Rapid changes to digital and new media are leading to shifts in advertising agency structure.
Melbourne, Australia (PRWEB) August 28, 2013
The Advertising Agencies industry is sensitive to changes in economic conditions, which affect the level of advertising and promotional spending by clients. In the five years through 2013-14, the relatively high cost of main media advertising and fragmentation of consumer media viewing habits have prompted clients to include a greater proportion of below-the-line communication in marketing campaigns, negatively affecting the industry. Media fragmentation has been driven by the emergence of digital and new media, including web-enabled smartphones and tablets; faster and cheaper internet connections; iPods and podcasts; pay TV; new free-to-air TV channels; and social networking websites, such as Twitter, Facebook and YouTube. IBISWorld industry analyst Alen Allday states “this is providing a challenging and fragmented media environment for advertising agencies to operate in and causing many agencies 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, such as public relations agencies, market research firms, digital advertising agencies and web developers.
IBISWorld forecasts the industry to generate revenue of $1.3 billion in 2013-14, which is an increase of 1.9% from the previous year. This will come on the back of higher advertising demand as the economy continues to improve from 2010-11. During previous years, clients cut advertising budgets amid weaker consumer spending, particularly on highly discretionary and big-ticket items. Over the five years through 2013-14, industry revenue is expected to increase by an annualised 0.8% as business and consumer confidence continues to increase. In the five years through 2018-19, the industry will continue to reinvent its services to be more in line with increasing media fragmentation. According to Allday, “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.”
The Advertising Agencies industry has a low level of market share concentration. Consolidation of marketing communications businesses has also occurred on a global scale, as increasing globalisation of clients necessitates the provision of services on a global basis. Further consolidation is expected over the next five years, as the major players acquire emerging digital agencies. Over time, the mid-size independent agency is expected to become rarer, with most firms operating at the extremes of the spectrum. There will be large firms operating under the holding company model, and small firms serving niche and emerging markets. The industry’s major players include STW Communications, Dentsu Australia, Clemenger and Enero Group. For more information, visit IBISWorld’s Advertising Agencies report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies operating in the industry provide advertising services, such as the creation of advertising campaigns and materials, to clients.
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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