An advertising agencyâ€™s major role is purchase of media time and space. Besides it is directly responsible for development of an advertising copy and or the commercial. It should be noted that in both these tasks, i.e. purchase of media time and space, and copy development, the advertising agency is greatly assisted by market research. Many of the large advertisers like Hindustan Lever, Procter and Gamble, ITC and GTC, etc. have their own internal marketing research departments.
With increasing professionalism and catchy slogans almost known to every household even larger companies are developing their campaigns taking the help of advertising agencies. Reputed agency personalities like Piyush Pandey, Prahlad Kakkad, Alyque Padamsey, R.K.Swamy of reputed advertising agencies are now treated as celebrity and they are considered as leaders in the field of advertising.
With increasing competition and buyer behavior and decision processes becoming more complex, many large industrial houses and companies are creating their own internal marketing research departments. Even the large advertising agencies and media have their own research departments or affiliates. For example, Mudra Communications, one of the leading advertising agencies in the country, has an affiliate in SAMIR which does all the marketing research and provide the input to Mudra and client advertiser.
In areas like copy development and media buying, generally, advertising agencies act independently. In increasing number of cases, agencies are going beyond their traditional role to get involved in a client firmâ€™s marketing planning and brand strategy development. The growing feeling among the agencies is that since advertising plays an important role in attitude formation, they should take a strategic perspective of the brand and hence their involvement in brand strategy. Rasnaâ€™s success is largely attributed to this strategic role advertising agencies.
In terms of compensation, most agencies generally work on commission and fees basis. They get 15% commission from the media in which advertisements are placed. On â€œnon commissionableâ€? services like brochure development or strategy, printing etc. agencies usually mark-up the suppliers invoice cost. The agencies also charge fees for creative copy development or, to put in commonly used term, for the art work.
A growing area of interest in agency compensation is whether agencies could be made committed to a marketing goal in terms of market share or sale and then given an incentive in the form of bonus once that goal has been achieved. This may help create â€œadvertising that worksâ€?