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 21,000 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 fewer than 5 workers, and generates about $4.4 million in annual revenue. A typical public relations agency also operates out of a single location and employs fewer than 5 workers, but generates $2 million in annual revenue.

    • The advertising agency industry includes 13,000 companies that employ 223,000 workers and generates $57 billion in annual revenue. The public relations agency industry includes 8,000 companies that employ about 65,400 workers and generates $16 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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 9, 2023 - Advertising & PR Wage, Employment Growth Flatten
                                  • Employment and wage growth in the advertising and PR industry has flattened through the third quarter of the year compared to the more substantial rises in 2021 and 2022. 2023 has also seen a continued leveling out in pricing power for advertising and PR firms that began in 2022 after prices rose sharply throughout most of 2021. Flattening advertising and PR wage, employment, and price growth may indicate a more cautious ad-buying environment.
                                  • CEOs and CMOs are often not on the same page regarding marketing priorities and strategy, according to a recent survey by McKinsey. Half of CEOs surveyed said they were comfortable with modern marketing tech, but two-thirds of CMOs said their chief executives were not. Only 50% of CEO-CMO pairings agreed on their company’s top three marketing metrics. CEOs tended to focus on increasing revenue and optimizing margins, while CMOs valued brand awareness the most. The disconnect between CEOs and CMOs may be exacerbated by the emergence of new C-suite roles – such as chief brand officers and chief customer officers – that can reduce clarity about who is ultimately responsible for specific aspects of marketing. To minimize the disconnect between CEOs and CMOs, McKinsey suggests executives need to clearly define the CMO’s role while developing an outcome-focused framework for measuring success that’s understood throughout the leadership team.
                                  • Knowing and trusting a brand is the most significant factor influencing US consumers’ purchasing decisions, according to a recent survey by consumer analytics firm CivilScience. Fifty-seven percent of US adults said sticking with brands they already know and trust is the most significant factor driving their purchasing decisions, followed by recommendations from friends and family (12%) and stories about the company that features photos of the product (7%). Only 4% of consumers said advertising was the primary force driving their buying choices. At 1%, recommendations by in-store salespersons were least likely to influence purchases, and 19% of consumers said none of the factors mentioned in the survey had any influence. Brand trust was even more important for consumers aged 55 and over.
                                  • Microsoft has rolled out a new offering, Microsoft Advertising Network, aimed at helping retailers develop their own retail media networks, or enhance existing ones, according to Marketing Dive. Retail media networks (RMN) are ad platforms operated by retailers that utilize their own first-party customer data gathered by their websites, apps, loyalty programs, or other customer touchpoints. RMN platforms allow retailers to monetize their digital landscapes by offering brands targeted ad audiences. The Microsoft Advertising Network will enable retailers to establish their own RMNs by leveraging Microsoft’s ad network, which includes its Bing search engine, Edge browser, and publishing partners, including The New York Times and Yahoo. Microsoft says its advertising network provides access to more than a billion users who spend 22% more than the average internet user.
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