- The Agency's Role
- Agency Structure
- Case Studies: Bringing it All Together
- Prominent Agencies & Direct Advertisers
Advertising agencies have traditionally handled all of their clients' advertising needs, from formulating the advertising strategy, to the creative development, to the media planning and buying. Slow to react to the boom in online activity in the late 90's, the traditional agencies inadvertently left the door open for new interactive-focused shops to enter the market, offering creative, rich media development and online media buying services. Since then the traditional agencies have entered the online market in full force, either launching their own interactive divisions or acquiring one of the more prominent online agencies.
Going Direct
Some advertisers will choose to build in-house creative and/or media buying teams, rather than work with advertising agencies. LowerMyBills.com, for example, conducts all of its online advertising through a dedicated internal creative and media buying team. Over time, the media team has learned to identify which placements work best for the company, and negotiate prices that best enable LowerMyBills, a strong direct response advertiser, to acheive its ROI goals. Meanwhile the internal creative team works on developing fresh new creative units that are placed into the rotation to prevent the campaign from becoming stale. In cases like this it may be helpful to just view the in-house team as an internal "agency" with just one client.
Today, although some advertisers rely on in-house advertising or media-buying teams, the industry as a whole has recognized the importance of agencies as gatekeepers for large advertising clients.
Agency Structure
The typical advertising agency is structured along the following lines:
| Account Services | → | Creative | → | Media Planning | → | Media Buying |
Account Services
The Account Services department of an agency is responsible for working closely with the client to formulate the overall advertising strategy, which is formalized in a document called a Creative Brief. Typical elements included in a creative brief are: campaign objective, primary/secondary audience, tone, message, and call to action. Here is an example of what a creative brief looks like. The account services team will work to bring together the creative and media functions within the agency, helping to focus the various parties involved in a campaign on putting the strategy into action.
After a much publicized agency search, in October of 2004 Vonage named Arnold Worldwide to handle the account management and creative side its advertising account. Together with the marketing executives at Vonage, Arnold's account directors crafted a strategy that compared Vonage's unlimited phone service with that of higher priced competitors. Once a strategy had been agreed upon, the next step was to develop a creative strategy to effectively communicate that message in a clear and memorable way.
Creative
The creative department is responsible for translating the advertiser's overall strategic direction into tangible content, using the creative brief as a guide. The final creative that is developed should appeal to the right target demographic, have a consistent tone that matches what's described in the brief, and work to achieve the desired goals of the advertiser. For direct response advertisers, this goal is often to maximize the click-through rate to the advertiser's landing page, however there is often a trade-off that exists between clicks and the conversion rate. Providing pre-qualifying information (e.g. price) in the creative may decrease the click-through rate, but can result in a higher conversion rate due to the qualified nature of the consumers that do end up clicking through. Typically a range of creative will be developed for all the mediums that are being utilized by the advertiser, including video, print, radio, outdoor, and Internet. Several versions of Internet creative will be developed and rotated into the final media mix to keep the online campaign looking fresh.
There are three general categories of Internet creative:
1. Banner Ads
Banner ads are one of the oldest and simplest advertising formats on the web. They typically consist of a JPEG or GIF image, and a unique linking URL. The images can be static or animated, and are usually under 15k in size to minimize file load time. Banners will usually link to the registration page or landing page of the advertiser. Since banner ads allow for impression tracking, they can be priced on a CPM, CPC, or CPA basis.
The Internet Advertising Bureau (IAB), an online association which counts the largest online companies on its board (Google, Yahoo, AOL, ValueClick, etc.) has issued a set of guidelines for the dimensions and size of online banners that have been widely accepted and put into use online. This standardization of creative units is regarded as one of the factors that made it easier for companies to advertise online.
The IAB specifications for the most popular online banner sizes are as follows:
728 x 90 Leaderboard:
468 x 60 Full Banner:
300 x 250 Rectangle:
125 x 125 Square:
120 x 600 Skyscraper:
160 x 600 Wide Skyscraper:
720 x 300 Pop-Under:
2. Text Ads
Text ads are one of the most basic, and most effective, forms of online advertising. Used primarily in paid search advertising, text ads usually consist of a few words of text, hyperlinked to point to a unique URL. Each publisher will have their own set of guidelines as to number of characters allowed per placement. Text ads are usually priced on a performance (CPC or CPA) basis, since the format does not allow advertisers to track impressions. Recent studies have shown that text advertising is significantly more effective at generating click-throughs than banner ads, prompting some advertisers to create banners that imitate the look and feel of text ads.
Below are a couple of common examples of text ads. To the left is a typical Google AdWords sponsored link. To the right is an example of a couple of text ads along the column section of eBaum's World, the 463rd most highly trafficked site on the Web.
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3. Rich Media
Rich media has become more and more popular recently, as advertisers look to grab consumers' attention and increase click-through rates. The term "rich media" is really an umbrella expression for content that contains multimedia elements such as sound and video, or content that moves when a visitor clicks on the page where the featured content is posted. It is generally usually used to describe two technologies - Web-based animation and streaming.
Web-based animation
Web-based animation is generally perceived to be animation that is authored using one or more sequential timelines in which actions and interactions are defined. Macromedia's Flash has emerged as the undisputed leader in Web-based rich media animation, mainly due to the fact that the last three versions of Microsoft's Internet Explorer have come pre-bundled with copies of Flash Player. A September 2003 study from NPD Online found that 98 percent of Web users were able to access at least some Flash content. Macromedia's Flash MX, as well as many other third-party authoring programs, generates Flash files.
Some advertisers simply use flash to create animated banners with fast load times, such as the flash banner below for AT&T. It looks and acts like a standard banner, with no interactive or advanced features.
However other advertisers make full use of the flash format to create interactive banners that allow consumers to pre-select information, respond to surveys, and even play games. In fact, interactive game-based Flash ads have become so popular that Orbitz, the company that pioneered putting games in their ads, recently launched OrbitzGames.com, an online casual gaming site where people can play all of Orbitz's games for a chance to win free travel and other prizes. Advergaming, the practice of using interactive games to promote a brand by integrating the advertiser's message into the features of the game, has become increasingly popular among both brand and direct response advertisers. The widespread popularity of online casual gaming translates into extremely high (albeit non-qualified) click-through rates for these types of ads.
Recently it has been the online lead generation and incentive-based customer acquisition companies that have taken the interactive flash-based creative concept to the next level, and resulted in the spread of the "Win a Free iPod" banners currently seen everywhere on the Web. Due to the numbers centric nature of their business, companies such as LowerMyBills, NetBlue and GratisInternet turned to flash-based advergaming creative to drive up their click-through rates.
Below is an example of a NetBlue "Shoot the Duck" flash banner:
Streaming
Streaming takes large sound, video, animation or other files, and breaks them into smaller pieces and sends them along to their destination. This process is very similar to how computers send information across a network or the Internet in general. Streaming media player software such as RealNetworks' RealOne player, Microsoft's Windows Media Player and Apple's QuickTime are able to read the file stream as it is coming in and begins playing - long before the rest of the file arrives. This is combined with buffering, where a large bunch of packets are collected before you hear or see them on your computer, to create as smooth a viewing experience as possible. The streaming media format is most popular with entertainment companies such as Sony and FOX, who use it to stream previews and clips from the TV shows and movies they are promoting online.
Here is an example of a rich media advertisement from Sony that incorporates streaming to advertise the movie Zathura:
Some advertisers are very creative in their use of rich media, such as this execution from EA Sports which combines streaming video of Tiger Woods with an interactive-flash based golf game:
| :: A Closer Look: Rich Media Agencies | |||||||||||
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Several agencies have recently emerged to help advertisers create, manage and distribute their
rich media campaigns. Popular with entertainment companies, these services allow advertisers
to show movie clips and game previews, while combining interactive features with elements of their brand.
They also enable advertisers to deploy creative advertising formats such floating ads, expandable
banners, and webpage take-overs, at relatively small file sizes. Rich media agencies typically
handle rich-media hosting and traficking, ensuring that the creative can be viewed on the websites
selected for the final campaign.
A more recent trend among rich media companies has been the use of rich-media avatars, or virtual talking characters. When CareerBuilder.com wanted to extend its popular 'Working with Monkeys' TV campaign to the internet, it hired avatar-focused Oddcast to develop an interactive 'Monk-e-mail' site where consumers could choose and accessorize one of three monkeys, type in or record a message by phone for the monkey to lip-sync, and then send it to friends and co-workers. Since its launch in January 2006, 'Monk-e-mail' has seen by over 7 million unique visitors, with over 14 million Monk-e-mails sent and played. The campaign was also featured in several publications including BusinessWeek and Advertising Age. This was accomplished purely through viral marketing - CareerBuilder did not spend any money marketing 'Monk-e-mail' to consumers. Company Profiles: | |||||||||||
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Media Planning & Buying
Media Planning
The Media Planning team works closely with the creative department to find media placements that are in line with the overall advertising strategy. After scanning the creative brief, media planners will use syndicated research and analysis of previous placements to identify the best media locations for a particular campaign. Their goal is to reach the target audience identified by the client, and deliver the campaign message in a relevant, effective way. After a range of possible placements have been considered and selected, the media planner will put together a Request-For-Proposal (RFP) that includes information on the advertiser's goals, target audience, budget, and campaign start date.
Media Buying
Media Buyers take over where the Media Planners leave off (some companies combine the two functions into one position). Buyers have to deal with the real world, translating the idealism of the planners vision into the best possible realization of what will actually work. The Buyer sends and follows up on the RFPs and creates a targeted competitive marketplace among the appropriate sites to secure the best rates, placements and creative units available for the client. Here is the actual RFP that was sent out by OMD Digital Buyers in March 2006 for the McDonald's Q3 & Q4 Happy Meal Campaign.
Selected companies will respond to the RFP with detailed information on their prices, demographic breakdown, number of impressions available, recommended ad locations, and how the proposed placements fit in with the overall advertising strategy that the client is seeking. The buyer will then compile the detailed campaign information into a final deck that is presented to the client for their approval.
Once the placements have been approved, the buyer will then execute the actual media buys. These are done through a contract called an Insertion Order, which specifies the number of impressions being bought, the type of creative being used, the placements they are to run in, the price per creative type, the flight dates, and terms and conditions specific to the campaign - such as payment terms (Net 30 to Net 60 is industry standard), indemnity, opt-out clauses, and whether the campaign is pre-emptible. Here is an example of an actual Insertion Order used for an initial test campaign by True.com. It is interesting to note that the Insertion Order can be drafted by the advertiser, the agency, or the publisher.
Once the Insertion Order has been signed by both parties, the Buyer is responsible for sending out the creative units and unique linking URLs, and conducting tests to make sure that they are implemented correctly before the campaign goes live. At or around the beginning of the agreed-upon flight dates, the campaign will go live on the publisher site. As soon as a campaign goes live, the Buyer will begin checking the reporting to determine how well the campaign is performing along a variety of predetermined success metrics (e.g. CTR, eCPA) It usually does not take very long for the Buyer to know if the placement is working out or not. Depending on the terms of the Insertion Order, Buyers can be very quick to exercise their out and pull a campaign if the numbers do not meet their expectations.
At this stage it is important to point out a significant difference between in-house direct response advertising teams and traditional advertising agencies. Due to the number of companies that they work with, and the need to obtain client approval, the media planning process at large agencies typically takes place two to three months prior to the expected campaign launch date. Note that the RFP for the Q3 & Q4 2006 McDonald's campaign was sent out in March. In-house media buying teams do not have to deal with these constraints, and so typically tend to follow an iterative sense and response strategy when it comes to their advertising campaigns. The turnaround time it takes an internal media buying team to test a new media placement can be as short as a couple of days, and those teams will typically be continuously testing and running new media campaigns throughout the year, using the data from past campaigns to help refine and optimize the media buying process and the overall campaign performance.
Case Studies - Bringing it All Together
This section uses real world analogies to shed more insight into the the different online advertising approaches taken by traditional advertising agencies vs. in-house teams.
The Agency Approach
McDonalds is getting ready to roll out eight Happy Meal promotions in the second half of 2006. The marketing department at McDonalds has asked DDB, the advertising agency handling the creative part of its account (sometimes large advertisers will split the creative and media functions among two separate agencies) to come up with a compelling advertising campaign to increase awareness of the new Happy Meals among kids aged 2-11 in order to boost family "drag-in" traffic to McDonalds stores.
Account executives at DDB meet with the Happy Meal brand managers to formulate a strategy that effectively integrates the Happy Meal campaign with the promotional partners McDonalds is working with, including the movie Pirates of the Caribbean, Super Mario Bros, and Barbie. The final strategy is summarized in a creative brief that is sent to the DDB creative team, and to the McDonalds's media planning & buying team at OMD Digital - the agency that handles the media potion of the McDonald's account.
At DDB, creative work begins on the overall execution and tone of the campaign, with mockups and storyboards developed for a number of different creative approaches. Meanwhile, the media team at OMD will have worked to identify a list of prospects that seem to have innovative and effective reach within the desired 2 to 11 year old demographic. RFPs are sent out to all the media properties that make the initial cut asking them to submit proposals if they would like to be included in the Q3/Q4 McDonalds media buy. All of this information is put together and presented to the client for their final approval.
Once the McDonalds' marketing team has given them the thumbs up, DDB and OMD begin executing the final campaign. The creative team will develop final versions of the approved execution in all the formats required by each of the media placements. For a large advertiser like McDonalds this will typically include TV, print, radio, outdoor and Internet formats. The media buying team issues Insertion Orders to execute the media buys on each of the properties where the campaign is running. Creative units are trafficked to each of the online publishers that are running the McDonalds campaign, either by email or through the ad server that OMD uses to serve its online advertising.
Finally the creative will go live on the publisher's websites and the online portion of the campaign will be up and running. The whole process from initial strategy meeting to getting the campaign live could easily have taken two to three months. Although OMD Digital will monitor the performance of the campaign as it runs, it will most likely let the campaign run its course before conducting in-depth analysis of how well the campaign performed against its goals as measured by the click-through rate, increase in awareness, and overall bump in family traffic to McDonalds stores.
The Internal Direct Response Approach
LowerMyBills.com has been on a roll lately. The business development team has just signed several new mortgage lenders as partners, and Matt Coffin, LMB's CEO, is looking to dramatically increase the number of mortgage leads that is generated through the website in order to meet demand. The internal media buying team is asked to begin testing new placements in order to increase the number of leads generated through LowerMyBills.com.
Armed with a spreadsheet that gives them the average revenue per mortgage lead generated, historical CPM rates across a range of publishers, and expected performance per type of placement and category of website, the media buying team begins placing calls to highly trafficked websites where it thinks the LowerMyBills.com offer would perform well. The team actively tries to push publishers to run its offers on a CPA basis, but will test a CPM placement if the price sounds right. One of the publishers that is quickly identified as a good fit is Homestore.com.
Within a couple of days a deal is negotiated over the phone with the Homestore.com sales representative for a 10,000,000 impression test at a $2 CPM. The LMB media buyer then formalizes the terms of the agreement by having each party sign an Insertion Order. Creative units that match the Homestore.com requirements are selected from an internal banner farm which contains hundreds of creative units in all sizes, dimensions and formats, and uploaded to Atlas, LowerMyBills' third party ad server. Atlas automatically generates unique URLs for the creative and the landing page they link to, and forwards these links to the trafficking manager at Homestore. Use of a third party ad serving and reporting system allows both advertiser and publisher to feel secure in the reliability of the reporting data.
Once the campaign goes live, the LMB media buying team begins the process of optimization in order to boost performance and ROI as much as possible. They notice that while the 728x90 leaderboards are generating a 1.5% click-through rate and a 1% conversion rate, the 120x600 skyscrapers are only generating a 0.5% click-through rate with the same conversion rate. The decision is made to pull the skyscraper impressions and transfer them to the leaderboard placement. The necessary changes are completed on the Homestore.com site within a couple of hours. Because it knows how much each lead can be sold for on the back end, LowerMyBills can easily calculate the maximum cost-per-acquisition it can afford to pay per new lead on the front end. As long as the campaign continues to meet these targets, the company will continue to advertise on Homestore, constantly testing new creative units, placements and formats in an effort to increase its overall ROI.
Prominent Interactive Agencies
| Agency | Clients |
| AvenueA-Razorfish | AstraZeneca Best Buy Expedia Hotels.com Nike WeightWatchers |
| Beyond Interactive (Grey) | GlaxoSmithKline Warners Bros Western Union |
| Carat Fusion | AOL Kodak PerfectMatch.com Pfizer |
| Digitas | American Express Cingular Wireless General Motors The New York Times |
| FootCone&Belding Interactive | HP Motorola |
| GSD&M | AT&T BMW Mastercard Sam's Club Wal-Mart |
| Mindshare Interactive | Sprint |
| Moxie Interactive | Blockbuster Online Verizon Wireless Weather.com |
| MPG/Media Contacts | Fidelity Investments ING Direct Royal Caribbean Vonage |
| OMD Digital | Dell Hilton Hotels McDonalds Sony Playstation United Airlines |
| Organic | 20th Century Fox Bank of America Chrysler Virgin Mobile |
| Universal McCann | H&R Block MicroSoft U.S. Army |