Annual Survey of Advertising and Related Services

Despite higher revenues along with an improved profit margin in 2004, the advertising and related services industry in Canada continues to face challenges that have kept a lid on growth.

The trend of multinational advertisers to use global advertising campaigns has resulted in decreased demand for Canadian creative content. At the same time, the rise of the Canadian dollar has reduced the industry's price-competitiveness internationally.

Revenue has also been siphoned off by increasing media costs, as well as by growth in forms of marketing outside the advertising industry, such as company Web sites and Internet search engines. Finally, the industry also had to contend with allegations surrounding the federal sponsorship program and the ensuing "Gomery Inquiry".

Firms in the advertising and related services industry earned operating revenues of $5.0 billion in 2004, up 5.5% from 2003. Although broad-based economic growth in 2004 boosted the industry across the country, much of the 2004 rise was merely a rebound from industry declines recorded in both 2002 (-1.9%) and 2003 (-3.3%). Indeed, after accounting for inflation, total industry revenues in 2004 were still below the level reached in 2001.

Advertising agencies, which accounted for 45% of total industry operating revenues, earned $2.2 billion in 2004, an increase of 3.4% over 2003. Operating revenues of the other more specialized advertising industries (such as public relations, display advertisers and flyer distributors) were up 7.3% to $2.8 billion.

Profit margins improved from 8.7% in 2003 to 10.2% in 2004 among advertising agencies, and from 5.8% to 6.7% in the remainder of the industry.

There were 11,900 establishments involved in advertising and related services in 2004, little changed from the previous year. Advertising agencies accounted for 5,300 of these establishments.

The bulk of industry revenue was generated in Ontario (57%) and Quebec (26%). Operating revenues in Ontario rose 5.9% in 2004, following a 1.9% decrease in 2003. In Quebec, operating revenues rose 3.7% in 2004 on the heels of a 4.5% decline the previous year.

Note: This survey covers establishments classified as Advertising and Related Services (5418) according to the North American Industry Classification System (NAICS) during the reference year. It comprises establishments primarily engaged in: creating mass-media advertising or public relation campaigns; placing advertising in media for advertisers or advertising agencies; selling media time or space to advertisers or advertising agencies for media owners; creating and implementing indoor or outdoor display advertising campaigns; creating and implementing direct mail advertising campaigns; delivering (except by mail) advertising materials or samples; creating and implementing specialty advertising campaigns; providing related services, such as sign painting and lettering, welcoming services and window trimming services.

This industry does not include advertising sales by newspapers, magazines, radio, television or Internet, which accounts for the majority of the difference between results of this survey and calculations of total advertising spending in the Canadian economy.

Results from the 2004 Annual Survey of Advertising and Related Services are now available. These data provide information on the industry's revenue, expenditures, salaries and wages, profit margin, and the distributions of revenue earned by type of service and client base.

Data for 2001 to 2003 have been revised to reflect more accurate coverage of the target population for this industry.

Detailed tables at the provincial level for a range of industry characteristics are included in the data release package, which is available upon request. To order a copy contact Paul McDonald (613-951-0665; fax: 613-951-6696; paul.mcdonald@statcan.gc.ca), Service Industries Division.

Available on CANSIM: table 360-0003.

Definitions, data sources and methods: survey number 2437.

For further information, or to enquire about the concepts, methods or data quality of this release, contact Paul McDonald (613-951-0665; paul.mcdonald@statcan.gc.ca), Service Industries Division.