|Last Quarterly Update:||1/16/2017|
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Companies in this industry create advertising material and place it across media such as television, the internet (mobile and desktop), newspapers, magazines, radio, and outdoor displays. Major US advertising agencies include units of Interpublic and Omnicom; leading companies based outside the US include Dentsu and Hakuhodo DY Holdings (Japan), Publicis (France), and WPP (Ireland).
Worldwide spending on advertising -- including purchase of media time and space as well as ad agencies' services -- was estimated to be about $550 billion in 2016, according to eMarketer. Growth of between 5% and 9% per year is forecast through 2020. The top five advertising markets include the US, China, Japan, UK, and Germany. Digital ad spending is driving industry growth.
The US advertising agencies industry includes about 13,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $39 billion.
Demand for advertising is driven by companies that do business in sectors such as automotive, retail, pharmaceuticals, and telecommunications. The profitability of individual agencies depends on the ability to attract and retain creative employees and establish and maintain successful relationships with clients. Big agencies have advantages in providing integrated, large-scale advertising in multiple geographic markets. Small agencies can compete effectively by specializing in niche markets or offering lower pricing. The US industry is fragmented: the top 50 advertising agencies account for less than 50% of revenue.
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