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Global Forces and The Advertising Industry

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hussam bata

on 13 October 2014

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Transcript of Global Forces and The Advertising Industry

Role of advertising
For any organization, its resources and core competencies alone cannot bring the competitive advantage, unless it is able establish the brand and penetrate the market for the same.
Effective advertising and branding plays a vital role in the strategic positioning and growth.

Key Services
• Creating brand position & advertising campaigns for their clients.

• Offerings include creative services, production, account management, and media planning.

• Major companies include Interpublic and Public.

Over the past year the advertising industry has continued to witness increased political interest
the advertising was used recently by the political groups as a way to deliver their ideas, thoughts and believes.
the advertising industry has witnessed an improved growth in the industry because of the positive economic growth in recent years
Advertising plays a big role in pursue the people to purchase
values, norms and beliefs are controlling the material displayed in the advertisement. Meaning that paying more attention to other cultures
New legislations and regulations were founded to put boundaries on the advertising industry to not be crossed to keep it in line with the countries legal work frame.
Legal environment
Porter's Five Forces Analysis
Threat of New Entrants
Engagements based on long term relationships.
Attracting, nurturing & retention of creative talent is expensive & challenging.
Difficult to attain deep connect with regional demographics, behaviors, attitudes and values.
Constraints in getting access to key media channels or space
Expected Retaliation

Threat of new entrants is medium
Entry Barriers
Threat of substitute products
No absolute substitutes for an Ad-Campaign
, Social Media tools etc offers new channels for forward integration with low switching costs
Conclusion: Threat of substitutes is Low for the industry but high to the channels
Premium ad spaces are limited and supply is less compared to demand
Seasonal campaigns put pressure on supply
Product launches demand better integration with the supplier.
• Suppliers are industry independent
Forward integration is a possibility
Bargaining power of suppliers is high
Bargaining power of Suppliers
Long term relationships with static fee structures.
Large Buyers can demand concessions
Identity of buyer adds prestige to sellers list of customers.
Backward integration by buyer not possible
bargaining powers of Buyers are high for big buyer and low for small
Bargaining power of Buyers
High stakes with each campaign to build credibility
Large budgets for ad campaigns.
High premium on scarce resources

Rivalry among existing competitors is high
Rivalry among existing competitors
Five Forces conclusion
• Threat of new entrants: Medium (Negative)
• Bargaining power of Suppliers: High (Negative)
• Bargaining power of Buyers: High for large corporations (Negative) and low for SME’s (positive)
• Threat of substitute products: Low (Positive)
• Rivalry among existing competitors: High (Negative)

Overall the advertising industry is not an attractive industry
Digital revolution offered Technological channels for both advertisers and customers in this industry to interact using all modern technologies
Nowadays, advertisement industry has become more environmentally friendly because of depending more on online advertisement; using techniques that do not harm environment
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