Advertising

What had been merely a $27.5 billion industry (in terms of total dollars spent on advertising) more than 35 years ago has grown to reach nearly $800 billion today (total global advertising spending projected for 2024), according to the research group Statista. In 1975, advertising dollars were spent in newspapers, magazines, business publications, medical journals, and telephone directories, on billboards and buses, the radio, network television, and cable. In 1998, online advertising catapulted total ad spending to more than $180 billion.

The advertising industry is tied closely to the economy, and the 2007 global recession slashed advertising spending as clients streamlined staff and curbed costs. Many industry experts reported the declines in advertising during the recession as the sharpest drops experienced in business since the Great Depression.

More than a decade later, the advertising industry was still rebounding from the recession. The pandemic further disrupted the industry, resulting in a decrease in media budgets in 2020. A Statista survey found that in response to the media budget cuts, nearly one-third of advertisers “explored new channels for new businesses,” while others offered new services to their clients, and some also explored new industries. By late 2020, advertising companies had adjusted to the pandemic, by hosting online and hybrid events, videoconferences, webinars, and moving much of the trade to the Internet. The state of the advertising industry started to improve in 2021, with Statista reporting a 9 percent boost in total ad spend for all global regions, compared to the previous year.

In 2022, the U.S. digital advertising market was valued at $261 billion, outranking China and Europe, the two other leading digital advertising markets. The U.S. comprises one-third of the global digital advertising spending, with China accounting for about 25 percent and Europe nearly 17 percent.

An Ad Age report cited that employment in U.S. ad agencies in 2018 had reached its highest point since the early 2000s when the dot-com bubble hit. This was good news considering that, during the darkest days of the recession, in 2009, an average of 41 jobs per day were cut in advertising agencies. Some advertising agencies scaled back on staff in 2020, during the early part of the pandemic, but overall there continues to be employment growth in the industry since then. In January 2023, IBISWorld reported that there were 267,601 people working in U.S. advertising agencies. This represents small growth—about 1.1 percent over 2022 and a 1.5 percent average increase in employment between 2018 and 2023—but it’s growth nonetheless.

One sector that continues to do well is out-of-home (OOH) advertising, with a nearly 26 percent increase in 2022 compared to the previous year, according to a report by the Out of Home Advertising Association of America (OAAA). Among the top industry product categories, by growth rate order, were: media and advertising; public transportation and resorts; schools, camps, and seminars; government, politics, and organizations; automotive dealers and services; local services and amusements; financial services; and retail. The top 10 advertisers included Apple, McDonald’s, Samsung, Amazon, Google, Paramount+, American Express, T-Mobile, Panera, and Dunkin. OAAA also reported that more than one-quarter of the top 100 out-of-home spenders are technology or direct-to-consumer brands, including Altice, AT&T, Comcast, Disney, DoorDash, DraftKings, DuckDuckGo.com, Expedia, Hotels.com, Hulu, Indeed, and Uber, to name just a few.

As digital becomes increasingly popular as people's top choice of media, the print industry continues to decline. Newspaper advertising, for instance, has not fared well over the years. According to a report by the Pew Research Center, newspaper circulation dropped by about 6 percent from 2019 to 2020, and newspaper advertising revenue dropped by 25 percent in that timeframe, to $11.1 billion by 2020. The Pew report highlighted that the bright spot was digital advertising, accounting for 39 percent of newspaper advertising revenue in 2020, a slight jump from 35 percent in 2019, and more than double compared to 17 percent in 2011.

Some of the more established ad agencies that have been among the top for years continue to rank high today, according to Ad Age magazine, but newer, creative shops are also getting their due. Each year Ad Age releases its “Agency A-List." Among the top listed in 2023:

1. The Martin Agency—This full-service, 57-year-old ad agency is known for their relationships as agency of record (AOR) for most of their clients. Rather than hiring different agencies to handle different aspects of ad campaigns, companies hire only The Martin Agency as the AOR. In 2022, Martin had a 30 percent jump in revenue over 2021, and 40 percent organic growth from existing clients. Their clients include Axe, Bud Light Seltzer, Buffalo Wild Wings, CarMax, Geico, Old Navy, Oreo, Penske, TIAA, UPS, and others. An example of Martin’s ability to spark conversations and increase engagement with brands was the TIAA campaign highlighting that women retire with less savings (30 percent less, $1.6 million total) than men. The agency worked with designer Fe Noel, who created a 16-foot-long dress composed of $1.6 million artificial bills for NYC’s Fashion Week. The results: more than 1.3 billion impressions in 2 days; 61 percent increase in share of voice, and a 300 percent increase in sign-ups for TIAA retirement advice sessions.
2. VMLY&R—Created through a merger in 2018, this global advertising and marketing agency now has more than 7,000 employees around the world. VMLY&R’s total revenue has been growing year over year recently, with a 12 percent increase in 2021, and a 5 percent increase in 2022, compared to previous years, and nearly $1 billion in revenue in the United States. A subsidiary of the holding company WPP, VMLY&R was an early adopter of the “connected brands” approach, to strategically connect people with brands that are relevant in their lives. VMLY&R’s connected brands philosophy garnered them new clients and increased business from existing ones, such as Abbott Nutrition, AstraZeneca, Pfizer, SC Johnson, and T-Mobile. It also expanded WPP’s global business for Coca-Cola brands.
3. Mischief. At No Fixed Address—Yes, this is the company’s name. And nope, it doesn’t have a brick-and-mortar headquarters. Mischief is an independent agency that doubled its revenue from 2021 to 2022, picking up 10 agency-of-record wins, including Tinder and FanDuel Casino, and 12 more pieces of new business. Mischief finds interesting ways to solve a brand’s problem. One example was its “The Official Beer of Everything Unofficial Campaign” for Molson Coors Light in 2022. NFL players are prohibited from officially endorsing alcohol, so Mischief created the Coors Light flashlight, which NFL quarterback Patrick Mahomes could endorse as the “unofficial” spokesperson for Coors Light. This was also a fundraiser for Mahomes’s foundation. The campaign was a success: flashlights sold out in one day and Coors Light sales increased over the same timeframe the previous year.
4. Weiden+Kennedy—Headquartered in Oregon, with eight offices around the world and 1,400 employees, W+K has been doing creative, innovative work since it started in the 1980s. W+K is well known for its Nike campaign with Colin Kaepernick, who took a stand against police violence in communities of color. This independent, global creative agency landed 40 brands to its client roster in 2022, including Allstate, and grew its global work for clients such as Anheuser-Busch InBev, Ford, and McDonald’s.