Service prices are expected to rise steadily from 2011 to 2014 in response to demand growth resulting from increases in corporate profit and total advertising expenditure.
Los Angeles, CA (PRWEB) July 27, 2014
The market for media placement and fulfillment services has a buyer power score of 3.1 out of 5, indicating a moderate level of buyer power. According to IBISWorld analyst Kayley Freshman-Caffrey, high vendor specialization, high switching costs for buyers that have worked with a particular supplier in the past and high market share concentration hamper buyer power. On the other hand, a favorable pricing environment tempers the negative effects of these factors for buyers.
Because media placement and fulfillment services are labor intensive, and solutions are customized to each buyer, suppliers are highly specialized. As a result, buyers may be compelled to work with a specific supplier if that supplier's competencies are most suited to the buyer's needs. This factor reduces the buyer's ability to leverage the availability of other suppliers during negotiations, hurting buyer power. Additionally, it is costly for buyers to switch between suppliers due to the relationship-based nature of the service, continues Freshman-Caffrey. Some suppliers have monopolies on certain media spots, further impeding the switching process by preventing buyers from retaining particular media spots when considering another supplier.
High market share concentration further limits buyers' choice of supplier. The top four firms exert considerable influence over the market, and in many cases buyers may find that the only available agencies are subsidiaries of these market giants. Examples of market firms include Dentsu Inc., Empower MediaMarketing and Havas SA. This restriction on available suppliers tempers market competition, although competition is still high because these advertising conglomerates must compete with each other business.
Buyer power is strengthened by the pricing environment for media placement and fulfillment services. Price volatility for these services is low, allowing buyers to predict prices and budget for expenses. Because price volatility is low, buyers do not need to enter a binding contract to lock in prices. Prices are expected to remain stable in the three years to 2017, to the benefit of buyers. Overall, buyers are limited in their selection of available suppliers, but face favorable pricing conditions. Consequently, buyer power in the market is moderate. For more information, visit IBISWorld’s Media Placement & Fulfillment Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of media placement and fulfillment services. These providers, also known as media buying agencies, research, negotiate and place orders for advertising time and space on behalf of a client. These services are provided primarily by media and advertising agencies. This report does not cover other agency services, such as advertising creation and production.
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
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.