In 1856 Mathew Brady created the first modern advertisement when he placed an ad in the New York Herald paper offering to produce "photographs, ambrotypes and daguerreotypes.His ads were the first whose typeface and fonts were distinct from the text of the publication and from that of other advertisements. At that time all newspaper ads were set in agate and only agate. His use of larger distinctive fonts caused a sensation.Later that same year Robert Bonner ran the first full-page ad in a newspaper.
In 1864, William James Carlton began selling advertising space in religious magazines. James Walter Thompson joined this firm in 1868. Thompson rapidly became their best salesman, purchasing the company in 1877 and renaming it the James Walter Thompson Company, which today is the oldest American advertising agency. Realizing that he could sell more space if the company provided the service of developing content for advertisers, Thompson hired writers and artists to form the first known Creative Department in an advertising agency. He is credited as the "father of modern magazine advertising" in the US.
Most full-Service agencies work on a combination of fee-based and commission based compensation. The fee is paid by the entity for which the marketing is being done. The commission is a payment from the media to the agency and is usually equal to 15% of the cost of the advertisement. The broadcast media, radio and television, traditionally pay a commission.
Full-service, or media-neutral advertising agencies produce work for many types of media, creating integrated marketing communications, or through-the-line (TTL) advertising. The "line", in this case, is the traditional marker between the media that pay a commission to the agency and the media that do not.
Interactive Agencies may differentiate themselves by offering a mix of Web Design/Development, Search Engine Marketing, Internet Advertising/Marketing, or E-Business/E-Commerce consulting. Interactive agencies rose to prominence before the traditional advertising agencies fully embraced the Internet. Offering a wide range of services, some of the interactive agencies grew very rapidly, although some have downsized just as rapidly due to changing market conditions. Today, the most successful interactive agencies are defined as companies that provide specialized advertising and marketing services for the digital space. The digital space is defined as any multi-media enabled electronic channel that an advertiser's message can be seen or heard from. The 'digital space' translates to the Internet, Kiosks, CD-ROMs, DVDs, and Lifestyle Devices (iPod, PSP, and Mobile). Interactive Agencies function similarly to advertising agencies, although they focus solely on interactive advertising services. They deliver services such as strategy, creative, design, video, development, programming (Flash and otherwise), deployment, management, and fulfillment reporting. Often, Interactive Agencies provide: Digital Lead Generation, Digital Brand Development, Interactive Marketing and Communications Strategy, Rich Media Campaigns, Interactive Video brand experiences, Web 2.0 website design and development, e-Learning Tools, email marketing, SEO/SEM services, PPC Campaign Management, Content Management Services, web application development, and overall Data Mining & ROI Assessment.
Lately, Search Engine Marketing (SEM) and Search Engine Optimization (SEO) firms have been classified by some as 'agencies' because they create media and implement media purchases of text based (or image based, in some instances of search marketing) ads. This relatively young industry has been slow to adopt the term 'agency', however with the creation of ads (either text or image) and media purchases, they do technically qualify as 'advertising agencies'. Recent studies suggest that both SEO and SEM are set to outpace more traditional channels of media spending over the next 3-5 years.
The recent boost in Interactive Agencies can also be attributed to the rising popularity of web-based social networking and community sites. The creation of sites such as MySpace, Facebook and YouTube have sparked market interest, as some Interactive Agencies have started offering personal and corporate community site development as one of their service offerings. It still may be too early to tell how agencies will use this type of marketing to monetize client ROI, but all signs point to online networking as the future of brand marketing.
Not all advertising is created by agencies; companies that create and plan their own advertising are said to do their work in-house.
The people who create the actual ads form the core of an advertising agency. Modern advertising agencies usually form their copywriters and art directors into creative teams. Creative teams may be permanent partnerships or formed on a project-by-project basis. The art director and copywriter report to a creative director, usually a creative employee with several years of experience. Although copywriters have the word "write" in their job title, and art directors have the word "art", one does not necessarily write the words and the other draw the pictures; they both generate creative ideas to represent the proposition (the advertisement or campaign's key message). Creative departments frequently work with outside design or production studios to develop and implement their ideas. Creative departments may employ production artists as entry-level positions, as well as for operations and maintenance.
The other major department in ad agencies is account services or account management. Account Services or account management is somewhat the sales arm of the advertising agency. An account executive (one who works within the account services department) meets with the client to determine sales goals and creative strategy. They are then responsible for coordinating the creative, media, and production staff behind the campaign. Throughout the creative process, they keep in touch with the client to update them on the ad's progress and gain feedback. Upon completion of the creative work, it is their job to ensure the ad's production and placement.
The creative services department may not be so well known, but its employees are the people who have contacts with the suppliers of various creative media. For example, they will be able to advise upon and negotiate with printers if an agency is producing flyers for a client. However, when dealing with the major media (broadcast media, outdoor, and the press), this work is usually outsourced to a media agency which can advise on media planning and is normally large enough to negotiate prices down further than a single agency or client can.
Modern agencies might also have a media planning department integrated, which does all the spot's planning and placements
In small agencies, employees may do both creative and account service work. Larger agencies attract people who specialize in one or the other, and indeed include a number of people in specialized positions: production work, Internet advertising, planning, or research, for example.
An often forgotten, but still very important, department within an advertising agency is traffic. The traffic department regulates the flow of work in the agency. It is typically headed by a traffic manager (or system administrator). Traffic increases an agency's efficiency and profitability through the reduction of false job starts, inappropriate job initiation, incomplete information sharing, over- and under-cost estimation, and the need for media extensions. In small agencies without a dedicated traffic manager, one employee may be responsible for managing workflow, gathering cost estimates and answering the phone, for example. Large agencies may have a traffic department of ten or more employees.
Advertising interns are typically university juniors and seniors who are genuinely interested in and have an aptitude for advertising. Internships at advertising agencies most commonly fall into one of six areas of expertise: account services, creative, interactive, media, public relations and traffic.
An internship program in account services usually involves fundamental work within account management as well as offering exposure to other facets of the agency. The primary responsibility of this position is to assist account managers. Functions of the account management intern may include:
• Research and analysis: Gathering information regarding industry, competition, customer product or service; as well as presenting findings in verbal/written form with recommendations
• Involvement in internal meetings and, when appropriate, client meetings
• Assisting account services in the management of creative projects
Interns often take part in the internal creative process, where they may be charged with creating and managing a website as well as developing an advertising campaign. Hands on projects such as these help interns learn how strategy and well-developed marketing are essential to a sound advertising and communications plan.
During their internship, the intern will experience the development of an ad, brochure and broadcast or communications project from beginning to end. During the internship, the intern should be exposed to as much as possible within the agency and advertising process.