Business Overview

In today’s marketing-saturated world, businesses need creative and effective advertising campaigns to help attract customers. Advertising agencies specialize in creating and planning these campaigns. In the United States, which is the world’s largest advertising marketplace, the industry’s annual revenue is $44 billion and growing.

Who is this business right for?

People who are both creative and have a mind for business may be well-suited for running an advertising agency. Creating pitches for clients requires great creativity, but this must be balanced with a business sense that considers the agency’s financial viability.

What happens during a typical day at an advertising agency?

An advertising agency owner is responsible for managing their agency, finding clients and producing campaigns for clients. On any given day, a business owner might:

  • Search for leads or follow up with leads on potential new clients
  • Prepare pitches for prospective clients
  • Work on campaigns for clients
  • Present pitches or completed projects to clients in meetings
  • Manage employees

The work of preparing pitches, designing campaigns and meeting with clients is often done with other business partners or employees. Even after an agency grows, however, business owners usually remain involved in these activities.

What is the target market?

Advertising agency's clients are most often other businesses, corporations or non-profit organizations. A particular agency’s ideal client will be one that is within an agency’s marketing niche and needs ongoing work. Often, such a client will ask to place an agency on retainer. (A retainer is an arrangement where a client pays an agency a consistent amount each week or month and, in exchange, the agency sets aside a certain number of hours each period to work on the client’s campaigns.)

How does an advertising agency make money?

An advertising agency makes money by charging clients for creating and planning advertising campaigns. In most situations, an agency will pitch a potential client without being compensated. If the client likes the pitch, the agency is contracted to execute their proposed campaign.

What is the growth potential for an advertising agency?

Advertising agencies can grow to be internationally recognized companies that receive accolades and land clients from all over the world. Advertising Age published the estimated 2014 revenues of the world’s five largest advertising agencies:

  • WPP Group (in London) had an estimated annual revenue of $19 billion
  • Omnicom Group (in New York) had an estimated annual revenue of $15.3 billion
  • Publicis Groupe (in Paris) had an estimated annual revenue of $9.6 billion
  • Interpublic Group (in New York) had an estimated annual revenue of $7.5 billion
  • Dentsu (in Tokyo) had an estimated annual revenue of $6.0 billion

In many cases, agencies are able to become national or multinational businesses with offices in just one or a few cities because they offer services rather than physical products.