Have you thought about buying a business in the marketing and advertising industry?
There are over 37,000 companies in the US alone that service this sector, with a combined annual revenue of approximately $94 billion. The industry is highly competitive. An ever-changing technology and regulatory landscape characterize it. Additionally, it relies heavily on creativity and the fostering of strong client relationships. There are, however, many opportunities with current evolving trends and niche marketing.
The majority of demand for marketing and advertising services comes from businesses that sell consumer products, entertainment, financial services, technology, and telecommunications. Large or small, those marketing and advertising agencies that are successful do three things very well:
- They generate creative marketing/advertising messages and campaigns
- They creatively deliver marketing/advertising messages
- They maintain good client relationships
Notably, in the marketing and advertising industry, reputation is crucial for both retaining existing clients and acquiring new ones. For this reason, including solid monitoring of ad and campaign success is an essential reporting mechanism for any marketing or advertising service business.
According to the Interactive Advertising Bureau, more than 60% of live television viewers use a connected device for at least a few minutes while watching live TV. Approximately 45% of multitasking TV viewers use their smartphones while watching TV. Multiscreen TV viewing could create new opportunities for advertising agencies. They can design ad campaigns that engage viewers and initiate online conversations about products and brands.
In 2012, global spending on advertising worldwide, a key indicator of demand for advertising and marketing firms, increased, with television accounting for the largest share of spending. Internet advertising showed the most improvement, growing more than 12%.
Smaller marketing and advertising companies can primarily compete by focusing on a niche. They stay ahead of the latest marketing trends. Increasingly, with the evolving and varied multimedia landscape, agencies with digital media capabilities could have an advantage over traditional firms.
Some key industry highlights to consider when investing in a marketing or advertising business are as follows.
Products, operations and technology
- Primary services are advertising for print, broadcast, and online media (25%), direct mail advertising (15%), and public relations (10%)
- Other services include display advertising, media buying (reselling advertising time or space), and media representation (selling advertising time or space on behalf of media outlet owners)
- Generally, advertisers must adhere to the standards set by the FTC, FCC, voluntary industry groups, and individual media companies.
- Gaming ads are on the rise significantly, with revenue expected to grow by more than 80% over the next three years.
- Marketing and advertising spending for platforms such as networks and portals is expected to decline in the coming years.
- Digital and social media spending is expected to increase, with a focus on brand-focused advertising.
- Optimization and search marketing that targets mobile Internet users is becoming an increasingly important segment, with many advertisers shifting their budgets from traditional media, such as newspapers, to search engines.
Human resources are critical for marketing and advertising success
- The significant resources of marketing and advertising services are staff talent and expertise.
- Salaries are the most significant expense, typically accounting for approximately 30% of revenue.
- Recruiting and retaining staff is a significant concern for individual companies, with turnover rates as high as 50%.
- Employment contracts are rare, except for senior management.
- Average hourly industry wages are significantly higher than the national average.
Marketing and advertising current business trends
- Consolidation – Large advertising agencies are being built by acquisitions to provide a complete range of services to customers
- In-store Ads – In-store TV marketing (running commercials and infomercials on TVs in retail stores). Shelf-talkers and end-aisle displays are also proving successful in attracting consumer attention.
- Hispanic Markets – With the Hispanic population of the US expected to grow from 16% to 30% by 2050, more advertisers are appealing to this increasingly affluent demographic.
- Search Engine Marketing – Search engine marketing has gained traction as a positive venue for advertisers and marketers, with significant technology advancements by major providers such as Google proving it a viable option.
- Targeted Marketing – With broadcasting to national audiences losing traction to the advent of specialized channels, ads targeting specific groups of potential customers are on the rise (this also has enabled smaller companies to advertise nationally)
Marketing and advertising industry opportunities
- Global Market – Advertising companies have expanded to serve customers in foreign, as well as US, markets. Improving economic conditions in other parts of the world have also made it possible for agencies to expand their services to the global arena.
- Fee revenues – Consultancy, PR, and brand management activities continue to grow faster than traditional media advertising, as clients seek more added value in marketing. Advertisers are seeking new ways to sell products, including market research, direct marketing, PR, package design, and brand image consulting. These are more likely to be paid through fees, rather than traditional commissions on billings, thereby providing a more stable revenue source.
- Mobile Marketing – To expand the reach of advertising campaigns, many agencies are investing in technology related to mobile marketing. Mobile marketing involves sending ads to users’ cell phones and PDAs.
- Social Networking Commercialization – More marketers are using social media to support traditional advertising. Social media sites, such as Twitter and Facebook, enable brands to engage with consumers, increase product awareness, and establish new sales channels.
For more immediate assistance, you are welcome to contact Andrew Rogerson or call me Toll-Free (844) 414-9700 or email me at support@rogersonbusinessservices.com.