Global Forces and the Advertising Industry

Discuss about the Global forces and the advertising industry.  

Introduction

This discussion is mainly concerned with the global advertising industry which currently is facing a lot of strategic dilemmas due to the high increase in the rate of spending by individuals and consumers in the third world countries. Other causes of this kind of dilemma when it comes to strategies are the high rate of technological advancement. The fast-changing patterns in the global consumer markets have greatly affected the advertising industry dynamics and its structure too.

Background of the advertising industry

In the traditional days, the main aim of the all the advertising agencies was to reach their set or aimed audience on behalf of their clients as a way of communicating with them concerning the goods or the services that they offer. The result of this ended up baring the outcome whereby the targeted audience made purchases of such goods or services. In both traditional and modern advertising industry, advertising is carried out through media channels.

In the advertising industry, branding is considered very crucial since brands enable consumer make a difference between products and services.  The advertising agencies, therefore, chip into position these brands in a way that is acceptable or pleasing to the target customer who in this case are the brand users and consumers. Example of this brands includes Coca-Cola brand which is a brand for the Coca-Cola drinks company, Nike and the Mercedes Benz brand in the motor vehicle company. Advertising is not only in the private sector business but it’s also practiced by the public sector and the government. The government makes use of advertising in fields such as healthcare and education advertising to reach its people and also influence individual behavior too. Moreover, the advertising industry has also been of great significance to the religious and non-profit making organization since it helps them raise lots of funds and awareness. (Ha 2008)

Procedure in the adverting industry

 Mainly this is how advertising is carried out. The adverts are mainly placed in selected media (TVs, press, radio or the internet). This is usually done by the advertising agencies or agents who are employed by the client brand companies. They agents utilize their acquired set of skills and knowledge together with creativity and experience to make these pleasing and persuasive adverts and other marketing aids. They, therefore, expose them to the consumers via the above-stated media. When it comes to the issue of agencies payment and compensation plan, they are paid according to the time they spend on this advertisement together with additional commission due to the goods and services bought due to their efforts. However, off late big companies are shifting from this compensation plan to a better model of compensation that is based on several metrics that is growing in sales and market share. 

Growth in the advertising industry

Over the past two decades the advertising industry has tremendously grown and changed and therefore the amount of money that was being spent on such activities has in greater rate increased too. According to the experts, it was predicted that by 2015, globally the advertising expenditure would even exceed 560 billion. The advertising industry is growing and practicing new trends whereby it’s shifting its focus as emerging market drive revenues from geographic sectors that would have been significant 5 to 10years ago. These include BRIC countries, Middle East and North Africa. The outcome of such shift was that agents specialized in areas like Islamic marketing that was characterized by a very strong ethical responsibility to customers.

According to this trend and future predictions, there is an indication that a strong emergence of consumer brands in some areas globally whereby sophisticated consumers brands awareness are currently a minority. Some of the companies that are greatly growing due to the advertising company include the car manufacturing companies. They are nicknamed as the global advertisers. On the other hand, Procter and gamble and nestle are ranked as the highest spender on advertising when it comes to fast moving consumer goods. (Zenithoptimedia 2012)

Competition In the adverting Industry

The advertising industry is turning out to be one of a competitive industry. Everyone is in business and they are trying as much as possible to reach out their target audience maximally. Agencies are of all sizes, ranging from one or two person boutique operations to medium sized agents, large independents agencies, multinational agencies and multi conglomerates that employ over 140000 people. The increase in concentration through acquisition in the industry has led to the creation of multi-agency conglomerates. Most of these conglomerates have their headquarters in London, New York, and Paris. Otherwise, all these operate globally and are not just limited to these locations.

The large multi-agency conglomerates compete on the basis of the quality of their creative teams and the ability to buy cater for the media cost effectively the market knowledge. On the other hand, the midsized and smaller boutique advertising agencies compete by delivering value-added services via in-depth knowledge of specific market sectors specialized services. One main and common thing is that the most of the small specialist agencies are rooted or founded by former employees of the large agencies to cater for new sectors or markets or even to provide more services to already existing clients.

When it comes to search engines like the Google, Microsoft Bing and Yahoo Company, competition has been taking place too.  These companies compete for their potential consumers at greater depths. They exploit their ability to interact with and gain the maximum information about billions of their able, willing and potential consumers of branded commodities. Introduction of the internet and online search advertising, there was an establishment of a new breed of interactive digital media agencies that established themselves in the digital space before the traditional advertising agencies could embrace the internet. A good example is the AKQA. The distinctive service that these agencies offer different from the rest is that offer services like web design, search engine marketing, and e-commerce. They use social media such as Facebook, MySpace, and YouTube.

The competition and the disruptive change in the advertising industry have been caused by internet, TVs, smartphones, tablets, and laptops. Many believe that this change is inevitable and is expected to have a more impact on the industry in future. The main question that remains unanswered to the minds of many people is if creativity will be more or less important in future when it comes to advertising services and global reach. 

References

Evans, DS 2009, ' The online advertising industry: Economics, evolution, and privacy', Journal of Economic Perspectives, vol 23(3), pp. 37-60.

Ha, L 2008, 'Online advertising research in advertising journals', Journal of Current Issues & Research in Advertising, pp. 31-48.

Yung, C 2014, 'The degree of competition in the advertising industry.', Review of Industrial Organization, p. 41.

telamon, G 2003, 'Methods for valuing and placing advertising. ', U.S. Patent Application, vol 10/345, p. 026.

ZenithOptimedia 2012, advertising age, Omnicom group.