Advertising Industry Analysis

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Environmental Analysis – “Global Forces and the Advertising Industry” is a study which indicates of effect of advertising industry on the environment towards development of the any company or product of a company. This study is evaluated using PESTEL and Porter Model for Five Competitive Forces which are considered as effective tools of environment analysis.
A PESTEL analysis is a framework or tool used by marketers to analyze and monitor the macro-environmental (external marketing environment) factors that have an impact on an organization.
PESTEL stands for:

• P–Political
• E–Economic
• S–Social
• T – Technological
• E – Environmental
• L – Legal

PESTEL – Tools Explanation
Political Factors
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Bargaining power of customers This force looks at the power of the consumer to affect pricing and quality (Porter, 2008).


Advertising is at front of delivering the proper message to customers and prospective customers. The purpose of advertising is to convince customers that a company’s services or products are the best, enhance the image of the company, and to hold existing customers.
From Table 1, it is clear that all the countries strongly believe that advertising industry is the strong mode of support for any industry for their development. The analysis made from Table 1, indicates that the expenditure of advertising by region has increased since 2009. It is about 8% growth in the emerging countires such as Africa and Asia Pacific, and 5% rise in the world.

Table 1: Advertsing expenditure by region.(US$ million, currency conversion at 2009) 2009 2010 2011 2012 2013
N America 156,556 160, 386 164,516 169,277
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2.2.1 Threat of Entry
The entry of new people into the advertising industry is always a threat for the existing customers. It affects the long term relationship between the people and the industry. It is costly and challenging for the new industry to sustain among the older ones. Even though, the development is not much an issue, the popularity among the customers will be a difficult task. So it is concludes that the threat of new entrants is low.

2.2.2 Threat of Substitutes
The threat of substitution in an industry affects the competitive environment for the firms in that industry and influences those firms’ ability to achieve profitability. The advertising industry has no substitute but it may have various other modes to support. From the case study it is evident that in the early years, magazines and newspapers are the major mode of advertising agent but now in the recent year’s internet and online search dominate