Advertising agency

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While the very term "advertising agency" may seem self-explanatory, it is only on the surface. This term is not only a broad set, which includes more specialized institutions, but it is also something different than the company's marketing department, branding agency or media house. An advertising agency also goes by the name of creative agency which is a type of company that specializes in creating advertising campaigns for products and brands. Advertising can take many different forms such as by print, radio, television, press, mobile, and through internet channels.

According to the Encyclopedia of Management, the advertising agency deals with designing and implementing advertisements, developing a media plan, creating promotional strategies, selecting the media and communication tools, managing the advertising budget, and analyzing the market and evaluating the effectiveness of advertisements. This type of business allows for new brands and products to reach the market in the most effective way possible. It is the job of these agencies to develop, and plan, advertisements with certain specifications that were provided by the outside company. A thing to note is that advertisement agencies are usually independent from the company that hires them, as they are able to provide an outside perspective. Having a trusted advertisement agency work with your company, guarantees recognition and results. Besides creating personalized advertisements, these agencies can be hired in your companies’ sales department in order to help develop certain marketing strategies and promotions. Having this assistance, and combining two forces, allows for an inside, and outside, perspective on what you are trying to sell, and how to sell it[1].

History of Advertising Agencies

A brief history of Advertising Agencies

  • 1800s - The first advertising agency was established in the 1800s in the UK. Advertising has always been a part of the world, the industrial revolution really pushed the boundaries of advertising and made it more structured. It was until the 2nd half of the 1800’s that the first American advertising agency was created.
  • 1850 - Volney B Palmer opened the first advertising agency located in Philadelphia. This was the start of placed advertisements that were being printed into newspapers[2].
  • 1856 - Mathew Brady a professional photographer used a different typography in a newspaper. This led to the first instance of modern advertising. He promised to create work that consisted of “photographs, ambrotypes, and daguerreotypes.” His work was very different from traditional advertisements. Shortly after, the first full-page ad was released in newspapers.
  • 1864- New York, U.S. James Walter Thompson created the first creative department in the world. His idea was that his own company would create projects for other advertising companies[3].
  • 1941 - The first television commercial appeared in the United States during a baseball match between the Brooklyn Dodgers and the Philadelphia Phillies. The advertisement was showing of “Bulova” watches[4].

Commission Rates for Advertising Agencies

The most common, and the worldwide, standard of payment is 15% of the final billing. This is because advertising agencies do not make money off of their own advertisements. They require the income to fund salaries and other production costs. In some situations, opposing advertisement companies drop prices down in order to steal potential clients[5].

List of the biggest advertising agencies

Rank Advertising Agency Name Revenue (USD Billions) Headquarters
1 WPP plc 17.34 London, UK
2 Omnicom Group 15.29 New York, USA
3 Publicis 11.39 Paris, France
4 The Interpublic Group of Companies 9.71 New York, USA
5 Dentsu 9.6 Tokyo, Japan
6 Hakuhodo 3.06 Tokyo, Japan
7 Havas 1.71 Paris, France
8 Dentsu Aegis Network 1.48 London, United Kingdom
9 MDC Partners 1.33 New York, USA
10 Publicis Sapient 1.31 Massachusetts, USA

Top 10 Largest Advertising Agencies Worldwide 2020, Top Advertising Agencies according to BizVibe[6].

Footnotes

  1. ↑ "Advertising Agency" Business Plans Handbook. Encyclopedia.com. 16 Oct. 2020 Advertising Agency
  2. ↑ Ralph Hower, The History of an Advertising Agency N. W. Ayer & Son 1869–1949 (1949) p. 185 The History of an Advertising Agency
  3. ↑ Applegate, E. (2012). Stanley B. Resor and the J. Walter Thompson Company, 1908-1961. In The rise of advertising in the United States, A history of innovation to 1960 (p. 134). Lanham Scarecrow Press [1] In The rise of advertising in the United States
  4. ↑ Newman, Lily. "Watch America’S First TV Ad, Which Aired 75 Years Ago Friday". Slate Magazine, 2020 Watch America’S First TV Ad, Which Aired 75 Years Ago Friday
  5. ↑ Business and Defense Services Administration (1986). Business and Defense Services Administration U.S. Industrial Outlook
  6. ↑ “Top 10 Largest Advertising Agencies Worldwide 2020, Top Advertising Agencies.” Bizvibe, 20 Aug. 2020 [2] Watch America’S First TV Ad, Which Aired 75 Years Ago Friday

References

Author: Krzysztof Nagaba-Poniatowski

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