What are functions of advertising agency? The functions of advertising agency depend upon its organizational structure. Let’s discuss in detail various functions of advertising agency below;


The functions of advertising agency can be broadly classified into five areas:

1) Creative Services,

2) Account Services,

3) Marketing Services,

4) Management & Finance.

5) Other Special Functions.


These services include copywriting artwork and production of finished ads.

  1. Copy: Most advertising people believe, that copy writing is the most important aspect of advertising. In most agencies, the copy department is one of the largest departments. It usually plans and prepares advertising copy for all media, although some agencies maintain separate sections or departments for preparing TV, radio, outdoor and press ads.
  2. Art: The art department arranges for finished artwork, although in many cases, most of it is prepared by outside independent units. The main art function is to layout or arranges various elements so that the ad will attract the attention of the right audience. The copywriters and art directors work in close co-ordination and are responsible to Vice President – Creative Services.
  3. Production: After the copy has been written and the layout and illustration approved, the ad is turned over to the production department. This department maintains contacts with printers, photoengravers, typographers, etc. The production department orders engraving of the illustration, arranges to have the copy set in type, and assembles them in the final ad. Before the ad is submitted to the print media, the department may offer proofs for approval of the client. In the case of TV and Radio Commercials, the agency may on its own write the script and produce the entire commercial. In recent times, most agencies take the help of outside independent units to produce such commercials.
  4. Traffic: Traffic is a matter of scheduling. To keep the work flowing on schedule, there is the traffic officer. His major duty is to monitor the production of the finished ad so that it gets completed as per schedule.


The account services section is headed by Vice President – Account Services. He is responsible for the overall agency-client relationship. To assist the Vice President, there are account supervisors. As the business grows and more and more clients signs up, account executives are appointed to look after the account of one or more clients. The account executives perform the following work:

  1. Advertising Plan: The account executive studies the client’s product and problems and formulates advertising plan and after the client’s approval of the plan, he looks after the execution of the same. He should see to it that the plan is executed effectively and efficiently. The account supervisor coordinates the work of account executives and reports to the Vice President of Account Services.
  2. Budget preparation: The account executive may assist the media planning department in preparation of advertising budget of the client.


The Vice President in-charge of marketing services is responsible for media planning, buying time and space, for research and for sales promotion:

  1. Media Planning: The media in-charge is responsible for planning and selection of the right media and also for buying time and space. He works in close co- ordination with account executives. The media man prepares a media schedule, showing the various media and the dates and time/space of broadcasting or publishing the ads. He often contracts the media and finally pays the media bills.
  2. Research: The Research section will help to collect new facts from the field, so that the ads can be presented according to the changing needs of the market.
  3. Sales Promotion: The sales promotion section prepares promotional material such as POP material, dealer aids, etc. and work with the sales manager of the client to get it to the sales people and dealers.


Office Management: The Vice President of this department is responsible for the office management and looks after the problems of the personnel – recruitment training, promotion, transfer, etc. This department provides all clerical services such as typing, filing, and keeping records.


  1. AGENCY COMMISSION: Traditionally advertising agencies have been paid a percentage of the billing charged by media. The commission has been 15% of gross billing (although some media in the press and outdoor sector may offer a higher commission. Some publications offer discount. If the agency pay media bills on lime say within 10 days after running the ad, they are offered cash discount. The cash discount may be passed on to the client so that he pays promptly. The cash discount is offered not on gross billing but on the amount due to be paid by the agency to the media. The agency commission can be illustrated as follows:

The gross billing is Rs. 1,00,000;


Gross Billing is charged to the client by Agency Rs. 1,00,000

– Less: Payment made to Media by Agency Rs. 85,000

– Agency Commission Rs. 15,000

Historically, commissions from media provided about 2/3 of agency income, although the larger the agency, the higher proportion of income from media commissions. Even among the largest agencies, however, 10 to 25% of income comes from sources other than media commissions.


There are other out-of-pocket costs to the agency beside the cost of space or time. An agency may have to buy finished artwork, comprehensive layouts, television storyboards, etc. The agency may also pay for printing plates, filming TV / Radio Commercial etc. The agency will charge the client for such expense. The suppliers of such services may also provide a commission to the agency for large orders.

  1. FEES:

Agency income is also derived from the fees it charges. In a fee system, the advertiser and its agency negotiate a flat sum to be paid to the agency for all work done. The agency estimates the cost (including out of pocket expenses) of serving the client plus as desired profit of service. This total is submitted to the client who either accepts it or negotiates for a lesser amount. Negotiations continue until an agreement is reached.


Cost-plus system is mostly used when media billings are relatively low and the client requires a great deal of agency service. This happens most often with industrial accounts, new products being prepared for marketing and circumstances requiring a disproportionate amount of agency help such as preparing brochures catalogs, and other non commissionable marketing activities.

In a Cost-plus system, the client agrees to pay the agency the cost of its work (employee costs as well as out-of-pocket expenses) plus a certain percentage of this amount (often 20 to 25%) to cover agency overheads and profit.