ADVT 250 1st Edition Lecture 3Outline of Last Lecture II. Components of the Advertising IndustryIII. The Advertising Industry StructureOutline of Current Lecture I. The Advertising AgencyII. Advertising Agency DepartmentsIII. Agency Compensation IV. Specialized AgenciesCurrent LectureI.) The Advertising Agency1.) The Advertising Agency: is an independent (of any media organization) business organization. Specialists are business and creative people at the same time. Specialists assist marketers with a wide range of needs related to marketing commination and advertising. Agencies are located locally(Knoxville: The Tombras Group, Asen Marketing and Advertising), regionally (Atlanta, Nashville, Dallas), Nationally, (New York, Chicago, LA), Internationally (London, Paris, Buenos Aires, Cape Town). You can locate advertising agencies through the Standard Directory of Advertising Agencies- www.redbooks.com – (UT library). Or you can look up the company’s websites. 2.) Agency Holding Groups (a business that buys another business and holds them) : Business that own various advertising and marketing businesses. The holding group does not ‘do’ advertising. Holding groups manage a portfolio of businesses. IPG (Interpublic group) is a holding group. II.) Advertising Agency Departments1.) Account Management: You are the agency’s liaison to the client. You mange schedule and budget. You are also the team organizer and point person. You must be organized, motivating, efficient, a good listener, energetic, and problem solving. You get to have contact with A LOT of different people in the industry. A good place to learn a lot about the different facets of the industry. These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.2.) Strategy (Account Planning): You determine the direction of brand and advertising. You research, do creative briefing, and evaluate adherence to strategy. You must be a mix of ‘left’ and ‘right’ brained! 3.) Creative: You are a writer (copywriter) or a designer (art director). You work to execute the creative strategy and you have to work as a team. Can be the hardest department to get started in. 4.) Production: You oversee the actual creation of individual ads. Production is often divided by media type. You are speculative and some finished work. You coordinate with outsideproduction facilities for finished work. 5.) Legal: You review all agency contacts and work. You check adherence to regulations. 6.) Media: You place advertising in media (you are an expert at media) to best reach the target market. There are researchers- figure out the audience. Planners take researchers information and then plan the best form of media to use to get the message out. Buyers have toactually go out there and negotiate the contract- they contact ABC or whoever so that they get the time and space for their ad. A perk of being in the media department of advertising agency is that you usually get wooed by lots of different media people. 7.) Interactive/Digital: This department specialized in web/mobile based initiatives. They develop interactive advertising, product specific websites, viral video, blogging, mobile (apps, games), etc… III.) Agency Compensation1.) Commission system: traditionally 15% of the media costs are kept by agency. About one half of marketers still use commission. However, few use the traditional 15% now. They tend to use a sliding scale now (negotiate price). 2.) Markup Charges: Add a percentage to services from outside suppliers. Usually 17.65% to 20%. So, basically you charge the client a markup to make up for the money you mustpay the agency. 3.) Fee system: Hourly rate for different services provided. Problematic due to nature of advertising. Agencies usually don’t like this system.4.) Pay-for-results: Based on achieving goals. Usually Communication Goal Oriented. Can be problematic because multiple agencies might be involved in same goal. IV.) Specialized Agencies1.) Promotions- coupons, etc.2.) Events- build a brand presence at an event. (AT&T at the Olympics)3.) Demographics- Specialized in kids, youth, elderly, male, female, ect.4.) E-Commerce- Electronic sales5.) Sales Promotions- can overlap with promotions6.) Direct Marketing/ Database- 1-800 numbers, catalogs7.) Interactive-