Digital Advertising Agencies
Overall market share concentration in this industry is medium, in which the top three digital advertising agencies are expected to account for an estimated 40.0% of total industry revenue. Over the five years to 2019, the industry has become less fragmented, as full-service value-add larger companies continue to generate more business than smaller companies. Concentration has increased during the period due to strong merger and acquisition activity, which has enabled larger digital advertising agencies to purchase small, independently operated agencies.
Major companies control the market
• The three major companies, The Interpublic Group of Companies Inc., WPP PLC and Omnicom Group Inc. capture 40.0% of the market. Due to the global presence of big advertising agencies and their clientele, it becomes difficult for new players to enter the market and succeed. Interpublic Group of Companies Inc. has three global media service companies, including UM, Initiative and Brand Programming Network (BPN).
Consolidation helps drive profit
• Major companies acquire smaller firms that specialize in a specific industry or have expertise in a particular form of advertisement.
• In 2014, a division of the company called Lowe and Partners acquired Profero, a global digital network that specializes in digital advertising, media and marketing solutions. This acquisition significantly increased Interpublic Group of Companies Inc.'s presence in the digital sector.
• In 2014, WPP PLC's Millward Brown subsidiary acquired InsightExpress, which was a leading provider of media analytics including for advertising effectiveness in online, mobile, tablet and cross-media campaign.
Price and brand awareness drive internal competition
• The industry has high fragmentation that has intensified competition, due to small, independently operated agencies appealing to a market niche of local businesses. Companies compete on the type of services that are offered, price for advertisement and commission-based fees for performance based advertisement models.
Businesses in this industry create advertising campaigns and place the advertisements across digital media outlets. Through in-house capabilities or subcontracting, the agencies provide advice, creative services, account management, production of advertising material, media planning and buying.
This report covers the scope, size, disposition and growth of the industry including the key sensitivities and success factors. Also included are five year industry forecasts, growth rates and an analysis of the industry key players and their market shares.
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