Advertising Agencies
| Author | John Swope, Scott Williams |
| Pages | 20-23 |
Page 20
Advertising agencies are independent businesses that evolved to develop, prepare, and place advertising in advertising media for sellers seeking to find customers for their goods, services, and ideas (American Association of Advertising Agencies, 2000). Advertisers use agents when they believe the agency will be more expert than they are at planning and creating advertisements or at developing an advertising campaign. As businesses have become more complex and diversified, many of them have consulted agencies to help them carry out their marketing communication efforts.
The modern advertising agency provides a variety of important services to clients, including media planning and buying, research, market information, sales promotion assistance, campaign development and creation of advertisements, plus a range of services designed to help the advertiser achieve marketing objectives. The first advertising agency in the United States was opened in Philadelphia by Volney Palmer in 1841 (John Hartman Center, 2000). At this time, advertising agents were largely space brokers agents who solicited ads from businesses and then sold them to newspapers that had difficulty getting out-of-town advertising (Lane, King, & Russell, 2005).
While the invention of printing paved the way for the development of modern advertising, the influence of salesmanship began to influence the evolution of advertising toward more like what we recognize today. The advertising agency, working on a commission basis, has been chiefly responsible for this evolution. During the late nineteenth century, most advertising appeared in newspapers, on posters, and in handbills (Wells, Burnett, & Moriarty, 2000). Because it was difficult to reproduce illustrations, most of these ads were simple text-based items.
By 1900, the first specialized magazines had begun to appear in the United States. Magazines such as Field & Stream (in 1895) and Good Housekeeping (in 1900) established niche markets, which allowed for mass marketing to consumers with varied interests. Also, print technology had evolved considerably, making full-color illustrations possible. Advertising agencies began to use the new technology to create more attractive advertisements for the new niche markets, thus becoming creative centers rather than merely space brokerages.
The late nineteenth and early twentieth centuries were also times of public concern about unethical business practices. Many professions formed their own organizations to create ethical standards of operation. The American Association for Advertising Agencies (AAAA) was founded in 1917 to represent the agencies, partially in response to these ethical concerns.
Newspapers also set their own ethical standards concerning rates charged for advertisements. By 1917, publishers had agreed to set a flat rate of 15 percent as the standard commission an advertising agency would receive with the exception of local advertising, for which there was generally no predetermined commission (Lane et al., 2005).
In addition, two laws were passed to alleviate concerns about unethical advertising practices. The Federal Trade Commission Act of 1914 was originally designed to make all unfair methods of competition unlawful. It was not until 1922 that advertising was legally regulated under this act. The case that set this legal precedent was FTC v. Winsted Hosiery Company (1922) (Lane et al., 2005). The Pure Food and Drug Act of 1906 was the first act that limited the advertising of patent medicines—drugs that were advertised using exaggerated claims of effectiveness—for use...
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