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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Quarterly Insight, 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
Coronavirus Update
May 15, 2022 - Mid-term Election Ad Spending Under Way
- The Democratic Senatorial Campaign Committee has reserved $33 million to be used this fall ahead of the mid-term elections. The initial reservation of funds is likely to be added to and modified as the election season progresses. The announcement is the first of several expected for the 2022 mid-term elections. The National Republican Senatorial Committee is expected to announce its campaign ad reservations in May. Spending by both groups will be a fraction of what will be spent by Political Action Committees (PACs). Politico says that The Mitch McConnell-aligned Senate Leadership Fund placed $141 million in ads and the Chuck Schumer-aligned Senate Majority PAC reserved spots totaling $106 million.
- Investment bank and financial services company UBS is projecting between 40,000 to 50,000 US retail stores closures through 2026, down from the 80,000 closures for the period forecasted in 2021. That's out of about 880,000 total retail stores that the firm tracks nationwide, excluding gas stations. This estimate assumes that US retail sales grow about 4% annually, during the period, and that e-commerce sales as a percentage of total retail sales grows to 25% by 2026, from 18% in 2021. UBS expects most closures to be among clothing and accessories retailers, consumer electronics businesses, and home furnishing chains. About 23,500 closures are expected to occur within these categories by 2026.
- Retail openings are expected to outnumber planned retail closures in 2022, according to Coresight Research. About 1,910 openings are expected, compared with 742 planned closures over the course of the year. That would continue a trend from 2021 when major retailers announced 5,083 store openings compared to 5,079 store closures, and it is an improvement over 2019, when a record 9,300 stores closed.
- People are changing their priorities about consumption because of the pandemic, according to the results of a survey conducted for consulting firm EY’s Future Consumer Index. Many respondents said that they want to buy fewer, higher-quality products that can last longer. Fewer people — only 27% — now agree with the statement that they buy more things because it makes them happy. And 85% say that they want to consider sustainability when shopping. “There’s often a large intention and action gap with consumers, so we don’t know what the actual result will be,” said Kristina Rogers, global consumer leader at EY. “But I think we’re seeing a lot now around consumers ready to change their behavior to make better-informed [decisions about] products for the good of society. And in fact, what’s coming through now is much more demand for brands and companies to take some responsibility for leading some of that positive change.”
- Some industry experts say that advertisements which promote COVID-19 vaccination are tapering off because they are no longer able to persuade the unvaccinated. “I believe that people are now actually inoculated against the Covid message instead of the Covid virus,” said Punam Keller, the senior associate dean of innovation and growth at the Tuck School of Business at Dartmouth.
- Real disposable income, an indicator of demand for discretionary purchases, decreased 0.4% month over month in March, according to the US Bureau of Economic Analysis. It was the sixth straight month that real disposable income decreased. Consumer spending increased 1.1% month over month in March.
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