The rise of digital content has changed the traditional advertising model
(PRWEB) September 13, 2012
London, United Kingdom` The Advertising Agencies industry has endured a difficult five years. Since the downturn began in 2008, businesses have cut back sharply on advertising expenses, causing revenue to contract in 2008-09 and 2009-10 and grow weakly during 2010-11 and 2011-12. The industry will enjoy a better year in 2012-13. The London Olympic and Paralympic Games should prove a major boon to advertisers as companies increase advertising spending for the events. Industry revenue is estimated to grow 2.9% over the year to reach £18.4 billion.
The recession was not the only factor causing headaches for the industry over the past five years, during which the industry contracted an annualised 1.8%. According to IBISWorld industry analyst Angela Kidson, “fragmentation of consumers' media viewing habits stretched the traditional agency model, with clients diverting increasing amounts of their marketing budgets away from traditional media”. A shift from TV and print media towards digital content occurred, as consumers spent more time online.
It also became increasingly difficult for advertising to reach a broad audience in one fell swoop, as consumers could access the same content via multiple mediums and use technology to avoid advertisements. This saw some spending leak out of the industry and flow instead to public relations firms. The rise of internet search-based marketing was another challenge, with clients able to bypass advertising agencies and deal directly with online providers such as Google and Yahoo. However, internet advertising has also opened up a potential new market for the industry.
Over the next five years, a slowly recovering economy should raise advertising budgets from the low levels of the recession. There is some optimism in the industry as a number of the big advertising companies have posted better than expected results for the second quarter of 2012. However, spending on advertising is expected to remain tight for some time yet, as high debt levels, lengthening recession and the eurozone crisis weigh on both business and consumer confidence. Media fragmentation will cause more marketing expenditure to go to PR and online marketing, and less to traditional mass media advertising. Kidson adds, “firms that adapt to this new advertising world will perform best over the period”. Industry revenue is forecast to rise over the five years through 2017-18.
The level of market share concentration in the Advertising Agencies industry is medium but it has increased substantially over the past two decades via many mergers and acquisitions across the entire global marketing sector. The three largest players are global marketing and communications giants that have emerged out of this period of consolidation: WPP, Publicis and Omnicom. These three are now estimated to account for over 50% of total industry revenue.
For more information on the Advertising Agencies industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
Advertising agencies provide advice, creative services and production and placement of advertising material across a range of media including TV, print, radio and the internet. They also advertise at the point of sale, on billboards and using direct mail promotional campaigns. The industry excludes public relations agencies and media sales representation.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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