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
Feb 21, 2025 - AI Adoption in PR Growing Fast
- 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.
- Americans have increasingly soured on Internet advertising’s use of third-party cookies to target consumers and collect user data, according to a recent survey from Prosper Insights & Analytics. The survey reported that 63% of consumers across all age groups do not like using platforms that store data for targeted advertising. The practice of using third-party cookies, once a ubiquitous feature of online ads, is seen more and more as an unsustainable practice in the face of consumer demands for privacy and increased government regulations to protect sensitive customer data. Advertisers are looking to compensate with more privacy-first targeting methods - new ways of more transparently gathering demographic and targeting information. Such methods include data collection directly from consumers instead of third-parties, obtaining consent before collecting data and clearly explaining how it is used, and minimizing the volume of data gathered.
- Influencer marketing is an increasingly critical and lucrative business for the industry. Research company eMarketer predicts a 14% increase in spending on influencers in 2025. Influencer marketing is a method by which popular social media figures promote brands in posts and receive a commission when their followers make purchases. The ability by advertisers to better track the effectiveness of influencers, which until recently had been vague and difficult to track, is leading to a boon of investment in the marketing niche. MyShop, an influencer marketing technology company, has raised millions of dollars in venture-capital funding and is now valued at $410 million - up from $80 million in early 2024. Spending on influencer marketing is expected to be more than on standard social media and digital marketing, per eMarketer.
- In December, advertising firm Omnicom announced it would acquire rival Interpublic Group in an all-stock deal that will create the world’s largest advertising company. The two firms had a combined 2023 revenue of $25.6 billion. Omnicom said the merger will create a company providing end-to-end services across media, marketing, CRM, data, digital commerce, advertising, public relations, and branding. The deal comes as tech firms, including Google and Meta, gain larger shares of the ad market and as big tech’s generative AI efforts are expected to further encroach on traditional ad players’ creative development space. Once the deal is complete, Omnicom shareholders will hold a 60.6% stake in the combined company, and Interpublic shareholders will own 39.4%. The transaction is expected to close in the second half of 2025, and the combined company will retain the Omnicom name.
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