Porter’s Five Forces Analysis of Advertising Industry 

The advertising industry comprises of advertising agencies, media services, marketing companies, and public relations. It deals with planning, creating, managing, and running different types of marketing and promotional campaigns for client companies. Today, we’ll discuss Porter’s five forces analysis of advertising industry; bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.

Role and Function of the Advertising Industry

• Out-of-home advertising
• Online advertisement
• Advertisement campaign
• AR advertising
• Radio advertisement
• TV ads
• Mobile Marketing

Top companies in Advertising Industry

• Dentsu
• Interpublic
• Publicis Groupe
• Omnicom
• WPP plc
• Bird Marketing Limited
• Web Windows Marketing Limited
• Megaphone Marketing
• Single Grain
• Disruptive Advertising
• The Bigger Boat
• Farsight
• THP Client Reviews
• Creative Sponge
• Wow-How Studio
• WebFX
• Dream Theory

Porter’s five forces analysis of advertising industry would analyze the bargaining power of suppliers and buyers; the threat of new entrants and substitutes; intense rivalry as competitive forces in strategic management. Here’s the advertising industry Porter’s five forces analysis of marketing and advertising agency as follows;

Porter’s Five Forces Analysis of Advertising Industry 

Let’s discuss Porter’s five forces analysis of advertising industry as competitive forces in strategic management; they’re as follows;

Bargaining Power of Suppliers in Advertising Industry

The bargaining of suppliers is higher in the marketing and advertising industry as competitive forces in strategic management. The main suppliers in the marketing and advertising industry are as follows;

• Publishing companies and platforms
• Marketing agencies
• Media channels
• Client companies

Some of the main factors impacting the bargaining power of suppliers in the marketing and advertising industry Porter’s five forces analysis of marketing agency are as follows;

I-Limited Ad Spacing & High Demand

The demand for ad spacing in the top leading media channels in the busy hours is very high. It is because their media channels have limited ad spaces, and they give it to the high priority and mega clients that are paying the top dollar. Every advertisement campaign wants to be on the front line, but very few of them could make the headlines.

II-Seasonal Campaigns

There are different seasons for the promotion of various products and services; their advertisement campaigns keep on running throughout the years. The media channels and ad campaigners are always busy creating and running different types of campaigns. For instance, they are like the Christmas season, winter, spring, summer, holidays, festivals, autumn, and winter all over again.

III-Independent Firms

The publishing platforms and media channels are independent firms and they have their own policy for advertisement and campaigns. They run only a particular type of ad campaign with a heavy budget and leave the rest; very few of them can make their standards. The bigger the platform, the tighter their requirements would be for advertising agencies.

Bargaining Power of Buyers in Advertising Industry

The bargaining of Buyers is moderately high in the marketing and advertising industry as competitive forces in strategic management. Some of the main factors impacting the bargaining power of buyers in the advertising Industry five forces analysis of marketing agency are as follows;

I-Big Clients Demanding

If the advertising client companies are big companies and bring millions of dollars, then they have a high bargaining power. There are many advertising companies, but there are very limited advertising clients that are willing to pay for the marketing and campaigns. However, it gives them significant bargaining power.

II-Long Term Relationship

The goal of ad companies is to establish long relationships with the client companies by offering them discounts, quality service, and preferences. Securing the long-term contract allows them to manage the bargaining power of clients.

Threat of New Entrants in Advertising Industry

The threat of new entrants is Lower in the marketing and advertising industry as competitive forces in strategic management. Some of the main factors impacting the threat of new entrants in the advertising Industry five forces analysis of marketing and advertising agency are as follows;

I-Long Term Relationships

Many advertising companies establish long-term deals and relationships with client companies. It is highly risky for the satisfied client company to switch to a new advertising firm and negotiate the new deal without knowing the campaign result. However, they prefer to repeat the experience by collaborating with the same client company.

II-Securing Ads Space Issues

It is highly difficult for the new firm to secure the ad space in the busy hours on the leading media channels. They have limited or no big clients in their portfolio to secure their position in the top channels. With limited funding, they have limited access to the creative talent team to hire and retain them over time.

Threat of Substitutes in Advertising Industry

The threat of substitute products and brands is lower in the marketing and advertising industry as competitive forces in strategic management. Some of the main factors impacting the threat of new substitutes in the advertising Industry five forces analysis of marketing and advertising agency are as follows;

I-No Substitution of Ads Campaigns

There is no alternative to the advertisement and marketing campaigns to the client companies. They have developed a particular product or service; they want to spread the word by hiring the top advertising company to run the campaign and generate their sale.

II-Digital Media

Digital media and social media platforms offer a substitute option to run advertisement campaigns. In fact, they have become the new media channels for running advertisement campaigns. They offer various benefits like editing the running campaign, getting statistical results, user engagement rate, sale ratio, and conversion rate. You can’t have such an in-depth report with traditional media channels.

Competitive Rivalry in Advertising Industry

The competitive rivalry among advertising companies is higher in the marketing and advertising industry as competitive forces in strategic management. Some of the main factors impacting competitive rivalry in the advertising industry five forces analysis of marketing and advertising agency are as follows;

I-High Budget & High Demands

The competition is very high in the advertising industry. Their objective is to attract and convert mega clients and establish long-term relationships with them. However, the big client companies bring large capital resources, and their demands are high and they want high growth rates and results.

Conclusion: Advertising Industry Porter’s Five Forces Analysis |Five Forces Analysis of Marketing Agency 

After an in-depth study of Porter’s five forces analysis of advertising industry; we have realized that advertising and marketing play a key role in business growth. If you are learning about the advertising industry five forces of marketing and advertising agency; then you should keep in mind the abovementioned bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.