ADVERTISING AND CREATIVITY

By Sandra Ross[45]

The advertising industry is locationally very concentrated. It is perhaps not surprising that major capital cities register the presence of advertising companies, it is very common to find advertising agencies grouped in small quarters of cities (for example, Soho in London). The literature might lead one to expect advertising agencies to echo the geography of their clients (Nachum and Keeble 2003).

Put simply, advertising agencies produce adverts. However, some agencies may produce the idea, and others realise that idea and purchase the media time/space. Moreover, agencies can run a campaign in one or many media (newspaper and magazines, posters, radio, tv, film, internet and direct marketing), and/or many territories, targeted at one or many sub-groups of the population.

Until the mid-1970s in the Full Service Agencies (FSA), agencies that are vertically integrated and take the client from idea to final advert were the norm. In addition, although out with the analysis presented here, there are also many large companies, especially in the beauty product field, have in house advertising functions. The focus of this paper is on the changes subsequent to the last 25 years as agencies have outsourced functions to specialists. The means of remuneration is somewhat unusual in the advertising industry: an advertiser pays the media company (where the advert will be displayed or broadcast) and the media company rebates back a standard ‘commission’ to the agency; the agency meets its costs, and makes a profit from the 15% commission on the media costs. Under this system independent, single function, media brokers or creative agencies were forbidden. There was little if any transparency of costs within the agency from the client’s point of view; moreover, the remuneration for the agency was pegged to the price of media, not to the actual work done. In the last 15-20 6years the old form of regulation and the commission system has been eroded and been replaced by fees based work which is considerably more transparent. The fees generally charged are now closer to 8-9% of the total budget (compared to 15%).

Medium and large agencies will have a number of creative teams working on individual accounts: these creative teams must also interface with media and overall campaign/account planning (which may include market research and brand management). In larger integrated agencies the ‘creatives’ have a different culture and physical location from the rest of the organisation; they work in a less formal manner, keep different hours and generally consider themselves to be the star players in the firm and the industry.