A move toward web-based marketing and promotion is driving demand for PR firms
Los Angeles, CA (PRWEB) June 22, 2013
Clients use public relations (PR) firms to improve a company's image and to publicize a new product or service. The Public Relations Firms industry's performance depends on clients' marketing budgets, which fluctuate with changes in corporate profit. “The recession forced many client businesses to reduce costs wherever possible, including advertising expenditure,” according to IBISWorld industry analyst Austen Sherman. “Even so, industry operators have benefited from advertising's shift away from traditional media toward more direct media during the past five years.” More PR firms are specializing in or launching divisions devoted to blogs, social networking sites, mobile media and podcasts. The move away from traditional media has caused PR firms to earn a greater portion of businesses' marketing dollars. As a result, IBISWorld estimates that the revenue for the Public Relations Firms industry has increased at an annualized rate of 3.1% during the past five years to $12.6 billion, including growth of 2.8% in 2013 as the industry benefits from a recent recovery in clients' budgets.
The decline in demand following the recession significantly impacted industry profitability. After the financial crisis, clients continued to expect the same level of service at a discounted rate, and industry firms were forced to comply in an effort to maintain client relationships. The decline in profit margins caused industry operators to reduce employee head count, while some firms left the industry altogether. Nevertheless, as profit and industry performance has improved the number of firms operating in the industry is expected to have risen slightly at an average annual rate of 1.1% to 33,235 during the five years to 2013.
The market for low-value, high-volume business will remain largely the domain of small firms during the next five years. Such firms must rely on numerous local clients, whereas larger firms can generate substantial revenue from several national clients. Consolidation and globalization in client industries will erode the middle-market and make mergers with large PR firms attractive for medium-size firms that have thus far valued independence over size.
“During the next five years, PR firms will benefit from rising corporate profit and larger marketing budgets,” says Sherman. Relatively strong growth is expected during the period, largely driven by the expansion of niche and social networking services and the continued development of mobile media. In addition, the industry's largest operators are expected to remain active in their acquisition of small- and medium-sized niche firms, as global advertising agencies look to diversify their service offerings. Consequently, IBISWorld anticipates industry revenue will increase in the five years to 2018. The Omnicon Group, Interpublic Group of Companies, WPP PLC, and Publicis Group are the largest companies in this industry. For more information, visit IBISWorld’s Public Relations Firms in the US industry report page.
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IBISWorld industry Report Key Topics
Public relations (PR) agencies manage the communications between an organization and the public to promote favorable relationships and portray a desired image. This includes communication with the general public, as well as 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, 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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