Prices are forecast to continue rising in the three years to 2013 due to further increases in demand; however, the rate of change will be lower because the primary price drivers for the service will be subject to reduced levels of growth
Los Angeles, CA (PRWEB) January 16, 2014
Digital advertising agency services have a buyer power score of 2.9 out of 5. This score represents a medium level of power for buyers and reflects high product specialization, recent price growth, high availability of substitutes and low vendor risk. “Price growth from 2010 to 2013 was high, driven primarily by demand growth stemming from increases in internet traffic volume, corporate profit and total advertising expenditure,” says IBISWorld procurement analyst Kayley Freshman-Caffrey. “Additionally, buyer power was reduced by high product specialization, which limits the choices of suppliers from whom buyers can source their digital advertising agency services.” Prices are expected to rise further from 2013 to 2016 as a result of continued increases in internet traffic volume, corporate profit and total advertising expenditure.
On the other hand, buyer power is helped by the availability of substitutes and low vendor risk. “A buyer who is unsatisfied with the digital advertising agency services offered by suppliers can choose to buy their digital advertising services individually or to manage them in-house,” added Freshman-Caffrey. The most popular digital advertising firms are large full-service agencies that act as subsidiaries of the market’s top suppliers. For example, one of the top agencies, Razorfish, is a subsidiary of Publicis Groupe SA. Other big names in the market include Wunderman, DraftFCB and Rapp, which are subsidiaries of WPP PLC, Interpublic Group and Omnicom respectively. Buyers can also choose to pursue other types of advertising, such as print advertising or broadcast advertising.
Another boon for buyer power is the low level of overall risk to which vendors and their supply chains are subjected, due to steady downstream demand. Low risk is beneficial for buyers because it reduces the probability that they will face service disruptions due to supplier bankruptcy. The boost that low vendor risk and the availability of substitutes gives buyer power counteracts the negative effects of high product specialization and recent price growth, giving buyers a moderate level of power overall. For more information, visit IBISWorld’s Digital Advertising Agency Services procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of digital advertising agency services. Digital advertising refers to promotional messages delivered to consumers through online media outlets. Services provided by digital advertising agencies include search engine optimization, mobile advertising, digital display advertising and social media management. This report does not cover the purchase of these services individually; instead, it focuses on agencies that provide all of these services combined in a coordinated digital advertising campaign.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.