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
Aug 16, 2024 - Traditional Media Continues to Lose Ground to Digital
- Digital media continues to command more of consumers’ time at the expense of traditional media, according to eMarketer. In 2024, digital (including desktop and laptop computers, connected TV, nonvoice mobile, and other connected devices) will account for 63.7% of adults’ time spent with media overall, while traditional sources (radio, print, TV, and cinema) will hold a 36.3% share. As recently as 2019, digital and traditional were nearly even, with digital having a slight edge at 50.8% compared to traditional media’s 49.2%. The gap is expected to widen further in 2025 and 2026 as digital’s share of adults’ time spent with media is expected to rise to 64.9% and 65.9%, respectively. At 4 hours per day in 2024, mobile commands the most time adults spend with media. However, connected TV still trails traditional TV, which adults spend two hours and 55 minutes per day watching.
- In July, Google said it would abandon its plan to sunset tracking cookies in its Chrome browser, backtracking on a four-year saga that aimed to phase out and replace the tracking technology, according to The Wall Street Journal. Cookies are small bits of code that track user activity across websites, allowing marketers to target ads and measure campaign effectiveness. Instead of scrapping cookies altogether, Google will reportedly roll out a prompt that will allow users to opt in or out of cookies. Digital advertisers are worried they could suffer if consumers opt out – which happened when Apple rolled out a similar prompt in 2021 as part of a privacy enhancement. The UK regulator overseeing Google’s overhaul of its cookie policy, the Competition and Markets Authority, has said it is soliciting input from the ad industry. The wording and timing of Google’s cookie opt-out option have not yet been determined.
- 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%).
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