1. Necessity of an Advertising Agency
The highly specialized services of an advertising agency are as necessary for a successful advertiser as are the services of a surgeon to one who has a troublesome appendix. The analogy goes farther than this. While we are not yet as enlightened as the Chinese, who pay a doctor regularly when they are well but stop his pay when they become ill, we appreciate, more than formerly, preventive measures. An advertising agency often renders a valuable service to its client by advising him not to advertise, if the agency considers that to be good business policy at the time.
The general impression of an advertising agent is either that he is a gifted and persuasive being, who can write anything from a help-wanted advertisement to a circular letter, or that he is merely a broker in magazine and newspaper space. When advertising was in its infancy, these conceptions might have been justified, but a well-organized agency today consists of an aggregation of specialists, each an ex pert in some particular branch of advertising. The agency has become a business counsellor.
The American Association of Advertising Agencies defines agency service in these terms:
Agency service consists of interpreting to the public, or to that part of it which it is desired to reach, the advantages of a product or service.
Interpreting to the public the advantages of a product or service is based upon:
(a) A study of the product or service in order to determine the advantages and disadvantages inherent in the product itself, and in its relation to competition
(b) An analysis of the present and potential market for which the product or service is adapted— as to (1) location, (2) the extent of possible sale, (3) season, (4) trade and economic conditions, and (5) nature and amount of competition
(c) A knowledge of the factors of distribution and sales and their methods of operation
(d) A knowledge of all the available media and means which can profitably be used to carry the interpretation of the product or service to consumer, wholesaler, dealer, contractor, or other factor
This knowledge covers (1) character, (2) influence, (8) circulation (quantity, quality, location), (4) physical requirements, and (5) costs.
Acting on the study, analysis, and knowledge as explained in the preceding paragraphs, recommendations are made and the following procedure ensues:
(e) Formulation of a definite plan
(f) Execution of this plan:
(1) Writing, designing, illustrating of advertisements or other appropriate forms of the message
(2) Contracting for the space or other means of advertising
(3) The proper incorporation of the message in mechanical form and forwarding it with proper instructions for the fulfilment of the contract
(4) Checking and verifying of insertions, display, or other means used
(5) The auditing, billing, and paying for the service, space, and preparation
(g) Cooperation with the sales work, to insure the greatest effect from advertising
This is a summary of advertising agency practice, but it does not convey anything like an adequate picture of all that an advertising agency can do for its clients or of the work it may be called upon to perform. The agency frees the advertiser from burdensome detail, and enables him to devote more time and attention to his manufacturing problems. The expert services that the agency can muster to the manufacturer’s aid are numerous. us he faced with a merchandising problem? There is someone in the agency who can help him solve it. Is there a question of trade-mark or package? Other men are qualified by experience to advise him. Should changing conditions witness the decline of uses for his product, the agency will study and may develop new uses for it.
Back in the early nineties, a prominent agent discovered Gerhard Mennen handing out samples of his talcum from the tail-end of a platform wagon to a crowd which had gathered to watch his dancing troupe. The advertising agent suggested a method of advertising which would introduce the talcum to the nation more quickly. Today Mennen’s is stocked in every drug store.
It was an advertising agent who suggested to a manufacturer of communion wine the idea of selling grape juice to the public as a beverage. This idea not only built up that particular business, but brought about the present big trade in bottled grape juice.
For twenty years, advertising men have been responsible for changing bulk goods to package goods, and the process is going on all the time. The house wife no longer buys crackers picked out of an open barrel, or sugar scooped from a receptacle in which the cat may have slumbered during the night. She owes a debt of gratitude to the advertising agent. And not only has he worked improvement in the sanitary handling of goods, but he has contributed to convenience by the improvements he has brought about in packaging.
The advertiser who derives the greatest benefit from the services of his agency does not consider it as an agency at all. Rather, he looks upon the agency as a partner, as part and parcel of his selling force. And the agent, by studying his client’s business, from raw material to the time the product is in the hands of the user, is constantly acquiring a priceless fund of knowledge.
One of the fundamental advantages of agency service to an advertiser is that it helps him to obtain the outsider’s viewpoint. He must keep abreast of all that has anything to do with making and selling his product. On the other hand, the agency is constantly adding to its knowledge of the use and technique of advertising. Both advertiser and agent must remember the adage, “Shoemaker, stick to your last,” or they drop out of the procession. From too close application to his own problems. the manufacturer’s
Perspective sometimes becomes distorted, he cannot see the forest for the trees. It is then that the fresh viewpoint of the agency can often give him ideas that may profitably alter his whole scheme of affairs, that may even save him from rapidly declining profits.
The percentage of advertising in newspapers and magazines that is placed “direct” by advertisers is so small as to he almost negligible. The advertiser who deals direct with publications is at a (disadvantage. It is not that magazines and newspapers do not welcome his patronage and give him value received for his orders. But the agency, handling many accounts, can obtain assistance from publications that the latter could hardly afford to render an advertiser placing his business direct. While mans- newspapers and magazines conduct a service department for the benefit of advertisers in their columns, the service is too restricted to be comparable with organized agency service.
2. Types of Agencies
While a similarity is found in the functions of all agencies, many specialize on specific forms of advertising. Some are known as “farm-paper agencies,” specializing in the farm- paper field. Some are “mail-order agencies.” There are agencies that specialize in the medical, motor, financial, or real estate fields. The reputation of others rests upon their advertising of. products for women. There are agencies, known as “service” agencies, which place little advertising, but whose province is the planning of campaigns and the preparation of the material therefore.
The majority of the larger and better organized agencies have centralized copy departments. Here arc found men and women whose time is devoted entirely to writing the text for advertising messages. In some of these larger agencies, one writer will confine his efforts to the copy for but one account, pre paring all the text for consumer and dealer messages. In other agencies, depending upon the number of accounts, a copy writer may have to prepare the copy for a dozen or more advertisers in diversified lines. Still other agencies do not maintain a copy department. They have the copy prepared by free lance copy writers, or each account executive writes the copy for the accounts in his charge.
Some of the large agencies retain highly paid men who write nothing but technical copy for accounts that require it. For instance, if a product is to be sold to architects and engineers, the agency may enlist the services of a trained architect or engineer qualified to write the copy in terms that will best be under stood by the class to whom the appeal is directed.
Then there is the small agency, where one man may assume the manifold duties of selling, planning, writing the copy, and acting as account executive. It is very readily seen that a man so burdened with detail can supervise only a few accounts.
In general, there are two types of agencies. In one, the account executive writes the copy and at tends to the other details incidental to the preparation of advertisements for clients in his charge. The other type of agency maintains centralized departments to perform the necessary work.
3. Importance of Recognition
There are four fields in which recognition is granted to advertising agencies:
- (a) Newspapers: American Newspaper Publishers Association, New York; Southern Newspaper Publishers Association, Chattanooga, Tenn. (In many cities there are local associations of newspapers that grant local recognition)
- (b) Magazines: Periodical Publishers Association, New York
- (c) Agricultural Publications: Agricultural Publishers Association, Chicago
- (d) Outdoor Advertising: National Outdoor Advertising Bureau, New York
The details concerning the qualifications of an agency for recognition differ with these different associations. The guiding principles in all cases, how ever, can be summed up in four questions:
- (a) Does the applicant know advertising?
- (b) Is his credit good?
- (a) How many accounts does ho handle?
- (d) Are there any moral hindrances?
Recognition by one association does not mean recognition by all, or any, of the other associations. To be entitled to recognition by the associations listed, an agency must have advertising accounts active in the field in which application is made. In order to avoid the possibility of an advertiser’s establishing his own agency for the placing of his own advertising, thereby securing for himself the agents’ commissions, the various publishers’ associations require that a new agent have a minimum of three accounts to place be fore granting recognition to him. The names of the accounts must accompany the application, together with a financial statement, and other data sufficient to establish the agency’s responsibility. Individual papers sometimes grant the agency commission to small agencies who do not have general recognition. It is usually the weaker publications that do this as an incentive to place the business with them.
Recognition is of paramount importance to an agency. The commissions paid by newspapers and magazines on business placed are usually paid only to recognized agencies. An agency without recognition means an agency without a credit rating, so that it must pay cash with order when placing business. There have been, and probably are today, agencies which have not yet secured recognition and which “clear” their business through another agency that is recognized. The practice of splitting commissions with an advertiser, or with another agency, has been banned by the several associations, and an agency detected violating this rule is liable to loss of recognition.
An agency’s recognition is almost as important to the advertiser as to his agency. It assures him that there will be no interruption in the placing of his advertising and that his agency will have the co operation of the magazines and newspapers. If the advertiser happens to be a new one, the fact that his advertising is being looked after by a recognized agency gives him standing and prestige with the media.
4. The Agent’s Compensation
The usual commission paid to recognized agencies is 15 percent on the gross, with a 2 percent cash discount on the net. There are few exceptions. Some publications pay 15 percent and 5 percent. On classified advertising in newspapers, commissions vary. Some classifications, such as “Legal” and “Amusements,” pay only 5 percent commissions. Some of the trade papers do not pay commissions to agents. Many agencies conduct their operations for clients on a fee basis, drawing a regular retaining fee by the month or year, regardless of the amount of advertising placed. This is usually a guaranty of a minimum income. This method of compensation is considered by many to be the most equitable basis, as it tends to insure against the recommendation of unwarranted expenditures by the agency. Needless to say, unwarranted spending happens only in the case of inexperienced or unethical agencies.
Some agencies deduct all commissions and discounts earned and charge the advertiser a service fee of 15 percent on the net amount. The usual practice, however, is for the agent to retain the full commission allowed by the publication. Many agencies also apply a 15 percent service fee to all mechanical charges—art, engraving, printing, etc.—to compensate them for the labor of handling these items.
5. How Agencies Are Organized
Advertising agencies, for the most part, are organized in such a way as to have three main divisions:
- (a) Sales department
- (b) Production department, which prepares the advertising material
- (c) Clerical force for estimating, buying space, ordering, accounting, checking, and billing
However, one will not always find, in every agency, sharp lines of demarcation between the functions per formed by different members of its personnel.
The advertising agent, through his contact with hundreds of cases and any number of precedents, has accumulated a valuable fund of experience. He has learned, to an important degree, at least, what advertising will do and what it will not do. Just as the physician must spend a good part of his time in study, learning about new forms of old ailments, keeping abreast of the times, making the acquaintance of, and experimenting with new medications, so does the advertising agent study every branch of his profession, that he may be in a position to advise his client on what is best in any form of advertising practice.
Take, as an example, the important matter of media. Every worthwhile publisher is in constant touch with the agencies throughout the country, advising them of what he is doing or has done for some particular advertiser or group of advertisers. Thus, the agencies are furnished with facts that are of great value to the advertiser. True, while some advertisers also receive promotion material from media, it usually is not as extensive nor as carefully weighed and compared as it is by the experienced specialists in the advertising agency.
Agency executives, through their clubs, conventions, associations, and clients, are constantly kept advised of advertising conditions, markets, selling plans, and all manner of business relations, which they, in turn, can employ to the advantage of each individual client.
6. Selecting an Agency
The farsighted advertiser will give much thought to the question of which advertising agency to employ. If he is wise, he will look beyond mere personalities to the advertising equipment in the background. He will base his ultimate decision on the record of the agency in the field of performance. He will remember, likewise, that the service for which he is looking calls for many types of specialized knowledge.
One well—known national advertiser tells of the method he followed in selecting his advertising agency. He knew that there were many good agencies available, but he did not know how to go about selecting the one best agency for his needs. He had been solicited by a member of high-grade agencies, who had all presented impressive stories, and who seemed to be about equal as to ability, experience, and accomplishment. He had gotten the opinions of other manufacturers, and he had seriously studied the advertising of the agencies as it appeared in various advertising trade journals. After a great deal of “willy—nillying around,” as he expressed it, he finally decided to hear the specific story of twelve agencies, which he had tentatively decided were, in general, what he was looking for. After preliminary conferences, he was as much at sea as ever. He hit upon the plan of submitting to these twelve agencies a list of fifty questions, requesting full and complete answers, which he proposed to use as a basis of decision. Because these questions are interesting in themselves, and because they indicate the importance attached by this successful advertiser to the selection of an agency connection, they are repeated here:
1. What is the age of your agency?
2. What has been the selling and advertising experience of the executive and important members of your organization?
3. How many people are employed?
4. How are their duties divided, viz., executive, productive, artistic, clerical, outside?
5. How many would be assigned to our account, and what are their special qualifications?
6. Would our contact be through one man, or through several, covering various phases?
7. Is the contact man on a salary basis or commission?
8. Is contact man a salesman or an active copy writer or merchandiser?
9. Would contact man be capable of assisting or advising in preparation of technical-information pamphlets?
10. Would contact man handle accounts other than ours? If so, how many and who are they?
11. Is contact man experienced in: (a) radio, technically; (b) radio, commercially; (c) manufacturer to jobber and dealer policy; (d) radio publication field?
12. How many accounts have you? List names and length of service.
13. How many are active and exclusive?
14. How many accounts added during past year?
15. How many accounts lost during past year? Give names.
16. Do you handle any account that would compete with ours? If so, give name.
17. Do you or would you handle competing accounts in any line?
18. Have you any objection to our getting in touch with present or past clients?
19. What is value of each account you handle? (This can be listed individually or in groups).
20. What is total business handled per year during past five years?
21. Has your agency shown a consistent yearly profit?
22. Why do you consider your agency qualified to help us?
23. Have you anyone in your organization who can qualify for the following, and if so, who? (a) radio fan; (b) engineer—radio or otherwise; (c) practical workman; (d) salesman; (e) merchandiser?
24. What experience has your agency had in the radio field?
25. How do you propose to handle the technical features of our account?
26. Do you have your own artists, or is all art work jobbed?
27. What does your service include, in addition to the preparation of copy for commissioned space?
28. On what basis of compensation is this service rendered?
29. What is your policy on the placing of printing and other mechanical work for the broadsides, pamphlets, etc.?
30. Do you prefer that we, or you, place the orders for such printing?
31. Do you aim to be a factor in determining and con ducting our merchandising policies?
32. What would be your plan for helping us with these policies?
33. How far ahead do you normally plan advertising campaigns?
34. W this be any different for our business?
35. Are you familiar with the seasonal nature of the radio business and the shortness of the selling season?
36. What effect would this have on your advertising preparations?
37. Are you familiar with our form of distribution— manufacturer to jobber?
38. Do you favor any modification of tins plan for our present lines?
39. Would you favor a modification if we decided to add a high-priced line of sets?
40. If so, what change would you recommend?
41. Do you make personal field investigations for anticipated sales and advertising campaigns?
42. Do you consider them practical in the radio field?
43. Do you favor trial campaigns in certain localities or mediums?
44. Do you favor them for the radio business?
45. What do you consider as the important factor on which to base an advertising appropriation? (Check this against) (a) last year’s business; (b) last year’s net profit; (c) anticipated business; (d) intensity of campaign; (e) requirements to cover field; (f) general business conditions; (g) conditions in radio field; (h) our position in radio field; (i) production possibilities; (j) experience of others.
46. Do you favor a yearly gross appropriation to be spent at the discretion of the agency, or would you recommend a monthly control of such expenditures?
47. Based on anticipated yearly sales of $1,500,000, what would you recommend as an advertising appropriation, covering all expenses?
48. How would you allocate this appropriation for: (a) newspaper space; (b) trade magazine space; (c) general magazine space; (d) direct mail; (e) dealer helps; (f) salaries and miscellaneous?
49. In what relation to each other do you hold production, advertising, and distribution, and how do you regulate the tie-up?
50. Submit a complete file of one year’s campaign matter for one of your accounts, preferably of a technical nature. This should include all forms of advertising and merchandising matter.
To the surprise and disappointment of the advertiser, each of the twelve agencies replied so fully and satisfactorily that he was at just as much of a loss as ever. After all his effort, time, and care, he finally selected an agency on the opinions of that agency’s clients. This is an extreme case, and certainly it does not hold good as a general basis of agency selection.
7. Essentials in Selection
The task that an advertiser faces in selecting an agency is a difficult as well as a delicate one. Selection is rendered more difficult in view of the fact that modern agency practice is largely standardized. In the final analysis, choice centers upon these attributes:
- Reliability—financial soundness
- Experience—years in business
- Character of the personnel
- Stability of accounts and personnel
- Number, size, and diversity of accounts
- The character of the agency’s work
- Experience in the advertiser’s particular line
All these points must be applied by the advertiser as a measure of the agency’s qualifications to advise with him and to function in the execution of the advertising itself. The error of judging an agency’s ability to serve by one point alone has often brought an advertiser to grief. The advertising graveyard can muster many skeletons of unsuccessful campaigns where the advertiser selected his agency from a brave showing of art work and copy without sound merchandising experience in his line to back it up. Many advertisers have selected an agency on its record of success with an entirely different product, in an entirely different field, to discover, only too late, its inability to serve him in his field.
The majority of the larger agencies make it a rule not to accept the advertising of competing products or services. Their ethics are highly commendable, yet this presents a barrier to the advertiser in making his selection of an agency. For example, he may be a manufacturer of women’s shoes. The XYZ Agency has made a brilliant record with the advertising of “XL” shoes for women. “The very agency I need,” thinks the advertiser, but the agency will not accept his business because it is competitive with “XL” shoes. The result is that the advertiser must eliminate the agency that he feels is best qualified to serve him and cast about until he finds one without a woman’s shoe account on its list.
8. Preliminary Research
Timing an advertising campaign is important. Many campaigns owe their success to being launched when conditions were propitious, but there are dozens of cases on record where an advertiser seriously considered spending a huge advertising appropriation, and was advised against it, by his agent, because the time was not advantageous.
A few years ago, a large manufacturer put on the market a cheap phonograph. At the price, the article looked to be a sure winner. Pages were used in the Saturday Evening Post. The campaign was a fiat failure. When people who had read the advertising made inquiry, they found few dealers who were stocked with the phonographs. The advertiser had fallen down on deliveries and his premature advertising campaign was dead waste. By the time the manufacturer’s production was sufficient to stock the dealers, the dealers refused to buy. I this advertiser, or his agent, timed the campaign better, made the necessary preliminary research, opened retail outlets, and sold the dealers on the advertising before it started, there might have been a different and more cheerful story to relate. Advertising campaigns, to be successful, require much preliminary work.
A manufacturer is so close to his product that he will often fail to recognize good selling points that an agent, coming to him with the outsider’s viewpoint, may be able to point out and capitalize. A story is told of a western canning concern that was marketing canned pineapple. The product was as close to perfection as they could make it, but sales were slow. An advertising agent called on the canning company. In conference, with an opened can of pineapple be fore him, the agent asked, “What is this liquid in the can? Is it syrup C’ “No,” replied the president of the canning company, “we put up the pineapples in their own juice.” The advertising man was fairly aghast. “Good heavens, man. Why haven’t you told the people that?” The big talking point was discovered. New copy was arranged and published. The turning point came when the canning company began to tell the public what kept their pineapples so fresh and delicious.
Sometimes a product is right, but the package is wrong. The agency is qualified to show the advertiser why. One of the large agencies in New York maintains a miniature store, with show windows, shelves, and show cases, in which they conduct experiments with packages under various lighting conditions until the highest development of visibility is reached. The dominant note in an advertising campaign often will be the package.
9. Planning Campaigns
The agency’s expert and technical advertising advice is most valuable at the crucial time when the plan of a campaign is being formulated. Even after it is under way, it is well to show the agency all material at hand, for they are often able to make helpful suggestions. In addition to the agency’s regular work, problems of sales resistance are carefully studied, even to the extent of sending members of the agency out into the territory with salesmen, meeting jobbers and retailers, studying the buying habits of the people, and learning what selling obstacles must be overcome. The agency representative often obtains valuable information from the publishers of local newspapers in the territory to be covered—information to which the advertiser would probably never have access.
A story is told of an agency representative who went south with a salesman for a nationally advertised food product that was moving slowly in the South, but selling well in the North and W A number of visits to retail grocery stores disclosed that a competitor’s product was called for by customers four times as often; yet the price was the same. The agency man discovered that the competitor’s article was advertised in large space in the local newspapers. When he reached his office, a conference was called with his associates and the advertiser. Part of the national campaign was cancelled, and the money thus saved was Put into local newspaper advertising in the “weak” territory. The response justified the change in campaign plans.
10. Producing Advertisements
The actual process of preparing advertising material for publication requires considerable time. When the idea for the advertisement, and the method of presenting it, have been agreed upon. the task of writing is assigned to a copy writer. If he is a competent writer, he does not depend upon inspiration, but draws upon experience and knowledge. His work may need. many revisions before it is final. The idea for the illustration is given to an artist who presents a rough sketch for approval, before he makes the finished working drawing. Another man makes a layout, which shows how the advertisement will look when completed. A type expert designates the sizes and styles of type to be used. When all this has been done, the work is assembled, and a proof is presented to the advertiser. Sometimes four, five, or more proofs are necessary, before final approval is given, and both major and minor operations may have to be performed.
11. Placing Advertising
After the copy has been prepared, the agency submits to the client a schedule of the publications that are to be used to carry his message. If the media selected by the agency meet with the approval of the advertiser, he OK’s the schedule and returns it to the agency.
A contract form is forwarded to the selected publication, reserving a definite amount of space for specific issues, generally within the period of one year. If the publisher accepts the stipulations of the contract as made by the agency, he acknowledges it by means of the tear-off acknowledgement slip that is attached to the contract. Occasionally, a publisher will run an advertisement before his acknowledgement is returned to the agency. In that case, the contract is automatically made effective by that act, which is termed “accepted by running.”
Advertising agencies specializing in financial advertising have achieved some remarkable results through placing advertisements simultaneously in widely separated sections of the country. By means of a carefully worked out formula, they are able to handle as regular routine the announcements of new bond or security issues, information of which it is not deemed advisable to have spread in any one place before another. An advertisement is prepared by the agency, and then telegraphed to possibly twenty-five cities. The advertisement appears the next day, in twenty-five different newspapers, all exactly alike in text, set up uniformly as to the kind of type, and the display of the message. This is highly specialized service, and is confined to a few advertising agencies who have devoted years to perfecting the system that makes it possible.
12. The account Executive
The account executive is the agency’s point of contact with the client. Sometimes he is the salesman who has brought the business to the agency. He is a man experienced in planning campaigns and in merchandising problems. He is often a man with copy ideas, and writes the copy for accounts in his charge when there is no centralized copy staff. The account executive usually manages accounts which, while in no way competing, are similar in merchandising problems. For instance, an agency will have account executives, each specializing on food, agricultural, mail-order, clothing, building materials, office appliance, and technical machinery advertising. Each one of these men, through contact with his particular industry, becomes a specialist in that particular division of business and furnishes the production or creative departments with the merchandising information on which to build the campaign. The account executive passes on to the agency’s production department the dominant copy note in the campaign, the main selling points, and assists them by his suggestions and criticisms to produce the type of copy appeal best suited to the client’s needs.