Media planning will grow in importance as consumer markets increasingly fragment
Los Angeles, CA (PRWEB) May 28, 2012
In 2012, revenue for the Media Buying Agencies industry is forecast to increase 5.8% to $4.9 billion. Overall growth, however, slowed as a result of the recession, which caused clients to reduce their ad budgets. Furthermore, the shift toward online and digital media has hurt the demand for traditional media, which has historically been a large component of industry revenue. Nevertheless, the opportunity afforded by the digital landscape has caused overall industry growth. According to IBISWorld industry analyst Kevin Culbert, industry revenue has grown an average of 0.5% annually during the five years to 2012. In spite of reduced advertising budgets, profit margins slipped little during the recession. IBISWorld estimates industry profit will represent 6.5% of industry revenue in 2012.
Industry players 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. Media planners craft media campaigns by deciding when and where to place advertisements that suit a target audience. They then monitor the results and make changes as necessary if the results fail to meet agreements or expectations. Media planning is more important than ever, as consumer markets continue to fragment and audiences become more targeted. The decline in traditional media, coupled with an increase in the number of media outlets available to advertisers, has made reaching a mass audience more difficult. “On the other hand, the rising use of digital media has made reaching very specific target markets easier, opening access to markets that were hard to reach in years past,” said Culbert. As the economy recovers, rising corporate profit and consumer sentiment will boost advertising expenditure. As a result, industry revenue is forecast to increase in the five years in 2017. Opportunities in digital media are expected to bring more players into the industry. Over the next five years, industry enterprises are projected to increase.
IBISWorld estimates that in 2012, the top four Media Buying Agencies industry players for 41.7% of total industry revenue, indicating a medium level of concentration. Concentration has been increasing as integrated advertising agencies and communications holding companies continue to acquire firms offering complementary 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. As more niche agencies are acquired by large competitors, industry concentration has increased. Typically, major players have achieved higher market shares by owning numerous media buying agencies, rather than through the size of any individual agency. Consequently, independent agencies are relatively small and numerous, composing a large portion of industry revenue. More than 80.0% of industry enterprises have fewer than 10 employees while only 2.5% has more than 100 employees. 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
Market Share Concentration
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Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.