Buyer Behaviour in Advertising Industry

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Executive Summary

In the advertising industry, the agency-client relationship recognises the association between an advertising agency and their client. The nature of this service is a high risk and high involvement purchase which makes the information search a crucial element of the buying process. Understanding the drivers of this buying behaviour will enable the agency to become more responsive to their clients needs and tailor their services to positively influence the relationship. The foundations for a successful agency-client relationship rely on understanding: 1.What are the key drivers of successful client retention? 2.Are these in line with the key success factors for new client attraction? In response to answering these questions, our report aims to investigate segmentation and buyer behavior within the advertising industry.

The selection and retention criteria of advertising agencies can be described by three distinct elements: 1.Relationship Management: the chemistry between the client and agency and quality of account management. 2.Service Delivery: Technical and creative experience and the quality of the output. 3.Cost Management: Ability to manage client budget and justify spend through added value. Using these key elements, an analysis of the frameworks discussed by Waller (2004) and Triki, Redjeb & Kamoun (2007) three viable segments have been identified and the concepts of these articles have been applied to gain a greater insight into their buying behaviour processes: 1.New Client, New Task: Agency Selection  Relationship Development  Agency Review/ Termination 2.Existing Client, New Task: Agency Evaluation  Relationship Development & Maintenance  Agency Review/ Termination 3.Existing Client, Existing Task: Agency Reselection  Relationship Maintenance  Agency Review/ Termination

The best determinant of agency-client success across the three segments was the relationship development and maintenance phase. This was consistent across all the research within each segment and the agency review stage focuses on how well the relationship has developed to bring out the best from each party. Agencies need to satisfy the key elements and this can be achieved through reviewing their own buying context and how they can service their segments. These insights are also applicable across many high-involvement B2B service environments, such as management consulting and the medical industry.

Table of Contents

1. Context4
2. Buyer Behaviour4
A. The Buying Process4
i. Key Elements4
ii. Actors/Players6
iii. Inputs to the Buying Process6
iv. Outputs of the Buying Process7
B. Segmentation7
i. New Client, New Task8
ii. Existing Client, New Task8
iii. Existing Client, Existing Task9
3. Findings Discussion10
i. Research Limitations10
ii. Key Success Factors10
iii. Key Elements11
iv. Management Implications12
4. Summary and Recommendations13
i. Broader Applications13
5. References13

Deconstructing Buyer Behaviour in the Advertising Industry

1. Context
Like other high-involvement B2B service-based industries, the advertising industry is an example of a monopolistic market, where there are many producers and consumers, heterogeneous products and few barriers to entry and exit. Producers in these markets will attempt to differentiate themselves and add value through the use of marketing strategies like product differentiation, branding, and ironically advertising. Given there are no barriers to entry, competition within the industry is fierce - particularly for large lucrative buyers with vast advertising budgets, like P&G, whose business strategy relies heavily on the success of advertising communications (Neff, 2007). Often buyers are serviced by several advertising agencies – sometimes these agencies complement one another’s work (for example direct mail and online advertising agencies) but as the industry converges and the scope of each...
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