Media planning will grow in importance as consumer markets increasingly fragment
Los Angeles, CA (PRWEB) October 29, 2012
Overall growth for the Media Buying Agencies industry slowed during the past five years as a result of the recession, which caused a drastic decline in clients' advertising budgets. Furthermore, adds IBISWorld industry analyst Austen Sherman, “the shift toward online and digital media has hurt demand for traditional media, such as newspapers because traditional forms of media have historically been a large component of industry revenue.” IBISWorld estimates industry revenue has been relatively flat, growing at an annualized rate of 0.5% to $4.9 billion during the five years to 2012. Nevertheless, the recent rebound in corporate profit has provided clients with the opportunity to expand their marketing budgets, boosting recent demand for industry services and leading to overall industry growth.
Media Buying Agencies industry operators perform two distinct functions: media buying and media planning. Media buying involves negotiating the terms on which ads are purchased from media operators on behalf of industry clients; agencies aggregate the media spending of multiple clients to achieve the best deal and maximize margins. “With the development of digital media, this service has changed because online advertising is much cheaper and easier to access than more traditional forms of media,” Sherman says. “As a result, media planning has become a more important service for industry firms to provide.” Operators monitor the results through data analytics and make changes as necessary if the results fail to meet agreements or expectations. New analytical software has helped firms provide more accurate information on clients' return on investment; consequently, revenue has risen as long as operators can prove the worth of their services.
The rising use of digital media has made reaching target markets much easier, opening access to demographics that were hard to reach in the past and providing firms with new opportunities. As the economy recovers and firms in the industry learn how to further benefit from the growth of digital platforms, rising corporate profit and consumer sentiment will boost advertising expenditure. As a result, industry revenue is forecast to increase at a stronger rate in the five years to 2017. Additionally, opportunities for niche firms in the digital media space are expected to bring more operators into the industry. And as more niche agencies are acquired by large competitors, industry concentration is expected to continue over the period. Concentration has been increasing as integrated advertising agencies and communications holding companies continue to acquire firms offering complementary services, such as media buying services. Many of these companies are trying to become one-stop marketing and communication shops for major clients. Agencies will particularly look to enhance their digital capabilities through acquiring firms specializing in new media. For more information, visit IBISWorld’s Media Buying Agencies in the US industry report page.
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IBISWorld industry Report Key Topics
Media buying agencies purchase advertising time and space from media providers and resell it to advertisers. They can also be involved in planning individual campaigns and monitoring the results of advertising placements against agreed metrics, such as target audience reach. Large advertisers may bypass this industry by using in-house media buying teams and dealing directly with media representatives.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
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