Have you thought about buying a business in the marketing and advertising industry? There are over 37,000 companies in the US alone servicing this sector, with a combined annual revenue of about $94 billion. The industry is highly competitive, has an ever-changing technology and regulatory landscape, and relies heavily on creativity and the fostering of client relationships. There are, however, many opportunities with current evolving trends and niche marketing.
The majority of demand for marketing and advertising services comes from businesses that sell consumer products, entertainment, financial services, technology, and telecommunications. Large or small, those marketing and advertising agencies that are successful, do three things very well:
They generate creative marketing/advertising messages and campaigns
They creatively deliver marketing/advertising messages
They maintain good client relationships
Of particularly note as well, in the marketing and advertising industry reputation is crucial in keeping and obtaining new clients. For this reason, including solid monitoring of ad and campaign success is an important reporting mechanism of any marketing or advertising service business.
According to the Interactive Advertising Bureau, more than 60% of live television viewers are using a connected device for at least a few minutes while watching live TV, with about 45% of multitasking TV viewers using their smartphone. Multiscreen TV viewing could create new opportunities for advertising agencies to design ad campaigns that engage with those viewers and start online conversations about products and brands.
In 2012, global spending on advertising worldwide, a key indicator of demand for advertising and marketing firms, increased, with television accounting for the largest share of spending. Internet advertising showed the most improvement, growing more than 12%.
Smaller marketing and advertising companies can primarily compete by focusing on a niche and/or staying on top of and offering the latest trends in marketing. Increasingly, with the evolving and varied multi-media landscape, agencies with digital media capabilities could have an advantage over traditional firms.
Some key industry highlights to consider if you are wanting to invest in a marketing or advertising business follow.
Products, operations and technology
Major services are advertising for print, broadcast, and online media (25%), direct mail advertising (15%), and public relations (10%)
Other services include display advertising, media buying (reselling advertising time or space), and media representation (selling advertising time or space on behalf of media outlet owners)
Generally, advertisers must conform to FTC, FCC, voluntary industry groups, and individual media company standards
Gaming ads are significantly on the rise, with revenue expected to grow more than 80% over the next three years
Marketing and advertising spending for platforms such as networks and portals is expected to decline in coming years
Digital and social media spending is expected to increase, with a focus on brand-focused advertising
Optimization and search marketing that targets mobile Internet users is becoming an increasingly important segment, with many advertisers shifting their budgets from traditional media, such as newspapers, to search engines
Human resources are critical for marketing and advertising success
The major resources of marketing and advertising services are staff talent and expertise
Salaries are the largest expense, often amounting to about 30% of revenue
Recruiting and retaining staff is a major concern for individual companies, with turnover rates up to 50%
Employment contracts are rare, with the exception of senior management
Average hourly industry wages are significantly higher than the national average
Marketing and advertising current business trends
Consolidation – Large advertising agencies are being built by acquisitions in order to provide a complete range of services to customers
In-store Ads – In-store TV marketing (running commercials and infomercials on TVs in retail stores). Shelf-talkers and end-aisle displays are also proving successful in attracting consumer attention
Hispanic Markets – With the Hispanic population of the US expected to grow from 16% to 30% by 2050, more advertisers are appealing to this increasingly affluent demographic
Search Engine Marketing – Search engine marketing has gained traction as a major venue for advertisers and marketers with signfigant technology advancements by major providers such as Google proving it a viable option
Targeted Marketing – With broadcasting to national audiences loosing traction to the advent of specialized channels, ads targeting specific groups of potential customers is on the rise (this also has enabled smaller companies to advertise nationally)
Marketing and advertising industry opportunities
Global Market – Advertising companies have grown to be able to serve customers in foreign, as well as US markets. Improving economic conditions in other parts of the world have also made it possible for agencies to expand their services to the global arena.
Fee revenues – Consultancy, PR, and brand management activities continue to grow faster than traditional media advertising, as clients seek more added value in marketing. Advertisers are seeking new ways to sell products, such as market research, direct marketing, PR, package design, and brand-image consulting. These are more likely to be paid through fees, rather than traditional commissions on billings, thereby providing a more stable revenue source.
Mobile Marketing – To expand the reach of advertising campaigns, many agencies are investing in technology related to mobile marketing. Mobile marketing involves the ads being sent to users’ cell phones and PDAs.
Social Networking Commercialization – More marketers are using social media to support traditional advertising. Social media sites, such as Twitter and Facebook, allow brands to interact with consumers, build product awareness, and create new sales channels.
If you would like more information about buying a business in the marketing and advertising services industry, or in other industries, please visit my webpage Buy a business or buy a copy of my book Successfully buy your business. If you would like more immediate help with buying a business you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.