To the public everything from a TV ad to a telephone sales pitch, from a poster to a postcard, a banner ad on the web to a banner around a football pitch is advertising. By true definition, all agencies are ad agencies although in Britain many people still refer to above-the-line agencies as ad agencies but almost all the below-the-line agencies now do above-the-line.
The trend is towards total integration. Only a few are currently practising this - Saatchi & Saatchi, FCA! and Bates are the best examples. Smaller agencies do it because they tend to have smaller clients who only work that way.
Most of the major agency groups now have joint operations, ie Ogilvy & Mather and OlgilvyOne or Publicis and Publicis Dialogue. AMV works closely with Craik Jones, BHWG and Clarke Hooper Momentum. The future trend is very much combining these operations as one to offer total service through-the-line. This is partly driven by clients but also by economics - through-the-line/integrated agencies are cheaper to run and more profitable. You'll find smaller agencies outside London and most agencies outside Britain are integrated, they don't really differentiate, it's all about providing clients with the right solution to the marketing problem, not just a TV ad.