Los Angeles, CA (PRWEB) December 13, 2012
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 businesses to reduce costs wherever possible, including advertising expenditure. Meanwhile, 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,” says IBISWorld industry analyst Austen Sherman. The move away from traditional media has caused PR firms to earn a greater portion of businesses' marketing dollars. As a result of these conflicting factors, the industry growth has been relatively slow; IBISWorld estimates that industry revenue has increased at an annualized rate of 0.8% during the past five years to $10.9 billion, including growth of 6.4% in 2012 as the industry benefits from a recent recovery in clients' budgets.
Nevertheless, the decline in demand following the recession had a much more significant impact on industry profitability. In 2012, margins are estimated at 7.8% of revenue, down from 8.8% in 2007. 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. The number of firms operating in the industry is expected to decrease slightly at an average of 0.1% annually to 31,255 during the five years to 2012. IBISWorld analysis indicates that many of the firms that left the industry during the five-year period were nonemployers, which represent about 77.4% of industry enterprises. However, other PR firms were also acquired by large, multinational advertising agencies that serve an increasingly globalized client base. According to Sherman, during the next five years, PR firms will benefit from rising corporate profit and larger marketing budgets. 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.
IBISWorld estimates the four largest PR firms account for 19.9% of Public Relations Firms industry revenue in 2012, which is indicative of an industry with low concentration. There are a large number of small PR firms, with the vast majority having fewer than ten 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. Over 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. 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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