|
|
 |
|
Viewing report
|
|
|
|
Advertising Agencies Market Assessment
Key Note Publications Ltd, Jan 2000
Advertising is on the brink of the biggest change in the media scene for over 50 years. As the Internet sector matures, and as the long-expected proliferation of 'narrowcast' channels through digital, cable and satellite providers becomes a reality, what price the mass market, and what price mass market advertising?
Advertising agencies have developed over the last century to service certain types of clients with certain types of advertising: primarily large consumer goods companies, through press advertising and, latterly, television.
It can no longer be assumed that these clients and these kinds of advertising will be the mainstay of advertising tomorrow, nor that the current agency organisation will be best placed to service new needs and new clients. However, it is important, in order to understand what the realistic rate of change in the marketplace will be, neither to be complacent nor to accept all the hype about new media.
The total value of UK advertising on the Internet is currently rather less than the value of cinema advertising, and will remain so according to industry experts for the next three years or more. Advertising by dot.coms, and other new media providers such as telecoms companies, however, is the next growth sector. Ironically, the best way for a dot.com to gain web site hits is to tell its potential customers where to find it through television or in print ñ or even through posters.
Over-optimistic estimates of where dot.coms are to get their revenue have also shifted rapidly from selling advertising space (which, in the way the Internet is currently configured, is not much more appealing to the major advertisers than relying on banner advertising in newspapers) towards taking a commission on sales generated in total ñ in which advertising will play a role, as will web site creation and electronic commerce management.
Successful agency groups will adapt, although it is important to understand the implications of the fact that there are no agreed financial parameters in new media opportunities, and there are major downside risks in jumping on the bandwagon too soon ñ in a service industry 'there is no currency in being ahead of your client'.
However, the gradual but perceptible shift away from setting out an advertising message so that your market may see it, and towards targeting materials and messages directly to a pre-selected group which has been identified through sophisticated buyer analysis, is already evident.
As clients increase their pressure on agencies to move with the times - and increasingly, to be paid by results - the agencies best placed to have a long term future are those which can offer a combination of 'creativity'.
They will need creativity of advertising imagery ñ as perceived, it must be noted, by their clients, not necessarily by artistic, social or aesthetic judgements.
But they will also need a truly creative approach to finding and addressing the consumer, since the old certainties of the 20 million viewer ITV audiences and the 5 million circulation national newspaper are long gone.
Market Sectors
The main distinction in the advertising industry is between creative/strategic agencies- often described as full service agencies - and media buyers which operate purely as agents for buying media time or space. Large clients demand not only creative input (although this is normally ranked of the highest importance) but also marketing planning, research, and co-ordination, integration and planning of campaigns and marketing strategies. Only large agencies can offer this depth of service. The biggest agencies are those which service the biggest clients, and all are 'full service'. Specialisations other than media buying do not make it into the top agency ranking by size.
Value and Growth
The advertising market has been growing remarkably strongly as demand continues to outstrip supply. New methods of reaching customers are under active development, especially in non-traditional means such as direct mail, or through 'narrowcasting' to specific audience sectors, which include the use of previously minor media such as cinema and radio.
The value of the market for all advertising in 1998 was £14.3bn, and growth in value has been 41% since 1990. Media prices continue to rise in real terms across all types, and the number of advertisers wishing to enter the market is constantly rising as new sectors mature into industries that need to talk directly to their consumers. In the 1970s, this was banks and financial institutions in the 1980s, the telecoms companies and utilities came in and in the 1990s, the computer companies and, latterly, Internet companies have become significant spenders.
Largest Sectors
The major advertising market by value is television, and the major advertisers are those that use television heavily, notably the international car, consumable, and telecoms companies. Even with the shift to direct marketing, this will remain the most valuable sector for the foreseeable future.
Significant Players
As one of the largest free markets for advertising in the world - other European markets such as France and Germany have much less opportunity for advertising, especially television advertising ñ the UK is a major market for all international agency groups, and also the base of several international media groups, notably WPP, Aegis and Chime Communications. As large companies espouse global operation, they also seek global suppliers, and this will continue to fuel the trend for big agencies to buy out small ones.
Regulatory Factors
Although advertising itself is not heavily regulated as an industry ñ anyone can set up as an agency, and membership of a trade body is optional ñ it operates within a set of voluntary codes and regulations which are extensive. The major regulations apply to where products are allowed to be advertised at all, the restrictions for sensitive subjects, and a range of qualitative judgements related to taste, social acceptability, and honesty as well as legality ('legal, decent, honest and truthful' in the words of the CAP code).
However, other European Union (EU) countries, such as France, have historically taken a much more legalistic approach and the pressure is growing to put legislation in place to ban certain types of advertising (tobacco in 2000/2001, but possibly restricting or banning other sectors such as alcohol and toys).
Consumer Attitudes
The results from the NOP survey made for this report could be seen as disheartening against this background. Although UK advertising is widely regarded as creative and entertaining, there is a surprisingly high level of disquiet about some topics, revealed by the number of people who think 'something should be done' to restrict several forms of advertising.
Advertising exists by the permission of consumers, who accept it taking space in their newspapers and magazines and appearing within their TV programmes, while it is useful, relevant and/or entertaining. But this relationship will always be precarious, a fact which advertisers and their agencies forget at their peril.
Customers who bought this item also bought
Advertising Agencies Market Assessment 2007
Mobile Media Advertising Opportunities: The Market for Advertising
Global Digital Media - Advertising and Marketing
Global Digital Media - Advertising and Marketing
Mobile Advertising
Advertising Agencies Market Assessment 2003
Advertising & Technology Collide: Semiconductor Companies, Technology Providers, Media Companies and Ad Agencies Partner to Move from Disruption to Monetization
Advertising in the DVR Age - The Strategic Response of Advertising Executives to DVR Viewership
Analyzing the Australian Media & Advertising Industry
Advertising Agencies in the US
Internet Advertising in China: New Agency Model Brings New Growth
Outdoor Advertising: A New Look
|
|
|
|
