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 due to the recession and the fragmentation of consumers' media viewing habits stretching the traditional agency model, with clients diverting increasing amounts of their marketing budgets away from TV and print media towards digital content, as consumers spent more time online. Industry revenue is forecast to rise at a modest rate over the five years through 2017-18 in line with a slowly recovering economy but spending on advertising is expected to remain tight for some time yet as high debt levels, the continuing recession and the eurozone crisis weigh on both business and consumer confidence.

IBISWorld industry market research
Many traditional operators are developing digital platforms

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 limiting it to weak growth during 2010-11 and 2011-12. The industry has enjoyed a better year in 2012-13, with companies increasing advertising spending to promote through the London Olympic Games, the Queen's Diamond Jubilee and the European Football Championships. Industry revenue is estimated to grow 2.7% over the year, to reach £18.4 billion.
The recession has not been solely responsible for the 1.9% compound annual contraction rate over the past five years. According to IBISWorld industry analyst Michael Grosz, “fragmentation of consumers' media viewing habits stretched the traditional agency model, with clients diverting increasing amounts of their marketing budgets away from TV and print media towards digital content, as consumers spent more time online”.
It has become increasingly difficult for advertisers to reach a broad audience, as consumers can access the same content via multiple media and use technology to avoid advertisements. This has seen some spending leak out of the industry and flow instead to public relations firms. The rise of internet search-based marketing presented another challenge, as it allowed clients 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 those industry operators that choose to specialise in the field.
Over the next five years, a slowly recovering economy is expected to raise advertising budgets from the low levels of the recession. There is some optimism in the industry as several of the big advertising companies posted better-than-expected results for the first three quarters of 2012. However, spending on advertising is expected to remain tight for some time yet as high debt levels, the continuing recession and the eurozone crisis weigh on both business and consumer confidence. Grosz adds, “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 at a modest rate over the five years through 2017-18.
The level of market share concentration in the Advertising Agencies industry has increased substantially over the past two decades because there have been many mergers and acquisitions across the global marketing sector. The three largest players are global marketing and communications giants that have emerged from 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, media sales representation and market research.

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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Gavin Smith
IBISWorld
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