The History of the Advertising Agency: From Print to the Internet

Advertising has changed dramatically over the past few decades, largely driven by the shift from traditional print to the internet — a transition that introduced new technologies for delivering ads more efficiently and accurately to consumers.

Advertising agencies have always been central to how campaigns get made and run, but their role has come under real pressure from the rise of advertising technology, or AdTech. That said, agencies that have learned to harness AdTech and the enormous quantities of data now available have managed to hold their ground. They've been indispensable partners to brands for over 230 years — and the ones embracing technology look set to remain so.

This piece traces the history of the advertising agency, examines how its role shifted with the arrival of the internet, and looks at how agencies have adapted to the challenges that followed.

What Is an Advertising Agency?

An advertising agency — often called a creative agency — is a company that creates, plans, and manages advertising campaigns on behalf of clients. It may also handle other forms of promotion and marketing. Agencies are typically independent, external businesses serving a broad range of clients: commercial brands, multinationals, non-profits, and sometimes other agencies.

Traditionally, brands hired agencies to produce television commercials and run print campaigns in magazines, newspapers, and on billboards.

Today, many agencies create, run, and manage online campaigns using a range of advertising and marketing technologies. These types of firms are also known as interactive, media, or digital agencies.

The History of Advertising Agencies

Before formal advertising agencies existed, ads were placed through representatives who bought and resold advertising space at a markup. These early intermediaries were the precursors to fully fledged agencies. Over time, these individuals took on broader responsibilities — planning, writing, designing, and coordinating — along with an expanding set of services.

The first agencies trace back to 1786, when William Taylor opened his office in London, now recognized as the first advertising agency in history. While that UK operation is considered the European precursor, it was Volney B. Palmer who carried the concept across the Atlantic.

Palmer opened the first agency on American soil in 1840. Adland: A Global History of Advertising cites Palmer describing his services using the term "agent": "the duly authorized agent of most of the best newspapers of all the cities and provincial towns in the United States and Canada, for which he is daily receiving advertisements and subscriptions."

Palmer's office, located at the northwest corner of Third and Chestnut Street in Philadelphia, became the prototype for the modern advertising agency. In 1842, he began buying large amounts of newspaper space at discounted rates and reselling it to advertisers at higher prices. The actual ad — copy, layout, artwork — was still prepared by the client, making Palmer essentially a space broker with limited creative involvement.

Some agents, at client request, compiled directories listing advertising rates at newspapers across New England. Many agencies profited from buying newspaper space in bulk and reselling it with a markup. That model prevailed until the 19th century, when N.W. Ayer & Son was founded in New York. Rather than simply brokering space, N.W. Ayer & Son offered a full range of services — planning, creating, and executing complete campaigns. It became well known through work with clients including De Beers, AT&T, and the U.S. Army, producing a number of memorable slogans:

N.W. Ayer & Son advertisement example

N.W. Ayer & Son advertisement example

N.W. Ayer & Son U.S. Army campaign

N.W. Ayer & Son advertisement example

N.W. Ayer & Son advertisement example

N.W. Ayer & Son advertisement example

How Have Ad Agencies Changed Over Time?

There's a common assumption that agency work is primarily about conceiving and producing ads. In practice, the creative process has always been only one piece of a much larger puzzle. In the early days, agencies were barely creative at all. Even today, as Ogilvy has observed, agencies spend considerable time on market research, detailed media planning, buying online inventory and broadcast time, and a host of other activities that fall loosely under the marketing umbrella. Across the decades, agencies evolved to meet changing client needs — and the arrival of the internet fundamentally redefined what those needs were.

Before the Internet

The earliest advertising agents acted — directly or indirectly — on behalf of newspaper publishers rather than advertisers. They were intermediaries: selling space, collecting commissions, and doing little else. Creativity was not really part of the brief.

From those origins in the 1800s, through the golden era of the 1950s, through globalization, and eventually into the digital shift, agencies accumulated new capabilities and diversified steadily as new marketing options emerged.

In the Mad Men era, the agency was effectively the brand's operating partner. It developed strategy, conceived campaign ideas, oversaw production and media, and managed the whole process on the brand's behalf. Gradually, the market for specialist agencies expanded, allowing brands to engage partners tailored to specific goals.

The Introduction of the Internet

For a long time, ad agencies were the default choice for all offline advertising. The internet changed that completely. AdTech companies introduced entirely new capabilities that disrupted the traditional agency model and shifted the balance of power away from agencies toward technology vendors.

Online advertising gave agencies access to previously unimaginable volumes of consumer data and behavioural signals. The resulting diversification of marketing options became the central challenge for brands, reshaping what they expected from their agency partners. Digital marketing generates enormous quantities of information, and extracting value from it requires tools that most traditional agencies weren't built to provide.

While many brands still think of agencies in conventional terms, specialists have increasingly moved into social media, display advertising, retargeting, and content personalization. Online tracking and data-collection techniques have elevated advertising efficiency to levels that offline methods simply can't match — though agencies don't necessarily need to become software development houses to stay competitive.

AdTech companies now build sophisticated platforms that let brands and advertisers leverage capabilities like demand-side platforms (DSPs) — tools that combine targeting and data analytics well beyond anything available in traditional advertising. DSPs draw on past campaign data, advertisers' own first-party data, and third-party data sources to enable highly precise audience targeting.

The Agency Model Under Pressure from AdTech

As DSPs and similar platforms allow brands to run online campaigns with precise targeting and accumulate large volumes of user data, they've delivered higher return on investment and — perhaps most importantly — lower campaign costs than the traditional agency model. The result is that brands can increasingly bypass agencies altogether and engage AdTech vendors directly.

To remain competitive, agencies need to find ways to combine their creative experience and market knowledge with modern online technology — and to make that combination visible to clients.

In practical terms, agencies that operate custom, in-house AdTech solutions are better positioned against pure-play AdTech vendors. Data has become the core asset, and agencies that can leverage the customer data they collect gain a meaningful advantage in campaign effectiveness. Owning the underlying technology matters too: proprietary solutions keep data within the agency, adding tangible value to the client relationship and making the "go direct to an AdTech vendor" option less attractive.

That said, agencies still hold genuine advantages that technology alone can't replicate. AdTech companies, regardless of how sophisticated their targeting algorithms become, are not in the business of crafting compelling brand narratives or deeply understanding a brand's audience. The combination of creative expertise and technological capability is where agencies can genuinely differentiate.

Examples of Large, International Ad Agencies

The globalization of advertising — and the rapid growth of large agencies — accelerated in the 20th century, when American agencies began opening overseas offices ahead of the two World Wars.

McCann Erickson, established in New York City in 1902, opened its first European offices in 1927, followed by South American offices in 1935 and Australian offices in 1959. Agencies like J. Walter Thompson adopted explicit global expansion strategies to serve clients wherever those clients operated.

British agencies followed suit in the 1960s and 1970s, pursuing international growth as a route to new markets. Saatchi & Saatchi, arguably one of the most iconic English agencies, was founded in 1970 and rose to international prominence through relationships with clients including British Airways and Toyota, building a worldwide office network in the process.

The five largest agencies by estimated worldwide revenues in 2014:

Publicis logo

Omnicom Group logo

Dentsu logo

WPP Group logo

Final Thoughts

Despite the genuine disruption brought on by the rise of AdTech vendors — particularly over the past decade — advertising agencies have proven resilient. Those that have embraced technology while holding onto their creative and strategic core remain valuable partners in the advertising process. The agencies most likely to thrive are the ones that treat AdTech not as a threat to absorb, but as a capability to own.