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Introduction

Advertising agencies or do it yourself?
Advertising is just one of many marketing disciplines and it can occupy a central role in the strategic development process. This leads to the question: how are you going to plan and implement your advertising? Do you engage the services of an advertising agency or coordinate it yourself? As a general rule the services of advertising agencies are cost prohibitive for most SME's. In our view this option should not be considered if your advertising budget is less than six figures.

Appointing an advertising agency
Assuming the availability of a substantial advertising budget the process of agency selection can be complex and time consuming. It is often worthwhile to talk to suppliers and other network contacts to obtain referrals and personal recommendations before compiling a 'short list' from which you could invite two or three candidates to make speculative creative submissions.

From these you can assess which one you feel comfortable working with and which meets the brief most closely and creatively. Advertising agency relationships should be looked at as long term so it is important to get the selection process 'right' in the first instance.

Agency remuneration
There are various methods of setting agency remuneration. The most common is a combination of media commissions (paid by the medium with whom the advertising is placed - usually around 10% of billings) plus additional fees paid by the advertiser (ranging from around 5 to 10% of media billings).

Many advertisers argue that this method is inequitable, as it bears no relation to the amount of work undertaken and encourages agencies to consciously or not propose self serving increases in media spending.

The fee system is becoming increasingly popular among advertisers. When a program has been agreed a 'set fee' is negotiated based on the amount of work required. In this scenario media commissions are rebated to the advertiser either in part or in full. This is sometimes augmented with an additional media placement fee of a percentage of gross media billings to cover media planning, negotiation and placement. A recent trend is to negotiate performance based compensation based on sales or market share results. This concept is an over simplification for many advertisers because of the many variables involved which make it almost impossible to accurately identify cause and effect.

Managing your advertising 'in-house'
Coordinating your advertising yourself is a more practical approach for most small businesses. Producing advertising without an advertising agency is not quite the same as 'doing it yourself'. In the past some companies such as large retail chains elected to have in-house advertising departments but is increasingly less common because of cost prohibitive overheads.

A more practical and less expensive approach is to outsource the services you require to independent specialists such as freelance copywriters, graphic artists, web designers, photographers, or studios that offer a comprehensive service. You can also enlist the services of the publication or station with which the advertising is placed to help you create the advertising material. Printers, newspapers, magazines, outdoor advertising firms and radio and TV stations often offer these services at a reasonable cost. When the advertising material is produced, media placement can either be handled by placing a schedule with the publication or station directly or through specialized media buying services or consultants. Another realistic option is to engage the services of an independent marketing consultant to assist you with planning, coordinating and implementing your entire advertising program.

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