First Research US Industry Profile

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Advertising & Marketing Services
SIC Codes: 7311, 7312, 7313, 7319, 7331, 8743
NAICS Codes: 5418
Last Quarterly Update: 3/18/2019
Companies in this industry create advertising campaigns, implement public relations campaigns, and engage in media buying, among other advertising services. The world's major advertising companies include Dentsu (based in Japan), Interpublic (the US), Omnicom (the US), Publicis (France), and WPP (Ireland). The digital marketing arms of global consulting firms Accenture, IBM, and PwC also rank among the top agencies by revenue, according to Agency Spotter.
Global ad spending -- measured by media owners' net advertising sales -- is about $550 billion per year, according to MAGNA. Growth is expected to be strongest in markets such as India, Russia, and China.
The US advertising and marketing services industry includes about 38,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $100 billion.
Competitive Landscape
Migration of ad spending to digital media continues to drive change in the industry. Global media owner revenue from digital ads, including search, social, and mobile, surpassed TV ad revenue for the first time in 2017, according to MAGNA. Within the industry, competition is high between firms that provide traditional TV or print advertising and those that provide more modern digital and mobile/social focused services. This leads many larger firms to create or acquire brands that offer a wider array of services.
At the same time, some of the world's largest consultancies have entered the advertising industry, including Accenture Interactive, PwC, IBM's iX, and Deloitte. All four made recent acquisitions that placed them on Ad Age's list of the 10 largest ad agencies in the world in 2017. These companies have the advantage of already doing business with some of the largest firms in the world and having strong reputations for helping customers solve problems.
Competitive Advantages:
Digital Prowess - Traditional TV and print advertising is still important, but agencies that can help customers keep a foot in the old world while successfully navigating the new will attract more customers.
Offering Simplicity - Major brands, the customers of big ad agencies, are trying to streamline and reduce complexity in their marketing programs. Agencies that can bring together multiple offerings in a simplified approach stand to benefit.
Companies to Watch:
Accenture - Already one of the largest consulting firms, Accenture has been purchasing companies to expand its capabilities in the advertising and marketing digital transformation space. The company's interactive division is the world's largest digital ad agency, according to Ad Age. It's going after traditional big agency customers who know the Accenture name from its cost-cutting consulting work.
Zulu Alpha Kilo - The Canadian firm won Ad Age's International Small Agency of the Year in 2017. It has turned heads and attracted big name clients, including Corona, Uber, Whirlpool, and Harley-Davidson. Providing ideas and proposals on spec has long been a staple of the advertising industry, but Zulu Alpha Kilo has a strict no-spec policy so it can focus resources on existing clients.
Products, Operations & Technology
Major sources of revenue for the industry in the US are advertising for print, broadcast, and online media (about 25% of industry sales), public relations ... plus:
Sales & Marketing
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Finance & Regulation
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Regional & International Issues
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Human Resources
Also includes the following chapters:
Quarterly Industry Update
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Industry Indicators
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Business Challenges
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Trends and Opportunities
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Call Preparation Questions
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Financial Information
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Industry Forecast
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Industry Websites
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Glossary of Acronyms

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