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How many mid-market digital agencies are in the USA? Please give a typical market sizing. Focus on the number of digital agencies offering PPC/SEM/Paid Search Advertising.
OVERVIEW
In the USA, the ad agencies industry is highly fragmented. There are more than 11,000 agencies in the USA. Of this number, 2,331 are focused on providing digital solutions to the clients while 878 are focused on web, search, social and mobile. With revenue of more than $12 billion, the average digital agency revenue is $5.7 million with average employee size of 37. Apart from digital solutions for Mobile, Search, Social Media and Web, digital agencies also provide services for AR/VR, CRM automation, E-Commerce, Gaming, Marketing Automation and Email.
Methodology
As requested by the client, we have restricted our research on digital agencies to those which are focused on Pay per click, SEM, and Paid Search Advertising in the USA. We have triangulated data to find average revenue and average employee size of these digital agencies.
We have assumed that a mid-size digital agency will have 10-100 employees because of the constraint of data availability.
Findings
We found that there are 11,436 agencies in the USA. This number is comparable with another data point of 13,356 ad agencies in the USA.
Out of these 11,436 agencies, 2,331 agencies are classified as digital agencies. Amongst these 2,331 digital agencies, 878 agencies are focused on Web, Search, Social, and Mobile.
So, there are 878 digital agencies of which 742 have employees in the range of 10-49 while the remaining 136 have employees in the range of 50-100.
Using the formula for weighted average, we calculated that the average employee size of such agencies is 37.
So,
[{(10+49)/2}*742 + {(50+100)/2}*136]/878 = 37
Now, we know that the revenue of digital ad agencies in 2015 was $12.36 billion. The revenue growth of agencies in 2016 was 8%. Also, we know that there are 2,331 digital agencies in the USA.
Using the growth formula, we calculated that average revenue of such agencies is $5.7 million.
So,
{(12.36*1.08)/2331}*1000 = $5.7 million
Now we will look at the usual breakdown of services offered by digital agencies. This includes AR-VR, CRM Automation, E-Commerce, Email, Gaming, Marketing Automation, Mobile, Search, Social Media, and Web. Very few agencies provide services related to AR-VR, CRM Automation, Marketing Automation and Gaming while the majority of them are focused on Search, Social Media, and Web.
Conclusion
Digital agencies constitute around 20% of all the agencies in the USA. Of these, mid-sized agencies focused on Web, Search, Social, and Mobile are 878. Such agencies have average revenue of $5.7 million with average employee strength of 37.