An advertising agency or ad agency is a service business dedicated to creating, planning and handling advertising (and sometimes other forms of promotion) for its clients.
Advertising Agencies can be classified by the range of services that they offer. Also, advertising agencies range in size from one man shows to large firms that employ thousands of people. Accordingly, different types of advertising agencies are:
- Full Service Agencies: As the name implies, a full service agency is one that handles all phases of advertising process for its clients: it plan, creates, produces and places advertisements for its clients. In addition, it might provide other marketing services such as sales promotion, trade shows, exhibits, newsletters and annual reports. One major point that differentiates a full service agency from other is that the personal work full time and the services provide are extensive. The services usually provided by a full service agency include collecting and analyzing market data, proposing strategy, preparing and producing the ads, placing the ads in approved media, verifying the advertisements appearance (publication, broadcasting, etc), invoice the client, collect the bills and pay the media and other suppliers.
- Limited Service Agencies: Some advertising agencies limit the amount and kind of service they offer. Such agencies usually offer only one or two of the basic services. For example, although some agencies that specialize in creative also offer strategic advertising planning service, their basic interest is in the creation of advertising. Similarly, some media-buying services offer media planning service but concentrate on media buying, placement, and billing. When the advertiser chooses to use limited-service advertising agencies, it must assume some of the advertising planning and coordination activities that are routinely handled by the full-service advertising agency. Thus, the advertiser who uses limited-service agencies usually takes greater responsibility for the strategic planning function, gives greater strategic direction to specialist creative or media agencies, and exercises greater control over the product of these specialized agencies, ensuring that their separate activities are well-ordered and coordinated.
- Creative Boutiques: It is an organization that specializes in the actual creation of advertisements. In general, boutiques create imaginative and interesting advertising themes and produce innovative and original advertisements. A company that uses a creative boutique would have to employ another agency to perform the planning, buying and administrative functions connected with advertising. Full service ad agency studies the product or service and determines its marketable characteristic and how it relates to the competition. At the same time the agency studies the potential market, possible distribution plans and likely advertising media. Following this, the agency makes a formal presentation to the client deadlines, it’s finding about the product and its recommendation for an advertising strategy. Creative boutiques are different from freelancers. Freelancers are individuals who work on their own with out any formal attachment with any agency. Clients or agencies hire these from time to time. The clients also hire creative boutiques.
- In-House Agencies: Such agencies are owned and supervised by advertisers or the client organizations. The organizational structure and functioning of in-house agencies are similar to full service agencies in most cases. The advertising director of the company usually heads an in-house agency. In house agencies are organized according to the needs and requirements of the company and are staffed accordingly. Some companies solely depend on their in-house agencies for their advertising needs. Others depend both on their in-house agency and outside agencies. Some other companies allow their agencies to take outside jobs.
- Specialized Agencies: There are many agencies, which take up only specialized advertising jobs. Certain fields like recruitment, medicine, finance, outdoor advertising, social advertising, etc. require specialized knowledge. Specialization occurs in such fields for a variety of reasons. Often, as in recruitment advertising, for example, specialized media or media uses are involved that require knowledge and expertise not ordinarily found in a general-line agency. In other cases, such as medical or industrial advertising, the subject is technical and requires that writers and artists have training in order to write meaningful advertising messages about it. Such specialist advertising agencies are also usually provide full-service in that they offer all the basic advertising agency services in their area of specialization plus other, peripheral advertising services related to their area of specialization. These agencies are usually small in size.
- Media Buying Agencies: It is an organization that specializes in buying radio and television time and reselling it to advertisers and advertising agencies. The services sells time to the advertisers, orders the spots on the various stations involved and monitors the stations to see if the ads actually run.
This trend for special media buying agencies started in the 1970s. Such agencies have a lot of contacts in the media and offer very low commission on media rates. Media buying agencies complement the creative boutiques. Also large companies use their specialized negotiating talents for buying media space and time.