Advertising Agencies in the UK Industry Market Research Report Now Updated by IBISWorld

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The Advertising Agencies industry has endured a difficult five years where industry revenue contracted and annualised 1.8%. Since the downturn began in 2008 businesses have cut back sharply on advertising expenses. The industry will enjoy a better year in 2012-13 with the London Olympic and Paralympic Games providing 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. 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. 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. 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. For these reasons, industry research firm IBISWorld has updated its report on the Advertising Agencies industry.

IBISWorld Market Research

IBISWorld Market Research

The rise of digital content has changed the traditional advertising model

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.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalisation & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on many UK industries. 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 London, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.co.uk or call (020) 3008 6568.

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