When you watch TV or videos on Youtube, you see ads and commercials. The people behind those ads are most likely ad agencies. Some agencies have production departments and some hire freelance video production companies. But, in the world of startups, it is getting more common for video production companies to also act as creative agencies.
With these production companies, they already have creative people on their team than they probably know how to make a great script and concept better than others. By hiring a production company like this for your startup video or explainer video, you are bypassing an expensive step of going through an ad agency.
Many ad agencies take a percentage of the budget, forcing the video producers to charge more to the client. Others will be the middleman and will hike up the price from the producer and put their cut on top of it. Going directly to the source can save everyone a lot of time, money and headaches.