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 20,300 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

The average advertising and PR agency employs 12-13 workers and generates $3.2 million in annual revenue.

    • A typical ad agency operates out of a single location, employs about 15-16 workers, and generates about $4.2 million in annual revenue.
    • A typical public relations agency operates out of a single location, employs 7-8 workers, and generates $1.7 million in annual revenue.
    • The advertising agency industry includes 12,400 companies that employ 193,600 workers and generates $52 billion in annual revenue.
    • The public relations agency industry includes 7,900 companies that employ about 58,600 workers and generates $14 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

                                  Mar 30, 2023 - Ad Spending to Rise
                                  • Net media owner advertising revenues are expected to grow 3.4% to $326 billion in 2023 compared to 2022, according to a March forecast by advertising firm MAGNA. However, MAGNA’s latest outlook represents a slight downgrade from the one in December when the firm projected that 2023 media owner advertising revenues would grow 3.7% over 2022. Aside from political ad spending, most types of ad spending growth slowed substantially in the second half of 2022 amid mounting global economic uncertainty. In terms of verticals, consumer packaged goods and financial services marketers will likely see flat ad spending growth in 2023, while automotive, entertainment, and travel will continue to rebound from the pandemic.
                                  • About 60% of marketing leaders say that striking the right balance between first-party data collection and customer privacy will be more challenging in 2023, according to a recent survey by Gartner. Privacy remains an issue despite 85% of marketers surveyed saying they have implemented a strategy to manage customer data. Gartner Marketing Senior Director Analyst Ant Duffin said, “Third-party cookie depreciation is causing sources of data to disappear, and many marketers are still scrambling to shore up their first-party data strategy. As this data becomes more challenging to collect, marketers must adapt by leveraging new sources of data to fuel personalization and build deep customer relationships.”
                                  • In a recent survey by Capterra, three-quarters of marketers surveyed said they plan to increase spending on TikTok over the next 12 months, despite security concerns and a possible ban by the US government. About 82% of survey respondents said a TikTok ban would have a moderate to significant impact on their media marketing or advertising goals, but only 56% said they thought a ban was highly or somewhat likely. In the event of a ban, 70% of those surveyed said they would look to digital channels other than social media. The Biden administration has demanded TikTok’s Chinese-owned parent ByteDance divest the social media platform or be banned.
                                  • Anticipating smaller marketing budgets, some marketers are pivoting their focus from acquiring new customers to fostering loyalty in the ones they already have, according to a recent survey report by Advertiser Perceptions. Fewer than one-third of marketers expect their 2023 budgets to grow compared to 2022, and 55% say inflation is having an impact on their business. About 45% of marketers say that rising interest rates and supply chain issues are impacting them. Amid these challenges, 38% of marketers plan to prioritize customer loyalty over customer acquisition.
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