lish multinational client-agency group planning meetings ... strategy and implementation decisions, many in- .... about the quality of the media planning depart-.
AN EMPIRICAL INVESTIGATION OF ADVERTISING AGENCY - CLIENT RELATIONSHIP IN AN ADVANCED DEVELOPING COUNTRY Erdener Kaynak, Pennsylvania State University at Harrisburg Orsay Kucukemiroglu, Pennsylvania State University at York Yavuz Odabasi, Anadolu University regional, and global (Caulkin 1990). For instance, as the number of major advertising agencies has been reduced through mergers and acquisitions, agencies are more and more finding themselves faced with having multiple clients in a given industry and having to choose among longheld clients. In France, for instance, advertising agencies are responding to the maturing of their domestic markets by looking abroad for market growth opportunities (Seaman 1991). This is the current state of the global advertising industry both in developed and developing countries of the world. In recent years, there has been a strong resistance by international advertising clients to the global campaign before quality or market effectiveness are considered. When properly undertaken, the global advertising campaign requires a good deal of effort and creative time, with the costs often being much greater than the sum total of creating many individual market advertising campaigns. If a worldwide uniform brand image is important to a company, it should do the following: a) select one advertising agency worldwide with a worldwide account coordinator reporting to client headquarters, b) establish multinational client-agency group planning meetings, c) conduct or supervise consumer research and advertising pretesting from brand headquarters, d) have a global campaign elastic enough to be effectively transliterated into the lifestyles and cultures of intended audiences (Peebles 1989).
Abstract Parallel to the rapid developments taking place in manufacturing sector, the advertising industry is also experiencing a stage of rapid development in most of the advanced developing countries, as evidenced by the increased number of advertising agencies and total billings. This paper examines present structured characteristics of Turkish advertising agencies and critically compares the role and functions of the advertising agency and client relationships in that country. Introduction During the last decade, there have been substantial changes and developments in the global advertising industry. A number of factors have contributed to this rapid change. Among all, increased advertising agency consolidations and concentration, the growth of satellite television, increased sovereignty of global consumers and recent changes in Eastern Europe and former Soviet Union and the anticipated full unification of West European countries at the end of 1992 as well as increased impact of communication technology all had profound effects on the global advertising industry (Higgins and Ryans 1991). Indications are that these changes and transformations will continue at a faster rate in the 1990s.
Dramatic increases in international advertising spending are leading major U.S. agencies to re-organize in order to get better management, more services and better profits from their overseas operations. To this end, much of their attention is focused on Europe, where the removal of panregional marketing barriers by the end of 1992 is creating account consolidation and market expansion (Levin 1989).
Global advertising approach assumes that modern advertisements which work well in one area/country will work equally well in another area/country. However, few truly world brands exist, and these may not be advertised in the same fashion everywhere. Global advertising agencies often place more importance on cost-efficiency and simplicity than on local needs and responsiveness. Globalization can create niches in which more responsive, local agencies can work. These can create certain advantages which do exist for the small to medium-sized advertising agency. Globalization makes it difficult for advertising agencies to subscribe to the idea that good advertising requires a detailed understanding of particular market and social issues (Anonymous 1988).
In recent years, in an effort to keep home country biases out of their advertising/promotion strategy and implementation decisions, many international firms have made use of local advertising agencies. These local agencies, in most cases. offer a wide range of marketing services including market research, concept testing, demand forecasting, purchase of radio time and press space, production of artwork and neon signs, billboards, direct mail and personal selling (Kaynak 1989). This has also been the case in the U.S.A. A recent survey indicated that U.S. firms use a foreign advertising agency more than they use an American advertising agency with overseas branches. They are also responding to the maturing of their domestic markets by looking abroad for market growth opportunities (Seaman 1991).
Parallel to these recent developments, institutions such as European satellite television seem to be forcing changes in the traditional advertising agency-client relationships (Howard and Ryans 1988/89). As a result of this, the 1990's will be different in several respects. The Anglo-U.S. hegemony that has ruled advertising since it was invented may be seeing serious competition from European rivals. There is currently room for an unprecedented variety of advertising agencies - large and small, local,
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introduction of free market economy principles. In 1982, total advertising expenditures was $100 million, and this increased to $300 million in 1990. This amount represented 0.36% of the Turkish GNP in that particular year. In practice, total advertising expenditure as a percentage of GNP expresses the importance of the resources devoted to advertising out of the total economic activity of a country, rather than having any intrinsic meaning.
Many factors enter into the selection of an advertising agency. For instance, the advertising agency should know something about the firm's products and services, and how, when and where they are used, the industries in which they are used, the services required, and the budget and the organizational setup of the firm for marketing. Evaluation of the specific agency should revolve around the following factors: 1) its organization, 2) a methodology for handling clients, 3) marketing thinking within the account team, 4) sensitivity to cultural differences, 5) creative skills in marketing, and 6) adequacy of presentations (Roth 1978). To be able to perform advertising tasks properly, advertising agencies need to prepare plans and programs that include clear-cut objectives. The ability to specify realistic objectives for a particular advertising campaign requires the preparation of an overall advertising plan. This plan necessitates an assessment of the firm's task system as well as an analysis of the existing marketing programs and procedures (Dart and Pendleton 1984, p. 40). Advertising agency planning procedure is shown in Figure 1.
Companies which manufacture goods for sale in a developing country, such as Turkey, have naturally made use of advertising techniques which have originated elsewhere. In practice, the techniques of advertising have been applied by multinational companies in environments different from those in which they were initially developed. In a developing economy, such as Turkey's, the consumer is likely to be more affected by individual brand promotions, whether these are in the form of advertising, personal selling or point-of-purchase display, than will his or her counterpart in a wealthier society such as that of U.S.
FIGURE 1 Advertising Agency Planning Procedure OBJECTIVE SPECIFICATION FOR A PARTICULAR
AN OVERALL requires - - - - . 1 PROMOTIONAL
A MARKETING AUDIT requiree--~-----~r-----~
PLAN
I
TASK
CAMPAIGN
FUNCTION
Written Document Outlining 1.
Target Market
1.
Company Goals
1.
Situation
1.
Market
2.
Creative Strategy
2.
Product/Market Scope
2.
Objectives
2.
Competition
3.
Performance Criteria (quantified)
3.
Identification of Market Segments
3.
Strategies
3.
4.
4.
s.
Time and Budget Constraints
Identification of Target Market Segmenta 5.
Tactics
4.
Measurement
Potential and Current Customers
4.
s.
Specification of Proposed Marketing Program/Target Segment
Product/ Service
5.
Pricing
6.
Specification of Action Plans
6.
Distribution
7.
Communication
7.
Pel:'formance Review Process
Source:
Control
Jack Dart and Lome L. Pendleton, wThe Role of Advertising Agencies in Entrepreneurial Education," Journal of Small Business Hauasement, Vol. 22, No. 2, April 1984, p. 41.
Advertising Practices In A Developing Economy
Study Methodology
As practiced in Turkey today, advertising is in a stage of rapid development, evidenced by the increased number of agencies and total billings during the last ten years along with the
The purpose of this study is to investigate the satisfaction level of advertiser-advertising agency relationship in an advanced developing economy, Turkey. To achieve the objective of
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channels give 15% agency discounts. Advertising agencies are free to reflect this 15% agency discount to their clients or to keep it for themselves. This will depend on the individual agreement reached between each advertising agency and its individual client, Therefore, it is not uncommon to some across different applications even within the same advertising agency.
this research, the complete list of advertising agency firms was obtained from the Bilesim Market Research Company's 1990 Media Expenditures Report. This report included the names and cumulative media expenditures of the Turkish advertising agency firms for 1990. The survey sample was made up of 194 firms which spent a minimum of 1 billion Turkish Lira through different media in that year.
Before private TV channels started broadcasting in Turkey, TRT's commercial belts were very much in demand, as TRT was the only TV medium in Turkey. The demand for TV airing time exceeded the allocated time for commercial slots. Therefore, TRT had a draw each year before the Notary Public after all of the applications were turned in. However, TRT does not have draws anymore, as the demand for TRT's commercial airing time dropped considerably over the last two years or so. Of course, advertising agencies perform other services for which they charge on a costplus-fee basis (Kaynak 1989).
Individuals who were responsible for advertising activities of the firms were the data source for the study. The self-administered questionnaire was used as the instrument to collect the data. The questionnaire was divided into three parts. In part I, managers were asked to rate their satisfaction level along twenty attributes on a scale of I ("Not Satisfactory at All") to 5 ("Very Satisfactory"), Respondents were also provided with a "No opinion" option. The list of attributes was culled from Verbeke's (1988-89) study and it was pretested to ensure comprehension and clarity in Turkish language and also in Turkish advertising environment. In addition to twenty attributes, respondents were asked to rate their overall satisfaction level with their present advertising agency. In the second and third part of the questionnaire, respondents were asked about the name and industry category of the firm for which they worked, their demographic background, and their current position in the company along with years of relations with the present advertising agency.
It is found that the company managers in banking, insurance, consumer durable products, computers and automobiles thought more highly about the quality of the media planning department of their advertising agencies than the companies in health, grocery, cosmetics and petrochemical products. The reason for this maybe attributable to the fact that the former group of products require larger investments, they are high-involvement products; and consumers of these products experience higher level of risk in purchasing them. As manufacturers of these products, in most cases, differentiate their product offerings very carefully, they need to plan their marketing and advertising strategies more highly compared to the latter group of companies. This is also true about the quality of advertising research done by their advertising agencies, as they would need better data and information from the marketplace to develop more appropriate marketing strategies and programs. Companies in durable products, computers, automobiles and petro-chemical products are more satisfied about their advertising agencies than the companies in health, grocery, cosmetic, bank and insurance about "agency makes the deadline," "clarity of assignments," and "good personal relationship with the account people."
To obtain a high response rate from the respondents, a carefully worded cover letter assuring confidentiality was sent with each questionnaire. It was requested that the recipient in the main office of the firm pass all correspondence on to the manager responsible for advertising activities in case he or she was not the one. The data collection process spanned the Spring of 1991. From a total of 194 questionnaires mailed, after one follow-up process, 93 usable responses were received representing a 47.9% response rate. Two of the questionnaires could not be used because they were incomplete. Some of the sampled firms sent more than one questionnaire back because of their relation with more than one advertising agency. In these cases, these multiple questionnaires were discarded from further analysis.
It is statistically significant that companies which spent $7 million or less are more satisfied about "the quality of public relation campaigns," and "agency has low turnover." On the other hand, companies which spent more than $7 million are more satisfied about their agencies with "agency makes the deadlines," "the quality of creative work," "easy to get in touch with the people of agency," "good personal relationship with the account people," and "overall satisfaction level." It can be concluded that companies spending higher amounts of money on advertising expect higher levels and more varied services from their advertising agencies than their counterparts who spend lesser amounts. There is also some indication that a relationship exists between amount of money spent on advertising through an advertising agency and the diversity and differentiation of the promotional and
Adversiting Agency-Client Relationship In Turkey Generally, advertising agencies use three different methods of obtaining advertising jobs. These are: 1) the advertising agency finds the client; 2) the client comes to an advertising agency; 3) subcontracting. However, there are differences in the utilization and in the mix of these three methods in different countries, For instance in Turkey, advertising agencies small or gigantic turn over wise directly purchase the TV airing time they need for their operations. This practice is applicable to both the state owned TRT (Turkish Radio and Television) and private channels. It is a customary practice that all TV
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advertising agency to changes in the environment (.742)," "agency provides full range of services (.803)," "agency meetings are productive and efficient (.545)," and "agency shows strong leadership (6.79)." This factor accounts for 33.58% of the total variance and may be labeled as efficiency and adaptation factor.
advertising mix expected from their advertising agencies. Companies which did business with advertising agencies six or more years evaluated their agencies more favorably about the following attributes than the companies which had shorter span experience with their advertising agencies: "agency makes the deadlines," "agency operates within agreed upon strategy," "quality of creative work," "agency personnel is experienced," and "overall satisfaction level with the agency." Advertising agency client relationships do change over time. As the two sides work together for a longer period, the personal relationships become very important. Hence those agencies who had a longer period of relationships with their clients evaluated the performance of their advertising agencies in a more favorable manner than their counterparts who had a shorter period of relationships.
The second factor consists of "easy to get in touch with the people of agency (.681)," "the agency charges fairly (.785)," "good personal relationship with account people (.623)," and "agency stays within the budget limitations (.658)" which accounts 19.11% of the total variance. This factor may be labeled as friendliness factor. The third factor delineates a cluster of relationship among "quality of public relation campaigns (. 723)," "quality of advertising research (.765)," and "the quality of marketing research (. 858)." This factor accounts for 7. 71% of the total variance and may be labeled as research capability factor.
It is also found that the effect of the position of the respondents in the company in their evaluation of their advertising agency. Sales and advertising manage"rs are more satisfied with "quality of public relations campaigns" than the president/or the vice president of the company. On the other hand, president/or vice president thought more highly of the advertising agency than the sales and advertisement managers about the following attributes: "agency meetings are productive and efficient," "agency shows strong leadership," "agency personnel experienced," and "good personal relationship with the creative people."
The fourth factor accounts for 6.95% of the total variance and consists of "quality of creative work (. 658)" and "good personal relationship with the creative people (.796). 11 This factor may be labeled as creativity factor. The fifth factor delineates a cluster relationship among "assignment of responsibilities is clear (.662)" and "agency has low turnover (.833)." This factor explains 6.06% of the total variance and may be identified as responsibility factor.
People with graduate or higher education level attainment are more satisfied with their agencies than the people with lower educational levels about "agency operating within agreed-upon strategy," "easy to get in touch with the people of agency," and "overall satisfaction level with the agency." People with undergraduate university and lesser educational levels thought more favorably about "quality public relation campaigns" and "agency shows strong leadership" than the people with higher educational levels.
A further analysis was conducted by using regression analysis. The regression line was fitted by the method of least squares to find the underlying relationship between these 5 factors and overall evaluation of advertising agency. Total variation explained by regression line in overall evaluation of advertising agency was R2 .84. The corresponding F value was 185 (significant at p ~ .00). All factor coefficients in the model were also statistically significant at p ~ .001. The factor with the highest beta value is the efficiency and adaptation capability of advertising agency factor which consists of the following attributes: "quality of media planning," "agency operates within agreed upon strategy," "advertising agency reacts ·quickly to changes in the environment," "agency provides full range of services," "agency meetings are productive and efficient," and "agency shows strong leadership." The second most important factor was the friendliness factor. The research capability, creativity and agency responsibility factors were important in that order.
The set of attributes which are considered by company personnel were factor analyzed for the purpose of finding the factors defining companies' selection criteria of their advertising agencies. The purpose of this analysis was to discover how the 20 variables correlated, thereby determining the underlying dimensions affecting agency-client relationships in an advanced developing economy. Factor analysis can help to identify the dimensions of advertising agency selection criteria. The resultant Varimax rotation factors were evaluated. The analysis produced five factors which explained 73.5% of the total variance. Only those factors with an eigenvalue greater than 1.00 were retained, and only those variables achieving factor loadings of 0.49 and over were used to interpret the factors.
Conclusions This empirical study indicates that certain identifiable factors may account for differences in advertising agency-client relationships in an advanced developing country such as Turkey. Study findings indicated that there were differences in terms of certain advertising functions
The first factor delineates a cluster of relationship among opinion about "quality of media planning (. 711) , " "agency operates within agreed-upon strategy (.665)," "quick reactions of
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performed and the attitude of company managers in the four different industries studied to the practice of advertising. The differences may be accounted by the different state of industry, its competitive situation as well as the structural characteristics of the companies operating therein.
6, p. 4. Peebles, D.M., {1989), "Don't Write Off Global Advertising: A Commentary," International Marketing Review, Vol. 6, No. 1, pp: 73-78. Seaman, D. (1991), "Tomorrow the World," International Management {Europe Edition), Vol. 46, No. 9, (November) pp: 82-85. Verbeke, W. (1988-89) "Developing an Advertising Agency-Client Relationship in the Netherlands," Journal of Advertising Research, Vol. 28, No. 6, December-January, pp: 19-26.
It is the finding of this study that the personal relationship between the advertising agency and its client is very important in a developing economy such as Turkey's. This result is contrary to the findings of Verbeke {1988-89), in which he concluded that in the Netherlands, personal relationships between the two parties did not play a crucial role. This finding indicates to us that in advertising agency-client relationships in a high context culture as that of Turkey, personal relationships are more important compared to a low-context culture of the Netherlands. It is also discovered that at different levels of relationship between advertising agency and its client, various factors may be at play. Clients evaluate the performance of their advertising agencies very differently depending upon the duration of their relationship with them as well as the structural characteristics of the companies. This empirical study looked at the advertising agency client relationship in one country at one point in time. Additional studies are needed to analyze the relationship in more than one country {developed versus developing) over a period of time. Besides studies of private firms, investigations of agency selection behavior of state economic enterprises and government departments in multiple environments may shed additional light onto this very important but neglected area of promotion. References Anonymous {1988), "Ad Exec: Going Global Is Not Always the Best Choice An Agency Can Make," Marketing News, Vol. 22, No. 16, August 1, p. 15. Caulkin, S. {1990), "Last of the AdVentures," Management Today {u.K.) February, pp: 54-58. Dart, J. and L.L. Pendleton {1984), "The Role of Advertising Agencies in Entrepreneurial Education," Journal of Small Business Management, Vol. 22, No. 2, April, pp: 38-44. Higgins, S. and J. Ryans (1991) "EC-92 and International Advertising Agencies," International Journal of Advertising, Vol. 10, No. 4, pp: 293-298. Howard, D. and J. Ryans (1988-89), "The Probable Effect of Satellite T.V. on Agency/Client Relationships," Journal of Advertising Research, December-January, pp: 40-48. Kaynak, E. (1989). The Management of International Advertising: A Handbook and Guide for Professionals, Quorum Books, New York and Connecticut 1989, pp: 165-168. Levin, G. (1989), "Shops Shape Up for Foreign Growth," Advertising Age, Vol. 60, No. 10, March
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