Consulting Business Status regarding Ad Business in the US

In a long term economic stagnation in the Unites States, cost reduction is one of the management strategies. Therefore, companies are becoming more conscious toward the cost-effective of advertising cost, which requires a vast amount of money. The current situation is appearing as setting up a service purchasing department (procurement) or hiring of specialized consultant to the buying-in of services from advertising agency. In relation to the movement of advertising industry in the United States, I would like to introduce;

1. Types and business contents of the specialized consultants
2. Conference information in a global scale (Worldwide Summit of AdForum.com)

There are two types of consultants in the advertising industry of the United States, “Search consultants”, who advise on the selection of advertising agencies, and “Compensation consultants”, who advise on rewards and compensation toward the advertising agencies.

Search consultants participate in orientations and presentations on behalf of the advertisers to preside the compensation, when selecting advertising agencies in charge of the account or competitions to decide the handling of the billing. In specific, there are operations such as;

1. Establishment of screening process (RFP and schedule with screening outline listed)
2. Selection of advertising agencies participating in the account screening.
3. Advice and participation in screening process.
4. Development and offer screening tools.

Compensation consultants determine whether the advertising cost is decent or not by cooperating with the purchase department (procurement), which is the professional in purchases, and negotiating with advertising agencies.

The rise of these consultants is due to the requirement of high level information for making the most rational decisions of for the cost reduction and efficiency of clients, and therefore outsourcing them.

The AdForum.com I would like to introduce today is one of the companies (websites) specializes and offers these types of information. AdForum.com offers global scale agency information (18,000 agencies) and ad materials by media (50,000 creative materials) for clients worldwide. ADFORUM WORLDWIDE SUMMIT is a place for sharing information of clients, agencies, and consulting firms in advertising field, and covers the newest hot themes every year.

In the summit held every year from 2002, sessions focusing on account globalization, agency consolidation, and service integration are held for exchanging information for business negotiations.

Also, for clients who develop communication globally, global ad management is a topic covered recently and how to form network and hubs was discussed. In addition, problems regarding the unity of the global communication between clients and agencies have been brought up, and the most effective method was to organize a workshop.

In this movement, the importance of objective index has been focused heavily because the mission of the consultants has been to reduce cost and gain efficiency of clients. There are causes for concern that communication does not lead to achievement due to homogenization and similarities of ideas.

However, according to the research by a research company in New York in 2003, 29% of the 273 American companies with ad budget more than 10 million dollars hire specialized consultants. It may be an unmistakable fact that this is a large flow within the ad business in the United States.

References: BRAND AND ADVERTISING BUSINESS : ADVERTISING AGENCY ASSESSMENT SYSTEM ON THE BASIS OF BRANDING(HIDEYA AZUMA, 2006,WASEDA UNIVERCITY PUBLISHING DEPARTMENT) AdForum.com

Written by SPI

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