The rise in service activities, increased digital marketing services and the success of the work-from-home trend enable the Zacks Advertising and Marketing industry to counter the prevailing revenue softness.
Customer-centric approaches, digital strategies, and technology investments are helping Omnicom Group OMC, Stagwell STGW and Quad/Graphics, Inc. QUAD navigate the current testing times.
About the Industry
The Zacks Advertising and Marketing industry comprises companies that offer an extensive range of services, including advertising, branding, content marketing, digital/direct marketing, digital transformation, financial/corporate business-to-business advertising, graphic arts/digital imaging, healthcare marketing and communications and in-store design services. Prominent players from the industry include Interpublic and Omnicom. The pandemic has significantly altered the way industry players conduct business and deliver services. Currently, the industry’s key focus is on channeling money and efforts toward media formats and devices. To position themselves suitably in the post-pandemic era, service providers are increasing their efforts toward formulating strategic initiatives and identifying sources of demand.
What’s Shaping the Future of the Industry?
Economic Recovery: According to the third estimate of the Bureau of Economic Analysis, the economy remained resilient, with GDP growing 3.8% in the second quarter of 2025 against a 0.6% decline in the first quarter. Non-manufacturing activity stayed firm, as reflected in the Services PMI’s return to expansion in October. The index recorded 52.4, putting it in expansion territory for the eighth time in 2025.
Reviving Demand: The industry is mature, with demand for services remaining stable over time. Revenues, income, and cash flows are anticipated to gradually reach pre-pandemic levels, aiding most industry players in paying out stable dividends.
Digital Marketing Gathering Steam:Digital media consumption has increased, with consumers spending more time on various media platforms and video-streaming services. Thus, agencies offering digital marketing services stand to gain, as these firms are better positioned to address the rapid change in customer preferences.
Zacks Industry Rank Indicates Dull Near-Term Prospects
The Zacks Advertising and Marketing industry, housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #175. This rank places it in the bottom 28% of 243 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock market performance and current valuation:
Industry’s Price Performance
Over the past year, the Zacks Advertising and Marketing industry has underperformed the S&P 500 composite and the broader sector. The industry has declined 30% compared to the S&P 500 composite’s growth of 13% and the broader sector’s decline of 17%.
Industry’s Current Valuation
Based on the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing advertising and marketing stocks, the industry is currently trading at 9.52X compared with the S&P 500’s 22.8X and the sector’s 19.31X.
Over the past five years, the industry has traded as high as 17.84X and as low as 7.65X, with the median being 10.82X, as the charts below show.
3 Advertising Stocks to Consider
Here, we have presented three stocks that are well-positioned for near-term growth:
Quad/Graphics: The marketing solutions provider is strengthening its position as a differentiated marketing experience company by simplifying omnichannel complexity and investing strategically in AI tools, data intelligence and retail media. These capabilities enhance client results and support long-term diversified growth. The company’s proprietary household-level data stack gives it a competitive edge, improving targeting accuracy and ROI. New natural language features in the Audience Builder platform further accelerate insights and audience creation. Quad is also gaining strong traction with its In-Store Connect retail media network, delivering higher brand awareness and sales for major campaigns, positioning the company for sustained momentum and operational efficiency.
The Zacks Consensus Estimate for QUAD’s 2025 EPS has increased 3% in the past 60 days. The company currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Omnicom:The company is a provider of advertising, marketing and corporate communications services. OMC’s presence across various segments of the advertising and marketing industry and the breadth of its offerings across traditional advertising, digital marketing, public relations, brand consulting and precision marketing ensure that the company can cater to varied needs and can capture business from a range of organizations, small, medium and large, whether they’re traditional players or new-age. By focusing on consumer-centric strategic business solutions, the company aligns more closely with clients’ evolving needs, fostering stronger partnerships. This would help it drive volumes. This, along with Omnicom’s size and reach, indicates that revenues would be very stable and growing.
The Zacks Consensus Estimate for the company’s 2025 bottom line has been revised 1.4% upwards to $8.59 over the past 30 days. It currently carries a Zacks Rank #2 (Buy).
Stagwell: The company provides digital transformation, performance media and data, consumer insights and strategy, and creativity and communications services. It stands out for its digital-first marketing approach, strong client relationships and data-driven solutions. Its focus on AI, analytics, and media innovation drives growth. Strategic acquisitions expand its capabilities, while cost efficiencies and global reach enhance profitability, positioning it as a competitive player in modern advertising and marketing.
The Zacks Consensus Estimate for Stagwell’s 2025 EPS has increased 6.5% in the past 30 days. The company currently carries a Zacks Rank #2.
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Omnicom Group Inc. (OMC) : Free Stock Analysis Report
