GLOBAL ADVERTISING INDUSTRY

Global advertising industry



Global advertising industry

Importance of Advertising in Global Marketing

“Advertising is a paid, mediated form of communication from an identifiable source, designed to persuade the receiver to take some action, now or in the future” Advertising is a vital part of every successful business regardless of whether its print media, TV media or outdoor media. Advertising is a way companies can communicate to consumers; to inform, remind, reinforce, build and sell.

With the world shrinking, it's a level playing field out there and more companies are going global. It's important for global advertisers to stand out, to identify themselves and to gain awareness. On a global playing field, the rules are different and there are so many factors and players to take note of. Advertising is one powerful tool for global companies to communicate their unique selling proposition and sell their image to consumers. Many a times, consumers might have certain misconceptions about a global brand based on factors such as country of origin and advertising is one method to properly communicate the brand image to public. Advertising can help global companies position themselves and inform people on what they stand for, build awareness, constantly remind people about the presence of the brand, change image in peoples' eyes, react to competition and entice others to try/buy the product.

Global Advertising as an Industry

The world advertising industry is characterized by a large number of small and medium sized advertising agencies that operate primarily in one country and by a small number of very large advertising agencies with operations in many countries. These agencies have developed extensive networks of offices throughout the world in order to coordinate the advertising process in all the countries where their clients do business. These networks often include both wholly-owned subsidiaries and formal relationships with local advertising agencies to establish a presence in new markets, particularly in emerging markets.

In an effort to establish greater control over their advertising, many major advertisers are consolidating all their advertising with one agency. For some major advertisers such as IBM and Citibank, this represents annual advertising expenditures in excess of $500 million worldwide (Grein and Ducoffe, 1998). As a consequence, advertising agencies that do not have a global network are at a serious disadvantage when competing for new advertising accounts or attempting to retain existing ones that are expanding globally.

The majority of these large advertising agencies are headquartered in the US. Of the ten largest advertising agency groups, seven are headquartered in the US, and one each in the UK, France and Japan, although WPP, the British agency holding company, is made up of two large US-based agencies. With the exception of Dentsu, the Japanese agency, most other agency networks generate the majority of their revenues outside their home country. The largest agency group, Omnicom, places over $37 billion of advertising for its clients around the world and derives half its revenue from outside the US. Omnicom has 891 offices in over 85 countries and employs 35,600 persons worldwide (57 ...