Advertising Agency Methods

Advertising Agency

An advertising agency is a specialised institution performing advertising functions for remuneration.  There are a large number of advertising agencies in India which organise and plan advertising activities for producers and marketers.  They have developed as independent agencies in the area of advertising.  They have developed a relationship with several in the area of advertising.  They have developed a relationship with several media, viz., newspapers, magazines, radio, etc., for advertising creative messages as a lower cost.  Because of their close association with the media and research agencies, they provide effective and cheap services to the advertiser.  The commission to the agency is generally fixed in relation to the total expenditure viz., 15 per cent of the total expenditure on advertising.  They may charge extra for the creation of the message and research.  They suggest a suitable layout, illustrations and designs for which they charge a free; but suggestions are given free of cost.  They may also suggest some discounts, prizes and price-cuts for wholesale purchasing.

The role of the advertising agency has been accepted because it provides specialist services to the companies which have inadequate services of experts for the promotion of their goods and services.  Many institutions have enlisted the services of advertising agencies to make their products and services known to the potential consumers.

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 o 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.  He prepare a list of newspapers with their respective rates of advertisement.  It was stated by him that he was an agent of the advertiser and not the newspaper.  He laid emphasis on advertisements.  Several other agencies developed.  They assisted in advertising planning, copy writing, artwork, media selection layout and research.  This was the period of the standard services stage.  Advertising agencies improved the quality of their services.  In 1901, Curtis Publishing B. Company promulgated agency recognition policy to combat the offering of rebate.  Curtis said that magaznes did not accept the business of those agencies which granted rebates on their commission.  The adverting agencies have to charge advertisers the rates prescribed by magazines and newspapers.  The national advertisers started using the services of advertising agencies.   By 1950, adverting agencies offered many specialised services.  The entered the marketing services stage.

Selection of Advertising Agency:

An advertising agency may be a full-service agency or a part-service agency.  Each has a different outlook and advertising activities.  The selection of advertising agencies depends on whether one wants a full-service agency or a part-time agency.  The selection is also made on the basis of compatibility of the agency team, agency stability, services, credibility and the agency’s problem solving approach.

Full-Service Agency or Part-time agency:

The full-service agency is involved completely in the advertising functions.  It has a large number of expert employees.  The organisation is typically useful for performing advertising activities.  It looks upon customers as key clients.  It communicates with the prospective purchasers.  The distinguishing characteristics of the various advertising agencies lie in the creative skills of the personnel of each organisation and in the philosophy of adverting.  Larger agencies offer better servcies.

The part-time agency offers service on free of cost or project basis.  Theses agencies perform various outside activities and co-ordinate the activities of the advertiser and mediamen.  Clients have greater control over adverting campaigns.

Compatibility:

The selection of an advertising agency depends on the compatibility of the agency.  The needs of the company determine the fitness of the agency.  The advertiser visits several agencies and chooses the best agency on the basis of its merits, its methods of handling the accounts and using the available opportunities.

Agency Team:

The agency team includes management specialists, market researchers, copywriters, media experts, production managers and art directors.  The attitude, thinking, experience and personalities of the team members have positive effects on the selection process.

Agency Stability:

An agency which has been long in existence generally performs efficiently and effectively.  The greater the investment in the agency, the more vital and contribution of the agency to the advertising activities.  The personnel, finance, management and credit are examined before selecting a suitable advertising agency.

Services:

The services rendered by the agency are evaluated with a view to choosing the best advertising agency.  Cost accounting, general agreement, project estimates, selling attitudes and other services performed by the advertising agencies are considered to evaluate their efficiency and credibility in performing advertising jobs.  The greater the range of an agency’s services.

Creativity:

Creativity is the main element in advertising.  If the advertisign agency is capable of great creative effects, it is selected for the purpose.  Style, clarity, impact, memorability and action – these are taken into account while evaluated creativity.

Problem-solving approach:

The agency which has a problem-solving approach is considered to be superior and useful.  The importance of choosing the right agency cannot be ignored.  Calibre, compatibility, balanced services, responsiveness, talent and equitable compensation-these are important factors in selecting an advertising agency.

Functions of Advertising Agency:

Planning:

The advertising agency plans the advertising campaign.  The management delegates the responsibility of advertising planning and execution to the agency.  The agency must have a fair knowledge of the firm’s products, its history, the present market conditions distribution method, price level and other conditions.  A successful advertising programme is built on the basis of these data.

Creation and Execution:

Specific advertisements are created.  The advertising copy is written; the layout is prepared; illustrations are drawn; photographs are finalised; and a correct mechanical form for running it in the selected media is produced.  The advertising agency prepares a suitable advertising copy for insertion in all the media.

Co-ordination:

The advertising agency co-ordinates several activities.  It often works with the client’s sales force and distribution network to ensure the long-run success of the advertising programme. The combined efforts of sales persons, distributors and retailers ensure maximum sales.  Ideas, media, copy and decisions are co-ordinated properly to project and implement the advertising programme.

Accounting:

The advertising agency maintains proper accounts in co-operation with the client.  The account executives see to it that the agency keeps to the stated plan.  The accountant is in charge of the administration of the advertising programme on the agency side.  A misunderstanding arising between the aency and the client is eliminated by the accountant.

Media:

The advertising agency selects the media or a set of suitable media for the client to reach the right type audience which is an important factor in media selection.  The rates, circulation, population, audience income ad other important information are collected for the purpose.  It has to see to it that the media plan is carried out properly which is devised to implement the campaign’s communication objectives.  The media experts know all about the media and their coverage.  They prepare the schedule of advertising, publication, data on printing and the time available from television and radio.

Research:

Research is a key function in an advertising campaign.  The decisions on creativity and media selection are taken on the findings uncovered for research.  Research makes every decision systematic and logical, based as it is on facts and figures.

Internal Control:

The advertising agency manages its employees, finances and other resources effectively and economically.  It conducts the business behind the scenes and exercises proper control over activities and funds.  Public relations, sales promotion functions and client contacts are maintained by the management for the effective operations of the advertising agency.

Types of Agency Organisation:

The agency may be organised on the basis of a group system or a departmental system or as a decentralised organisation or smaller agency organisation.

Group System:

The group system involves writers, artists, and media planners.  They remain with the advertising agency.  They are employed under the general direction of the executives.  Each member of the group is give a special function.  The main advantage of these system is the concentrated application of the skills of specialists to a common set of objectives.

Departmental System:

The specialists are grouped under separate departments.  For example: Copywriters are employed or deputed under the copy department.  Artists work under the art department.  They work directly under departmental heads.

Decentralised organisation:

The decentralised function are allocated to some branches which perform the advertising jobs in their respective areas.  The branch office is fully authorised to discharge its functions effectively.

Smaller Agency Organisation:

The smaller agency organisation performs all the jobs of advertising.  The executives handle a variety of jobs.  They write copy, specify production, work out the media schedule and perform other advertising functions.

Agency Compensation:

The agency compensation is based on the forms of commission and problems in agency compensation.

Forms of Commission:

The agency is paid in three forms, viz., commission, agency charges and fees.

a)                 Commission: The advertising agency charges a certain percentage to the media.  The advertising commission is decided on the basis of the cost of full page in the newspaper, magazine, etc.  The radio and television charge a certain amount to the clients as their fee.  The agency secures a certain percentage of the total cost received by the media.

b)                 Agency Charges: The agency charges a certain amount to its clients.  The rate is fixed on the basis of the amount received by the media.  The expenditure on talent, production, copywriters, films, etc., is paid to the respective sources.  The charges of the agency are determined on the basis of these factors. Generally speaking, 15 per cent of the total cost is charged by the advertising agency.

c)                  Fees: The advertising agency charges a certain fee for specific non-commission services.  There are certain activities which are provided on the consideration of fees.  for example, the agency may charge fees for conducting market surveys, market search, advertising research, and so on.

METHODS OF MEASURING EFFECTIVENESS

The methods of measuring advertising effectiveness may be experimental or survey.  Under experimental measures, consumers are given a controlled exposure to the message and the effects are measured on the basis of the change in opinion or attitude.  The experiment may take place in the laboratory or in the field.

Field experiments are conducted to measure the effects of mass communication.  Sample surveys or interviews or questionnaires are used to obtain information about people’s exposure to the advertising campaign, i.e., message, media, cost etc.

Pre-testing Approach

Pre-testing is preferred because it enables one to know how effective an advertisement is likely to be, before spending the budget and adopting advertising actions.  Some pre-testing methods are employed to examine the effectiveness of each campaign.  The advertiser should use only those messages and media which prove to be the strongest in producing the desired results.  It is important to adopt corrective methods against mistakes.  Pre-testing may involve a consumer jury, storyboard tests, laboratory tests, tachistoscope, psychogalvanometer, eye camera, pupil dilation, attitude test, and depth interviewing.

Consumer Jury:

The consumer-jury test involves persons most likely to be exposed to the advertisement.  Consumer reactions have greater validity than the reactions of non-consumers.  Consumers can provide true information on reaction to and adoptability of products following an advertising campaign.  Other persons may underestimate or overestimate the reactions to and acceptability of advertising.  The copy, illustrations, filming techniques, layout, etc, can be properly evaluated by the consumers concerned with the product.  The print media’s message should b e evaluated before its publication.  Similarly, the other media’s messages should be evaluated before their presentation.  The consumer jury technique is adopted for print media, broadcast media and direct mail.

Print media: the consumers selected to test the message for print media may be asked either to evaluate an advertisement or rate two or more advertisements by their attention – getting power and believability.

The most common method is to insert a questionnaire in the advertisement and request the readers to indicate their preferences on the form and return it to the advertiser or the producer.  Aided and unaided recall techniques may be used for this purpose.

Some advertisers have designed a puzzle to find out which headlines and illustrations draw the maximum attention.  The advertisers ask which of the pictures, symbols, headlines and subheads are the best in the opinion of consumers.  Consumer goods advertisements are generally shown to housewives. Industrial products advertisement are tested with industrialists.  The sales conviction test is employed to examine which of the two advertisements has been very effective.

Broadcast media:

The consumer jury has been used for pretesting a broadcasting media campaign.  The juries are selected at random or from among specific consumer groups with a view to testing specific types of advertisement.  Consumers are sometimes asked to come to the television studio where they are shown different television programmes for final consideration.  Some times, the television advertisement message are pre-examined by some persons in different localities.

Direct mail test:

The direct mail test is used through the mail.  Different copy appeals are condensed and printed on post cards.  These post cards, each with a reply-paid card, are sent free-of-cost to consumers, who are required to indicate how they evaluate the direct mail copy.

Storyboard:

The storyboard prepared for television advertising is tested before it is used.  The storyboard pictures are transferred to a film strip and the audio section onto a tape.  Vision and sound are synchronized and shown to an audience for evaluation.  The costs involved can be cut by reducing the unnecessary part  of the storyboard.  This test uncovers the unnecessary part for deletion.  The important part of advertising is accepted for telecasting.

Laboratory Tests:

Laboratory tests have been a very important method of pre-testing advertisements.  The respondents responses are recorded and special laboratory tests are conducted to examine the effect of the advertisements.

The laboratory test is used to measure awareness, attention, desire, retention, etc.  The respondents are placed in laboratory situations and are asked to explain the measurements regarding the effectiveness of the advertisement.

Tachistoscope:

The tachistoscope is a project that can project objects on to a screen at rates so fast that the viewer cannot detect the message.  It is slowed down to a level where the message can be perceived easily.  The respondents should understand and appreciate the message, interesting words, slogans, headlines, etc.  they can be easily segregated from the less interesting message.  This process can separate the messages which are more effective from those which are less effective.

Attitude Test:

There are several techniques for measuring the attitudes of respondents.  These are known as psychological techniques.  The semantic differential is a rating scale which has been used extensively to measure advertising effectiveness.  Respondents are asked the questions to be answered on a seven poit bipolar scale about their feelings about a particular advertisement.  The various advertising treatments can be measured in terms of consumer reactions.  Advertisers devise some sort of checklist of the qualities to be included in advertising.  The checklist is based primarily on the quality of an advertisement which is capable of generating inquiries.  Some relationships are developed and are measured on this scale.

Depth Interviewing:

Depth interviewing is concerned with getting the respondent to react freely to the brand, organization and product.  By suit able questions, the interviewer brings out his unconscious reactions to the surface.  The reactions to communication stimuli are noted to bring out the facts for the advertisers.  Depth interviewing involves non-structured questions.

Post-Testing Techniques:

Post-testing techniques are applied after the advertisement has ended.  These techniques are used to find out how far advertising has been successful.  The data are collected by research.  In some countries, some research agencies are engaged in collecting data and helping the advertisers evaluate advertising effectiveness.  The immediate objective of advertising is to arouse consumer awareness, his interest, desire  and develop his attitude to the product.  Therefore, the post-testing techniques are in the nature of recognition tests, recall tests, attitude change, sales tests, enquiry tests.

Recognition tests:

The recognition tests were developed by Danial Starch to measure the readership of printed advertisements.  George Gallup supported his views.  They pointed out that the mere presence of advertisements in some publication had no meaning unless they were read by some persons.  Therefore, the recognition test is also called the readership test.  They organized research activities to find out how many readers went through printed magazine advertisements.  A particular advertisement may be examined by sending  the whole newspaper or magazine wherein it is published.  After a few days, readers are approached to find out whether they have read the advertisements or not.  Those who read the advertisements are counted from among the total number of persons given the advertised publication and the percentage of readership is calculated accordingly.

Recognition tests have been helpful in determining the actual percentage of person “recognized” the advertisement.

Recall Tests:

A recall test depends on the memory of the respondents. This test is applied to measure the penetration of, or the impression made by an advertisement on, the readers mind.  Recall tests have been classified into two classes- aided recall ad unaided recall.  Some authors have combined the two and made it a combined recall test.

Aided Recall:

The aided method is used to measure the reading memory of magazine advertising impressions.  This test has a high degree of objectivity which arises from the respondents attempting to perform at the maximum level of recall without subjectively screening out the response.  It is necessary to use a large sample size for statistical realiability.  The aided test is used mainly to measure television advertising.  It is easy to determine when a commercial advertising appeared on the television screen.

Unaided Recall:

Under the unaided recall, little or no aid is given because the purpose is to measure the penetration of the advertisement.  Respondents are asked whether the advertisements included a particular picture or message.  The name of the product is not given to the audience. They have a recall it themselves.  If they do remember, it is established that there was some impact of the advertisement.  The impact may be probed to find out the attitude, etc of the audience to the product.

Combined Recall Test:

The combined recall tests included aided as well as unaided recall tests. This test was developed by Gallup and Robinson.  They designed it to test the impact of an advertisement.  Respondents are asked whether they have read the magazine or newspaper, or listened to the radio or watched television.

Attitude Change:

Attitude measurement tests measure advertising effectiveness.  It measures the extent to which favourable opinions have been created about the product, image and company.  Loyalty, acceptance, preference, intent, etc these are measured with this technique.  There are several techniques for the measurement attitude change after the advertising campaign has ended.  These techniques are the semantic differential, the Likert scale, the ranking techniques and the projective technique.

Semantic Differential:

The semantic differential technique is used to measure attitude in the field of marketing and advertising research.  It uses a bi-polar (opposite) adjective statement about the subject of evaluation.  The attitude is measured in the light of some objectives.

         

The likert Scale:

The likert scale is used to measure audience attitude to advertisements.  A series of statements are described to measure the attributes of the advertisement.  Only the relevant statements are used for the purpose.

Ranking techniques:

The preferences to several types of advertisements are ranked to find out the place of a particular advertisement among the several advertisements.  The paired comparison approach is adopted for this purpose.  An advertisement of one product an be measured with the advertisements of other products taken together.  The measurement with the competitive products is generally done to find out the effectiveness of the advertisement in a competitive atmosphere.

Projective techniques:

The projective techniques are used to measure attitude change.  Association techniques, completion techniques, construction techniques and expressive techniques are used to measure the change in attitude.  Association techniques require the respondents to a given stimulus to give their first thought or idea that comes to their minds.

Sales Tests:

The tests are designed to evaluate the effects of advertising on the purchase behaviour of the consumer.  They produce sales after creating an image of and interest in, the product.  Advertising and sales functions are correlated, although there are a large number of variables that affect sales.

There are generally three types of sales techniques measure of past sales, filed experiments, and matched samples.

Measure of past sales:

Advertising and sales are correlated by using the past sales data.  Brand wise sales data re collected and tabulated.  The product, brand and company sales in the past ten years as well as the advertising expenses establish the correlation between the sales volume and advertising expenses.

Field Experiments:

Field experiments by advertisers, producers, wholesalers, retailers and researchers may show the extent to which a particular advertising campaign has affected sales.  The whole market may be divided into test and control areas.

Matched samples:

The respondents selected for comparison of advertising effectiveness should be of the same age, educational status, occupation, sex, etc.  these respondents are matched in every respect but not for the trest treatment.  One group has seen the advertisements and other group has not seen the advertisements.  The sales of the treated group should be higher than those of the not-treated group.  This would show the difference between the sale of the advertised products and the non-advertised products.

Inquiry Tests:

The effectiveness of advertisement is measured through inquiries. Respondents are offered certain inducements to reply to questions.  The offer may be of a booklet,  a sample of the product, a diary, a calendar, etc.  This method is employed to check the effects of media as well as individual advertising.  The effectiveness.  Only one factor of advertisement is examined at a time through several media.

Image Building:

The conventional and most common form of institutional advertising is that done by a manufacturer with a view to making prospective buyers of its products aware of itself and creating a favourable impression on them.  The corporate image is what people see in their mind’s eye when the name of the company is seen or heard, according to Hepner.  It varies for different segments of the audience, depending on the extent of their affiliation with the company.  Regular customers, occasional buyers of its products, shareholders, distribution channels, suppliers and non-users of the company’s products will have different perceptions of its corporate image.