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
Nov 1, 2021 - Pandemic No Longer Drives Political Advertising Expenditures
- Political advertising related to the pandemic decreased sharply before November midterm elections from earlier this year. Strategists of both parties are advising candidates to shift their focus, as COVID-19 is fading as an issue that animates voters. Polls in the off-year New Jersey and Virginia elections showed that pre-pandemic concerns like taxes, the economy, and schools now rank as the top voter priorities.
- Advertising spending increased 32% year over year in the first half of 2021 to reach $130 billion, according to media intelligence firm Magna. Magna raised its full-year forecast and now expects advertising spending to reach $278 billion, up 23% compared to 2020.
- The number of television advertisements intended to persuade people to get vaccinated has declined sharply, according to an analysis of national advertising data by iSpot, a company that measures impressions and the performance of TV ads. There were more than 512 million ad impressions for COVID-19 vaccine-related spots in January. The number of Covid-19 vaccine ads grew steadily to reach a peak of 3.5 billion ad impressions in May. The number has been declining since then as has, until recently, the number of people getting vaccinated. There were only about 713 million ad impressions for Covid-19 vaccine-related spots in July.
- 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 0.3% month over month in August following a 0.7% increase in July, a 0.5% decrease in June, a 3.2% decrease in May, a 15.8% decrease in April, and a 22.9% increase in March. The decreases in personal income from April through June primarily reflected a decrease in government social benefits. Payments made to individuals from the American Rescue Plan Act of 2021 (which was enacted on March 11, 2021) continued in May, but at a lower level than in April. Unemployment insurance also decreased, led by decreases in payments from the Pandemic Unemployment Compensation program. Consumer spending decreased 0.1% in July. Spending and income are expected to rebound in the coming months as more people become vaccinated.
- Direct-to-consumer (D2C) sales growth has drawn the interest of advertising agencies. Boomn, Homestead Studios, Freelance Crew, and several other agencies are expected to launch in-house D2C brands in 2021. Industry experts expect agencies to focus on streaming and digital television to drive sales growth and new user acquisition for clients, as D2C brands have likely reached the point of diminishing returns on Facebook and other social outlets.
- Local advertising will rebound along with the greater economy through 2021, according to the latest US Local Advertising Forecast published by BIA Advisory Services. BIA expects total local advertising expenditures to rise 2.5% year over year in 2021. About 22.7% of the increase is expected to come from direct mail and 17% each from mobile and online advertising. Local TV and radio round out the top five, accounting for 11.4% and 9.2% of the total, respectively.
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