a result of both these factorsspecial agency skills interacting with particular client needs. Although most advertising agencies differ in one or more respects from their competitors, they all provide four basic services:

1. Strategic advertising planning

2. Creation of advertisements

3. Placement of advertisements in advertising media

4. Billing advertisers for placed advertisements and paying of the advertising media

These four basic functions of the advertising agency can best be illustrated by showing how they fit into the overall process of developing and implementing advertising programs.

The Agency Role in Developing Advertising Programs

The Marketing Context for Advertising.

The work of the advertising agency is carried out within the context of the total marketing activity of the firm. That is, the advertiser determines the content and direction of a total marketing program for its products and services. Within this total marketing program, the purposes of the advertising program are determined, and specific advertising strategies and plans are developed and then executed.

Strategy is nothing more than an expression of intended action. It is a statement of how a goal is to be accomplished. Ordinarily, advertising strategy begins with a statement about what advertising must convey in order to maximize the sales potential of a product or service. If advertising can be developed without attention toor agreement aboutwhat the advertising is supposed to do and how it will do it, well and good. Most advertisers believe, however, that it is critical to the development of superior advertising to have some agreement about what the agency intends to dobefore it does it.

The advertiser and its advertising agency interact in this process: The advertiser tends to dominate the development of overall marketing goals and strategy, although the advertising agency usually participates. However, as advertising plans and executions are developed, the advertising agency becomes more important and dominant in the advertiser-agency relationship. It is the agency that ultimately produces finished advertisements and media placement programs.

The Process.

The entire process consists of the following series of seven steps:

Step 1. Determine marketing objectives or goals. Before specific marketing strategies and programs can be developed, it is necessary to know what they are supposed to accomplish.

The advertiser must specify the objectives or goals of its marketing programs in terms of dollar sales, unit sales, or market-share objectives, or in communication terms, such as desired levels of consumer product awareness or knowledge.

Advertisers are primarily responsible for setting marketing objectives or goals, although advertising agencies may participate in their determination as well.

Step 2. Develop general marketing strategies to accomplish marketing objectives or goals. Marketing strategies state specifically how marketing goals will be accomplished through a variety of marketing means. These marketing actions include the following:

Designing, redesigning, or embellishing products or services

Pricing products or services

Selecting the product, service line, or assortment

Organizing, stimulating, and compensating direct-selling efforts

Designing and implementing sales promotion and merchandising programs

Designing and implementing advertising programs

Using other marketing activities to achieve marketing goals

The agency may also participate in marketing strategy decisions involving product/service design, price, product/service line or assortment, direct-sales organizations, sales promotion programs, and whatever other marketing activities the advertiser uses to achieve its goals. Many advertisers make a point of requesting the agency's help in the development of these non-advertising strategies.

Step 3. Develop specific advertising strategies. Advertising strategies are statements about how marketing goals will be achieved through advertising. Specific advertising strategies will be developed to give direction to these four key elements of an advertising program.

Step 4. Create advertisements. Once advertising strategies have been developed and both advertiser and agency agree to them, the agency proceeds to create the finished advertisements.

First, advertising ideas are developed in rough executional form. These early advertising ideas should be completely compatible with all of the advertising strategies. That is, the rough executions of advertising ideas must express the core advertising idea; they must be compatible with the target audience; they must be capable of delivering the core idea to the target audience through advertising media; and they must be compatible with the tone of voice with which the advertiser wishes to convey its advertising messages.

The agency then decides which of several rough advertisements are to be presented to the advertiser. The rough advertisements must then be approved by the advertiser. Once they are approved, the advertiser authorizes the agency to proceed to final production within an agreed-upon budget, the advertisements are then produced in final form.

Step 5. Develop media programs. A plan of advertising placement will have been developed by the agency, before or at the time the creative work is initiated. This plan will identify the advertising media and specific individual units that will be purchased to reach the target audience. The plan will also include an advertising placement timetable. This timetable will indicate exactly how the advertising budget will be expended, by units of media, over time. The entire plan will be submitted by the agency to the advertiser for approval and expenditure authorization.

Step 6. Negotiate contracts for the placement of advertisements in advertising media. Following the approved media plan, the agency will execute contracts for space and time, negotiating for favorable media rates.

Step 7. Verify and pay media bills. As the advertising actually appears or "runs" in advertising media, the advertising agency receives bills for the advertising. The agency verifies that the advertising has, in fact, appeared as the bills reflect, then bills the advertiser. Finally, the agency pays the advertising media.

This review of the advertising process indicates the respective roles of both advertiser and agency. Most advertisers retain responsibility for setting marketing goals and basic marketing strategy while depending heavily on an advertising agency (or agencies) to provide the four basic servicesstrategic advertising planning, advertisement creation, advertising placement, and billing.