Article | Journal of Current Issues and Research in Advertising | 2013

How Concentrated Is the U.S. Advertising and Marketing Services Industry: Myth vs. Reality?

by Alvin J. Silk and Charles King III

Abstract

We analyze changes in concentration levels in the U.S. Advertising and Marketing Services industry using data from the U.S. Census Bureau's quinquennial Economic Census and the Service Annual Survey. These data, heretofore largely ignored, allow us to redress some of the measurement problems surrounding estimates found in the existing literature. The data available permitted concentration levels to be tracked for the period 1977–2007 in the case of advertising agencies and for 1997, 2002, and 2007 for the other industry sectors. Firm level concentration, as measured by the Herfindahl-Hirschman Index (HHI) and concentration ratios (CRs), varies across the nine sectors comprising the industry, but all are within the range generally considered as indicative of a competitive industry. At the holding company level, the four largest organizations account for less than a quarter of the industry's total revenue, a share that changed little over the period 2002–2009, but one that is approximately half of estimates frequently cited in the trade press. The persistence of a diverse and relatively unconcentrated size structure appears quite consistent with other research on the underlying economics of this industry.

Keywords: concentration levels; data; U.S. Census Bureau’s quinquennial Economic Census and the Service Annual Survey; measurement problems; Herfindahl-Hirschman Index; concentration ratios; Advertising; Advertising Industry; North and Central America;

Citation:

Silk, Alvin J., and Charles King III. "How Concentrated Is the U.S. Advertising and Marketing Services Industry: Myth vs. Reality?" Journal of Current Issues and Research in Advertising 34, no. 1 (2013): 1–28.