The Ad World Is Coming Back with a Vengeance – Digital Marketing Leads the Way

Things are looking up for advertising and marketing agencies worldwide. Check out this optimistic article by Bradley Johnson from Ad Age:

The agency business has come back to life, with U.S. revenue jumping 7.7% as the domestic market led a 2010 worldwide rebound in advertising and marketing services.

The standout performer: digital marketing, which accounted for 28% of U.S. agency revenue.

Plot line of this recovery: The recession officially ended in June 2009, U.S. measured-media spending turned northward in first-quarter 2010 (according to WPP’s Kantar Media), and U.S. advertising and marketing-services firms have added 23,100 jobs since ad industry employment hit bottom in February 2010 (according to Bureau of Labor Statistics data).

The Big Four agency holding companies—WPP, Omnicom Group, Publicis Groupe, Interpublic Group of Cos.—in 2010 added 11,000 jobs (including acquisitions) after slashing 22,000 jobs in 2009.

Shares in WPP, Omnicom and Interpublic in first-quarter 2011 reached their highest levels since pre-recession 2007, a sign of investors’ optimism about the sector. Publicis shares this year reached their highest point since 2000.

U.S. 2010 revenue for marketing-communications agencies—including advertising, marketing services, media, health care and public relations—rose 7.7% to $30.4 billion, according to the Ad Age Agency Report, which tracked the performance of more than 900 U.S. agencies. (Ad Age DataCenter adjusted agency revenue figures for acquisitions to show revenue growth on an apples-to-apples basis.)

Every major agency discipline rebounded last year, with U.S. revenue growth in the range of 6% to 7% for most disciplines (including advertising, promotion, health care and public relations). Revenue for digital-specialty agencies (essentially digital pure-play agencies) surged 16.3%.

The U.S. was the world’s star performer in 2010 for advertising and marketing services, exceeding expectations and outpacing growth in most other regions.

To be sure, some of the U.S. advertising market’s recovery reflected what WPP Chief Executive Martin Sorrell has called a “dead cat bounce”: The ad business fell so sharply that it wasn’t surprising to see decent percentage gains when the economy began to recover after the longest recession (December 2007 through June 2009) since the Great Depression.

To read more of this article, click here.

Author: Eric Swenson

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