A move toward web-based marketing and promotion is driving demand for PR firms.
New York, NY (PRWEB) January 17, 2014
Clients hire public relations (PR) firms to manage a company's image, publicize a product or service and communicate with stakeholders. The industry's performance depends largely on clients' marketing budgets, which in turn is largely determined by corporate profit. Lower profit during the recession forced many client businesses to reduce their marketing budgets, which lowered demand for PR services. Still, industry operators have benefited from the shift to digital media in recent years. More PR firms are launching divisions devoted to targeted social networking and mobile media campaigns, which have allowed PR firms to earn a greater portion of businesses' marketing dollars. As a result, IBISWorld estimates that industry revenue has increased at an annualized rate in the five years to 2013. The recovery in clients' marketing budgets is expected to translate into additional growth in industry revenue in 2013.
According to IBISWorld Industry Analyst Darryle Ulama, “the decline in demand for PR services following the recession significantly impacted industry profitability.” Margins fell in 2008, but have managed to recover in 2013, due to a rebound in marketing budgets and the success of digital promotion. PR agencies weathered the recession particularly well because the Public Relations Firms industry quickly adopted a below-the-line approach to PR services, whereby outreach efforts are tailored for a specific audience. With the increasing power of social media, PR agencies are providing their clients with targeted campaigns to reach an increasingly fragmented consumer market. Social media growth and low barriers to entry have encouraged entrance into the industry, which has offset consolidation: in the five years to 2013, the number of enterprises is expected to increase at an annualized rate.
IBISWorld estimates that the four largest PR firms (Omnicom Group Inc., Interpublic Group of Companies, WPP PLC and Publicis Groupe) account for less than 15.0% of industry revenue in 2013, which is indicative of an industry with low concentration (see IBISWorld report 54182 for major player market shares). There are a large number of small PR firms, with the vast majority having fewer than 10 employees. At the other end of the scale, there are a small number of large firms that operate on a national and international level. These firms focus almost exclusively on large, high-value clients and are often the subsidiaries of international advertising agencies. During the past decade, advertising agencies have increasingly acquired companies that allow them to provide their clients with value-added services, including market research and PR.
During the next five years, “PR firms will continue to benefit from rising corporate profit and larger marketing budgets,” says Ulama. 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 mid-sized niche firms, as global advertising agencies look to diversify their service offerings. Consequently, revenue is expected to increase at an annualized rate in the five years to 2018.
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.
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