Digital Spending Fuels Media Agencies' Growth

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Digital revenue for U.S. agencies surged 13.5% in 2015 to $19.3 billion, including digital work for all agency types from ad agencies and media agencies to public relations agencies and digital pure plays, according to Ad Age Datacenter's analysis.

Media agencies are now part of an ecosystem that is reducing its spending in measured media, which traditionally accounted for how media agencies made their revenue. In 2015, U.S. ad spending for the top 200 leading national advertisers totaled $142.5 billion. Of that, 45.3% was spent in measured media channels -- TV, magazine, newspaper, radio, outdoor ad spending as measured by WPP's Kantar Media. Unmeasured spending -- which includes Internet and mobile media (search marketing, internet display, social media, online video and other digital media), promotion, experiential marketing and direct marketing -- accounted for 54.7% of spending, or $78 billion. (Unmeasured spending is Ad Age Datacenter's estimate of difference between company's measured media and its total U.S. ad costs. Internet display advertising, which was broken out among measured media in previous LNA reports, now is included in Ad Age's unmeasured bucket.)

Despite that trend, U.S. media agencies last year registered robust revenue gains, with growth in digital more than offsetting a decline in traditional media.

Consider that WPP's biggest media relationship is with Google. WPP (including Essence, a digital agency acquired by WPP) last year boosted Google worldwide spending on behalf of clients by 25% to $4 billion. WPP expects its business with Google to top $5 billion in 2016. WPP last year pumped $1 billion into advertising on Facebook, up from $650 million in 2014.

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