Advertising Agency

What is an Advertising Agency?

An advertising agency refers to a team of creative experts appointed by the client (advertiser) to design, develop, produce and place advertising messages in media. For doing this work, the agency charges a commission of 15% on media bills from the media owners. Along with that, they also charge out-of-pocket expenses to the advertiser.

Initially, advertising agencies began as space brokers to manage advertisements placed in the newspapers. Over time, they have started serving advertisers.

The short form of an advertising agency is an ad agency because they are agency of the media which pays commissions to these agents. Hence, media is their principal. Further, Media pays commissions only to the recognised agencies. In a nutshell, an advertising agency works for the client. However, it gets its income from the media.


To advertise a product, the advertiser has two options:

  • Design, create and produce the advertising message and place it in the intended media directly via its own advertising department.
  • Assign the whole advertising task to the team of professionals, who specialise in this field, i.e. advertising agency.

Table of Contents

  1. Characteristics
  2. Role
  3. Functions
  4. Types
  5. Wrap Up

Characteristics of an Advertising Agency

  • An advertising agency is an independent organisation created to provide advertising services to its clients.
  • It comprises a team of experts in specific fields to help the companies reach their target audience. The team of experts includes copywriters, artists, photographers, editors, layout designers, and so forth.
  • These agencies make all efforts to sell the products of clients.
  •  Its work is to design and produce ads, decide on when, how and where the ad will appear and hand it over to the client.


  1. Designing and developing an advertisement based on the information collected about the product.
  2. Researching about the client, its offering, and customers’ reactions.
  3. Deciding the type of media to be used, when and how it will be used and for how much time it will be used.
  4. Receiving feedback from clients and customers. After that, decide on the next course of action.
  5. Agencies make the best possible use of their human resource, experience and knowledge.
  6. Savings in cost, up to a great extent.

Functions of Advertising Agency


Contacting Clients

It identifies and contacts prospective advertisers who wish to advertise their product or service. For this purpose, the advertising agency chooses those companies which are financially sound and makes quality products and services.

Planning Advertisement

The main task of an advertising agency is to plan ads for its clients. There are a series of tasks to be performed in this regard:

  • Researching and studying the client’s product to identify the basic characteristics related to its competitor’s product.
  • Analysing the current and potential market for the client’s offerings.
  • Assessing the market conditions.
  • Determining the seasonal demand for the product or service.
  • Evaluating the degree of competition and studying competitors and how much they spend on advertising.
  • Knowing about the distribution network, sales and operations.
  • Formulating an advertising plan.

Creative function

Copywriters, art directors, and graphic designers together design ads and write slogans and jingles for advertising. For that, they use colour psychology to get a better response from the customers.

Developing ad copy

The entire team of writers, editors, animators, designers, and directors works on preparing and developing the ad copy.

Client Approval

In the preparation of the ad copy, it is presented to the client, i.e. the advertiser to get approval.

Media selection and scheduling

The choice of suitable media is the crucial decision the ad agency must make. For this, they consider a number of factors like media cost, coverage, advertising budget, the need of the client, target audience, nature of the product, and so forth.

Execution of the Ad

After the approval, verification and necessary changes, the ad copy is provided to the media house for its execution.


Once execution is complete, the ad agency is responsible for evaluating its effectiveness. They do so to ascertain the outcome of the advertising.

Types of Advertising Agency


  • Full-Service Agency: This kind of ad agency provides a full package of services, including marketing, communication, research, ad production, media selection and promotion. Apart from that, it also offers services like direct marketing, package designing, public relations, publicity, etc.
  • Inhouse Agency: The advertising department operating within the company is responsible for planning and developing advertising content, is Inhouse Agency. Generally, MNCs have an in-house advertising department. It allows greater control and coordination in various stages of advertising.
  • Creative Boutique: These advertising agencies are famous for developing creative concepts and rendering artistic services. If any advertiser is looking for a high level of creativity in the content or advertisement, then they can approach this creative boutique.
  • Media Buying Service: Independent firms specialising in buying media time and space are media buying service agencies.
  • La Carte Agency: Some advertisers like to order specific services from a separate menu list instead of buying the entire range of services. These services are provided by both full-service agencies or an individual agency specialising in creative work.
  • Special Service Agency: Some agencies deal in selected domains and obtain expertise in that particular area. These are special service groups.
  • Sweet Shops: These are small ad agencies operating locally, usually in a city, town or village. Clients who look to advertise their products locally approach these agencies.

Wrap Up

Above all, an advertising agency is an independent organisation that renders advertising services. This includes creating effective and goal-oriented advertising campaigns to represent the company. Companies hire these agencies to connect with the audience.

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