Small Business Trends

What Is an Advertising Agency?

By | 7 min read | Published

Learn more about advertising agencies and what they can do for your business.

Advertising agencies started in the 1800s as an intermediary between businesses that wanted to buy ad space and the many newspapers with ad space to sell. Since then, of course, advertising has changed.

First, there was radio and TV for advertising to conquer. Then, in the 21st century, the internet took over our lives and brought with it online ads. Only a few years later, mobile advertising emerged on the scene, as a large percentage of the world’s population uses smartphones multiple times per day (if not per hour).

Alongside these changes, advertising agencies have evolved and now operate differently than they did in the past. This guide covers the basics of ad agencies, including the various types as well as the services covered/provided by these businesses.

Let’s start with a definition.


Defining advertising agencies

The role of advertising agencies is to create and manage ads and other marketing campaign elements for clients including other businesses, corporations, nonprofits, and government agencies. An ad agency also manages clients’ branding and marketing initiatives to increase sales of their products and services.

With all the options for advertising today, this can involve everything from matching ad space to ad buyers to the design and layout of print, digital, and video ads to complete marketing campaigns.


What types of advertising agencies exist?

Advertising agencies vary in size and can work in different mediums, as well as handle or focus on different types of clients. Here are a few of the main types:

2.1 Full-service advertising agency

A full-service agency does everything. These agencies offer an extensive range of services, from traditional to digital advertising. A full-service agency will provide campaign management, TV advertisements, social media management, content creation, radio commercials, print advertising, strategic planning, and search engine optimization (SEO) services.

2.2 Digital advertising agency

A digital advertising agency specializes in all things internet and digital. These agencies often offer social media management, SEO, web design, email marketing, and content marketing services.

2.3 Traditional advertising agency

A traditional ad agency focuses on advertising methods such as print, TV, and radio.

2.4 Social media advertising agency

This type of agency focuses on creating online content for various channels, including written blog content, Twitter and Facebook posts, and YouTube and TikTok videos. Sometimes, social media advertising agencies partner with social media influencers who have thousands of followers to help promote clients’ products and services.

2.5 Public relations advertising agency

PR firms work to enhance and control the public perception of a business and its personnel. Enterprise-level businesses and CEOs frequently use PR firms, which concentrate on getting them mentioned in the media, on trade websites, etc.

2.6 Media buying agency

This type of ad agency focuses on planning and buying media and may customize the services they provide to a specific channel. They provide a deadline, offer a suggested spending limit, and choose marketplaces to reach the intended audience.


What does an ad agency do?

Businesses and advertising firms collaborate to plan, execute, and evaluate the effectiveness of advertising campaigns. Ad agencies may also be in charge of marketing, branding, and sales promotions.

Often, advertising agencies have different departments to handle separate parts of the advertising process, including:

  • Account planning: Assists the creative services department in creating advertising campaigns. This team collects information about clients’ needs, markets, goals, and previous marketing methods.
  • Media planning and buying: Researches the most effective media outlets for each advertising campaign.
  • Creative services: Composed of graphic designers, visual artists, and copywriters, this team creates assets that fulfill the requirements of client campaigns/projects based on client objectives, established parameters, and target audience.
  • Client services: Serves as the go-between for clients and relevant ad agency departments to ensure client goals and needs are fully understood and fulfilled.

These departments work together to provide the following services for agency clients:

3.1 Pitch advertising campaigns

When a client decides that a product needs an advertising campaign or an update to an older campaign, the client will submit a request for a pitch. If the client already has an agency, they may only send the pitch to that agency. Some clients may send out requests to multiple agencies and have them contend for business. This is known as a request for proposal (RFP).

It is then up to the ad agency or agencies to develop various ad ideas and present them to the client. The client then decides which pitch fits what they are looking for in a new campaign.

Often, this is how advertising agencies win new clients. For others, it is how they keep their current clients. Once the pitch is done, the real work on the advertising campaign begins, and the end result may not even look like the original pitch.

3.2 Analyze consumer behavior

Ad agencies routinely conduct market research to ensure their deliverables appeal to their client’s target market.

In the early days of market research, this mainly involved polling the general public as well as product and service users. Some polls would be as simple as asking random people on the street if they read a certain magazine and if they remembered seeing a specific advertisement in it.

Polling is still an effective means of conducting market research. And while some polling is still done via phone and in-person, polling software has made this process simpler and even more effective.

In the last few decades, the techniques used for market research have evolved every few years. The internet and web analytics have made it possible to know even more about consumers. Ad agencies can determine in a matter of days, or even hours, which ad design converts better through A/B testing.

The latest technologies contributing new market research insights and capabilities are artificial intelligence (AI) and machine learning. Using available data, ad agencies can segment customers in real time, determine which ads have better odds of converting, and personalize them for the user.

There is a lot of room for growth in this area; according to Gartner, 63% of digital marketing leaders struggle with personalization, but only 17% have used machine learning.[1]

3.3 Design advertisements

The creative department is the heart of an ad agency/ They use market research to design advertisements that grab consumer attention and differentiate clients’ products in the marketplace.

Copywriters are still required to write clear, concise copy that will sell a product or service, but there are more outlets and ways to do so than ever before. Writers work with art directors, creative directors, artists, web designers, graphic designers, videographers, and more.

Art and graphic design teams create visual concepts either by hand or by using graphic design software that become print and digital ads. They also may be responsible for branding or rebranding efforts (creating client logos, typography, and color palettes).

Web designers are one of the newest additions to ad agencies; they are responsible for turning graphic designs into interactive online experiences for users.

3.4 Manage rollout strategies

To ensure a product or service’s success, its deployment must be planned to have the greatest impact on consumers. This is the purpose of a rollout strategy, which draws on an ad agency’s experience and market research to purchase traditional and digital advertising space that will reach a product or service’s target market.

Traditional ads such as print ads and billboards still have their place, but digital ad revenue accounted for 65% of total ad revenue in 2021 and is expected to grow past 70% by 2025.[2] This makes digital ad strategy a major part of any rollout strategy.

Ad agencies often have experts on staff covering areas including web analytics, SEO and keyword research, and online advertising markets to ensure a strong ROI. Web analytics allows agencies to measure the effectiveness of a rollout strategy in real time and adjust as needed.

Want to learn more about marketing and advertising?

In today’s diverse digital landscape, ad agencies are only one piece of the marketing puzzle. These resources can help you take your marketing to the next level:


  1. Emerging Technologies Are Key to Executing an Effective Personalization Strategy for Digital Marketing, Gartner
  2. Share of Digital in Advertising Revenue Worldwide From 2019 to 2027, Statista

Looking for Marketing Automation software? Check out Capterra's list of the best Marketing Automation software solutions.

About the Author

Stephan Miller - Guest Contributor

Stephan Miller - Guest Contributor

Stephan Miller is a freelance writer and software developer specializing in software and programming. He has written two books for Packt Publishing.

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