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
Recent Developments
Nov 1, 2022 - Advertising Budget Cuts Expected
- Marketing executives will be asked to cut budgets in the next few months, according to Bob Liodice, chief executive officer of the Association of National Advertisers. Companies frequently reduce their ad and marketing budgets when the economy slows. Companies will also need to adjust the type of marketing that they do, according to Marla Kaplowitz, president and chief executive of the 4A’s advertising agency trade organization. Companies should be wary of offering extensive price promotions to generate short-term sales as “it can have a negative long-term effect on both the brand and customer experience,” she said. One-third of consulting firm Analytic Partners' customers, many of them Fortune 500 companies, have already been asked to cut their budgets for 2023, according to the firm’s chief marketing officer. Pressure to re-examine budgets is coming from C-level executives, financial leaders, and company boards.
- Magna, a unit of Interpublic Group of Companies' Mediabrands, cut its forecast for nonpolitical ad spending for the second half of this year and its total advertising spending growth forecast for 2023. Company analysts say that a weaker economic environment is likely to cut into consumer spending. Items like food, drinks, personal care, and household goods ‘are especially at risk as firms are forced to increase product prices and face the possibility of consumers trading down in favor of cheaper brands.’ Advertising expenditures will decrease as a result. Ad spending growth for all of 2022 will come in at 9.8%, Magna said, less than the 11.1% forecast in June. The growth forecast for 2023 was cut to 4.8% from the June prediction of 5.8% growth.
- Advertising expenditures for the 2022 midterm elections are expected to have hit an all-time high of $9.7 billion, according to AdImpact, a firm that tracks political advertising spending. A record percentage was shifted to ad streaming this cycle, allowing candidates to target ads to very specific groups.
- 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.
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