Agencies will grapple with the shift in client preferences toward internet-based content
New York, NY (PRWEB) January 21, 2015
During the past five years, the Advertising Agencies industry fared well as the proliferation of digital media has incited many businesses to invest in advertisements to reach their target audience. According to IBISWorld Analyst Sarah Turk, “Although total advertising expenditure contracted by 1.3% in 2013, which can be partly attributable to the decline in total television advertising expenditures, the changing media landscape has still provided a boon for the industry.” For example, many businesses wanted to implement advertisements across more mediums, including mobile devices and tablets, which has spurred many large advertising agencies' acquisitions of niche players that specialize in digital, social and mobile media.
Additionally, as audience viewership became increasingly fragmented, with many individuals accessing media via a plethora of devices, many businesses have divested their advertising budget from traditional media, like print and television. Instead, many advertising agencies have experienced robust demand for smartphone and tablet advertising. In turn, this trend has incited many industry operators to focus on how screen resolutions and other features integrate with advertisements specifically designed for mobile phones. “Moreover, as consumer spending experienced an upward spike, many businesses invested in advertising to develop strong brand awareness and bolster product sales volumes,” says Turk. During the five years to 2015, industry revenue is expected to grow at an annualized rate of 1.7% to $3.4 billion, including a 0.4% rise in 2015 alone. Profit is also anticipated to increase from 2010 to 2015, due to many agencies changing their pricing models to attract clients. For example, some operators have adopted models that charge effective costs per thousand impressions (CPMs) for digital display advertisements that reached targeted demographics.
While many advertising agencies have adopted CPM pricing models, many industry operators will adopt advertisement prices that reflect how long consumers engage with the media that is digitally viewed next to advertising content, or interaction rates with display advertisements. Overall, this trend will spur businesses' demand for advertising, due to downstream markets' desire to reach engaged consumers. During the five years to 2020, industry revenue is forecast to grow.
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IBISWorld industry Report Key Topics
Advertising agencies create advertising campaigns and place such advertising in periodicals and newspapers, on radio and television, or with other media. Through in-house capabilities or subcontracting, ad agencies provide a full range of services, including advice, creative services, account management, media planning and buying, and production of advertising material.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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