The First Advertising Agencies

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Originally called the Joseph A. Campbell Preserve Company back in 1869, the Campbell Soup Co. introduced its classic red-and-white soup can labels in 1897. Today, the label is updated, but Campbell’s red-and-white cans remain one of the most recognized brands in the country.

The first American advertising agents were newspaper space brokers: individuals who purchased space in newspapers and then sold it to various merchants. Newspapers, accustomed to advertisers’ not paying their bills (or paying late), welcomed the space brokers, who paid up front. Brokers usually received discounts of 15 to 30 percent, then sold the space to advertisers at the going rate. In 1841, Volney Palmer opened the first ad agency in Philadelphia; for a 25 percent commission from newspaper publishers, he sold space to advertisers.

The first full-service modern ad agency, N. W. Ayer, introduced a different model: Instead of working for newspapers, the agency worked primarily for companies—or clients—that manufactured consumer products. Opening in 1869 in Philadelphia, N. W. Ayer helped develop, write, produce, and place ads in selected newspapers and magazines for its clients. The agency collected a fee from its clients for each ad placed that covered the price that each media outlet charged for placement of the ad, plus a 15 percent commission. According to this model, the more ads an agency placed, the larger its revenue. Today, while the commission model still dominates, some advertising agencies now work for a flat fee, and some are paid on how well the ads they create drive sales for the client.