Marketing and Advertising Agencies Blur the Lines

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From the establishment of the first American advertising agency (reportedly in Philadelphia in 1841) to today, advertising agencies have come a long way, baby. Putting together an effective advertising campaign is an art and a science, which is why companies often turn to professionals to help them do it.

Choosing the right agency is no simple task. Today it is common for advertising agencies to offer marketing services, and vice versa. Boutique firms that specialize in certain areas have also sprung up. There are research marketing firms, loyalty incentive firms, digital agencies, etc. In addition to print, television, and radio, marketers must also contend with the digital components of a campaign.

On top of all that, companies have been forced to cut back on their marketing budgets. Ad spending suffered during the recent recession but is slowly coming back. In 2009, total ad spending, which includes TV, Internet, print, and radio, was $147.2 billion, according to research firm eMarketer, and it is expected to reach $164.2 billion in 2013.

The Agencies Behind the Super Bowl

A classic example of intense ad spending is the Super Bowl. When football fans sit down to watch their favorite teams battle it out, businesses know the anticipation for the commercials is just as high—if not higher—as for the big game. The price tag for a 30-second spot this year was $3.5 million, and it is predicted to rise to $4 million in 2013.

"What makes the Super Bowl so popular [for advertisers] is it's the only day of the year [when] people actually tune in to view ads," notes Ron Goodstein, associate professor of marketing at Georgetown University's McDonough School of Business. "It's the whole concept of 'I get to finally play ad critic and I'm specifically watching these ads to determine if I like them.'"

This year, 111.3 million people watched the Super Bowl, making it the most-watched program in television history for the third year in a row, according to Nielsen estimates.

In addition to plunking down millions of dollars for an ad spot, companies also hire agencies to produce the elaborate commercials that viewers expect.

"Ad agencies are able to attract the various types of talent…needed to make a unique and effective commercial," maintains Chris Carter, vice president and account director of advertising firm Deutsch L.A., which produced Volkswagen's "The Dog Strikes Back" commercial this year. "Even if a business can attract similar talent, they'll still use an advertising agency because they want experts."

Deutsch L.A. also created the pint-sized Darth Vader in last year's "The Force" Super Bowl commercial, which rated at the top of most consumer polls in 2011, and at the time this article was written, had received more than 50 million views on YouTube alone.

For "The Dog Strikes Back," the agency and its partners spent months creating the approximately 60-second commercial, which featured a dog getting in shape to chase after a Volkswagen Beetle. Preparations involved training a dog to wear a fat suit while walking on a treadmill and building a replica of the famous Star Wars canteen, complete with costumed actors.

Despite criticism that most viewers remember the creative angle of a Super Bowl ad longer than they do the brand, advertising agencies have begun extending the buzz surrounding a commercial through online media.

Deutsch L.A. was among the first agencies to pre-release its Super Bowl ad on YouTube before game day last year, garnering millions of hits and generating chatter on social media platforms. It also released a teaser ad, "The Bark Side," featuring a chorus of barking dogs, which was a viral hit, with more than four million online views in less than 48 hours.

In addition to producing high-profile commercials, advertising and marketing agencies provide businesses with a slew of other resources.

When Agencies Are an Extension of Your Brand

Andrea Anderson, the director of marketing and communications at Dallas Area Habitat for Humanity, needed help raising awareness and driving foot traffic to her company's ReStores, where customers can find discounted new and gently used home decorating and improvement products.

Anderson turned to MarketWave, a Dallas-based company she had hired in the past, for help. "I needed a support team that would be an extension of myself and whom I felt would be comfortable both driving or riding in the passenger seat on any given day as we embarked on this new journey together," Anderson says. "From my past history working with MarketWave, I knew I would get that and more."

MarketWave came up with "The Design Duel" contest. Two firms were given the challenge of redesigning the living and dining rooms of two families in three weeks using only items from Dallas Habitat's ReStores and a budget of $3,000. The families were selected based on need and their entry submissions.

"The results were amazing. They created an out-of-the-box campaign…which shed a whole new light on our home improvement stores and the deals and great finds you can get there," Anderson recalls.

In addition to seeing a 20 percent increase in sales a week after the local paper did a story on the contest, Anderson notes the campaign helped her company develop new relationships within the design community. A design firm that was relocating donated furniture, and a designer volunteered to build vignettes to better showcase the ReStores' items and also refurnished her own office with items from the ReStores. She hired the husband from one of the contest families to do the handy work.

According to Anderson, it would not have been possible for her team to create this campaign in-house due to a lack of resources and other priorities. "With so much for me to personally manage, I needed the assurance that I was working with a winner, and that's exactly what I got," she says.

Another benefit of working with an agency is getting access to expertise outside of your team's abilities.

Shoppers at Saks Fifth Avenue OFF 5th stores have slightly different expectations from their full-priced Saks Fifth Avenue counterparts. "My customer is really receptive to looking for savings and deals and notifications," says Amber Cacali, the company's vice president of marketing.

In order to offer her customers more options, Cacali says she was eager to get into the mobile solutions space. About a year ago, Cacali teamed up with Red Fish, a mobile marketing agency based in Miami Beach, Fla., to develop campaigns.

Compared to the full-priced division, Cacali describes her marketing division as 'a bit more lean,' and she relies on Red Fish to act as a strategic partner.

"Whether it's through the development of a QR code or a sweepstakes, they [Red Fish] are looking at us in two ways, from the acquisition side in terms of how we acquire customers and also from an engagement or retention strategy," Cacali explains. "We definitely use them as this strategic arm as well as a creative arm and a full solutions expert."

One of the latest projects is a mobile "look book" to show off the brand's spring line, with items that customers can also share on Facebook and Twitter. "It's a way for us to extend the experience of getting a direct mail piece that drives customers into the store to see our great products…but now in the palm of your hand," Cacali says.

Due to corporate policy, Cacali declined to provide ROI data about the campaigns, but she says she knew early on that she had made the right decision to work with the agency. She noted that soon after signing the account with her company, Matt McKenna, Red Fish's founder and president, pitched in during the launch of a new OFF 5th store to get a better understanding of her customers. "He really wanted that kind of hands-on knowledge…I found that refreshing, since I think, many times, when you work with an agency and they don't think of themselves as an extension of the brand, you won't get the solution that's applicable for your business," she notes.

Marketing or Advertising Agency—Does It Matter?

The traditional advertising agency has all but vanished. In order to meet the increasingly sophisticated demands of clients, there are two trends on the rise, notes Tulin Erdem, a marketing professor at the Leonard N. Stern School of Business at New York University. "Everything is about the integration across different communication channels, and many classic advertising agencies now offer consulting or creative services in all domains," Erdem observes. "At the same time, there is also a rise in smaller firms that specialize in a specific aspect, such as advertising communications, promotions, or a subset of online marketing or Web design, and even this might become even more micro."

Having more options increases the number of decisions companies must make when choosing an agency. As a result, clients have become more open to solutions from nontraditional agencies, according to Chuck Meyst, chairman and CEO of AgencyFinder.com, an online search and selection consultant.

"If you look at the hundreds of search inquiries we've processed over the last eighteen months, you see more and more clients willing to meet with the entire spectrum of marketing service firms—from integrated marketing firms to shops specializing in digital, social, experiential, and other mediums," said Meyst in a statement. "Advertisers want marketing partners to solve their marketing issues but don't particularly care what a marketing firm calls itself."

Whether an agency refers to itself as a marketing or advertising agency—or something entirely different—it is crucial to ask the right questions when choosing an agency. Here are some guidelines:

1. How well do you know my business? One of the first signs, according to Goodstein, is in the prospective agency's presentation. "The agencies I want to consider are the ones who did their homework and say, 'Here's what we did and here's how it resonates with how we see your problem,'" Goodstein says. "Do they have the problem right? If they can define the problem correctly, they can [most likely] help you resolve the issue. If they start talking about their agency first, I send them home."

2. What kind of experience do you have? An advantage of working with an outside agency is being able to leverage the experience an agency's team has gained from solving problems for other clients.

"An agency should be able to give very specific examples of what they've done for other brands—preferably similar brands—that have been successful, by leveraging both the conceptual pieces and the messages with the positioning," says David Simon, vice president of advertising solutions at Local Corporation, a media marketing company. "If it's not relevant to your business, it's just name-dropping."

Do not forget to ask about the failures, adds Cathy Beck, an account executive at video marketing agency Grey Sky Films. "Agencies should be prepared to talk about how they deal with campaigns that just didn't work," Beck says. "[Also] what is their culture; what inspires their creative teams; what magazines do they read; what criteria do they need their employees to adhere to; have they ever been fired from an account and why?"

3. What do your references say about you? Ask to speak with current and past clients.

4. Whom will I be working with? Find out exactly who you will be working with and where you fall in terms of client size, advises Doug McIntyre, CEO of Cult Marketing. The size of your account may affect how much attention you receive and whether or not your campaign is handled by senior executives, according to several sources.

5. How do you measure success? Prospective clients should get a "shared mental model" on their expectations regarding budget, measurable goals, and what a "big win" looks like, advises Jenny Herring, public relations director of The Creative Alliance, a strategic marketing, public relations, and creative services firm. "How will success be defined? Sometimes it's defined in terms of revenue growth; other times it's defined in terms of an improved brand image," Herring notes.

6. How much of the work will be outsourced? It is common for marketing and advertising agencies to outsource some of their clients' work. Find out the degree to which this occurs, Herring adds. "Prospective clients should also find out what level of self-sufficiency [the agency is] willing to hand back over to the client in terms of Web access, who owns the creative once it's paid for, etc.

7. How will the finances be handled? When asking about the agency's fees, make sure you have a clear understanding of the agency's price rate, e.g., hourly rates versus project-based fees, monthly retainer fees, a la carte pricing for projects, etc.

Even after doing an exhaustive search, the final decision is often based on gut instinct, Simon notes. "What usually seals the deal is the emotional side. You as the business owner know your business best," he says. "Ultimately the strategy and the plan and the results have to be something that you believe will work. It ultimately comes down to you."

Questions Agencies Should Ask You

Prospective clients should be prepared to explain to an agency what they want to accomplish through the partnership. Be prepared to answer the following questions:

1. How accessible will you be to our agency?

2. Who will be our designated contact and who will be responsible for approving work?

3. How much communication should be provided in terms of progress and status reports?

4. How involved do you want to be in the creation and review process and what does that look like in practical terms?

5. How long have you worked with previous agencies and why are you changing agencies?

Associate Editor Judith Aquino can be reached at jaquino@destinationcrm.com.

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