54181 CA Advertising Agencies in Canada Industry Report PDF

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premium report regarding the Advertising in Canada Industry which is a useful reference for the research course...

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Going viral: Agencies will incorporate digital media to expand consumer reach This report was provided to University Canada West (2133364441) by IBISWorld on 27 May 2019 in accordance with their licence agreement with IBISWorld

IBISWorld Industry Report 54181CA

Advertising Agencies in Canada March 2019

Ediz Ozelkan

About this Industry

19 International Trade

36 Technology & Systems

2

Industry Definition

21 Business Locations

37 Revenue Volatility

2

Main Activities

2

Similar Industries

23 Competitive Landscape

3

Additional Resources

23 Market Share Concentration

4

Industry at a Glance

2

37 Regulation & Policy

23 Key Success Factors

39 Key Statistics

24 Cost Structure Benchmarks

39 Industry Data

26 Basis of Competition

39 Annual Change 39 Key Ratios

5

Industry Performance

27 Barriers to Entry

5

Executive Summary

28 Industry Globalization

5

Key External Drivers

7

Current Performance

38 Industry Assistance

40 Jargon & Glossary 29 Major Companies

10 Industry Outlook

29 Omnicom Group Inc.

12 Industry Life Cycle

30 WPP PLC 32 Publicis Groupe SA

14 Products & Markets

33 Interpublic Group of Companies Inc.

14 Supply Chain

34 Vivendi SA

14 Products & Services 16 Demand Determinants

35 Operating Conditions

17 Major Markets

35 Capital Intensity

www.ibisworld.ca | 1-800-330-3772 | [email protected]

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Advertising Agencies in Canada March 2019

About this Industry Industry Definition

Advertising agencies create advertising campaigns and place such advertising in periodicals and newspapers, on radio and TV or other media. Through in-house capabilities or subcontracting,

Main Activities

The primary activities of this industry are

advertising agencies provide a full range of services, including advice, creative services, account management, media planning and buying and production of advertising material.

Creating advertising campaigns Sales promotion campaign services Advertising consulting services

The major products and services in this industry are Internet advertisements Magazine advertisements Mobile advertisements Newspaper advertisements TV advertisements Out-of-home advertisements Radio advertisements Other

Similar Industries

54143CA Graphic Designers in Canada Graphic designers conceptualize and produce artwork or graphic designs without providing other advertising agency services. 54161CA Management Consulting in Canada Companies in this industry provide marketing consulting services. 54186CA Direct Mail Advertising in Canada Direct mail advertising companies create direct mail advertising campaigns. 54189CA Promotional Products in Canada These companies provide advertising services that include providing promotional materials, distribution services and sign lettering.

Provided to: University Canada West (2133364441) | 27 May 2019

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Advertising Agencies in Canada March 2019

About this Industry

Additional Resources

For additional information on this industry www.adage.com Advertising Age www.adstandards.ca Advertising Standards Canada www.theica.ca Institute of Communication Agencies www.strategyonline.ca Strategy

IBISWorld writes over 400 Canadian industry reports to help you make better business decisions, faster. To see all reports, go to www.ibisworld.ca

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Advertising Agencies in Canada March 2019

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Industry at a Glance Advertising Agencies in 2019

Key Statistics Snapshot

Revenue

Annual Growth 14–19

Annual Growth 19–24

Profit

Wages

Businesses

$4.8bn $708.0m

4.5% $2.0bn

Total advertising expenditure

Revenue vs. employment growth

Market Share

Omnicom Group Inc. 11.6%

20

18 17

Publicis Groupe SA 6.1%

16

$ billion

% change

10

WPP PLC 9.2%

2.5% 7,621

0

15

-10

14

-20

13

Year 11

13

15

Revenue

17

19

21

23

25

Year 09

11

13

15

17

19

21

23

Employment SOURCE: IBISWORLD

p. 29

Products and services segmentation (2019)

2.3%

Key External Drivers

Magazine advertisements

Total advertising expenditure

5.0%

Out-of-home advertisements

7.8% Other

36.0%

Corporate profit Number of businesses

Mobile advertisements

9.0%

Radio advertisements

Consumer Confidence Index

9.2%

Newspaper advertisements

12.0%

Internet advertisements

p. 5

18.7%

TV advertisements

Industry Structure

Regulation Level

Medium

Technology Change

Medium

Low

Barriers to Entry

Medium

Industry Assistance

Low

Industry Globalization

Medium

Concentration Level

Low

Competition Level

Medium

Life Cycle Stage Revenue Volatility Capital Intensity

Growth Medium

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 39

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Advertising Agencies in Canada March 2019

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Industry Performance

Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage

mobile advertisement spending skyrocketed in comparison. This changing media landscape has been a boon for industry operators. During the period, many businesses have implemented advertisements across a wide range of mediums, including mobile devices and tablets, which has stimulated niche players that specialize in digital, social and mobile media. Many agencies have experienced robust demand for smartphone and tablet advertising, which is a trend that has incited many industry operators to focus on how screen resolutions and other features integrate with advertisements designed As consumer spending improved, businesses for mobile phones. Over the five years to 2024, the invested in advertising to develop strong industry will continue to be driven by brand awareness emerging digital formats and will also be defined by innovative machine learning and predictive model techniques that and pave the way for small niche help to make advertising campaigns more operators to emerge. Moreover, as consumer spending improved, businesses effective. Predicting consumer behaviour invested in advertising to develop strong and targeting increasingly specific demographics are contingent upon access brand awareness and have a competitive to consumer data, which will also shape advantage to bolster product sales the industry moving forward. Overall, volumes. Over the five years to 2019, this trend will spur businesses’ demand industry revenue is expected to grow at an annualized rate of 4.5% to $4.8 billion, for advertising, due to downstream markets’ desire to reach engaged including a 4.0% increase in 2019 alone consumers. Therefore, over the five years as corporate profit rises 5.9%. Although total advertising expenditure to 2024, industry revenue is forecast to grow at an annualized rate of 2.5% to is forecast to climb at an annualized rate $5.4 billion. of 2.8% over the five years to 2019,

Executive Summary

The Advertising Agencies industry in Canada creates and disseminates advertising campaigns through channels such as radio, print and digital platforms. Over the five years to 2019, the industry benefited from the proliferation of digital media that incited many businesses to invest in advertisements to reach their target audiences online. However, as more individuals accessed media with an increasingly wide variety of devices, audiences became much more fragmented, forcing industry operators to get creative in reaching broad audiences

Key External Drivers

Total advertising expenditure Total advertising expenditure reflects demand for advertising services from businesses. As corporate profit, business confidence and consumer spending rise, many industry clients are willing to incur higher advertising expenditures. Additionally, trends in total mainstream media advertising, particularly in radio, TV, newspapers and magazines, have a direct effect on this industry. Total

advertising expenditure is expected to increase in 2019, representing a potential opportunity for the industry. Corporate profit As corporate profit increases, many businesses may increase their budget for discretionary services, including advertising. Additionally, rising corporate profit may incite some businesses to expand their operations, thus

Provided to: University Canada West (2133364441) | 27 May 2019

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Advertising Agencies in Canada March 2019

Industry Performance

2019, the number of businesses is expected to increase.

spurring demand for advertisements to help generate brand awareness. In 2019, corporate profit is expected to increase. Number of businesses Although the degree to which a given company requires advertising services varies, businesses across sectors and industries use advertising agencies to promote various goods and services. The private sector generates the majority of industry revenue. Therefore, the more businesses that exist, the more demand for industry services will increase. In

Consumer Confidence Index The Consumer Confidence Index measures consumers’ willingness to spend in the current economic environment. As consumer confidence rises, many individuals will increase their discretionary expenditures, which causes many businesses to invest in advertising services to attract customers. The Consumer Confidence Index is expected to decrease in 2019, posing a potential threat to the industry.

Total advertising expenditure

Corporate profit

18

200

17

180

16

160

$ billion

$ billion

Key External Drivers continued

15 14

120

13

Year 09

140

100 11

13

15

17

19

21

23

Year 10

12

14

16

18

20

22

24

SOURCE: IBISWORLD

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Industry Performance

Going digital

Over the five years to 2019, the Advertising Agencies industry in Canada is expected to benefit from many businesses investing in advertising due to the changing media landscape. Total advertising expenditure is projected to rise at an annualized rate of 2.8% during the current period, led by the proliferation of mobile devices. In particular, many downstream markets purchased advertisements that had features and resolutions that integrated well with mobile applications, which is the fastest growing market. This trend has also opened up a niche for small operators specializing in online content to emerge, contributing to growth in the industry. Moreover, many advertising agencies have adopted new performance-based pricing models, including cost per impression, which also took into account consumers’ attentiveness to the advertisement based on the online content accessed. These positive factors are anticipated to lift profit, which is measured as earnings before interest and taxes, from 13.1% of industry revenue in 2014 to 15.0% in 2019, since these

innovations garner higher prices. At the forefront of these innovations are data analysis, machine learning and predictive analytics, which have contributed to revenue and profit gains because these techniques increase the efficacy and reach of advertising campaigns. Overall, over the five years to 2019, industry revenue is expected to grow at an annualized rate of 4.5% to $4.8 billion, including a 4.0% increase in 2019 alone as corporate profit rises 5.9%.

Over the past five years, the changing media landscape has incited many downstream markets to revitalize their demand for advertising. Online consumer engagement has driven industry trends during the current period and has provided consumer data to build actionable insights. While many downstream markets have facilitated the movement toward charging users for access to online content, including TV shows accessed online, some outlets have still offered free access to their online content to capitalize on advertising potential. This trend has enabled newspapers to secure higher prices for companies to advertise on their website

as print sales decline. Despite this trend slightly buoying the number of user views on newspaper websites, print media’s share of total advertising revenue has still declined over the past decade. Mobile advertising’s skyrocketing growth has supported industry expansion, accounting for more than three-quarters of total digital advertising revenue. At the same time, TV advertising spending has remained relatively stagnant during the past decade. The movement away from print formats and toward online formats has shaped demand for advertising. However, while this transition has been a boon for many operators, online advertisements

Industry revenue 20 15

% change

Current Performance

10 5 0 -5

Year 11

13

15

17

19

21

23

25

SOURCE: IBISWORLD

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Advertising Agencies in Canada March 2019

Industry Performance

Going digital continued

generally cost much less than print advertisements because multiple digital advertisements can be placed on one website depending on the time of day, demographics of the consumer and previous browsing history, among other factors, limiting expansionary potential. Ultimately, the transition to digital has been characterized by an attempt to measure the efficacy of advertisements on multiple platforms. In late 2017, IT World Canada created an Artificial Intelligence (AI) directory to encourage collaboration and innovation within the AI and machine learning communities that will likely bolster technological developments in the near future, driving innovation in audience engagement metrics. Audience engagement, real-time data analytics, predictive modelling and machine learning capabilities have

Fragmented consumer base

As consumer demographics have become increasingly fragmented across more digital platforms, it has made it more arduous for advertisers to target particular demographics, hence the turn to the aforementioned robust data analytics techniques. Many clients have viewed mass media advertising as a high-cost and low-reward option since proliferating advertising messages across various media forms such as smartphones, tablets, computers and TV is too broad of a strategy to provide a platform for a targeted campaign to specific demographics. Although many clients preferred targeted, cost-effective methods to reach their customers, they also required measurable results, such as a high number of advertisement impressions. As a result, agencies’ ability to demonstrate advertising effectiveness to downstream markets has been imperative during the period.

increased advertisers’ ability to create more targeted messages and effective campaigns through data-driven insights. Moreover, machine learning algorithms work to ensure that as more consumer data becomes available, the program can amend the algorithm to hone its output over time. Predictive modelling attempts to estimate the reactions of consumers who are most likely to purchase a client’s product based on historical data. Therefore, while the methods of manipulating and analyzing data have been of tantamount importance for advertising agencies during the current period, the ubiquity of consumer data has underpinned the success of these techniques and the continued compilation of this information is a necessity for operators to thrive.

Social media has given rise to viral marketing Social media has given rise to viral marketing, an advertising strategy that relies on content such as video clips and interactive games, which generates large audience viewership from consumer media sharing. Social media has incited large agencies to actively purchase companies in the public relations, direct-mail, market research and web design areas to provide clients with a full-service, one-stop advertising solution. In particular, robust demand for advertisements from particular aspects of industry operations such as viral marketing and targeted content creation has kept the industry afloat during the five-year period.

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Advertising Agencies in Canada March 2019

Industry Performance

Industry landscape

Over the five years to 2019, more independently operated advertising agencies have entered the industry to cater to a niche market, such as local businesses that want to build an internet presence and entrepreneurs with technical skills in machine learning and data analytics. In addition, many large advertising agencies with global operations have expanded their presence in Canada to tap into demand for advertising from numerous sectors, including the sizable automotive and financial sectors. Due to these trends, over the five years to 2019, the number of industry enterprises is expected to grow

More independently operated advertising agencies have entered the industry at an annualized rate of 4.4% to 7,621 companies. During the same period, employment is anticipated to rise at an annualized rate of 1.4% to 29,229 workers, as advertising agencies have included more employees that specialize in digital media, machine learning and content production.

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Industry Performance

Industry Outlook