Nature of the Industry

Firms in the advertising and public relations services industry prepare advertisements for other companies and organizations and design campaigns to promote the interests and image of their clients. This industry also includes media representatives—firms that sell advertising space for publications, radio, television, and the Internet; display advertisers—businesses engaged in creating and designing public display ads for use in shopping malls, on billboards, or in similar media; and direct mail advertisers. A firm that purchases advertising time (or space) from media outlets, thereafter reselling it to advertising agencies or individual companies directly, is considered a media buying agency. Divisions of companies that produce and place their own advertising are not considered part of this industry.

In 2004, there were about 47,000 advertising and public relations services establishments in the United States. About 4 out of 10 write copy and prepare artwork, graphics, and other creative work, and then place the resulting ads on television, radio, or the Internet or in periodicals, newspapers, or other advertising media. Within the industry, only these full-service establishments are known as advertising agencies. About 1 in 6 were public relations firms. Many of the largest agencies are international, with a substantial proportion of their revenue coming from abroad.

Most advertising firms specialize in a particular market niche. Some companies produce and solicit outdoor advertising, such as billboards and electric displays. Others place ads in buses, subways, taxis, airports, and bus terminals. A small number of firms produce aerial advertising, while others distribute circulars, handbills, and free samples.

Groups within agencies have been created to serve their clients’ electronic advertising needs on the Internet. Online advertisements link users to a company’s or product’s Web site, where information such as new product announcements, contests, and product catalogs appears, and from which purchases may be made.

Some firms are not involved in the creation of ads at all; instead, they sell advertising time or space on radio and television stations or in publications. Because these firms do not produce advertising, their staffs are mostly sales workers.

Companies often look to advertising as a way of boosting sales by increasing the public’s exposure to a product or service. Most companies do not have the staff with the necessary skills or experience to create effective advertisements; furthermore, many advertising campaigns are temporary, so employers would have difficulty maintaining their own advertising staff. Instead, companies commonly solicit bids from ad agencies to develop advertising for them. Next, ad agencies offering their services to the company often make presentations. After winning an account, various departments within an agency—such as creative, production, media, and research—work together to meet the client’s goal of increasing sales.

Widespread public relations services firms can influence how businesses, governments, and institutions make decisions. Often working behind the scenes, these firms have a variety of functions. In general, firms in public relations services advise and implement public exposure strategies. For example, a public relations firm might issue a press release that is printed in newspapers across the country. Firms in public relations services offer one or more resources that clients cannot provide themselves. Usually this resource is expertise in the form of knowledge, experience, special skills, or creativity; but sometimes the resource is time or personnel that the client cannot spare. Clients of public relations firms include all types of businesses, institutions, trades, and public interest groups, and even high-profile individuals. Clients are large and small for-profit firms in the private sector; State, local, or Federal Governments; hospitals, universities, unions, and trade groups; and foreign governments or businesses.

Public relations firms help secure favorable public exposure for their clients, advise them in the case of a sudden public crisis, and design strategies to help them attain a certain public image. Toward these ends, public relations firms analyze public or internal sentiment about clients; establish relationships with the media; write speeches and coach clients for interviews; issue press releases; and organize client-sponsored publicity events, such as contests, concerts, exhibits, symposia, and sporting and charity events.

Lobbying firms, a special type of public relations firm, differ somewhat. Instead of attempting to secure favorable public opinion about their clients, they attempt to influence legislators in favor of their clients’ special interests. Lobbyists often work for large businesses, industry trade organizations, unions, or public interest groups.

In an effort to attract and maintain clients, advertising and public relations services agencies are diversifying their services, offering advertising as well as public relations, sales, marketing, and interactive media services. Advertising and public relations services firms have found that highly creative work is particularly suitable for their services, resulting in a better product and increasing their clients' profitability.