Understanding our space; what is a marketing agency?

There is a lot of confusion in the local, small, and regional business arena as to what a marketing agency actually does. This is mainly because of the exploitation of several "buzz words" by companies that seem to claim to do the same things that an actual agency does. For example, your local signage store than tells you they can help brand your company or the place where you order your promotional items, like pens and mousepads with your logo on them, saying that they are a branding specialist. It's also the newspaper that tells you they can design your ad for free or for a little charge when you buy space in their paper or the t-shirt printer that tells you that ordering your shirts printed from them includes doing the art work. It's the guy that bought a video camera from Best Buy telling you that he can shoot a web video for you by himself for cheap or a sales rep from a print shop telling you that they also do collateral materials such as brochures, folders, and point-of-service materials and design is just a $100 more. These buzz words are being used to help these companies obtain business in a difficult economy, I get it. But they are also misleading business owners as to what true marketing, branding, and advertising really is. Unintentionally, maybe, but it's happening and business owners are confused and misled by it.