ADVERTISING AGENCIES

Definition of Advertising Agencies

A firm engaged in providing services of advertisement for clients to create awareness and

market for them is known as advertising agency. An advertising agency is composed of

creative and business people – the writers and artists, showmen and market analysts,

merchandising and research people, advertising specialists of all sorts. In an advertising

agency, they collaborate for running an independent business, financially responsible,

applying their creative skills to the business of helping to make their clients advertising

succeed.

According to the definition given by the Philip Kotler Advertising agency is a marketing

service firm that assists its clients in planning, preparing, implementing and evaluating

various activities of advertising campaign.1

Types of Advertising Agencies

Full-Service Agencies

A full-service advertising agency offers a comprehensive range of services that address both

the traditional and digital marketing aspects of a business. Full-service ad agencies are made

up of a team of experts, and they’re a one-stop shop of services:

1. Ad Campaigns

2. Strategic Planning

3. Social Media Management

4. Content Creation

5. Graphic Design

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Digital Advertising Agency

A digital advertising agency specializes in all things online. They probably have familiarity

with traditional media, but their primary focus lies in the digital sphere, including:

1. Search Engine Optimization (SEO)

2. Social Media Marketing

3. Website Design and Development

4. Marketing Automation

Digital ad agencies are the best fit for companies trying to reach a very specific audience

because digital marketing platforms allows for advanced targeting capabilities and wide

reach.

Creative Agencies

Creative agencies focus on the design and graphics of a brand, but outsource the strategy and

execution to other marketing partners. They usually excel in logo design, print marketing,

letterheads, billboards, and business cards. These types of agencies are well suited for

organizations who need to create a cohesive look and feel of their brand or who need to

create some new marketing collateral.

Media Buying Agencies

Media buying ad agencies focus on media planning and media buying, and they usually tailor

their services to a specific channel. They identify a time frame, recommend a budget, and

establish markets for reaching the target audience.

When to use: Media buying agencies are great for organizations looking to only use a single

channel. These agencies may have a creative team in-house, but they are typically most

effective when paired with a creative ad agency.

Interactive Advertisement Agency

These agencies focus mostly on web design and other technological and internet-based

development. They design and develop apps, games, and other interactive products.

Design Agencies

Design agencies focus mostly on graphic design for online and for print. They might also

collaborate with other types of agencies or have clients of their own. A lot of the time, a

design agency will have a printing service in house.

Social Media Advertisement Agencies

Social media ad agencies focus on one thing and one thing only: social media. They are a

team of content creators and ad optimizers that will max out your social channels. They may

focus on many social channels or be experts in a single channel, such as LinkedIn. Because of

recent social media algorithm changes that resulted in a drop-off in organic reach, expect

social media ad agencies need to charge a budget for ad spend.

Social media agencies are a good fit for companies who are looking to accomplish a single

goal, such as selling skateboards, through social media platforms. These marketing agencies

usually have a creative team, a content team, and might even have photographers and

videographers.
 Departments in Advertisement Agencies

Advertising agencies are structured to integrate the various services and tasks involved in creating and

placing advertising. There may be differences in the organizational structure of an advertising

agency based upon its size.

Contact Department
Contact department, also known as client department is in charge of keeping contact with their
prospective clients of the advertising agency, mostly the advertisers.

The functions of the client department includes:

 Carrying the important information to the clients
 Efforts for retaining and creating new clients
 Building the bridge between the advertising agency and the client

Art Department
The art department consists of all the artists in an advertising agency. The advertisement finally
becomes agreeable and acceptable because of these people in the art department. These
people use the principles of real art, probably on software, as a guideline or base to present a
product to the targeted audience. The personals working in the art department are known as the
Art Directors.

The functions of the art department are:

 Transform the idea that the client wants to convey, into a simple and beautiful imagery.
 Preparing layouts and visuals for the clients.
 To work closely with the copywriters for developing the visual messages.

Copy Department
The copy of the advertising agency is very crucial. It is called the heart of the ad as this conveys
a direct message to the consumers creatively.

Primary functions of the copy department are:

 Preparing an attractive copy for its clients and customers.
 Participate in brain- storming sessions and come up with ideas.
 Using their extraordinary skills of putting flair and fluent language while preparing a copy.

Production Department
Once, after the copy and art is finalized, the advertisement is sent to the production department
for further process. Both the departments, copy and art, create the basic model of the
advertisement. The production department takes the advertisement into its final stage. A
production manager heads the production department.

Functions of the production department are:

 Produces the final advertisements for the markets.
 Making contacts in the industry for the easy carrying out of tasks.
 Assemble the typographic design patterns, engraved photos, illustrations, copy, etc. and
prepare the final advertisement.
 Sending the final product to its clients and get the approval.
 ADVERTISING INDUSTRY IN INDIA

Definition of Advertising & Advertising Agencies

Advertising refers to the techniques and practices used to bring products, services, opinions,

or causes to public notice for the purpose of persuading the public to respond in a certain way

toward what is advertised.2 Most of the advertising activities are carried on with the aim of

promoting products but it can also be carried on with the aim of creating social awareness or

gather support for a political idea. Advertising agencies are an important part of the economic

fabric as they provide platform to the organisations to communicate with their audience.

According to the definition given by the Philip Kotler, advertising is any paid form of non-

personal presentation and promotion of products, services or ideas by an identified sponsor.3

Status of Advertising Industry in India

India is the world's second most populous nation. Over a billion people live within its

borders, making it second in size only to China. Hence making it one of the largest potential

market places for almost all multinationals for selling their products. In this background, the

role of the advertising agencies become crucial as post-liberalization, several companies

attempt to reach out to the masses.

Hence the advertising industry in India, has a tremendous growth potential catering to such

multinational organizations’ needs in understanding the diverse demographic distribution of

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India helping them reaching out to the populace. According to the Pitch Maddison Report

2019, the advertising industry saw a tremendous growth rate of 14.6% in the Financial Year

2019 despite the crippling economic slowdown faced by the global economy in the aforesaid

Financial Year.4 However the future of the advertising agencies may face a paradigm change

in its fate in the wake of the recent Covid crisis as several brands will seek to reduce their

advertising spending by whopping 69% due to lack of cash flow generation in the economy.5

PEST Analysis of the Advertising Agency

1. Political / Legal Factors

The Advertising Standards Council of India regulates the advertisement standards in India. In

regards to promote fair practices of advertisement in the Indian market and protect the right

of customers as guaranteed under the Consumer Protection Act, 1986, ASCI had come up

with the regulatory mechanism termed as "Code for Self-Regulation in Advertising"["Code"]

1. To ensure the truthfulness and honesty of representations and claims made by

advertisements and to safeguards against misleading advertisement.

2. To ensure that advertisements are not offensive to generally accepted standards of

public decency.

3. To safeguard against the indiscriminate use of advertising for the promotion of

products which are regarded as hazardous to society or to individuals to a degree or of

a type this is unacceptable to society at large.

The purpose of the Code is to control the content of advertisements and thereby issues

instructions in this respect along with complaint procedure in event of failure in compliance.

Though the ASCI is a non-governmental organisation and the code introduced by it is strictly

voluntary without any mandate but, the advertisers ought to give regard to such Code at the time of
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publishing their advertisements since if any advertiser fails to comply with the CCC decision in

writing on a complaint upheld against a Press Ad, the ASCI has option to inform the Press Council of

India and Ministry of Information & Broadcasting about the print Ad contravening the ASCI Code

and such action may dent the reputation of the concerned advertiser.

1. The Press Council Act 1978

2. Cable Television Network Rules, 1994

3. Norms for Journalist Conduct issued by the Press Council of India

4. Code of Conduct of the News Broadcasters Association

Moreover, Consumer Protection Act will make new progress in the area of consumer rights pertaining

to advertisements by providing specific powers to the proposed Central Consumer Protection Agency

who would be able to issue directions and penalties against false or misleading advertisements. It is

noteworthy, that the CP Bill extends the liability of misleading advertisements on not just the

manufacturer of the product or service in question, but also holds their endorsers liable.

Economic Factors

 Rural markets face the critical issues of Distribution, Understanding the rural

consumer, Communication and Poor infrastructure. Media reach is a strong reason for

the penetration of goods like cosmetics, mobile phones, etc., into the rural market

which are mainly used by the urban people. Increasing awareness and knowledge on

different products and brands accelerate the demand. So advertising had shown

opportunities for income growth from the rural market.

 The turnover of Indian Advertising Industry is less than 1% of the national GDP of

India whereas the share of US ad industry in national GDP of USA is 2.3%. This

indicates a tremendous growth potential for the Indian Advertising Industry. In

contrast the growth in GDP is fuelling the advertisement spending.

  Foreign Direct Investment in India: The liberalized investment administration, rapidly

growing economy, good and strong macroeconomic policies, continuous de-licensing

of industry sectors and the easing in business transactions has attracted multinational

corporations to put investment in India.

 The Services of an Advertising agency other than media buying services is taxable at

the rate of 18% for Digital media and 5% for Print media.

 For media buying services the rates may vary from 5%to 18%. If the advertisement

agency works on principal-to-principal basis, that is, buys space from the newspaper

and sells such space for advertisement to clients on its own account, that is, as a

principal, it would be liable to pay GST at the rate of 5 per cent. However, if the

advertisement agency sells space for advertisement as an agent of the newspaper on

commission basis, it would be liable to pay GST at the rate of 18 per6

Social Factors

India is the land where the old and the new, the traditional and the modern, and the local and

the international coexist—sometimes comfortably, sometimes not. In managing brands and

targeting consumers, advertising must understand and contend with the social and cultural

diversity of India.

Today, many Indians remain suspicious of imported goods and the multinational corporations

that produce them. Others view such foreign influences, including the establishment of

foreign corporation branches, as a means of modernizing the country and bringing it into the

global economic community.

After years of controlling and closing the economy to foreign influence, the Indian

government liberalized the economy in 1991. The years since have witnessed rapid change at

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virtually every level of the society and culture. Multinational corporations have moved in,

imported goods have become widely available, and consumption has become rampant. Today

it is possible to buy nearly anything in India—from inexpensive handcrafted bangles to

luxury watches, foreign cars, and designer clothing.

Since the mid-1980s, Indian society has undergone a dramatic shift in social values. Getting

rich and enjoying a good life has become the new mantra of social existence for the Indian

middle class. With more income and more purchasing power, the status-conscious Indian

middle class now seek to buy good quality consumer products and spend more money on

food and entertainment. In metropolitan cities, extensive foreign media exposure and the

Internet revolution have contributed to the emergence of a new social attitude which accepts

Western values and culture. The contemporary Indian society can be understood on the basis

of a 70/30 dynamic. While 70% of Indians are still traditional, poor, and live in rural areas,

30% of Indians (more than 300 million people) have emerged as rich, modern, Western-

exposed, English-speaking, urban dwellers.7

For a long time advertisers have focused on the world’s largest population of the young

(51.8% of Indians are below 35 years of age), wooing them with youth-centric

advertisements.8 However lately, Indian advertising has become inclusive enough to

accommodate senior citizens promoting products beyond insurance and banking products for

the retired.. Lowe Lintas launched a campaign in Tamil for classifieds site OLX featuring two

grannies making fun of a young man using an outdated phone, guiding him to sell it on OLX.

Recently, advertisements are turning the spotlight on seniors who have more time for TV.

Advertisers believe they are the target consumers. As they have more money to spend, more

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time, they want to do more things, eat out, shop and travel more, and they are willing to try

new experiences.

Technological Factors

 Outdoor advertising is no more restricted to billboards. As the Indian consumer is

bombarded with 1, 00,000 advertisements a day on more than 250 channels, outdoor

advertising has shown promise to break the clutter of advertising on traditional

mediums. OOH is now into digital and graphic innovations like Televisions

advertising in Malls, Banners, hoardings and on travel medium like planes.

 The biggest consumer of computer animation is advertisement industry. From low end

title scrolls to high end visual effect for TV commercial, its animation all the way.

This animation industry has become the driving force for creativity in advertising.

 Launch of INSAT satellite systems by ISRO enabled the rapid expansion of TV and

modern telecommunication facilities to even the remote areas and off-shore islands.

Today, INSAT has become the largest domestic communication satellite system in the

Asia-Pacific region with ten satellites in service

 Online advertising is penetrating into a large market with ways mainly through social

networking and over OTT platforms. The share of digital platform in advertisement

industry has considerably grown in the recent decades. In the FY 2019 digital

marketing has grown by almost 32.9% adding Rs 3,762 crore to Advertisement

industry, to reach a size of Rs 15,467 crore. It now contributes a whopping 23% to

Indian Advertisement industry.9