Advertising & PR Agencies
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 21,400 advertising and PR agencies in the US develop and place ads for companies and organizations and develop programs to promote the interests of or create an image for their clients. Some full-service agencies provide both advertising and PR services.
Advertising Overload Spurs Backlash
Advertising and publicity space has become increasingly cluttered, with marketers struggling to get their voices heard.
Increasingly Complex Media Environment
The media environment is constantly evolving as a result of new technology; in the last decade, the environment has changed dramatically.
Industry size & Structure
A typical ad agency operates out of a single location, employs less than 5 workers, and generates about $4.8 million in annual revenue. A typical public relations agency also operates out of a single location and employs less than 5 workers, but generates $2.5 million in annual revenue.
- The advertising agency industry includes 13,300 companies that employ 231,700 workers and generates $64 billion in annual revenue. The public relations agency industry includes 8,100 companies that employ about 66,400 workers and generates $20 billion in annual revenue.
- Agencies may compete with specialized agencies, such as media buying agencies or direct mail specialists. In some cases, agencies contract out specialized services.
- Large companies include Interpublic Group, Omnicom Group, and WPP. Large companies may act as holding companies for many smaller agencies.
Industry Forecast
Advertising & PR Agencies Industry Growth
Recent Developments
Dec 13, 2024 - Omnicom to Acquire Interpublic Group
- In December, advertising firm Omnicom announced it would acquire rival Interpublic Group in an all-stock deal that will create the world’s largest advertising company. The two firms had a combined 2023 revenue of $25.6 billion. Omnicom said the merger will create a company providing end-to-end services across media, marketing, CRM, data, digital commerce, advertising, public relations, and branding. The deal comes as tech firms, including Google and Meta, gain larger shares of the ad market and as big tech’s generative AI efforts are expected to further encroach on traditional ad players’ creative development space. Once the deal is complete, Omnicom shareholders will hold a 60.6% stake in the combined company, and Interpublic shareholders will own 39.4%. The transaction is expected to close in the second half of 2025, and the combined company will retain the Omnicom name.
- US net media owner advertising revenues rose by 12.4% to $380.2 billion in 2024 as cyclical events, including the Summer Olympics and the presidential election, pushed ad spending higher, according to advertising firm MAGNA. Growth in 2024 was driven by a 15.4% rise in pure-play digital ad spending, generating revenue of $271.8 billion. Traditional media owner ad revenue rose 5.6% to $108.4 billion. In 2024, the strongest ad verticals included automotive (16% revenue growth over 2023), finance and insurance (+15%), and food and beverage (+12%). The technology vertical saw weak spending in the first half of 2024 but accelerated in the second half as tech firms spent heavily promoting their AI-enhanced products. Absent the significant cyclical events that juiced ad spending in 2024, US net media owner advertising revenue growth in 2025 is expected to slow to 4.9%.
- While TV viewership has become more fragmented, it is still a robust driver of traffic to advertiser websites, according to new research by the Video Advertising Bureau (VAB). The VAB study tracked 201 first-time advertisers between April 2020 and April 2024. First-time advertisers that spent $500,000 or less on TV advertising saw an 8% rise in website traffic the month their ad launched and saw an average monthly rise of 20% over the several months the brand remained on TV. Ad buyers who spent between $2 million and $5 million on ads experienced a 9% increase in web traffic in their ads’ debut month and an average monthly jump of 25% throughout the multi-month TV campaign. Advertisers who spent $10 million or more saw web traffic rise 36% in the launch month and a monthly average increase of 42% over the months the ad stayed on TV.
- Marketing leaders are wearing more hats than ever as they are tasked to do more with less, including AI implementation, according to a recent survey by McKinsey. While 87% of marketing leaders surveyed said brand building leads their agenda, they are increasingly taking on other responsibilities, including design (46% of respondents), sales and ecommerce (34%), product innovation (24%), and generative AI (22%). The leading marketer use cases for AI included creative efficiency (39% of respondents), scaling personalization (28%), media optimization (28%), marketing automation (22%), and improvements in customer experience such as search and chatbots (20%). However, McKinsey found that only 5% of marketers are expanding GenAI capabilities, and just 4% are scaling their GenAI use cases.
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