Advertising Agencies (A&BM 03 Dec 2020)

Advertising Agencies

An advertiser either may have his own advertising department of may entrust the whole or part of the advertising work to a separate body of experts known as “advertising agency'. Thus, an advertising agency is an independent business organization specialized in advertising work which undertakes the work of planning and preparing advertising campaign for its clients. It is the body of experts who specialize in advertising. A modern advertising agency offers specialized knowledge, skills and experience which are required to produce an effective advertising campaign. It has a team of writers, artists, media experts, researchers etc. In this way, advertising agency is a professional body which undertakes the planning and preparation of advertising

“Advertising agencies are privately owned firms that specialize in performing the tasks of advertising.” According to Cundiff and Still, “An advertising agency is an independent business organization composed of creative and business people who develop, prepare and place advertising in an advertising media for sellers, seeking to find customers for goods and services”. According to American Advertising Agency Association (A.A.A.A.), “An advertising agency is

(i) an independent business organization,

(ii) composed of creative and business people,

(iii) who develop, prepare and place advertising in advertising media,

(iv) for sellers seeking to find customers for their goods and services.”

According to R. S. Dawar, “An advertising agency is a service organization which has come to be accepted as a professional body which undertaken the planning and preparation of advertising.” In the words of Rogen Barton, “Advertising agencies are organizations specialized in advertising."

 

“The work of a tailor is to collect the raw material, find matching threads, cut the cloth in desired shape, finally stitch the cloth and deliver it to the customer.”

Advertising Agency is just like a tailor. It creates the ads, plans how, when and where it should be delivered and hands it over to the client. Advertising agencies are mostly not dependent on any organizations.

These agencies take all the efforts for selling the product of the clients. They have a group of people expert in their particular fields, thus helping the companies or organizations to reach their target customer in an easy and simple way.

The first Advertising Agency was William Taylor in 1786 followed by James “Jem” White in 1800 in London and Reynell & Son in 1812.

 

Role of Advertising Agencies

1. Creating an advertise on the basis of information gathered about product

2. Doing research on the company and the product and reactions of the customers.

3. Planning for type of media to be used, when and where to be used, and for how much time to be used.

4. Taking the feedbacks from the clients as well as the customers and then deciding the further line of action

 

Why do they need advertising agencies?

All companies can do this work by themselves. They can make ads, print or advertise them on televisions or other media places; they can manage the accounts also. Then why do they need advertising agencies? The reasons behind hiring the advertising agencies by the companies are:

1. The agencies are expert in this field. They have a team of different people for different functions like copywriters, art directors, planners, etc.

2. The agencies make optimum use of these people, their experience and their knowledge.

3. They work with an objective and are very professionals.

4. Hiring them leads in saving the costs up to some extent.

 

Types of advertising agencies

There are mainly three types of agencies based on the type of services offered by them.

 

1. Full-Service Advertising Agencies:

These are the medium or large sized agencies capable of conducting complete advertising campaign. The main agency may be assisted by many subsidiaries engaged in various other related activities like market research, sales promotion, advertising, public relation, media buying, film production etc. Thus, these agencies are capable of handling all the various related activities of advertisement from beginning to end.

 

2. Specialized Advertising Agencies:

These are the agencies which provide only one or selected services out of the entire range services. Those agencies do not have specialization in all services or not supported by other specialized subsidiaries. The firms willing to get only a part of whole range of services may go in for specialized agencies. For instance, creative Boutiques and Media Buying Agencies.

These agencies get their charges in any form of – (i) Commission – A fixed rate of commission (ii) Fees – In addition to commission, it may insist for payment of fees, (iii) Percentage charges – agency charges some percentages of charges as mark up when agency buys some services from outsiders, (iv) Incentives based system – The fees here are based on how best the agency performs in achieving the pre-determined goals.

 

3. In-House Advertising Agencies

As good as the full-service agencies.

Big organization prefers these types of agencies which are in built and work only for them.

These agencies work as per the requirements of the organizations.

There are some specialized agencies which work for some special advertisements. These types of agencies need people of special knowledge in that field. For example, advertisements showing social messages, finance advertisements, medicine related ads, etc. AMUL.

 

Functions of an Advertising Agency

Advertising agency is an independent body which undertakes the work of planning and preparing advertising campaign for its clients. It is purely a business organization and thus provides a number of services to its clients. It produces idea for what will make good advertising. The main functions of a advertising agency are as follows:

(1) Selection of Clients: The first and the foremost function of an advertising agency is to contact and select clients who are desirous of advertising their products, services or anything which they want to sell. The preference in contacting and choosing the clients is given to those firms which have sound values, able management, efficient operative products and services. The financial position, size and nature of business, efficient management and operative products etc. must be given due weight.

(2) Media Selection: Media selection is another major function of the advertising agency. In making a media selection several factors such as cost, circulation, population which it serves, audiences, nature of the product, types of customers and above all needs of the clients should be kept in mind.

(3) Advertising Planning: The third as well as the major function of advertising agency is the advertising planning for its clients. For this purpose, the advertising agency requires a detailed knowledge of the firm's products, its advertising history, market conditions, channel of distribution, knowledge of competitors' products and their advertising techniques, field to be covered, nature and type of consumers etc.

Next planning job is to decide about the advertising medium in which the advertisement is to appear. The advertising message must be adapted to the medium in which it is to appear.

(4) Creative Function: The creative function starts when the planning function ends. It includes the preparation of an advertising copy, layout, illustration, photographs, advertising messages, theme of advertisement etc. These functions are performed by a varied group of creative people including writers, designers, artists, producers, photographers and graphic art specialists employed by the advertising agency.

(5) Research Function: It is the fifth major function of an advertising agency. It supports the decisions taken in the media and creative areas. In this connection the advertising agency gathers and analyses actual information about the product, extent of market, competitors' strategies and buyers' habits etc. That may help the creative personnel to make the advertising copy more attractive and effective

(6) Approval of the Client: As soon as the advertising copy etc. are prepared, the next function of the advertising agency is to show the copy to his client and obtain his approval. In case any changes are suggested by the client, the same may be incorporated and thus the final approval should be taken from the client.

(7) Marketing Function: The advertising agency also performs marketing functions such as selecting target consumers, designing products and packages, developing channels of distribution strategy, determining prices and rate of discount etc. It gives useful advice to its clients with regard to the nature and trend of the market conditions. Accordingly, the client produces goods keeping in his mind the prevailing conditions in the market.

(8) Evaluation Function: Simply drafting advertising copy and handing over the same to the media is not enough. The next major function of the advertising agency is to have an exhaustive evaluation of the advertising effects for the benefit of his client. In case of any deficiency, necessary suggestion should be given and the same be made effective after approval of the client.

(9) Coordination Function: The last but not the least important function of the advertising agency is to establish effective coordination with client's sales force and distribution network to ensure the long running success of the advertising campaign. Each time the advertising agency contacts the client regarding advertising media to be used and the number of times the advertisement is to be repeated after giving effect to changes, if any, as suggested by the advertiser.

 

Thus, in all, an advertising agency performs practically all the functions of an advertiser.

Evaluating Communication Effects of Advertising - Pretesting – Posting (A&BM 02 Dec 2020)

Evaluating Communication Effects of Advertising - Pretesting – Posting.

 

Effectiveness of Advertisement and Its Evaluation

 

Advertisement is a costly affair, but very seldom serious attempts are made to judge how far it is effective, how many benefits the costs of advertisement yield, how the benefits, if any, are related to advertisement and so as. Till recently, the effectiveness of advertisement has been measured in relation to sales. This is what is known as quantitative way of measurement.

This measurement emphasises whether an advertisement was acceptable to consumers and whether they digested it and remembered it. This is known as “stimulus response function”. There is no dispute about the fact that the most objective way of measuring an advertisement is through sales. Sales in turn are influenced by complex­ity of forces which fall into qualitative type of advertisements.

Therefore, the measurement of quality is an indicator of the index of the quantitative type of measurements. The advertisement should first appeal, that is, it should stimulate the demand for a particular type of the product. Only then can some results be expected from it. The success of an advertisement can be analysed only with the help of some survey data relating to consumer response and sales.

 

Evaluation of Advertising Effectiveness:

Good planning and control of advertising depend critically on measures of advertising effective­ness.

 

Test can be classified as:

(1) Pre-testing, and

(2) Post-testing.

 

(1) Pre-testing:

It means testing the potentiality of a message or copy before send to specific media.

 

There are three types of pre-testing and they are:

(i) Questionnaire-answer:

The draft of an advertisement along with some relevant questions is sent to a group of target consumers or advertising experts and their opinions are collected and analysed to find out whether the proposed advertisement is satisfactory or not.

 

(ii) Recall:

A group of respondents is shown a number of alternative advertisement drafts giving as much time as they want to read them. After the specified time, they are asked to recall them and to reproduce them as much as they can. The responses are analysed to find out how far the advertise­ments are impressive, which ones are more impressive and so on and so forth.

 

(iii) Reactions:

The potential effect of an advertisement may be judged with the help of certain instruments which measure heart beats, blood pressure, pupil dilution such as stethoscope, psychogalvanometer, eye observation camera, etc. These reactions provide case to its power to get attention and produce other psychological or nervous effects.

 

(2) Post-testing:

 

After an advertisement has appeared tests may be undertaken to judge:

(i) The impact of communication, and

(ii) The ultimate results in the form of sales.

 

(i) Communication Impact:

There are two methods used for this purpose and they are:

(i) Recall, and

(ii) Recognition.

 

(i) Recall:

Regular users of the related medium may be asked if they can recall a specific advertise­ment, including the name of the advertiser and the products referred to and if so, how much of the advertisement they can play back. Their responses are studied and graded to see how far the advertise­ment was successful in attracting notice or being retained.

 

(ii) Recognition:

In this case, a particular issue of a medium is shown page by page to a sample of its readers and they are asked to point out which advertisements they recognize as having seen and or on the basis of the replies, evaluation is made of the receptiveness of the advertisement.

 

(ii) Sales Method Test:

Advertising’s sale effect is generally harder to measure than communication effect. Sales are influenced by many factors besides advertising, such as the product’s features, price, availability and competitor’s actions. Sales impact is easier to measure in direct marketing and hardest to measure in brand or corporate image-building advertising.

 

Two different methods are generally used for this purpose and they are:

(i) Historical method, and

(ii) Experimental method.

 

(i) Historical Method:

In this method part sales are analysed in relation to past advertisement either on current or lagged basis. If an advertisement has been followed up with more sales it is considered to be more effective.

 

(ii) Experimental Method:

In this method the entire sales territory is divided into three or four sub areas, more or less on the basis of some uniform criteria. In one group, an advertisement is inserted involving a certain amount. In another group; the amount is doubled; in the third it is tripled; in the fourth, it is quadrupled (different percentage of sales for advertisement). The results in the form of sales are measured and compared with a view to finding out the impact of increased advertising effort.

 

Importance of Evaluation of the Effectiveness of Advertising:

The importance of evaluation of the effectiveness of advertising is listed below:

(i) It is generally opined that much of advertising expenditure is wasteful. Proper evaluation would help in finding out whether it is really wasteful and if so, how much of it is so.

(ii) Evaluation reveals the strengths and weaknesses of different media and thus provides useful guidance for future media planning.

(iii) Through suitable methods, the draft of a message or a copy can be tested beforehand so that preventive steps may be adopted and waste reduced.

(iv) The whole process of evaluation leads to a body of recorded experience which may be useful not only to the improvement of advertising but also to better planning.

(v) Evaluation shows not only which advertisements are less productive but why they are so. So, it indicates the sources for greater effectiveness.

 

Difficulties in the Evaluation of the Effectiveness of Advertising:

There are many difficulties in the evaluation of the effectiveness of advertising and they are:

(i) Good researchers who can successfully measure the impact of advertising are difficult to get.

(ii) It is difficult to say how much increase in advertising resulted in how much rise in sales.

(iii) The primary aim of advertising is to increase sales. But it cannot be concluded that the entire increase has been due to advertising. In reality, many factors influence sales, advertising is just one of them.

(iv) Advertising has many goals, one of them is to build goodwill. But measurement of goodwill is not possible.

 

Big Brand Failures; Lessons to Learn From

A good marketing strategy is the most effective way to increase the brand awareness. But, when the marketing strategies go wrong and turn into a marketing failure then it can be the major reason behind the fall of your brand.

Maintaining the brand value and strategy is a challenging journey, even when you reach great heights. Always take the right decision as single marketing blunder can destroy your brand completely.

In this age of rapidly changing technology either you have to adapt the change with time or you fail. Those who refuse to improve become redundant and irrelevant to the industry one day.

This case study talks about how fairly large marketing mistakes of big brands leaded to their devastation. If we come to seek examples there are many, yet here we have picked up 3 known names, Kingfisher, Kodak and Nokia, whose stories are mere enough to let you know the failure reasons.

 

1) The Rise, Dominance and Fall of Kingfisher

About Kingfisher

In 2003, Kingfisher Airlines Limited was founded by Vijay Malllya as a premium and world-class airline group. The airline was based in Bangalore India and had more than 400 flights per day (Domestic & International). It used to be the most admired name in Asia-Pacific region.

 

The Rise of Kingfisher Airlines

On its peak time, it was the 2^nd largest airline, in terms of carrying the number of passengers. The quality and comfortable service attracted many passengers in the initial years. And, then the Kingfisher acquired Air Deccan in 2007.

In just 3 years after touching the skies, the first international Bengaluru-London flight in 2008 was launched.

 

Marketing Strategy

They promoted the brand through all media channels like Radio, Television, Print, Multiplexes, Malls and in their In-flight magazines too.

·                  In just 2 years, the airlines achieved the aviation market share of 10%.

·                  During 2007, they had the most aggressive expansion plans of all Indian carriers.

·                  In June 2007, their influence in the market was increased with the acquisition of 26% shareholding of Air Deccan Airlines.

·                  During February 2009, more than 900,000 passengers flew with Kingfisher giving it the highest marketing share in India.

 

How Brand turned into Non-Performing Asset?

·                  By the end of the March 2008, company was under the debt of INR 934 cr and net losses continued to widen in the following financial year.

·                  Acquisition of Air Deccan marked the end of Kingfisher Airlines. By the year 2009-10, airlines accumulated the debt of over INR 7,000 cr as the losses continued to pile up. 2010 was the year when it turned into a non-performing asset for banks.

·                  In 2012, the airlines operations were shut down as the DGCA suspended its flying license.

 

What Went Wrong?

·                  Lack of Delegation.

·                  Low-cost airline aviation airline, Air Deccan was treated as a step-child.

·                  Unnecessary Burning of Fuel.

The major reason that the brand was grounded was that it wasn’t just into one business and trying hands on more than one business. The founder was taking care of different businesses personally without appointing proper CEOs and couldn’t succeed in doing so. And, it’s pretty obvious that if two brands serve almost the same service, then people would rather prefer the cheaper one.

 

2) How Kodak couldn’t evolve with time and failed?

About Kodak

The American technology company, Kodak, was built on the culture of innovation and change in 1888. The company was invented and marketed by George Eastmen who was a former bank clerk from New York. At that time, it used to be a simple box camera, loaded with 100-exposure roll of film.

Kodak held a dominant position in photographic film in its time. Its tagline “Kodak Moments” was so famous that it was used for promoting events.

 

Marketing Strategy of Kodak

The real genius of founder Eastman lied in his marketing strategy. He launched an advertising campaign which featured children and women operating the camera with a slogan, “You press the button, we do the rest.”

·                  In 1935, produced the first mass-market color film in 16 and 8mm.

·                  Kodak owned the film market with 90% market share in 1970s.

·                  Created the first digital camera in 1975.

 

How Kodak Failed?

The first digital camera was designed by a Kodak engineer, Steve Sasson in 1975. It was a filmless photography at that time so they didn’t want to threaten their film business so didn’t do the marketing of the Digital camera. Whereas, other digital companies like Sony, Nikon, Fujifilm took the full advantage of the situation.

 

Kodak missed the opportunities in the technology, they themselves invented.

·    Kodak couldn’t get on the nerve of the modern technology and remained in denial for long about digital photography while all the other brands adapted the change by introducing electronic cameras.

·    Even before the digital photography they were failing to keep up as its rivalry Fujifilm started doing a better job than them.

1.    In January 2012, the big name went bankrupt because of not making the smart move into the digital world fast enough.

2.    On February 9, 2012, Kodak announced that it will exit the digital image capture business.

 

What Went Wrong?

The Kodak failed due its slowness in transition. The world moved ahead with digital cameras, SD cards and USB cables but the company remained stuck with films. They didn’t know how to respond in time and technology eventually killed the Kodak films.

3) How Nokia got acquired by Microsoft?

About Nokia

Nokia Corporation was founded in 1865 in Finland. The company was formally known as Nordic Mobile Telephone (NMT). The company name was changed to Nokia in 1871. They built the first international mobile phone in 1981 and this marked the beginning of the mobile era.

 

The Rise of Nokia, Connecting People

·                  Nokia phone was used in 1991 for making the first GSM call.

·                  In 1992, they launched Nokia 1101, the first GSM handset which became an instant hit.

·                  In 1988, Nokia became the world leader in mobile phones.

 

Marketing Strategy

·                  Nokia’s Marketing share grew to 74% in March 2006 from 61.5%in October 2005.

·                  In the color phone category, market share jumped to 59.3% from 40.9%.

 

The Fall of Nokia

Nokia used to own a large portion of market of smartphone before the iPhone came out in market in 2007. Their refusal to change and learn new things lost their survival and this ultimately leaded to their demise.

It used to be the leader in its market whereas Samsung was nowhere to be seen. But Samsung made the move at the right time and gained the success.

 

What Went Wrong?

The pioneer brand failed to respond to the completely changed smartphones with full touchscreen and application-based operating system. The years passed and they didn’t keep up with the expectation of people and the consumers shifted.

They remained their focus on the Symbian series. Until 2011, company didn’t make the leap of faith onto the Windows phone and due to their slow response, they suffered such demise.

·                  Nokia got acquired by Microsoft in 2013.

And as we conclude, we look forward to the statement made by Stephen Elop, Nokia’s CEO in his speech when Nokia got acquired by Microsoft that “we didn’t do anything wrong, but somehow, we lost”. And, as far as the parameters on which success is measured, he was right somewhere that they didn’t do anything wrong, it’s just that they were unable to adapt the change at the right time and so, lost.

The unwillingness to embrace the needed marketing change when required was probably the main cause that turned these brands down. One needs to think and act holistically for growing the brand with time otherwise, if you don’t change, you will definitely get removed from the competition.