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
Jan 14, 2025 - AI Agents to Gain Wider Adoption in 2025
- Generative AI (GenAI)-powered tools are expected to gain significantly wider adoption by marketers in 2025, according to MarTech. Over the 2024 holiday shopping season, GenAI chatbots drove 13 times more traffic to retail websites than they did during the same period in 2023, according to Adobe. Industry insiders suggest 2025 will be the year that marketers move from AI pilot programs and experiments to full implementation in sales optimization and customer support. AI agents with natural voice capabilities and the ability to respond to customer requests also create new data streams marketers will use to improve customer experience. AI will also help marketers gain insights into the customer journey throughout enterprise systems and departments and streamline campaign improvements.
- In early January, Meta CEO Mark Zuckerberg announced the firm would no longer use fact-checkers and speech restrictions on its Facebook and Instagram apps. Instead, the platforms will implement a community notes system that allows users to flag content that they think could be misinformation or require more context. The community notes system is like that used on Elon Musk’s X (formerly Twitter). Meta said the move comes as the company pivots to a focus on free expression. The company also claims fact-checking has become an unwieldy and complicated distraction that could unfairly silence some users. Critics of the new policy claim that it could cause more misinformation to appear on Meta’s platforms. The Wall Street Journal reported that while the pulling back of content moderation on X alienated some advertisers, a similar scenario was unlikely to play out for Meta’s apps because they offer ad buyers a reliable return on investment.
- 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%.
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