Media fragmentation has been driven by the emergence of digital and new media
Melbourne, Australia (PRWEB) May 30, 2012
The Advertising Services industry is sensitive to changes in economic conditions, which affect the level of advertising and promotional spending by clients. In the past few years, the high cost of main media advertising and fragmentation of consumers' media viewing habits have prompted clients to include a greater proportion of below-the-line communication in marketing campaigns. Media fragmentation has been driven by the emergence of digital and new media, including web-enabled mobile phones, faster and cheaper internet, iPods and podcasts, pay TV, new free-to-air channels and social networking websites like Twitter, YouTube and Facebook. According to IBISWorld industry analyst Craig Shulman, “This is providing a challenging and fragmented media environment for advertising agencies to operate in, and is leading many to reinvent themselves by moving away from their traditional roles”. For example, all of the major industry players are now diversified marketing communications holding companies after acquiring complementary businesses like public relations agencies, market research firms, digital advertising agencies and web developers. IBISWorld forecasts that the industry will generate revenue of $2.04 billion in 2011-12, representing a decline of 0.8% on the previous year. This will come on the back of two years of revenue decline that coincided with the economic downturn and a modest recovery in 2010-11. During these years, clients cut advertising budgets amid weaker consumer spending, particularly on highly discretionary and big-ticket items. Over the five years through 2011-12, industry revenue is expected to grow by 0.1% per annum.
Over the next five years, the industry will have to further reinvent its services to be more in line with increasing media fragmentation. Shulman adds, “Increasing competition from similar services such as marketing and public relation firms will eat into potential revenue sources while greater investment will be required to continue to adjust to new mobile and online advertising spaces”. IBISWorld forecasts that industry revenue will increase marginally over the five years through 2016-17.
The four largest players in the Advertising Services industry are Photon Group, Mitchell Communication Group, STW Communications Group and Clemenger Group. The industry is estimated to have a medium level of market share concentration. Individual advertising agencies tend to be relatively small; however, the major industry players are holding companies that own numerous agencies. Many of these holding companies started as individual advertising agencies before merging with and acquiring other advertising agencies along with complementary marketing and communications businesses like public relations agencies, market research firms, web developers and digital agencies. This has occurred as clients increasingly seek marketing campaigns that integrate traditional media advertising with below-the-line methods to reach target audiences.
For more information, visit IBISWorld’s Advertising Services report in Australia industry page.
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IBISWorld industry Report Key Topics
Advertising agencies help clients create and place promotional material across a range of print and digital media, including TV, magazines, billboards and the internet. Many larger agencies also offer below-the-line services, which include direct mail, public relations and other sales promotion activities. This report does not deal with advertising space selling, aerial advertising service or sample distribution.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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