The prognostic for the financials of the United States multi-billion-dollar advertising industry remained sound in the post-pandemic world. After growing by about 23 percent in the first year after the coronavirus outbreak,
was forecast to surpass 380 billion U.S. dollars in 2024 – an annual value projected to increase substantially over the next three years, reaching 424 billion dollars by 2027. Perhaps unsurprisingly,
throughout that expansion, with a combined revenue estimated at 44.8 billion dollars in 2023. That would represent over fivefold growth compared to a decade earlier.
Leading ad agency networks
The most prominent
advertising, marketing, and public relations holdings operate across America and generate turnovers in the billions of dollars annually. In 2023, the net revenues of giants such as New York City-based Interpublic Group (IPG) and London-based WPP in the U.S. alone amounted to around 6.1 billion and 6.6 billion dollars, respectively. From Madison Avenue, Omnicom amassed 7.5 billion dollars in gross revenue, while Paris-based Publicis raked in more than nine billion. The previous year, the
top five ad agency networks in the U.S. recorded a combined revenue of 2.6 billion dollars. Deloitte Digital alone accounted for over one-third of that result. BBDO and TBWA (both run by Omnicom) followed. Altogether, the two networks accounted for 40 percent of the quintet's turnover.
New businesses: harder and scarcer
Of the four leading global ad groups, the two headquartered in the U.S. (IPG and Omnicom) had the
lowest estimated new business revenue in 2023, at around 397 million and 376 million dollars, respectively. Those results combined amounted to slightly more than Publicis's 700-million-dollar turnover, for instance. A study conducted every year among ad agency executives conveyed a bleaker scenario. In 2021, more than half of the respondents said
new business opportunities increased; in the following two years, more than four out of 10 noticed a decline. The same survey indicated tougher times succeeding the comparatively rosy 2021. Almost 60 percent of the interviewees said it was harder to obtain new business in 2023. Two years earlier, nearly 40 percent reported it being easier. If that complexity reflects the global economy, ad workers should brace themselves for the upcoming challenges.
Ad agencies placing big bets on AI, events
Despite sluggish growth, agencies have also been viewing 2024 as a potential rebound year thanks to events such as the Summer Olympics and crucial election cycles. Ad groups are also
laying money on generative artificial intelligence (AI) to help them ensure top line growth amid faltering revenues. WPP has
vowed to spend 318 million dollars on AI in 2024, while Publicis expected to fork out 108 million. On its part, IPG is projected to expend 80 million. WPP’s 2023 partnering with Nvidia to create ads with gen AI raised questions about the extent to which creative jobs would be affected, with CEO Mark Read arguing that the technology would augment, not replace, human capabilities. Read also highlighted clients’ need for AI-generated work that is “copyright-proof,” underscoring the need for agencies to ensure they do not bite off more than they can chew by promising hard-to-deliver results.
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