It is the advertising agency that is shortened as ad agency. Ad agency is a team of experts appointed by clients to plan produce and place advertising campaigns in the media. They are called as agencies because they are agents of the media who pay them commission and media becomes principal.
An advertising agency of today performs the functions of advertising and marketing, for which a good understanding of the market and the merchandising problem of the advertiser as well as knowledge of media, consumer psychology and advertising appeals required. Along with the size of the agencies, the services rendered by them also varies. It is the job of these agencies to make advertising plans and its execution.
In size, they range from one-person agency to a large firm employing a few hundred, in services. They also range from being agents for advertisement space booking to write copy, designing advertisement, selecting media for advertisement delivery, preparing advertising program and market research who stress on
looking for fashion model. 
Author