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
Apr 16, 2025 - Ad Industry Forecasting Down on Tariffs
- The unpredictability of the Trump administration’s tariff policies is leaving the advertising industry in a challenging position of trying to plan and budget marketing campaigns for products which might or might not be subject to levies. According to the International Advertising Bureau (IAB), 60% of US ad executives believe the tariffs will decrease ad budgets across the board anywhere from 6-10%. Ad giant Omnicom lowered its revenue forecast for 2025 because of tariffs and says it’s stuck in a “wait and see” mode if its corporate clients cut marketing spending. Some companies such as Ford and Stellantis are shifting their creative ad focus to their US-based operations. IAB’s survey said retailers and e-commerce are the most likely to slash ad budgets, followed by consumer electronics, media/entertainment, and automakers.
- The digital ad market is increasingly worried about the effects of tariffs on advertising spending, with several forecasters lowering 2025 revenue expectations and social media companies sounding the alarm. A February survey by the Interactive Advertising Bureau found that 94% of advertising decision makers expect to cut marketing budgets this year - and that was before Trump enacted broad-based tariffs on all imported goods. The volatility in the digital ad market caused big stock price drops for social media stocks including Meta, Reddit, Snapchat, and Pinterest. Meta in particular is vulnerable as it has increasingly relied on ad revenue from Chinese e-commerce giants like Temu and Shein. Those companies are able to sell goods directly to US consumers via the de minimus exemption (tariff avoidance due to low purchase price), which the US plans to eliminate and will cause a pullback on advertising from China-based retailers.
- Total US spending on advertising is expected to grow 4.5% in 2025, according to an S&P Global forecast, as consumers continue to spend despite growing fears about the state of the economy. The industry is expected to continue its shift towards digital advertising and away from legacy media (TV, radio, print). S&P expects digital advertising will expand by 9.1% this year, a slowdown from the 13.8% expansion in 2024 as the relatively new market normalizes. Digital ad growth is the fastest growing advertising segment as consumers shift away from traditional TV in favor of streaming and the technology offers detailed demographic user info to better target potential customers. National television advertising is expected to drop 8.9% in 2025 without the benefit of political ads or the Olympics as in 2024.
- Nearly 70% of public relations agencies have adopted AI into day to day operations in 2024 - a 25% increase from the year before, per an annual survey of PR companies of all sizes by law firm Davis+Gilbert. The rapid adoption of AI is increasingly removing the human element from the more mundane aspects of content creation and client management. Davis+Gilbert also found that AI usage by PR firms differs based on an agency’s size. Larger agencies use it primarily to analyze data and create graphics and visual content. Mid-sized and smaller firms, however, mostly utilize AI to generate ideas and write content. AI adoption theoretically lets smaller firms better compete for larger accounts by leveling the playing field on the costs of elaborate creative campaigns. Employment at PR agencies was relatively flat throughout 2024, and further adoption of AI is expected to continue driving that trend in 2025.
Get A Demo
Vertical IQ’s Industry Intelligence Platform
See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.
Build valuable, lasting relationships by having smarter conversations -
check out Vertical IQ today.