Media fragmentation has made traditional advertising less effective, a boon for public relations agencies.
Los Angeles, CA (PRWEB) April 15, 2013
Companies use public relations agencies for a variety of reasons, including improving a company's image or spreading news about a new product. According to IBISWorld industry analyst Austen Sherman, “In the past five years, marketers have dedicated an increasing proportion of their budgets to public relations rather than traditional media advertising.” In spite of this, firms are still recovering from significant revenue declines in 2009, when many companies cut back on marketing spending. Furthermore, fluctuations in global exchange rates affect industry performance in US dollar terms. For example, the appreciation of the US dollar in 2009 amplified the decline in underlying demand, driving revenue 13.3% lower. Consequently, industry revenue will total an estimated $30.5 billion in 2013, marking an annualized decline of 0.4% since 2008.
Luckily for industry operators, revenue for the Global Public Relations Agencies industry is expected to grow 4.5% in 2013 as the industry benefits from growth in advertising expenditure. “Furthermore, media fragmentation has made reaching a mass audience with traditional media advertising more difficult, which has prompted marketers to shift some spending from traditional advertising to public relations,” says Sherman. In addition, many of the new forms of media that have emerged, such as social networking websites and blogs, are well-suited for PR work. Demand has also been driven as incomes have risen in emerging markets, which has prompted increased spending on marketing in those regions. These trends will continue to drive growth over the outlook period.
The four largest companies in the Global Public Relations Agencies industry are estimated to account for slightly more than 15.0% of the total market share, which is indicative of an industry with low concentration. In spite of this, concentration has been increasing via mergers and acquisitions over the past five years. This follows a period of rapid consolidation among major players across the entire marketing sector throughout the 1990s and early 2000s. Mergers have occurred between firms across all aspects of marketing, resulting in a small number of giant marketing and communications holding companies. These holding companies, such as WPP, Interpublic and Omnicom, own hundreds of individual firms across all areas of marketing from advertising agencies and PR firms, to media agencies and market research firms.
In the five years through 2018, IBISWorld estimates industry revenue will increase. Growth in developed markets, notably the United States and Western Europe, will be relatively sluggish due to market saturation of PR services. However, PR expenditure is anticipated to rise in emerging economies; during the past five years major industry firms have been strategically acquiring operators in areas of Asia, South America, Africa and the Middle East. Demand for industry services will rapidly increase as businesses in these markets develop greater sophistication and need for PR services during the next five years.
For more information, visit IBISWorld’s Global Public Relations Agencies industry report page.
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IBISWorld industry Report Key Topics
Public relations agencies manage the communications between an organization and the public in order to promote favorable relationships and portray a desired image. This includes communication with the general public as well as with employees, investors, customers, analysts and other stakeholders. In contrast to advertising, PR campaigns aim for exposure through public interest and news items rather than paid advertisements in order to give their message third-party legitimacy.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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