Introducing
Your new presentation assistant.
Refine, enhance, and tailor your content, source relevant images, and edit visuals quicker than ever before.
Trending searches
10
AD INDUSTRY OVERVIEW
BPL 5100 DMWB, Mutual Funds Managers, Board of Directors:
Professor LaManna & Class of CUNY Baruch College - Zicklin School of Business
BoD
Group I/ObVi Advertising Consulting Group Assoc:
Consulting Group
Nia Mack
Casey Lin
Jackie Mok
Vanessa Valdez
Mateo Piragua
Mission Statement
Our goal at Obvi is to...
ObVi's Mission
Industry Size
- Global Advertising Agencies as of 2020: $345 billion
- Advertising Agencies in the US Market Size as of 2020: $60.1 billion
Industry Size
Industry Size (cont.)
Industry Growth
- Global In-app advertising: market size will be worth $226 Billion by 2024,
- Growing at a CAGR of 19.4% from 2019 to 2024
- Global TV advertising sales fell almost 4% in 2019, the steepest drop since the economic recession in 2009.
Industry Growth (cont.)
- Reasons for Television Advertising Downfall:
- Companies offer subscriptions for ad-free entertainment
- Advertising companies are more focused on social media advertising (social media influencers, bloggers, celebrities)
- TV viewership has declined significantly over the past years
- Expecting a temporary boost of TV advertising in Summer due to the Olympics - not happening this year due to COVID-19.
Competitive Segments
Creative Talent
- Difficult
Client Relationships
- Long term business relationships with brands.
Connections
- Difficult to gain access to key media channels and space.
Growth Segments
Growth Segments
1. Digital & Mobile Internet Advertising → growing at a fast rate (easy to reach audience because of immense use of social media in today’s generation)
2. Print Media Advertising → decreasing (overall a less popular market due to the availability of the internet)
3. TV & Radio Advertising → decreasing (hard to reach audiences because of subscriptions available on Netflix, Spotify, Hulu, etc.)
Technological Change
Technology is Rapidly Enhancing
- Cost Effective
- Industry are more focus on digital advertising than traditional advertising
Ease of Entry
Cost of Entry is High
- Attracting, nurturing and retention of creative talent is expensive and challenging
- High Research and Development Cost → High Capital Expenditure Cost
Differentiation
- Advertising services are highly differentiated
Ease of Entry (cont.)
Transaction Advantages of Incumbent Firms:
- Connections
- Client Relationships
- Credibility (popularity, brands heard about them)
Government Policies
- This industry requires strict licensing and legal requirements to be fulfilled before a firm can start selling.
Rivalry
Rivalry
1. Publicis Groupe S.A. - 1 of Omnicom's top competitors. Founded in Paris, Île-de-France in 1926. Marketing Services field. Compared to Omnicom, Publicis Groupe generates $4B less revenue.
2. Interpublic Group of Companies Inc. - Omnicom's #3 rival. HQ in New York, New York. Founded in 1902. Advertising & Marketing sector. IPG generates 68% of Omnicom's revenue.
3. WPP PLC - Top competitor of Omnicom. Founded in 1986. HQ in London, England. Advertising & Marketing field. WPP has 59,600 more employees than Omnicom.
Rivalry (cont.)
4. Dentsu - media-buying agency that offers public relations, digital marketing, branding, crisis communications and content creation services. HQ in Minato-ku, Tōkyō, Japan. Toshihiro Yamamoto is the President & CEO. Has 8 companies, including SmartNews.
Rivalry Assessment
Results Compared to Omnicom's Competitors:
- Total revenue increase of 1.33 % in fourth quarter 2019.
- While most of its competitors have experienced contraction in revenues by -5.23 %, recorded in the same quarter.
Industry Favorableness
Porter’s 5 Forces
Threat of New Entrants
LOW
- Existing firms usually have strong, long term client relationships
- High entry cost
- Connections
Threat of New Entrants
Bargaining Power of Buyers
Bargaining Power of Buyers
LOW
- Product is highly differentiated; therefore, it is not easy for buyers to find alternative firms
- The quality of the product is the most important to the buyers, making the buyers less price sensitive
- No significant threat to buyers to integrate backwards
Bargaining Power of Suppliers
Bargaining Power of Suppliers
HIGH
- Premium advertisement space are limited
- Supply is below the demand
- Limited Suppliers
- Product Launches and seasonal campaigns demand better integration with supplier
- Large firms have higher bargaining power over suppliers than small firms.
Threat of Substitute Products & Services
LOW
- Barely any substitute services are available
Threat of Sub. Products & Services
Rivalry Among Existing Firms
HIGH
- There many advertising agencies in the market
- Very competitive
- Competing for high large clients
- Competing to build credibility
- Spending large budget on ad campaigns
Rivalry Among Existing Firms
Omnicom Group Inc.
Data
- Advertising, marketing, and corporate communications services.
- Services include:
1. Traditional Media Advertising
2. Customer relationship management (CRM).
3. Public relations, and specialty communications.
- Serves more than 5,000 brands in more than 100 countries.
Global Ad Networks
1. BBDO: Pepsi, Snickers, Ikea, Dove, Tropicana, Pedigree, Guinness, Campbell’s, Fedex, , Emirates, Ford, Twix
2. DDB: Volkswagen, McDonald's, Unilever, Mars, Johnson & Johnson, and Exxon Mobil
3. TBWA: Adidas, Apple, Energizer, Gatorade, GSK, Henkel, McDonald's, Michelin, Nissan, Pernod Ricard, Pfizer, Standard Chartered Bank, Singapore Airlines, Sotheby's, and Vichy
Firm/Industry
- Multi-product firm with 4 Disciplines:
1. Advertising
2. Customer relationship management
3. Public relations
4. Specialty services
- Advertising and PR industry.
Advertising Revenues
Omnicom's Competition
Competition
Revenues of Omnicom & its Competitors 2019
- Omnicom: $14,953.7 million
- Publicis Groupe S.A: 11,001 million euros
- The Interpublic Group of Companies Inc: $10,221.3 million
- WPP PLC: 13,234 millions pounds
- Dentsu: 1,047,881 million yen
- BBDO: $1.78 billion
Omnicom's Statements
1. Mission - deliver big creative, competitive ideas based on actionable customer insights.
2. Vision - positioned for continued, long-term growth.
3. Strategic Goals - "A world wide family of companies" & "An industry recognized leader".
Shareholders
Governance
Board Structure:
The Board consists of 11 directors, 10 independent or outside directors, and Chairman and Chief Executive Officer John D. Wren.
Ideals:
"Global leader in marketing communications".
Cultural Integrity:
Dedicated to diversity.
Management Philosophy:
Running a smooth and efficient establishment of highly skilled workers to satisfy the clientele.
Competitive Advantages
1. Profitability Comparisons
- Industry average profitability:
Internal Analysis
Industry Overview (cont.)
2. R & D Strengths
Numerous patents issued in 2020.
Industry awards received for technological excellence.
3. Innovation
A number of new products introduced in a given period, relative to competition.
HR
4. Human Resource Strengths
- Employee selection
- Training and development
- Rewards
- Job satisfaction levels
Finances
5. Financial Strengths
- Cash holdings: $4.309B, +17.81%, 2018
- Absence of debt:
- Credit ratings:
Moody’s: Baa1
Fitch: BBB+
S&P: BBB+
- Analysts’ recommendations: Holds 3/5 stars
STRATEGIC ISSUES AND RECOMMENDATIONS
Strengths
- Strong financial positions
- Wide spread distribution network
- Strong social media presence
Strats & Recs
Strengths (cont.)
- Wide range of products to offer
- Tremendous brand recognition
- Partnered with other big brands/dealers
Weaknesses
- Omnicom has financial freedom.
- A lot of Omnicom’s property is rented rather than owned/purchased.
Weaknesses (cont.)
- Lower quality control budget when compared to their competitors which can damage their brand, lack of consistency.
- Omnicom has a high employee turnover rate, employees quit because of high workload.
Omnicom SWOT
SWOT
Strengths:
1. High brand awareness.
2. Continuous quality.
3. Strategic partnerships.
Weaknesses:
1. Mainly centralized decision making.
2. Not enough performance recognition.
3. Few "Cash Cow" products.
SWOT (cont.)
Opportunities:
1. Tourism industry.
2. Skilled laborers.
3. Growth of E-commerce.
Threats:
1. Rising fuel prices.
2. Increased competitor promo.
3. Changing consumer tastes.
Category 1
1. Abundant environmental opportunities and significant internal strengths: most favorable.
The firm’s strategy should be to pursue aggressive growth that will use its internal strengths to exploit the abundant external opportunities.
Final Thoughts...
Thank You!