M3 B3 Briefs: Agency Business Models

The Evolving Structure of the Agency Since the emergence of new age media and the resultant consumer empowerment, choice and autonomy, the traditional advertising and media communications model has encountered challenges in reaching and retaining the interest of consumers. While these developments do not totally discount the continued relevance and effectiveness of traditional advertising and media communications approaches, it is evident that structuring the agency around the traditional media components will deliver less than optimal media reach and compromise client value for money. How, in your opinion, may media houses and agencies structure themselves and package their media communications suite of services in manners that optimise consumer reach and client value-for money returns in the face of these dynamic developments in the industry? Submit: In no more than a 5 page essay format, a well-argued and presented case for the optimisation of media communications effectiveness and efficiency in the South African media landscape as it is affected by and responds to these changes When using any media ask: how well does this contribute to brand equity? What does the advert communicate - increase Brand awareness, strengthen brand associations. When assessing effectiveness the following simple test is proposed:
Figure 1-1 Simple test for marketing communication effectiveness

A number of different models have been proposed over the years to explain communications and the effectiveness. In order to impact on behaviour the following 6 steps must occur: 1. Exposure: the person must see or hear the communication 2. Attention: the person must notice the advert 3. Comprehension: the person must understand the intended message 4. Yielding: the person must respond favourably 5. Intentions: the person must plan to act in the desired manner 6. Behaviour: the person must act in the desired manner If the person stops at any one of the steps the communication is unsuccessful, all 6 steps must occur. Marketers need to increase probability of success e.g. ensure right target is exposed to right message, creative strategy is designed to grab attention, ad increases level of product knowledge and understanding, ad correctly positions

product in terms of benefits, ad motivates consumer, strong brand associations are created to influence purchase decision. Experiential marketing? Keller pg 188 Overview of Marketing Communication Options: Advertising: any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor. (Provides reason to buy) Includes: Television, Radio, Magazines, Newspapers, Direct Response, Interactive and Outdoor. Promotion: Sales promotion: short term incentives to encourage trial or usage of a product or service. (provides incentive to buy) Includes: Sales promotions: price off packs, premiums, sweepstakes, refund offers, consumer promotions: samples, demonstrations, educational material, Trade promotion: financial incentives or discounts to key stakeholders to stock, display or facilitate the sale of product through slotting allowances, POP displays, contests, dealer incentives, Event Marketing and Sponsorship: is a public sponsorship of event or activities related to sports, art, entertainment or social causes. Public Relations and Publicity: Publicity: is non-personal communication such as press releases, media interviews, press conferences, feature articles, newsletters, photographs, films and tapes. PR: may also include annual reports, fund raising and membership drives, lobbying, special event management and public affairs. Personal Selling: face-to-face interaction with one or more prospective purchasers for the purpose of making sales. Interactive falls under new media? Strengths: powerful means of creating strong, favourable and unique brand associations and eliciting positive judgements Weaknesses: difficult to quantify and predict Future of TV in computer era mass marketing advertising is uncertain. Eventually will bypass advertising agencies via interactive shopping channels, CD-ROM catalogues, multimedia kiosks and online services. Medium Television Advantages Mass coverage High reach High prestige Impact of sight, sound and motion (demonstrations) Low cost per exposure Attention getting Favourable image (can show brand intangibles) Local coverage Disadvantages Low selectivity Short message life high absolute cost High production costs Clutter Fragmentation of channels

Radio

Audio only

Low cost High frequency Flexible Low production cost Well segmented audiences Segmentation potential Quality reproduction High information content Longevity Multiple readers High Coverage Low cost Short lead time for placing ads Ads can be placed in interest sections Timely (current ads) Reader controls exposure Can be used for coupons Highly selective Reader controls exposure High information content Opportunity for repeat exposures Customised and personalised In-depth information Can be engaging Location specific High repetition Easily noticed

Clutter Low attention getting capabilities Fleeting message

Magazines

Long lead time for ad placement Visual only Lack of flexibility

Newspapers

Short life Clutter Low attention grabbing capability Poor reproduction quality Selective reader exposure

Direct Response

High cost per contact Poor image (junk mail) Clutter

Interactive

Non obtrusive Often lacks emotionality Short exposure time requires short ad Poor image Local restrictions

Outdoor

How are they different/the same? New media has had a profound influence on traditional media for example if you had a newspaper traditionally, with the advent of new media the daily circulation figures have dropped. However if that newspaper were to create an online version or a social media platform such as facebook then the lines become blurred. It is all Oprah, all the time, personalities are no longer limited to one traditional medium but have many online spheres of influence. Many use both as a way of being the first to break a story because of the immediacy of social media.
Some take pains to differentiate new media from traditional mass media, such as radio, film or television. But this effort seems to us perhaps too vague to mean much to readers, especially as even traditional media such as television become interactive with devices such as the TiVO. We're

discovering that TV generates and amplifies complementary activity online and on social media.

Direction of communication Targeting precision Level of innovation Speed of response Level of interactivity Precision of measurement of impact Access to climate

Advantages of new media: New media tools communication, collaboration and multimedia. Understand the evolution and speed of change online. Broad Audience: globally available instantly, users can share, collaborate and update product info creating a global online community. Targeting customers: demographic and geographic data allows advertisers to target specific audiences.
Lower cost-of-customer acquisition: If you truly focus helping your customers through advice and education, interactive media will result much more economic for your company compared to traditional media from a cost-ofcustomer-acquisition perspective. Flexibility - leads to better decisions: Interactive media is very flexible in terms of scheduling and launching, in addition, it allows to have 2-way conversations with our buyers about a new product or service, or about a particular problematic that your clients are dealing with. Measurability: all of your marketing efforts with interactive media can be thoroughly measured, allowing you to track the ROI with a high degree of confidence.

Read more: The Advantages of New Media |

eHow.com http://www.ehow.com/info_7743515_advantages-new-media.html#ixzz1u4bYkdlh

Who is the new consumer? What challenges are faced in reaching the interest of consumers?
Shift in way people learn, compare and buy Internet speeds increased - connectivity, advanced devices, audience more connected asses to info easier - flexibility Select what they want to see/hear about, use interactive media to research, gather info to gain confidence in purchasing decision No more interruption based traditional media 2 way communication irrespective of physical distance, can quell any fears by answering direct questions and can place all relevant info for consumer to read at own pace. Paradigm shift not how can you reach consumer, but how can consumer reach you! How can you leverage inteactive media platforms so that your target audience can reach you and learn about you; how do you make your brand - i.e. product or sevice value - matter in the cluttering of products and content as competitors are mushrooming in every segment of business, to which your buyers are exposed frequently.

Advantages of New Media vs Traditional Media Marketing

Posted by Eduardo Esparza on Thu, Apr 07, 2011 @ 07:00 AM

http://www.market8.net/Inbound-Marketing-and-BrandingBlog/bid/42743/Advantages-of-New-Media-vs-Traditional-Media-Marketing Keller pg 30 Branding challenges and opportunities: Savvy consumers: consumers more experienced, more knowledgeable and more demanding with decreasing brand loyalty in many categories. Brand proliferation new brands and brand extensions. More complex brand families and portfolios as well as the growth of private labels, difficult to differentiate.

Media fragmentation erosion of traditional advertising media (ineffectiveness has led to a decrease in ad spend) and the emergence of interactive and nontraditional media, promotion and other communication alternatives, Fragmenting media coverage especially in TV due to cost, clutter, fragmentation, technology. More sophisticated and increasing competition due to maturing markets, globalisation, low priced competitors, shifts in trade power with retailers gaining power, deregulation Increasing cost of product introduction and support Greater accountability, which leads to increasing job turnover rates for marketing managers and a short-term performance orientation to cut costs and offer short-term benefits. Increasing promotional expenditures

Current agency structure? Future agency structure package suite of services As Duncan states, the most common types of agencies are those that specialise in mass media especially advertising. Although there are different types of marketing communication agencies similarities exists in the structure of the agency. Full service: is an agency that provides all or most of the services needed in its area of specialisation. E.g. research, creative development of brand messages, media planning and buying, account management. These agencies are not specialists in and will not provide expertise in all areas of marketing communication. Duncan speaks about how these agencies provide the creative input and will hand over to an agency that is involved in the making of the final print adverts and broadcast advert. Usually these agencies have 3 core departments: creative services, media and account or client management.
President

Human Resources

Administration

Creative Services

Account Management

Media

Production

Research

Traffic

Account Management: liaisons between an agency and its clients. This is often structured with their own internal hierarchy. The main aim is to identify client problems and develop communication strategies to address them. Account

Executives are responsible with liaising with the brand managers and communicating the outcomes/instructions to the creative services department. Creative Services: this department is responsible for coming up with the creative ideas to deliver the communication strategy. This team consists of the copywriter, art directors, creative director, production and traffic manager ensure that once the design is approved the concepts are materialised. Media: this involves media planning and media buying. Research: this is primarily a function of the creative services and the account management departments. Research is done to improve the understanding of consumers and identify the most appropriate audiences for the communication messages. This department is involves in testing creative strategy and evaluating work at different stages. Some agencies have an account planner that works closely with the research department to have the full consumer insight and acts as the consumer advocate ensuring ideas and strategies resonate with the consumer. Other departments include finance, accounting, human resources and legal. Creative Boutique and Freelancers: Creative Boutique is an agency of creative specialists, usually designers and writers who work for clients. The difference between this and a full service agency is that they usually work on a project basis, turning over finished work to another agency for media placement and buying. Freelancers are independent creative thinkers who are self-employed and take on assignments from an agency or marketer on a project by project basis. In essence they are one person boutiques. They help with spill over if the agency is too busy and needs extra help or for small clients without huge budgets. Media Buying Services: agencies that specialise in media buying. By buying a larger inventory of media, these agencies are able to negotiate better discounts purely based on the quantities that they buy. A recent trend is that full service agencies have created standalone media buying agencies, in this way they can buy media for competing clients. A new area of media buying involves product placement, where media buyers negotiate with movie or TV show producers to feature their products. Agencies that specialise: Some agencies specialise in the clientele that they deal with, for example dealing exclusively with technology clients, or handling issues related to the health care industry. With new emerging markets certain firms focus on various target markets, for example the agency Foshizi specialises in the black market. In-house: a department that operates within a company and is responsible for producing some or all of the companys marketing communications. This is common in retail advertising where the company hopes to save money and exert more control at the expense of creativity. Buying power is often sacrificed and discounts are not as large. Working under tight deadlines, the agency must liaise with buyers and ensure specials correspond with quantity of stock to match any promotion. Other:

Direct Marketing: uses databases and technology to help clients acquire and build profitable and long-term relationships. Events Marketing: firms that specialise in handling events on behalf of companies and brands. IMC: manage the strategic use of a variety of marketing communication tools to create strong brand relationships for clients and customers. Packaging: creates the face of the brand in consumers view. Public Relations: counsel companies about public opinion and how to manage their relationships to create a platform of trust. This is especially key in crisis management. Relationship marketing: agency that helps companies specialise in how to create relationships with channel partners, employees and customers. Amazing harvard business article http://www.hbs.edu/research/pdf/11-039.pdf History of ad agencies:

Volney B. Palmer opened the first American advertising agency, in Philadelphiain 1850. This agency placed ads produced by its clients in various newspapers. In 1856 Mathew Brady created the first modern advertisement when he placed an ad in the New York Herald paper offering to produce "photographs, ambrotypes and daguerreotypes. His ads were the first whose typeface and fonts were distinct from the text of the publication and from that of other advertisements. At that time all newspaper ads were set in agate and only agate. His use of larger distinctive fonts caused a sensation. Later that same year Robert Bonner ran the first fullpage ad in a newspaper. In 1864, William James Carlton began selling advertising space in religious magazines. James Walter Thompson joined this firm in 1868. Thompson rapidly became their best salesman, purchasing the company in 1877 and renaming it the James Walter Thompson Company, which today is the oldest American advertising agency. Realizing that he could sell more space if the company provided the service of developing content for advertisers, Thompson hired writers and artists to form the first known Creative Department in an advertising agency. He is credited as the "father of modern magazine advertising
Types of advertising agencies; Following are major types of advertising agencies that are currentlyserving the advertising industry. Full Service Agencies A full service ad agency is one that provides a range of marketing services. A full services agency provides services that are directly related to advertising such as copywriting, artwork, production of ads, media planning etc. It also provides such services in respect of pricing, distribution, packaging, product design etc Modular agencies A modular agency is a full service agency that sells its services on a piecemeal basis. Thus an advertiser may commission an agencys creative department to develop an ad campaign while obtaining other agency services elsewhere. Or, an advertiser may hire an agencies media department to plan and execute a program for advertising that another agency has developed. Fees are charged for actual work undertaken.

In House agencies Those companies, which prefer to have closer control over advertising, have their own in-house agency. This type is owned completely by the advertiser. It performs almost all functions that an outside advertising agency would perform and thats why some people refer to it as full-service advertising department of the advertiser. However, the difference between an in-house agency and an advertising department is that the in-house agency can undertake to serve several other clients, if the owner so desires, but an advertising department solely undertakes that work of its owner and not of outside clients. Secondly an advertising department may not be equipped the personnel and facilities, which an in-advertising schedule and costs, but also offers convenience for its owner, because it is just available in the same building as that of the head office of advertiser. Such in-house agency also benefits the owner as it can bring revenue through agency commission that are offered by the media and by way of fees that are collected from outside parties for undertaking their advertising work. Such revenue increases the funds and profits of the company. There is another version of in-house agency whereby advertiser handles the total agency functions by buying service unit to buy time, space and place the ads. Such an In-house agency is an administrative center (under the direction of an advertising director) that gathers and directs varying outside for its operation use agency would posses. In-house agency not only provides control over Creative Boutiques These are shop agencies that provides only creative functions and not full-service. The specialized creative functions include copy writing, artwork and production of ads, they charge a fee or percentage of full service agencies, and as such most of them convert into a full service agency or merge with other agencies to provide a wide range of services. Mega agencies A significant of 1980s is the development of mega agency. Agencies worldwide merge with each other serve their clients in much better way. It was in 1986, Saachi & Saachi, a London based agency who started the movement and at present it is the third largest agency network in the world. The Specialists Agency There are some agencies who undertake advertising work only in certain areas. there are agencies that specialize only in financial services or only in publicity or only in point-of-purchase material etc. for instance Soubhagya advertising agency concentrate on specialized in financial advertising

INTRODUCTION:
New age media has revolutionised the new media landscape and advertising agencies have had to evolve in order to keep up with the pace of change. A new, empowered consumer emerged due to developments such as innovation in information and media technology, deregulation and globalisation. This choice and autonomy have led to consumers demanding a greater range of services as well as increased accountability from the advertising agency. The once popular one-stopshop agency has evolved to offer a range of services that can be packaged or sold as individual components with changing compensation systems (Harvard article). Traditional media remains an essential component but various challenges in the communication model have illustrated that a restructuring of the agency is evident in order to optimise media reach and maximise client value for money.

Marketing communications remains the means by which most firms attempt to inform, persuade and remind consumers directly or indirectly about the brands they sell (Keller, 2008).

DRIVERS OF CHANGE:
The new media landscape has had a profound effect on the new consumer as well as challenging the traditional media models and structure of the agency. Keller (2008) suggests four advancements as the main drivers of the evolutionary process. Innovations in the information and media technology fields have led to advancements in digitisation and wide spread internet connectivity. With globalisation many of the traditional intermediaries have become obsolete and new middlemen have been created. Consumer demand has changed to require customisation and customerisation with agency accountability for each rand spent. Convergence of the media industry with many of the boundaries being blurred. Harvard article includes privatisation and deregulation leading to the birth of a new consumer and companies having to create new capabilities.

NEW CONSUMER:
In the new media landscape, the new consumer has more consumer power and therefore is more of a challenge to interest. Consumers have a greater variety of available goods due to the proliferation of brands and highly competitive environment. In the information age, information is readily available to compare competitor product offerings, interact with other consumers and compare product reviews all independently of the company. Companies are able to create powerful information networks and can target consumers easily and conveniently. New sales channels allow orders to be placed at the consumers convenience. This facilitates two-way communication between consumers and the company, allowing consumers to articulate needs and companies to customise offerings to individual customers. Marketing promotions can be sent cost effectively and richer information about markets, consumers and competitor offerings is readily available. (Duncan) All these changes improve many of the traditional functions and have led to a review and integration of marketing programs. Keller (2008) states that traditional media such as TV, radio, magazines and newspapers began losing grip on consumer interest. After the dot.com crash people began to slowly use the internet again with marketers spending $18 billion on internet advertising in 2005. Online spend continued to sky rocket while TV spend remained flat. The prediction for traditional media is extinction, but many of the drivers of change have challenged traditional media functions and have led to the integration of marketing programs. The advent of TiVo and PVR have allowed viewers to skip over adverts causing advertisers to question the effectiveness of TV as a medium. The numerous amounts of channels available has led to proliferation and segmentation that is only relevant to niche products. Traditional advertising in general is dying with teens preferring to play video games and watch pirated dvds rather than TV and never reading newspapers.

NEW AGE MEDIA:

The definition of new age media is constantly shifting to accommodate the evolution. Any form of interactive communication that uses the internet can be defined as new media. This includes websites, podcasts, RSS feeds, social networks, text messaging, blogs, virtual worlds and more. Social networking is central to this definition with users connecting to each other and businesses relevant to their needs. Platforms for accessing content include personal computers, smart phones, video game consoles and other digital devices. Online consumer communities have exploded with paid for searches exploding to $3billion per year. 72% of teens exchange IMs daily through their cell phones, this mobile device has become more than a tool for more than just making calls. Interactive: online marketing communications Scramble to build a presence in cyber space. Websites: advantages: low cost, degree of customisation Consumer chooses info relevant to needs pave the way for solid relationship building. Can deliver timely reliable info as updated frequently. Online ads: accountable, non-disruptive, targeted, BUT consumers find it easy to ignore banner ads, ads not inspiring and therefore not attention grabbing, often irritate consumers. Another option is search advertising advertisers pay for sponsored links relevant to selected key words cost per click. Mobile ads: build closer relationships with consumers, cost effective channel, infotainment content. Cell phone taken with consumer to the point of sale. Eg sms barcode to win at POS can then track with diff codes to assess effectiveness of each store. Non-traditional/ alternative/ place/ support advertising: sometimes as part of experiential marketing. E.g. billboards, POS, product placement Billboards include mobile billboards, Bus shelter ads, stadiums, arenas, rubbish bins, AMBIENT media, elevators, railings, trains, Product placement pay fees to feature product in cameo role. Also involved in tie-in ads e.g. BMW featured in James Bond, launched Z3 POS: shopping carts, aisles, shelves, wobblers, strips, gondola ends, demonstrations, coupons, sampling, Advantages: reach consumer in spare time e.g. bathroom cubicle, can reach very specific and precise target audience in cost effective manner. Message must be simple and direct and not much time spent on reading. Challenge in demonstrating reach and effectiveness. Danger of overcommercialisation. What is traditional media. (what are traditional media?)

TRADITIONAL ADVERTISING:

CHALLENGES TO MODEL:

NEW AGENCY STRUCTURE METHODS:

(Kaul, 2012). (Arzaghi, M; Berndt, E.R; Davis, J.C; Silk, A.J; 2008). (Keller, 2008). (Duncan, 2005)