I'm going to really basically, and a bit crudely as there is quite a lot to the whole process, explain the client-agency relationship.
So the first step for a business when they decide they want a new campaign to push a product or something, is to use a model to work out where their brand is now, why they are in that place, where are they going, how can they get there, are we getting there, and then re-evaluate where they are again. So it goes round and round. They then give this information to a couple of advertising agencies. The agencies then go away, and prepare what they think to be the answers to all those questions. Which are then presented back to the client who decides which agency they think best aligns with the direction they want to go in.
The agencies therefore put a lot of work into the creative brief, which is what is presented back to the client. Agencies don't get paid for these (which I think is awful considering the amount of effort gone into them) but if they win the business of the client then it is worth all the effort.
The main issue for advertising agencies is convincing a client that their idea is the best. When it comes to advertising, clients want you to include everything that they think is great about their product or brand, and they have huge lists of features, but the main job of the agency is to come up with ONE single focus for the campaign. This is called a single minded proposition. I will write a whole new post for this (after I have explained the different functions of an advertising agency) because it's so important!
So that's how an agency fits into the whole thing!
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