Analysis of US Advertising Industry

Analysis of US Advertising IndustryHeadlinesThe US advertizing industry records a 7% growth in 2013 which is fuelled by growing level of business formation and increasing penetration of mobile devices among Americans.The main category contributing to industrys growth is digital publicize explanation for 27% of the foodstuff.2013 is the graduation stratum when Americans spend more m using their smartphones than in front of TV, leading publicisers to trade from focusing on mass marketing to one-on-one ad campaigns on mobile devices.The main consumers of the industry are retail enterprises, financial service providers and labour vehicles industry increasingly investing in mobile advertising campaigns and social networking.imputable to the growing smartphones penetration, spending on mobile advertising is expected to devolve screen background advertising over the forecast period and condition industrys turnover to grow by CAGR of 7% reaching US$188.688 one thousand thousand in 2019.TrendsWith the market size of US$189,136 million the US was the largest advertising market in the world in 2013. Japans expenditure on advertising at the uniform year was more than three-times smaller, while China stood in the third place. In Europe the biggest markets were Germany and the UK, however, they were left way behind the US with only a tenth of the US expenditure on advertising.1Even after events of significant importance such as Olympics and presidential elections in 2012, advertising industry in the US hasnt slowed down and experienced market growth of 7% in 2013. Fast recovery after profitable year was fuelled by constant formation of business units, tight competition in the market and growing market penetration for mobile devices.2B2B purchases accounted for the complete majority of market size, as households were left with less than 1% of the market. The major B2B buyers in 2013 were retail enterprises accounting for a fifth of all business purchases. Retai l industry was the largest spendthrift in digital advertising. Retailers are increasingly depending on mobile devices for their advertising. The biggest investments were made into direct-response campaigns and into increasing brand awareness among consumers. 3 The major spenders in advertising were Macys, Wal-Mart Stores, Target Corp, and Sears.4 other biggest B2B buyers were industries of monetary intermediation (American Express Co., Chase, Bank of America), and sale, maintenance and repair of motor vehicles and retail sale of elevator carmotive fuel, accounting for 10% and 7% of the total B2B purchases respectively. Biggest auto marketers were General Motors, Ford Motor, and Toyota Motor.5 However, the most rapidly growing shares of B2B purchases belonged to computer and related services and business and management consultancies.The main category of advertising industry is digital advertising accounting for 27% of the market. With 7% growth over 2013 it was the fastest growing c ategory in the industry. With growing penetration of mobile technologies digital advertising is slowly shifting from desktop advertising to reaching customers through tablets and smartphones. 6 In 2013 almost half of the adults in the US had smartphones and a third had tablets.7 At the same year for the first time Americans spent more time a day using digital media than watching TV. In addition, they spent more time per day surfing mobile internet than in front of PC8.Television was the second biggest advertising environment in the US in 2013 with 23% of the market. though television holds a significant share of the market, it is slowly dropping due to the growing popularity of digital videos in online advertising. 9Outdoor advertising having 21% of the industry leaves press and intercommunicate owning 18% and 12% of the market respectively. Print advertising revenues has been dropping by CAGR of 10% since 2008, while the share of online advertising in digital versions of newspape rs has been growing. 10In 2013 distant advertising services provided for US clients abroad cash in ones chipsed the ones US companies sold for foreigners by ten times. Most popular services provided for US companies were digital advertising accounting for 24% of all services provided by foreigners and TV and Press advertising accounting for 20% each, while foreigners mostly bought internet, outdoor, and radio advertising services.Industrys turnover grew by 7% in 2013 and accounted for US$125.541. The total increase was fuelled by the fastest growing internet and outdoor advertising. Outdoor advertising grew in general due to the constant expansion of digital outdoor advertising through billboards. 11Advertising costs are divided mainly into B2B costs accounting for 51% of total costs and labour costs accounting for 43%. The largest part of B2B costs are from other business services, real estate activities and advertising. Though bit of employees in the industry hasnt reached the pre-recession level, it grew by less than 4%, while average annual wages increased by less than 1% over 2013.Competitive LandscapeOver the review period small enterprises accounted for 96% of companies in advertising industry. However, in 2013 large and medium companies experienced the highest growth of over 4%. They accounted for less than 1% of the industry and acquired 35% of the industrys turnover causing the market to be concentrated. At the same time micro and small companies accounted for 26% and 27% of the industrys turnover.As of 2010 the major advertising enterprises according to their share of total services provided are Omnicom assort Inc (6%), Interpublic Group of Cos Inc (3%), WPP Group USA Inc (2%), News America Marketing In-Store Services LLC and The Clear Channel Outdoor Holdings Inc with 1% each.In 2013 Omnicom Group has announced slightly the target merger with the worlds leading communications enterprise Publicis Groupe. This merger was expected to join two f orces of advertising, marketing, and communication into one worlds leading advertising group. Its worth was expected to reach over US$35billion and exceed that of WPP twice.12 However, due to the prolonged process that has started affecting companies relations with its clients and staff, the merger has been modify in 2014.13In order to im put up its digital services Interpublic Group of Cos acquired digital shop Profero in 2013. Com salt awaying its one of businesses Lowe and Partner with Profero, IPG is expecting to spread head its operations in developing markets. 14 Other, significant IPGs acquisition strengthening its digital side of the business in 2013 was Interactive Avenues a digital theatrical in India.WWP made the record number of over 50 acquisitions in 2013. The company was also a leader in acquisitions in social media sector. Due to the growing consumers engagement in social networks, social media networking agencies are expected to be a valid addition to big advert ising enterprises as they prove to be more effective than public relation companies.15Hand in hand with increasing levels of digital advertising, in 2013 News America Marketing has introduced its in-store attached field communication campaigns in retail stores. These campaigns provide customised mobile coupons being sent into customers mobile devices whenever they are in the store and near a special product. This has helped to improve the usage of coupons and increase the sales of particular products. Moreover, brand familiarity is being increased through conglomerate value added services such as online recipes, various apps, and games connected with particular products. 16In 2013 The Clear Channel Outdoor Holdings Inc signed the five-year contracts with San Francisco, Chicago and capital of Colorados airports to install hundreds of digital screens in airports enabling companies to advertise their products and airports to present important information about flights. Digital scree ns will enable customers to receive the information to their mobile devices through the touch of the digital screens displayed in airports. 17In Denvers airport two digital video towers are planned to be installed to enhance customers experience. 18 In 2014 the company is planning on launching first interactive global mobile platform enabling costumers to reach all the content from the advertisers in one place through their smartphones.19ProspectsOver the period of 2014-2019 the US advertising industry is expected to grow by CAGR of 7% and reach US$188.688 million. It will be mainly fuelled by increasing popularity of digital advertising which is set to produce more sophistication to advertisements, making them target based and unique for different costumer.20With almost 90%21 of the US population using internet and half of the population22 having access to mobile internet in 2014, internet and outdoor advertising will experience the highest CAGR of 7% over the review period.Though desktop advertising was dominating category in digital marketing in 2013, however, mobile advertising and applications, experiencing a surge in popularity, are expected to exceed desktop advertising over the forecast period. Technologies enabling businesses to observe their customers across all screens will lead to enterprises eventually focusing on multi-screening advertising. 23The number of acquisitions performed by top advertising enterprises shows that companies will be concentrating on providing holistic solutions for their clients encompassing product and technology innovations, digital and social networking services. 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