Performance of China’s advertising agencies: a time series cross-sectional analysis

Although China has been the world’s second largest advertising market after the United States in terms of advertising spending since 2006, the performance of advertising agencies in China and the factors that contribute to this performance have been understudied. However, by incorporating the structure-conduct-performance model and agency theory into the integrative framework and conducting a time series cross-sectional analysis, we determine that the degree of concentration in the advertising agency industry and number of regulations in the advertising industry have had significant negative effects on the financial performance of agencies. In addition, agencies with mainly foreign capital have performed better than those with only Chinese capital. Agencies adopting strategies of initial public offering (IPOs) or engaging in name changes and mergers have performed better than those that have done nothing. Implications are also discussed.     

Advertising industry evolution: agency creativity,fluid teams and diversity. An exploratory investigation

ABSTRACT

The advertising industry is in a state of flux, where the agency model is evolving alongside todays’ fast paced digital environment. This paper reviews the drivers of change in the industry and explores how creative advertising agencies are evolving and developing their team resources to improve the creative product using the resource based view (RBV) as a theoretical lens. The study adopted a qualitative approach using a key informant strategy with 16 interviews with Creative Directors, Chief Executive Officer’s and Heads of Planning and Account Directors. The findings suggest that agencies who embrace team functional diversity, include external stakeholders and develop team fluidity as a dynamic capability will enhance agency creativity.     

Market Research and Advertising Strategy in Portuguese Agencies: Perspectives of Professionals

SUMMARY

The advertising campaign development process is frequently described in manuals and textbooks. Nevertheless, the empirical perspective gives us a better understanding of the real world. In this study, we tried to understand, to systematize, and to describe the process of research and strategy in advertising agencies. To accomplish this objective we conducted 25 in-depth interviews with advertising agency professionals in Portugal. Cross-analysis of the statements allowed us to identify 5 themes: research done by the client before providing the brief to the agency, client's brief, information gathering done by the agency, brief's discussion inside the agency, and creative brief.     

Are Mergers Beneficial or Detrimental? Evidence from Advertising Agencies1

We study 33 pairs of advertising agencies that merged between 1947 and 1985, comparing each merging pair against two controls: (a) a pair of agencies with combined merger-date billings close to the total billings of the merged unit, and (b) a single agency with similar total merger-date billings. Gross revenues are the dependent variable. Results: Merging firms do worse in the short run than controls. Assuming similar subsequent rates of growth for merging and non-merging firms, a loss of 16 percent of firm value due to merging is implied.     

A Comparison of Advertising Practices within the Accounting Profession

This article reports the findings of a survey among UK chartered accountancy firms on their promotional practices following the 1984 removal of advertising prohibitions in the profession. Specifically, it compares advertising practices between firms, using a typology of firms based on size of advertising budgets and use of advertising agencies. The financial resources devoted to advertising certainly influenced promotional activities. However, they were found to be no substitute for advertising agency expertise. Firms using advertising agencies had a more systematic approach to promotion; they were more likely to undertake pre-advertising research, segment their markets, make more varied and intensive use of media, and to evaluate their advertising. Firms with relatively large budgets which did not use advertising agencies tended to be less rigorous in their approach, showing little interest in crucial matters such as pre-advertising research and post-advertising evaluation.     

Service Quality of Advertising and Promotions Agencies in South Africa

Service quality is important to firms that use advertising and communication agencies and these agencies in turn need to make sure that their service quality is what clients expect. The purpose of this research is to assess perceptions of the service quality offered by agencies in South Africa and to identify the most important service attributes of the agency offerings. Agencies were also divided into three types: mass communication agencies, or above the line agencies (ATL), sales promotion agencies, or below the line agencies (BTL), and integrated marketing communication agencies, or full service agencies (FS). A total of 105 responses were received and results were reported for each agency type and in total. The results show some serious differences between what clients are looking for and agency strategies. These are discussed in detail. Recommendations are made which will help agencies in the development of strategic partnerships with clients.     

The advertising creative process: A study of UK agencies

Advertising agencies are hired to develop creative advertising for their clients. This paper explores the advertising creative process used by agencies when developing new creative work. Using in-depth interviews with 21 agency practitioners in the UK this study examines the stages that take place within the advertising creative process. Findings suggest the process is made up of a series of sequentially linked stages and illustrate how agencies validate advertising creative during development. The study provides insight into how agencies customise the process and identifies that agencies have different approaches to the level of client involvement. Implications for practitioners are discussed and areas for future research identified.     

Dramaturgy of a Campaign: Viewing the Advertising Agency Process as a Theatrical Production

The creation of advertisements is the most widely researched topic in the advertising literature. However, the extant literature on advertising agency dynamics during campaign development remains vague and imprecise. The purpose of this paper is to introduce a new framework that can be used in the practice of studying advertising agencies. Twelve face-to-face interviews were conducted with executives at an advertising agency. A qualitative discourse analysis revealed parallels that exist between the major skill areas of an advertising agency and a theatrical troupe. In particular, the roles of producer, director, designer, technical crew, house manager, actors, and audience are similar to roles in an advertising agency.     

Client-Agency Relationships

Abstract

The increasing occurrence of client turnover and agency switching among client/agency relationships is of concern to advertising agencies throughout the world. It is proposed that small firms could provide a substantial alternative client base for agencies in order to dampen the impact of uncertainty. This study investigates the perceptions held by owner/managers of small firms toward agencies within New Zealand. We identified two groups of respondents–those who perceived agency contribution to store performance as high and those who perceived it to be low.Significant differences were found between the two group' response ratings on advertising agency services, agency attributes and selection criteria. We conclude by discussing the managerial implications of this study and provide directions for future research in this area     

Client influence and advertising standardization: a survey of ad agencies

With increased globalization of markets, the standardization of products, services, and promotion activities has streamlined the work performed by advertising agencies. In this study, managing directors of Australian and US advertising agencies were questioned about the extent their clients influence agency functions and the degree of standardization used. It was found that copywriting was the main service offered and the clients usually have a major influence on their services. As for those that handle multi-country campaigns, older agencies tend to be more involved in international markets, and there was some degree of standardizing of campaigns and creative work.     

Investment in online advertising and return on sales: Does it pay to outsource the services to an advertising agency?

Abstract

The effect of investing in online advertising on a firm’s financial outcomes can depend on whether or not the development and implementation of advertising campaigns are managed by advertising agencies. Agencies may have experienced professionals or workload to perform these jobs, but the costs are greater. This paper aims to investigate the effects of investments in digital marketing on the financial outcome of a company’s services, comparing whether or not it is outsourced to advertising agencies. The secondary data relates to services advertised and marketed by a firm. We tested the possible moderating effect of outsourcing the service in the relationship between investment in online advertising (Google and Facebook) and return on sales (profit margin), by controlling the effect of covariates. Through four regression analyses, the results showed that outsourcing the service moderates the relationship. Specifically, the higher the amount of advertising investment, the more it pays to outsource the service to an advertising agency in order to generate greater profit margin. But with a low investment value, it does not pay to outsource. This study helps to identify situations in which it pays to outsource digital marketing services to an advertising agency.     

How to achieve true integration: the impact of integrated marketing communication on the client/agency relationship

ABSTRACT

Reports from the advertising industry suggest that the pressure to create effective integrated campaigns across the ever-increasing mix of paid, owned and earned media is putting an enormous strain on client/agency relationships. This research identifies the main challenges that an Integrated Marketing Communication (IMC) approach places on this relationship and thereby advances the IMC literature by examining the practical challenges of implementation. Six key issues, developed from academic and industry sources, are presented to advertising experts, through a Delphi study, to stimulate debate and identify areas of agreement. The findings are brought together in a model which presents three main areas that need to be addressed, along with specific recommendations. These topics include the need for clients to provide stronger leadership in defining agency roles and responsibilities, more transparent remuneration systems to encourage teamwork across agencies as well as individual input and an increased emphasis on the strategic contribution from agencies.     

China myths and advertising agencies

One of the fastest growing sectors in China's transforming economy is advertising. Within the industry, large numbers of ‘advertising agencies’ are typically reported. This article charts growth in the industry and classifies agencies by type, in order to establish a more accurate understanding of agency numbers and growth. Advertising agencies are but one type of organization among the huge number of licensed ‘advertising practitioners’ in China, which are often erroneously referred to as agencies.     

Evans,W. A. Advertising Today and Tomorrow. Great Britain: George Allen and Unwin, 1974

Abstract

This study reports on developments in the international advertising agency business during the 1970s. Findings suggest that U.S. agencies remain the dominant force in international advertising in contrast to the declining performance of U.S. industry in other sectors. Specifically, American agencies have found faster growth in their overseas markets leading to continually larger shares of their total billings; there has been a growing concentration in the international business of U.S. agencies and in the industry internationally; and, the international experience of U.S. agencies has led to a growing penetration of foreign markets, to growth in productivity, and to increasing domestic market power. Results of the study indicate however, that U.S. agencies may be facing increasing challenges from non-U.S. agencies in the future; notably from the West European, Japanese, and some developing countries.     

Use of Professional Journal Ads to Promote Accounting Services

ABSTRACT

This paper presents an examination of professional journal advertising by professional accounting firms. Advertisements in the three most widely distributed professional accounting journals were analyzed to ascertain the extent of advertising by accounting firms. Research questions included the following: (1) What is the message or purpose of the ads? (2) What size ads are preferred? (3) What is the information content (firm's location, phone number, etc.) of the ads? (4) Which firms advertise the most?

The findings indicate that the most common advertising message concerned selling computer software, followed by employee recruitment. The most common size ads were between a quarter of a page and a page. Information content ranged from phone number and address to professional credentials and specialized services. Advertisements were widely used by both Big Six and non-Big Six accounting firms. The extent of advertising among Big Six firms, however, is highly varied, with Arthur Andersen & Co. generating the most ads. Advertising allows firms the opportunity to reach consumers, provide useful information, and distinguish themselves from other firms.     

广告创意产业的差异化竞争策略

中国广告市场的逆向选择现象是广告公司同质化竞争的必然结果,也是影响广告创意产业竞争力提升的关键因素。本文运用信息经济学的逆向选择理论和企业竞争优势理论,对我国广告市场存在的逆向选择现象、危害及其成因进行深入分析,指出差异化代理是解决广告市场逆向选择问题的根本途径,并具体阐述了广告创意产业差异化竞争的四种策略。     

Advertising agency operating efficiency

This study uses data envelopment analysis to evaluate the operating efficiency of a sample of 41 US advertising agencies, based on their profits and expenditures in six key areas (i.e., payroll to employees, other payroll-related expenses, administrative expenses, space and facilities expenses, corporate expenses, and professional fees). The analyses reveal that, on average, 5% of an agency's budget is wasted, incurring the greatest amount of waste in the administrative and corporate expenses. The tobit model also indicates that professional fees contributed the most agency inefficiency overall.     

Strategic responses to market globalisation among advertising agencies

The advertising industry is undergoing major changes as markets and clients become more global. Using the integration-responsiveness framework and the transnational framework, it is apparent that advertising agencies have a high need to be simultaneously integrated and responsive. This paper reports on a series of depth interviews with international agency leaders intended to gain an assessment of both the extent to which their firms are responding to these important but conflicting needs and the appropriateness of the framework for understanding the strategic options available for ad agency management. The findings indicate that the agencies have tried to modify their strategies to accommodate both kinds of pressures. However, their success in this regard is questioned and other broader strategic concerns are considered.     

上海广告产业现状及转型发展所面临的问题

上海市是我国最主要的广告经营中心之一,本文通过对2012年上海市广告企业的普查数据的分析,解读上海市广告产业发展现状。与2011年度的数据统计相比,2012年的统计数据更为准确集中,更真实全面的反映了上海广告产业的现状。数据显示,小型微型广告公司数量占据上海主营广告企业绝大多数,国际广告公司与本土广告公司的经济地位成反比,生活服务仍是本土广告经营服务收入的主业,广告业务收入电视仍是主流,互联网与电影展露锋芒,少量规模庞大的内资广告公司分走较多收益,微型广告公司的广告业利润最低。     

Client Perceptions of the Customer Orientation of Advertising Agencies

Abstract

A national random sample of advertisers evaluated the customer orientation of their advertising agencies. The respondents also rated the importance of various agency attributes for agency selection, as well as their level of satisfaction with the performance of their current advertising agencies. Client perceptions of the customer orientation of advertising agencies was found to be significantly related to clients' satisfaction with agency performance. The importance of customer oriented selling behaviors by advertising agencies are discussed.