J.H. Cohn has become widely recognized for the consulting niche it has established in representing advertising agencies, media firms, marketing service and communications companies. In particular, we have become an industry leader by providing specialty consulting services to more than 150 marketing service companies in the burgeoning mergers and acquisition arenas.
In addition to mergers and acquisition consulting, we also regularly advise our agency clients on day-to-day matters involving client compensation, executive compensation, succession plans, valuation services, and tax issues. Of course, we also perform financial statement audits, and provide general accounting and tax services.
In preparing your agency or service business for a sale, one needs to set goals, resolve issues that impact the direction and the value of the agency, and review the options available. Retaining an intermediary is advisable if the intermediary is the right person with the right agenda: someone who knows the client, knows the industry, and is available; someone who is a good negotiator and can effect a win/win situation for all parties.
Advertising and Public Relations Industry Snapshot
The advertising services industry in the U.S. includes about 30,000 companies, with combined annual revenue of $60 billion and about 30 companies with annual revenue over $100 million, 150 companies with revenue over $25 million, and 6,000 companies with revenue over $1 million.
Advertising agencies provide a wide range of services for commercial customers, including creative ad development, media buying, direct marketing, public relations, corporate communications, event marketing and marketing consulting. While the large agencies provide a full range of services, smaller ones often specialize in market or product niches. The main sources of revenue for agencies are the creation of advertising campaigns and the placement of ads with various media channels such as newspapers, magazines, TV, radio, billboards, the Internet and direct mail.
Characteristics of the advertising industry include:
- Adherence to standards set by the FTC, the FCC, various voluntary industry groups, and individual media companies, like the TV networks.
- A focus on recruiting and retaining talented, highly paid, staff.
- The need to manage high accounts receivable and high payables along with considerable cash flow.
- The emergence of global markets
- A trend towards consultancy, public relations, brand management, healthcare and specialist communications activities that continue to grow faster than traditional media advertising.
- Offering clients fully integrated services.
- The proliferation of media outlets enabling ads to target a specific group of potential customers.
- Long-term relationships
Concerns facing the industry:
- Accelerated product cycles
- Consolidation
- Customers' short attention spans
- Decreasing effectiveness of commercials
- Dependence on ad spending
- Dependence on large customers
- Fragmented advertising outlets
- Pressure on compensation from clients
- Public annoyance with advertising tactics
- Use of commercial songs in place of original material