O'Reilley Associates

Case Overview

Company Information and case facts

In 1990, O’Reilley Associates was one of the leading advertising companies in the United States. During the latter half of the 1980s, expenditures on advertising increased over 200%. As the demand for advertising grew, so did the number of new entrants into the advertising industry. O’Reilley’s worked with approximately 50 clients, many of which have been with the agency for more than 20 years. This in turn implied that the company was relatively within its industry. The company was organized into six divisions:

• Account management

• Creative management

• Information management

• Media management

• Administrative management

• Production manager

In terms of new clients, O’Reilley would only accept clients that:

• Had a solid business reputation

• Was in good standing in the community

• Whose product met a consumer need

Additionally, the agency would assess the potential client’s acceptability dependent on whether the allowance for the company’s product exceeded the expected cost of building and maintaining target market share. When considering a launch of a new product, O’Reilley performed market research using focus groups to establish whether a need existed. If a need was identified, a creative strategy was developed based on the consumer benefit. Test marketing was continued to evaluate the effectiveness of the strategy. After a client’s advertising campaign ended, the agency and client needed to determine whether to continue with the existing campaign or create a new one. The need to recognize external threats was also a crucial ongoing task for both the client and agency. The most profitable clients were the ones that frequently reused the same copy, which ultimately kept many costs to a minimum, thus increasing the margin. Generally speaking, the larger the client, the greater the costs incurred by the agency.

Additional key facts:

• Payroll accounted for 60-65% of the company’s revenues....