Integrated advertising service prices are projected to continue rising due to further increases in total advertising expenditure, corporate profit and the number of businesses
Los Angeles, CA (PRWEB) July 09, 2014
The buyer power score for integrated advertising services is 3.9 out of 5, indicating that buyers have a medium level of power in the market. “High product specialization and high switching costs undercut buyer power, while low market share concentration and a high availability of substitutes counter these harmful effects,” says IBISWorld business research analyst Kayley Freshman-Caffrey.
High product specialization characterizes the market for integrated advertising services because such services are very labor-intensive. The knowledge and experience of an agency's staff influence their approach to advertising campaigns, which means that the results that can be attained through a campaign vary by supplier. If a buyer is partial to a specific agency's methods, they will have little choice but to hire that agency so they can obtain the exact services they desire. “Consequently, high product specialization harms buyer power by limiting the available selection of suppliers,” says Freshman-Caffrey.
In addition, high switching costs inhibit buyer power. When a buyer switches to a new agency, they can face an array of penalties such as learning costs and performance risk. These potential expenses complicate the switching process, making it hard for buyers to acquire a new supplier if their current one is performing poorly.
These problems are eased by the market's low concentration level. Low market share concentration signifies that no particular supplier controls the market, empowering buyers to procure their integrated advertising services from a range of suppliers. Additionally, this characteristic cultivates competition among suppliers, further benefiting buyers by driving prices down.
A high availability of substitutes also aids buyers. Instead of purchasing integrated advertising services from an outside agency, buyers can manage the process in-house or purchase advertising services on an individual basis. The presence of these alternatives puts downward pressure on the price of integrated advertising services. Overall, the positive impacts of a high availability of substitutes and low market share concentration negate the harmful effects of high product specialization and high switching costs to give buyers a moderate amount of negotiating power. Major vendors include Cramer-Krasselt, Dentsu Inc., Havas SA and Interpublic Group of Companies. For more information, visit IBISWorld’s Integrated Advertising Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of integrated advertising services. Advertising agencies included in this report are one-stop shops for companies looking to develop and implement advertising campaigns in a variety of media. Services provided by these suppliers range from basic conceptualization and design to media placement. This report does not cover advertising services purchased individually.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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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.