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
Jul 18, 2024 - Survey: Majority of Ad Agencies Using AI
- Nearly all US advertising agencies surveyed are either using artificial intelligence (AI) tools or are exploring its use cases, according to a recent report by Forrester. About 61% of ad agencies are actively using AI, and another 30% are looking into it. Overall, the advertising industry is one of the fastest adopters of AI, outpacing marketers and the overall business community. At 78%, large ad agencies (201 employees or more) have been quicker than their smaller counterparts (fewer than 50 employees) in embracing AI; about 53% of small firms are using AI. About 50% of those surveyed said they expect AI to have a significant or very significant impact over the next two years. Many agencies said the primary goal of adopting AI is to improve productivity by speeding the creative process and production. However, respondents still have concerns about AI, including copyright infringement, IP ownership, and attribution.
- In the first half of 2024, ad impressions on linear TV networks increased, but revenue fell slightly, according to iSpot.tv. Primarily driven by more sports programming airing in prime-time, national ad impressions on linear TV networks in the first half of 2024 rose to nearly 262 billion, up 14% over the same period in 2023. However, the gain in ad impressions failed to boost ad spending, which fell 2.8% to $22.2 billion in the first half of the year. In terms of ad impressions in the first six months of 2024, the top five linear TV networks were CBS (8% of total impressions), ABC (7.1%), NBC (5.4%), Fox News (4.5%), and ESPN (3%).
- US net media owner advertising spending is expected to rise by 10.7% to $374 billion, according to a June forecast by advertising firm MAGNA. Ad sales rose 11.6% in Q1 2024 compared to the same period in 2023. However, the Q1 2024 growth was due to pure-play digital (search, social, short-form video), which grew 17.3%. Traditional media spending (TV, audio, publishing, OOH, and cinema) rose 0.3%. Ad spending growth in 2024 will be driven by improving economic conditions, lower inflation, and the return of cyclical events, including elections and international sporting events.
- Spending for retail media networks is expected to post strong growth this year, but the channel could see spending slow in 2025 as brands’ ad budgets weaken, according to Marketing Dive. In a recent report by market research firm WARC, retail network spending is forecast to rise 13.7% in 2024 compared to last year and reach $153.3 billion. Retail media networks are ad platforms operated by retailers that use their own customer data gathered by their websites, apps, loyalty programs, or other customer touchpoints. Retail media platforms allow retailers to monetize their digital landscapes by offering brands targeted ad audiences. Large players are moving beyond ad placements in their own digital ecospheres to offer their first-party data to help brands launch targeted campaigns in other places, including social media and connected TV. Although the retail media market remains robust, year-over-year spending growth is projected to slow to 10.6% in 2025 amid tighter marketing budgets. While the retail media market remains competitive, Amazon controls about 37% of it.
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