The Peculiarities Of Cooperation Between Advertising Agency And Retailers

In the conditions of crisis and processes of absorption of weak companies by strong ones there acutely raise questions about the appropriateness and effectiveness of cooperation between marketing departments of retailers and advertising agencies (AA). A survey and an analysis of trade networks, a content analysis of media allowed us to determine the following. The nature of the interaction of large companies with large advertising budgets with AA differs from small and medium sized companies that use cheap forms of communication. However, responsibility for the advertising campaign is not taken by AA but the company-customer advertising of the product and therefore the unit of the enterprise, promoting it and its products on the market should exercise more careful selection of AA, and systematic monitoring of how the agency has complied with the negotiations of agreements during project implementation. The company management participates in planning and monitoring the implementation and effectiveness of marketing communication activities. Along with this there is often a pressure from the leadership in making decisions about the choice of the AA, generating promotional ideas, budget discussions progress.

Cooperation with AA for large and medium-sized companies may consist of the following main stages: selection of the agency, building a relationship, the mechanism of payment. As the contractor they select the agency on the basis of a tender among several companies that are developing ideas for future advertising campaigns and present them to customers. Enterprise order diverse services: from market research, creative and PR services, to the production and placement of advertising materials. The main evaluation criteria for the evaluation of commercial prepositions are, as a rule, the complexity of the proposed service, the optimality of the budget and the deadlines.

Development of commercial prepositions and ideas is usually free, paid for the cost of the AA to conduct presentations at the customer and the cost of production of materials for testing ideas on the target audience.

There are rules that the participants of the advertising market try to adhere:

  1. 1. The same AA can not serve competing companies.
  2. 2. It is allowed to serve the customers for the agencies of a single group.
  3. 3. One client can handle multiple AA.
  4. 4. If a company owns several brands, quite often the decision is made to bring to their promotion by various agencies.
  5. 5. In recent years, many customers do not want to be tied down to one agency, preferring to work with the best specialized companies in each specific direction. If it is necessary they use the services of freelance professionals and agencies of more narrow specialization. The customer chooses one of AA as the main contractor then this AA finds subcontractors, forming a pool of AA.
  6. 6. The quality of the work of the creative team determines the cost of agency services. Well-known advertisers, as a rule, do not work in start-up agencies.
  7. 7. In conditions when the advertiser seeks to expand the market, the capital advertising agencies are actively expanding to the regions and improve schemes of work in local markets. Currently, there are two ways to access the capital AA in the regions: through contractors or through its own field offices. Among experts of the advertising industry, there is no consensus about the benefits of a particular scheme.

However, despite the large number of RA, the choice of a suitable may be limited for several reasons:

  1. 1. The agency that is already working with the client may regard a tender as recognition of its failure (even if it is invited to participate in the tender) and refuse to participate.
  2. 2. The agency that has suffered defeat earlier may refuse to participate in further tenders through international policy networks, which include the agency, the
  3. personal ambitions of the owner. Such agencies may be interested in the opportunity to get a large order.
  4. 3. The AA may agree to participate in the tender only on a fee basis, or exposes deliberately inflated estimates.
  5. 4. There are not so many agencies that have won recognition, may be they serve the competitors, and it is risky to invite the unknown agency in the market of advertising services, because we are talking about huge advertising budgets. Accordingly, they select an unemployed AA or one that has worked is working with the company at the moment. Limited choice in terms of price leads to less flexibility of the AA and they ask a greater reward for their services.

The announcement of the new tender happens more often because of dissatisfaction with the client’s work of the AA. Otherwise the contract is prolonged without a tender and the customer can expect discounts. For example, if there are several advertising campaigns, the discount on the cost of the second campaign will 5% and 10% and above on the third one. This allows achieving the unity and continuity of advertising communications for an extended period, the stability of the brand image and the sustainability of its market position. As a rule, each calendar year, the assessment of AA is held, based on which the customer make the decision on the continuation or termination of cooperation.

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