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What does an ad agency do? It brokers ad sales, right? So is Google an ad agency?

I mean in the traditional sense of being the middle man between advertisers and media companies, not as a media company selling ads directly, as Google (GOOG) does with AdWords. You tell me:

Glam Media Inc. plans to announce today that Google Inc. will begin brokering advertisements on Glam’s fashion and lifestyle sites and some of the more than 300 blogs and sites affiliated with the company.

The agreement is part of Google’s efforts to broker advertisements for high-end sites such as Glam, as the Internet giant tries to lure big-brand advertisers to purchase ads through its online system and expand aggressively in selling graphical and video ads.

Under the multi-year deal, Google will sell some of the video ads and graphical display ads such as banner ads that appear on Glam’s sites, including its flagship Glam.com.

Sure sounds like an ad agency to me. Google is not only trying to broker ad sales, as a traditional media agency does, it’s also trying to broker the creation of ad creative, as a traditional creative agency does (via SEO Book):

Creating your video ad is the first step to launching a video campaign. Using the Google Ad Creation Marketplace, you can find a video production professional to create your custom video ad, at whatever budget you set.

Madison Avenue should be afraid — very afraid. Online advertising is all about scaling the infinite complexity of thousands of media channels and thousands of micro targeted ad messages — yeah, like AdWords and AdSense. Sure, it’s going to be much harder for Google to pull this off with video and brand advertising, but in order for Madison Avenue to compete it’s going to have to be completely dismantled and rebuilt.

Of course, Yahoo! (YHOO) and Microsoft (MSFT) (and let’s not forget WPP (WPPGY)) are also competing with Madison Avenue — and with Google to become the ultimate vertically integrated media and advertising company.

But the game is all about scaling — and when it comes to scaling, Google will be hard to beat.

Source: Google and Madison Avenue Go Head to Head