Changing Environment of the Advertising World

The uncertainty of the future remains a cause of concern for all agencies, big, medium or small. Developments in the last five to 10 years have changed (or are changing) the rules of the industry dramatically.

Clients are increasingly looking for a one-stop communication solution, including direct marketing, event management and public relations.

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  • Emergence of Internet and other new media such as ATM, WAP devices and interactive TV are both exciting and threatening — exciting for fast and first movers in building capabilities and early advantages and threatening for laggards and those basking in past glory. 
  •  Interactive divisions of many agencies are now offering online consulting, web branding, web designing and offline advertising strategies. 
  • Concentration in the industry is clearly visible, with the top 15 agencies accounting for 80 per cent of the billing and the balance 20 per cent being shared by a 100-odd agencies. 
  • Opportunities for growth appear substantial — total billing is expected to grow. Some of the opportunity areas will be healthcare, insurance, financial services, dot.com, Internet and special communications. 
  • Online advertising will be on the rise. However, it will change the rules of advertising and will help advertisers to shift focus from broadcasting to narrow casting. 
  • With media planning and media buying becoming highly specialized , there is a possibility that these two activities will move out of the range of services provided by a traditional advertising agency, implying splitting of the commission presently being earned.
  • Clients will be looking for more comprehensive and also better services with greater speed in delivery and applications across geographically dispersed markets. They will also be increasingly demanding a different remuneration structure (either fixed fee-based or performance-linked) to ensure accountability. 
  • Media planning has become far more complex than before — there are 100-odd channels, 400 publications and a plethora of new media that keep popping up every other day. With the rising cost of media and its ever-growing fragmentation, the efficiency and effectiveness of ad spend are now being examined critically more than ever before. 
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  • Online and offline media-buying companies will be fully integrated and automated. In general, technology will drive initiatives in devising better ways to reach consumers. 
  • Faced with increasing media cost and intense competition, many agencies are now trying to scale up quickly to become one-stop solution providers and reduce cost. In fact, the industry has already started witnessing a number of M&As and strategic alliances.