Global advertising agencies market to reach $455 billion by 2025, report
The global advertising agencies market is expected to grow from $317.63 billion in 2020 to $348.4 billion in 2021 at a compound annual growth rate (CAGR) of 9.7% according to the latest report by Research and Markets.
The growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges.
The market is expected to reach $455.38 billion in 2025 at a CAGR of 6.9%.
The advertising agencies market consists of the sales of advertising services and related goods by entities (organizations, sole traders and partnerships) that plan, develop, create and manage advertisement and promotional activities in newspapers, radio, television, websites and social media sites. The advertising agencies market is segmented into TV, digital, print, OOH (Out-of-Home Advertising), radio and other advertising services. Only goods and services traded between entities or sold to end consumers are included.
The launch of artificial intelligence (AI) in advertising is gaining popularity in the advertising agencies market. Major players operating in the industry are continuously focused on introducing innovations and technologies to better serve the needs of consumers. For instance, as of May 2019, according to a survey, 47% of advertisers are currently using artificial intelligence for audience targeting. It has been reported that several companies are focusing their AI capacities to streamline their sales process, sorting out "hot" leads from "cold" prospects, cutting sales lead considerably, and improving sales productivity.
The advertising agencies market covered in this report is segmented by mode into online advertising; offline advertising. It is also segmented by type into TV; digital; radio; print; out-of-home (OOH); others and by end-user industry into banking, financial services, and insurance sector (BFSI); consumer goods and retail; government and public sector; IT & telecom; healthcare; media & entertainment.
An increase in advertisement spending across industries is expected to drive the demand for the advertising agencies market. Video and mobile ads are major contributors to the increase in ad investment. Digital advertising has recently surpassed total TV ad spending.
For instance, according to the Global Digital Ad Trends report published by PubMatic, a digital advertising technology company, the US digital ad spend in 2019 was around $129.3 billion, constituting 54.2% of total spending ($238.56 billion). This shows that the US digital ad spending surpassed traditional media spending.
Consumer Cellular, an American postpaid mobile network operator, spent under $100 million on advertising in digital, print, and national TV in the year 2019. The retail industry has the highest percentage of total spend on advertising. Therefore, the rise in advertisement spending is predicted to fuel the demand for the advertising agencies market.
The high cost of hiring an advertising agency, especially during tough economic times, is limiting the growth of the advertising agencies market. For instance, in smaller regions or markets, the cost to hire an advertising agency could vary anywhere from $95 to $225 per hour depending on the service and the skill of the person supplying that service.