U.S. agency revenue may have increased 5.6% in 2012, but that was the slowest growth since the ad market started to recover in 2010. This year, agencies are on track for another period of moderate growth. U.S. agency revenue totaled $35.6 billion in 2012, so we can expect similar numbers in 2013. Here’s how the numbers break down for the various disciplines in marketing communications:
Advertising, $11 billion
CRM/Direct, $6.6 billion
Public relations, $3.9 billion
Health care, $3.6 billion
Media, $3.3 billion
Promotion, $2.9 billion
Digital revenue is what constitutes a large part of U.S. agency growth, bringing in $11.6 billion or 32.5% growth in 2012. These numbers continue to increase each year, from 30.3% in 2011, 28% in 2010 and 25.8% in 2009. While other sectors in marketing communications may not have had the same success, the promising news is that all sectors showed improvement on some level. From promotion to health care, each discipline saw positive growth and should continue on this modest path in 2013.
Just as U.S. agencies have stunted growth as the result of the Great Recession, further growth is impacted by troubles in the eurozone. Problems in Europe are part of the reason why we have only seen 2% to 3% growth on a global level, and even top contenders like Omnicom have an organic growth rate of 3.5%. There’s no doubt that we want to see the U.S. growing at a stronger rate. Still, slow and steady growth is better than no growth, and once the eurozone recovers, we should see more advancement.
Currently, the world is divided in terms of agency growth. Latin America and Asia are strong, the U.S. is growing slowly but steadily and the eurozone is experiencing challenges, with the euro dropping to 7.7% against the dollar last year. To help get out of this slump, more companies are looking for more ad hoc and less ad agency. Companies are consolidating for efficiency purposes, but this could potentially knock out 70 to 80 percent of local agencies.
At the end of the day, it’s not the agency brands that companies will be intent on but developing strong teams that have the best people working on their businesses.