A Review of the Activities of Advertising Agencies in Online World

Internet can extend market reach and operational efficiency of advertising agencies and enhance their contributions to Iranian economy. This paper reports a review study to identify the factors affecting the activities of advertising agencies with regard to the emergence of online world. By reviewing the body of tradition, Internal and external variables, including relationship management, uncluttered homepage, creativity, lead generation, account manager, direct email, and sponsorship ads were identified as the core activities of advertising agencies in new world. To localize these variables in Iran, Student’s t-tests were run for 34 different items used in the questionnaire. No significant difference (at 0.05 level) were found in the degree of validity of these variables; in other word, all variables get a good number of significance. Creativity was the most influential variable on the activities of advertising agencies reviewed. The findings of this study can be used to develop strategies for enhancing advertising agencies’ involvement with the Internet.


Introduction
Regarding the time taken by different media to reach fifty million audiences, the internet has spent only four years to reach this number of users in comparison to 38 and 13 years taken respectively by the radio and TV (Robert and Fox, 1999).The emergence of internet as the imperative channel of marketing (Shen, 2002) is the biggest challenge and, at the same time, the largest opportunity (Schwartz, 1998).Considering branding and direct selling purposes, internet has changed into an influential intermediary for advertisers in a small period of time (Shen, 2002).According to Interactive Advertising Bureau (2011), "Internet advertising revenues in the U.S. hit $7.3 billion for the first quarter of 2011, representing a 23 percent increase over the same period in 2010 …" By considering this exceptional growth, the question raised here is: do online advertising works like traditional advertising?In addition, do we need to have new practices and solutions?
It is evident that this new medium, like the conventional ones, is working on dissemination of information (Zeff and Aronson, 1999).However, its way of control made Internet completely different from the previous ones.In comparison to traditional, one-to-one media, Internet is many-to-many and interactive (Rogers and Thorson, 2000;Han, 1995;Ko et al., 2005).Internet allows publishers to switch from a mass dissemination practice to a targeted dissemination practice.Turban (2006) has listed many advantages for advertising through this medium.Taking these advantages into consideration, Internet advertising looks quite more effective than mass media advertising.Nevertheless, there is no common want to use this medium as an advertising channel.This paper aims at to consider this hesitation from an intermediate point of view and take advertising agencies' role into account.
According to Richards and Curran (2002), "Advertising is a paid non-personal communication from an identified sponsor, using mass media to persuade and influence an audience (p.64)".It is clear the phrase "a paid non-personal communication" that advertising is a service, prepared and published by an internal or external intermediate (agency and medium), and undoubtedly is a function of their capability.Parasuraman and Zeithaml (1983) believe that the people who prepare the materials are the core actors.The agency's first priority is to meet client satisfaction.Advertisers and marketers argue that they can only adopt Internet as an advertising channel when advertising agencies could identify specific metrics and scales with the purpose of evaluating the results and presenting a report (Coffey, 2001;Meforlond, 1998).Due to the interactive nature of Internet, and presence of the consumers who can easily make some comments and tell what they really want, there is no choice but to accept advertisers and marketers' argument ant try to be aligned with this fact.The abilities of Internet-based technologies that allow agencies to trace consumers' wants will result in higher client satisfaction if agencies use them effectively.
Therefore, advertising agency responsible for performing this task must have a set of capabilities to meet this goal.In this regard, the following questions are introduced to be pursuit in this study: 1) Which factors result in ad agencies' success in the Internet?
2) What are the key antecedents of an ad agency?

Literature review
Offering cost-effective and unique services like direct selling, public relationships strategies, and performance-based marketing by advertising agencies is the key reason for clients' interest in them.Agency theory has its origins in the 1930s (Berle and Means, 1932) and was developed in economics research as a "general theory of agency" (Ross, 1973;Mitnick, 1973;Jensen and Meckling, 1976).Different studies have been conducted to identify the effectiveness of online advertising.Some scholars have focused on media and its nature and tried to recognize key features to increase the effectiveness of online advertising (Shamdasani et al., 2001;Ko et al., 2005).Some studies concentrated on the content of messages (Rodgers and Thorson, 2000;Kim et al., 2001).Another category of studies evaluated information processing in order to increase the consumer's involvement with advertising (Rodgers and Thorson, 2000).Moreover, some researchers addressed the variables of selecting appropriate agencies from client (Doyle et al., 1980;Cagley and Roberts, 1984;Cagley, 1986;Harvey and Rupert, 1988;Wackman et al, 1987;Verbeke, 1988;Dowling, 1994) and agencies point of views (Cagley, 1986;Fam and Waller, 1999).The key functions of advertising agencies have also been examined by another group of studies (Wills, 1992;Butkys and Herpel, 1992).Wills (1992) considering 900 agencies, examined agencies' activities which are necessary for establishing new campaigns.Wills mentions activities viewed as core activities of advertising including positive recommendations of satisfied clients, personal contact with top management, and the publicity of recent successful campaigns (West and Paliwoda, 1996;Waller et al., 2001).Wackman et al., (1987) conducted another study in the field of advertising agencies and considered relationship change in the course of time.They reported that the variable of relationship is a key concept, taking the time issue into consideration.Herpel and Butkys (1992) found that direct mails are seen as an appropriate tool for self-promotion goal of advertising agencies.Cagley (1986) by analyzing 69 clients and 76 advertising agencies, found that both parties agree that delegating the establishment of an advertising campaign to advertising agencies requires some observations.According to benet.com (2007), commercial companies in their pursuit to select an advertising agency consider the following features: agency approach, track record, account ability, strengths, staff, and active clients.
In addition to the above-mentioned features, other scholars have mentioned other features like informative and advisory role (Beard, 1996;Trik et al., 2007;Tamson, 1996;Wackman et al, 1987;Gagnard and Swoartz, 1988;Michell et al., 1987;BNET, 2007;Hanafizadeh and Behboudi, 2008), total quality management and strategic planning (Ghosh and Ling, 1994) and the way agencies use resources (Wackman et al., 1987).Paliwoda and West (1996) argue that communication is the key factor of an advertising agency when it desires to have a long term business with client.This finding has also been reported by Pitta and Beltramini (1991) and Bourland (1993).Gabriel et al., (2006), examined the extent to which "account planners" in advertising agencies use formal academic models of "how advertising works" and identified the factors that discourage non-users from applying academic advertising theory.They found that the formal models of advertising effect were considerably ignored.. Agencies using these models typically favored the hierarchy-of-effects variants.Ensor et al., (2006) found that the UK advertising agencies are organized in a manner to allow them to strongly reinforce three key dimensions, namely work group supports, lack of organizational impediments, and organizational encouragement.Baladrón-Pazos (2011), considering agency oriented perspective to identify the role of immigrant in advertising, found that advertising for immigrants would give less importance to immigrants' ethnicity and the cultural references about their origins.The reason is that the new residents will be increasingly integrated into the Spanish society and therefore increasingly incorporated into the planning of any type of campaign.Hotz et al., (1982) also suggested that agency-client problems could be reduced by better communications between the parties.Advertising agencies, as communication professionals, should use ``best practice'' activities for promoting themselves to attract new clients.In this regard, Sanford and Maddox (1999) compared account management of domestic and international accounts, finding that formal account reviews are important for both types of accounts, but are used more for domestic accounts.To determine the reasons for the agency-client relationship breakdown, Doyle et al., (1980) found that the clients and the agencies mention different reasons for the account move.Clients rated "dissatisfaction with agency performance" as the most important factor for switching, while the ex-agencies rated "changes in client policy" as the most important reason.Ryan and Colley (1967) believed that many of the problems between advertisers and their agencies could be corrected through systematic performance appraisal.
Following these arguments, advertising agencies, in order to get a good position in online world, need to review their activities to be able to protect their market share.The present study is aimed at scrutinizing previous studies and finding critical success factors playing a crucial role in new business models of advertising agencies.

Creativity
Nowadays, creativity is one of the main functions of advertising agencies.However, branding through online banners put publishers into situations that assign more importance to creativity and effectiveness of ad messages.While publisher's main role is improving the reach and frequency, ad agency, itself, is responsible for providing creativity in online world (Parsons, 1997;Zeff and Aronson, 1999).Creativity lies at the core of the advertising profession (Reid et al., 1998;Smith and Yang, 2004;Vanden et al., 1986;Zinkhan 1993).Creative advertising can provide a competitive edge for a brand, add to its value, and give it an advantage over its rivals in terms of more positive market response (Frazer, 1983;Newman, 1993).Agency creativity is an integral part of advertising creativity; it refers to the creative quality of agency teams in producing innovative ads (O'Connor et al., 1996;Smith and Yang, 2004).Most advertising agencies emphasize creative products as their main strategy.Advertising clients, hence, expect high quality performance in several functions of the agencies, rather than just in creating outstanding advertising (Ghosh and Ling, 1994).In this regard, following hypothesis is put forward: Hypothesis 1: building facilities to generate creative ideas has a direct effect on advertising agencies' performance in online world.

Relationship management
The relationship management role is very important for the personnel of agency (Triki et al., 2007).Relationships can be defined as the communications among personnel, agency and client, and agency and competitors.Features like good personal communication with customer and appropriate meeting with clients are the key features in relationship management (Cagley and Roberts, 1984).Wackman et al. (1986) presented an agency-client life cycle with four stages: pre-relationship, development, maintenance, and termination.Moreover, literature about client and agency is threefold: the criteria of selecting agency, developing the dimensions of client and agency relationship, and the factors which present problem in agency and client communication.According to Cagley and Roberts (1984), personal behavior is the core concept in forming relationship.In order to survive and grow, agencies need to make good relationships with clients.While agencies offer their services to clients, there is no choice but to have suitable relationship with them.In pursuit of this goal, agencies must meet internal and relation-based factors.In order to examine these issues the following hypothesis is developed: Hypothesis 2: rebuilding relationship management process in activities reviewed will result in the effectiveness of agencies.

Sponsorship advertisement
Sponsorship advertisement is a new form of indirect advertisement which fill limited space and let advertising agencies to do marketing and advertising through creating key content.Sponsorships are seen as some parts of websites content or appear like a list at the corner of the websites (Hanafizadeh and Behboudi, 2008).Advertising agencies utilize both trade shows and trade journals, like Advertising Age and AdNews, to expose their services to potential clients so as to attract new business.This trade advertising also allows the agency to build a reputation and image of the agency in a non-personal manner (Waller et al., 2001).The Yellow/White Pages is generally perceived as an important and basic form of advertising for businesses.It has been claimed that a business could not survive without having some sort of advertising/ listing in either of Yellow/White Pages (Butkys and Herpel, 1992;Wills, 1992;Belch and Belch, 1998;and Waller et al., 2001).Therefore, an agency in order to present its performance and capability, needs to publish online advertising.In this regard, the following hypothesis is presented: Hypothesis 3: the ability to use sponsorship advertising and promoting agency's role on internet will result in more effectiveness.Beardi (2000) recommends marketers to use direct mail as the best promotional tool.Direct mails are a cost-effective way for marketer on the one hand, and a mutual way of communication for customers on the other hand.It is reported that customers have a kind of confidence to these types of messages (Beardi, 2000).Direct mail allows an agency to focus on specific targets in the hope of attracting their business.Direct mail, in the form of newsletters brochures and testimonials, allow the prospective client to gain insight into the potential agency and become aware of its unique attributes.Instead of analyzing the factors that can influence the advertising agency selection process, a few studies have looked at the activities used by advertising agencies to attract new business.Butkys and Herpel (1992) suggested 14 methods used by agencies for their own promotion, and found that direct mail was the main promotional method (Waller, et al., 2001).Hence, the following hypothesis is developed: Hypothesis 4: the ability of using and executing direct mail will result in effectiveness and improvement of advertising agencies' activities in the Internet.

Uncluttered homepage
Uncluttered homepage of an agency is one of the key variables that has been verified in different studies (e.g.Wills, 1992).A homepage would be able to display a great deal of information about an advertising agency, such as its history, its company philosophy, some of its major clients, its staff and services available.An agency, ignoring the process of self-promoting, will not be able to work well as a business intermediary; that is to say, the more an agency works on its promotion and self-introducing activities, the more it has the chance of being survived (Waller et al., 2001).Using well-designed navigating systems will let clients to obtain their needed information.Considering these issues, the following hypothesis is developed: Hypothesis 5: designing uncluttered homepages will result in effectiveness and improvement of advertising agencies' activities in the Internet.

Account managers' new roles
Account managers are the key actors of developing constant relationships with clients.Account managers or planners are responsible for long-term planning and participating with clients.In marketing, the existence of agency relationships is common as companies employ "specialists" to assist in the marketing of a product/service/idea, for example, warehouses, market research companies and advertising agencies (Bergen et al., 1992).An advertising agency is "an outside firm specialized in the creation, production and/or placement of the communication message which may provide other services to facilitate the marketing and promotions process" (Belch and Belch, 2001, p. 69).In addition to promoting themselves, Wills (1992) identified eight activities used by advertising agencies to win new business: personal contact with top management, positive recommendation of satisfied clients, publicity on recent successful campaigns, responding to requests for new-business presentations, trade advertising, direct mail, unsolicited speculative proposal, and sales calls by new-business development staff.These findings were confirmed by Waller et al., (2000), who surveyed 35 advertising agencies in Australia and added four more activities, including "Internet homepage".This study also supported the importance of personal relationships (or the "people factor") in the agency-client relationship with "Personal contact with top management" being perceived as the most important activity used to generate new business.The other activities seen as important were: "positive recommendation of satisfied clients", "responding to requests for new-business presentations", and "publicity on recent successful campaigns".Accordingly, the following hypothesis is developed: Hypothesis 6: personal and organizational ability of account manager plays a serious role in effectiveness and improvement of advertising agencies' activities on the Internet.

Lead generation
Trends show that the number of clients interested in advertising campaign has declined (Kunze, 1997;Orn, 1996).It is reported that the low level of banner effectiveness is the key reason of this trend (Fittau and Maab, 1996).In addition, measurement standards and the degree of banner influence on the user are not quite clear.Limited knowledge of advertising agencies from concepts like lead generation, behavioral targeting, tracing, and behavioral marketing has led to inability of internet advertising.Using virtual community for gathering information and tracing user needs requires technical knowledge.By tracing virtual community and forums, there is no need to spend high costs on conducting focus group (Ferris, 2007, p. 33).
Instead of using the above-mentioned techniques, online advertising in Iran is solely using animation in publishing advertising.By developing artworks with low quality, annoyance has been increased among Iranian users who are exposed to online ads.This approach resulted in a kind of avoidance from internet advertising (Cho and Chon, 2004).Generating online lead is one of rapidly-growing trends on the web.According to IDC Research ( 2008), lead generation, with 71 percent growth, has the highest growth level among other sections of internet advertising.Thus, the following hypothesis is developed to examine the role of lead generation among Iranian advertising agencies: Hypothesis 7: Adopting and using lead generation concept will result in effectiveness and improvement of advertising agencies' activities in the internet.

Conceptual model
Regarding the theoretical framework, content analysis (see Table 1) and the above-mentioned hypotheses, the following conceptual model is developed.
First, in order to identify factors affecting Internet advertising adoption, a content analysis was conducted on 22 previous studies in the areas of Internet advertising, e-commerce, online marketing, e-business, and adoption of new technologies in SMEs.Content analysis is a method confirmed in many studies and is considered as one of the instruments of theoretical frameworks (Kassarjian, 1977;Kolbe & Burnett, 1991;Okazaki & Rivas, 2002;Behboudi et al., 2011).Through content analysis, 34 indicators confirmed by most researchers were identified and categorized in 7 main constructs on the basis of exploratory factor analysis.
Insert Figure 1 here In this study, an inductive-deductive mixed method was employed in order to identify the influential factors confirmed by international researchers, on the one hand, and to investigate applicability of these indicators from the viewpoint of local researchers and experts, on the other.In order to identify appropriate statistical population, an operational definition of experts was proposed as: 1) To be an instructor, assistant professor, associate professor, or professor in one of the majors related to IT, business management, e-commerce, and computer; 2) To have at least one published research article in the area of Internet marketing, e-business, and Internet advertising; 3) To be one of the owners of successful e-businesses in Iran; and 4) To be active in advertising agencies.

Questionnaire development
The questionnaire used in this study was a self-administered one.It was designed in 5-sacle Likert format from extremely agree to extremely disagree.Each of the indicators was used as one question of the questionnaire and was administered to university experts and owners of e-business to be confirmed in the area of Iranian businesses.The printed questionnaire was administered to experts.From among 193 questionnaires sent to experts, 126 were completed and returned and the response rate of the study was 65%.Student's t-tests was used for validating the questionnaire items.

Reliability and validity
In order to estimate reliability and validity, a pre-test or pilot method was used.Since the foundation of this study was extracted from previous studies, the present research is intended to determine if the findings could be confirmed.In fact, reliance upon the literature and using experts' views for validating the questionnaire justified its validity.
Using pre-test method, this research first administered the five-point Likert questionnaire to 25 experts.Respondents faced some difficulties in answering some questions due to the novelty of these concepts (e.g., lead generation).However, once this research offered operational definitions, the ambiguities were resolved.Additionally, in order to estimate reliability, a Cronbach's alpha test revealed an alpha coefficient of 72%, which showed high reliability of the questionnaire.Thus, it was found out that the questions exhibited internal consistency; that is, all questions measured a common construct.Finally, in order to develop variables related to the ideal framework, this research conducted specialized interviews with e-businesspersons.

Results
Critical value in this examination with degree of freedom (α-1) was -1.65 which shows the examination statistics larger than this number or near zero will be acceptable.As shown in table 2, all hypotheses met this norm and were retained in the model.

Discussion
The objective of the present study was to provide insights into antecedents forming advertising agencies' new role by considering internet penetration in Iran.In pursuing this goal, a conceptual model was developed by scrutinizing the body of traditions of advertising discipline (see Table 1).A paper-based questionnaire was performed to examine the validity of variables in Iran.
It was found that creativity of advertising agencies in the web (2.647) is the key variable of advertising agencies' new role."Creative excellence" (2.97) would lead to a competitive advantage, and compared to two other items "provide a competitive edge for a brand" (2.3) and "add to its (brand) value" (0.9) has more impact on creativity.Thus, this study recommends that, for reviewing advertising activities, it would be preferable if practicing managers assign enough budgets to research in the area of creative artworks trying to build some core competencies.Moreover, they can employ new stuff to form new ideas in this industry.They must try to make a situation in which clients have enough motives to select internet as one of message-delivering channels.
The second influential variable in reviewing advertising agencies is "uncluttered homepage" (2.3).An advertising agency is a kind of business institute which acts in the competitive environment, so it needs to develop some promotional campaigns with the purpose of coping with competitors."Display great deal of information about ad agency" (2.64) and "Display about recent successful" (1.94) are two influencing items which must be taken into consideration.This study suggests that advertising agencies should try to appeal clients by designing comprehensive website.It was realized that when an advertising agency is able to design this type of uncluttered homepage, it will undoubtedly be able do it again for its clients.After that, the ad agency can place some requirements that will lead to customer trust in ad agency.For example, it would be good decision if ad agency could bring outstanding customers or partners' products and online intermediaries into clients' attention.
The third influential variable in reviewing advertising agencies is "account manager" (2.48).Beard (1999) suggested that giving and getting information and clarifying tasks for retaining a relationship between agency and client is important.Account manager is the right person who can do right thing for keeping client in touch."Creativity" (5.6) is the most influencing items followed by "responding to request for new business presentation" (3.16) "people factor" (2.5), "quality of account team" (2.19), "positive recommendation of satisfied clients" (1.7), "track responses to on-line ads" (1.6), "positive recommendation of satisfied clients" (.679), "Winning industry award" (.639), "personal contact with top management" (.45), "publicity on recent successful campaigns" (.36), and "interpersonal relations" (.177).In comparison to Beard (1999) who rated the item of "positive recommendation of satisfied clients" as the most important indicator, the present study yielded a completely different result.It can be concluded that ad agencies with the purpose of achieving predetermined goals must consider account manager's relationships with clients.
The fourth influential variable in reviewing advertising agencies is "lead generation" (1.07).It is the technical knowledge of an agency to trace and record users behaviors."Behavioral targeting" (1.2), in comparison to "behavioral marketing" (.93), plays a stronger role in this regard.If an internal or external unit can provide users' leads (name, age, gender, preferences and so forth) for ad agencies, the meaning of "targeted advertising" will come to practice.By operationalizing this practice, user avoidance as the key impediment of internet advertising will be removed.
The fifth influential variable in reviewing advertising agencies is "direct mail" (.47).Aligned with Butkys and Herpel (1992), it was found that direct mail is the key variable in directly promoting campaigns."Gaining insight into the potential agency" (.79) in comparison to "Becoming aware of unique attributes" (.32) and "attracting their business (advertise)" (.29) has more influence on direct mail.Advertising agencies must develop direct mail in which their positive experience should be mentioned.The more direct mail ad agencies' activities promote, the more clients will come to their websites.
The sixth influential variable in reviewing advertising agencies is "relationship management" (.16).It is reported that the next step after making an agreement for co-operation is retaining relations for long term 2004).Also, different studies mentioned a good position for the variable of "relationship management", but their norms could not be met in this study.It may result from the culture of Iranian businesses.According to Chandler and Graham (2009), in comparison to information-based culture of West, Middle East countries follow a relationship-based culture; therefore, relationship management has no specific meaning there.
The last influential variable in reviewing advertising agencies is "sponsorship ads" (.09).While Iranian ad agencies are now seen as interactive agencies, and just change their name for covering internet-based campaign, they have no knowledge about new processes of internet.Employing new and familiar personnel with internet-only process can help them to review their activities in the internet.
Reviewing ad agencies by considering their requirements in Iran can be seen more imperative because of changing clients' preferences from offline communication channels to online ones.We know that internet is the only channel that has aggregated three needed routs of business: ordering rout of product, paying rout of product, and delivering rout of product (Hanafizadeh and Behboudi, 2012).On the other hand, internet has passed a disintermediary and re-intermediary process that makes it imperative to review severely online activities.Although, this paper provides, some valuable insights into Iranian ad agencies, care must be exercised in generalization of results.

Table 2 .
Student's t-tests results