Professional Documents
Culture Documents
HISTORY of Advertising:
dvertising, the techniques and practices used to bring products, services, opinions, or causes to
public notice for the purpose of persuading the public to respond in a certain way toward what is
advertised. Most advertising involves promoting a good that is for sale, but similar methods are used to
encourage people to drive safely, to support various charities, or to vote for political candidates, among
many other examples. ( Source: Encyclopedia Britannica)
Advertising has been existent from medieval ages which was done through word of mouth. After the
printing industry rise in 15th and 16th centuries, a step towards modern advertising came with print ads.
Weekly newspapers started in 17th century started carrying advertisements which were flourishing more
in 18th century. 19th century saw the growth of advertising industry and agencies. Agencies started
building brand image for many products and started using different mediums for advertising.
The first product branding was developed, for Dentrifice Tooth Gel.
First advertisement appeared in a newspaper.
At the dawn of American revolution, political ads appeared encouraging enlistment.
The birth of the automobile fuels the rise of billboard Ads in US.
Volney Palmer established the first advertising agency in Philidalphia 1843.
First electric light in Times Square that made a huge difference in the world of advertising. Lit in
1882 1882, this sign inspired people worldwide to use this light-up sign to attract the eyes of people
walking down the street.
1892 Direct marketing is born when sears sends out 8000 handwritten postcards and receives back 2000
orders.
1917 The American association of advertising agencies is founded.
1920 KDKA, the first commercial radio station, was founded in 1920 by Frank Conrad.
The first official TV commercial aired in 1941 before a baseball game. The commercial was
advertising for the Bulova Watch. Bulova payed $9 for the 20 second commercial.
1963 David Ogilvy ushers in the modern age advertising age with this quote The consumer isnt moron;
she is your wife.
1984 Apple sets a precedent at the super bowl with the most expensive TV ad: directed by Ridley scott,
the macintosh promo costs $90000.
1994 pay-per-click keyword advertising debuts at GoTo.com
1941
1997 The first mobile ad is launched. A Finnish news provider offers free news headlines via SMS,
sponsored by advertising.
2006 A video advertisement is a TV commercial put on the internet that usually plays before a video or
game. Youtube metaphorically gave birth to this concept when it launched in 2006.
Facebook launched in 2007 and we witnessed another metaphorical birth- the birth of social based
2007 advertising. Social based advertising lets companies see what people like by tracking their social
interactions.
Right now, online advertising is quite the rage and there are pop up ads everywhere, but TV
2012 commercials are also on the rise. Though they technically can't rise any higher. Companies are trying
to weave their way through the loopholes of advertising laws and Facebook and Twitter are
becoming another type of advertising
Unit
Date
Source
Worldwide
Global Advertising Spending
546.0
578.0
171.0
68.7
23.6
213.5
PRE
36.6
PRE
37.7
PRE
3.03
Billion
2014
ITU
7.0
Billion
2014
ITU
Projection
Global Digital Advertising Spending
Even the ads are regulated to the extent whether at what time the ads should be shown so that
audience under 18 years are not affected.
Changing political environment creates a good landscape for advertising. Now a days
political parties are focusing more on the quality of advertisements and their reach.
Consumer privacy is becoming an important priority where every device is capturing the way
an individual is sharing data. Government regulates the firms to ask individuals before
capturing any data that can be used to display ads specific to individuals interest.
With comsumers increasing awareness towards product and its legal aspects, advertisements
have to be very careful in what they say in an advertisement. If the claims are false and
without any data, it can have legal implications.
Economic issues:
Economic crisis: Advertising has been affected by financial meltdown/recession. During
recession, advertising was the first thing that experiences a cut-down. Advertising is considered
as extra expense which can be loaded off, although, this can be the perfect tool to connect the
product with the consumer easily. It has been seen, that during recession, the companies who
have invested in advertising more got a better ROI
Social issues:
With increasing awareness of internet and its usage on multiple devices, advertising industry
has to change the way and ad reaches to its customers.
Advertisers has to follow the ethical and social standards of the society in which they are
displaying. Whenever social issues are violated, government comes to take corrective
measures to what is deceptive and fair.
With changes in social values and ethics, its the advertisers that have to change their way so
as to connect with the society.
Advertisement changes the way people look towards the society. It can change the view to a
materialistic society, where it will tempt viewers towards unnecessary spendings. Advertisers
effect the people outside their displayed product and create an unexpected cost to the society.
Although advertisers can found a leeway through the laws to exhibit their alcohol brand in
rock concert, its the responsibility of the advertisers now a days to create socially responsible
advertising.
Advertisements relate themselves to the society through a social issue, through a social cause
which shapes up the society for good.
Technological issues:
Technological advancements: With growing internet reach and other technological
advancements, advertisers target viewers in every medium (phone, TV, tablets, digital
billboards). YouTube, Facebook target viewers with displaying ads that are customized to
users interests.
With big data analytics, every users interests can be captured and can be used to display ads
that prompts user to click and buy. Industry earlier paid for opportunity to see and hear, but
they are now paying for engagement.
Source: Bloomberg Intelligence Report ( How tha ad spending is changing for various
mediums)
Environmental issues:
Advertising through print media, banners, posters and billboards are the traditional way and
are widely used today also. But with increasing awareness about the environment degradation
due to the wastage of papers used in advertisements and electricity and resources used in
billboard advertisements, this is really a concern for advertisers.
With more environmental concerns, advertisers have to come up with other innovative
solutions that will decrease the energy consumption and decrease the cost to environment.
People are more inclined towards natural organic products and appreciate products which are
environment friendly.
(i)
ii)
Advertising forecast in Europes sluggish economy ( Boosted by
Elections and Olympics)
Power of buyers
Every product needs advertising to increase their market reach to customers. There are
many such big companies who are always looking to create an impact on buyers.
Advertising industry is dominated by companies who are big and have greater market
share.
With less companies in advertising sector having a significant presence, power of buyers
is low.
9|Page Advertising Industry Report + O&M analysis
Intensity of rivalry
Intensity of rivalry among existing competitors is high. If we look at the market share of
existing customers there are no dominant players. Most of the advertising companies are
under a single corporate umbrella and the parent companies are sharing the advertising
space.
With increasing use of technologies and different mediums of advertising, there is always
a constant run for the new innovative ideas and improvement in advertising techniques
Starting in 1948, David Ogilvy built his company into one of the eight largest advertising networks in the
world. Today it has more than 500 offices in 126 countries.
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Over the past 66 years, Ogilvy has helped to build some of the most recognizable brands in the world:
The firms client roster consists of Fortune Global 500 companies and other major groups, including
Siemens, Dove, Coca Cola, Cisco, IBM, Yahoo!, Ford, Nestle and Adidas.
Ogilvy has received numerous industry awards for work that reflects the diversity of clients' customer
bases. In every country/city O&M is established, there are numerous awards won locally and globally.
It was named the Cannes Lions Network of the Year for three consecutive years, 2012, 2013, and 2014;
and the EFFIEs World's Most Effective Agency Network for two consecutive years 2012 and 2013
O&M is into various domains of branding, advertising and Marketing:
Ogilvy Public Relations, a fullservice consumer marketing, investor relations, public affairs
lobbying and creative media firm
OgilvyOne Worldwide, which is a direct marketing and interactive marketing network
Neo@Ogilvy brand is a digital and direct media agency, providing media strategy, planning
and buying, search marketing and mobile and social media marketing services.
OgilvyAction is a global activation services subsidiary that focuses on changing purchase
behavior.
RedWorks helps clients increase marketing efficiency.
OgilvyEntertainment is a development, production and distribution strategy subsidiary.
Ogilvy Commonhealth Worldwide is a subsidiary with services designed to increase the
value of health care communications
Important key persons at O&M are:
Miles Young - CEO
Nelly Anderson - Exec. VP Global Brand Mgmt.
Chris Graves - CEO Ogilvy Public Rel. Worldwide
Tham Khai Meng - Chief Creative Officer
Ben Richards - Head Integrated Strategy
Gunther Schumacher - Pres./COO OglivyOne Worldwide
According to 2011 data( Ogilvy.com)
Revenue: $1,878,600,000 (estimated)
Gross Profit: $183,749,526
Net Profit: $6,504,408
Employees All Locations: 15000 (Actual)
Employees At (Ogilvy & Mather Worldwide Inc.): 2200 (Actual)
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O&M have 4000 digital specialists around the world. Digital has been embedded in Ogilvy
culture much before anyone have started and can be seen in the new-age ads.
Companies business model has been to decentralize the control. Every country operations has
enough independence to work to ensure excellence locally. Sharing of resources globally
helps them to build a culture where a person has in-depth knowledge of how the culture,
socio-economic factors etc. work for a country.
O&M works on many disciplines, and that makes them to give a wholesome solution to the
clients. The integration of creativity and technology helps to build a platform where the brand
and users communicate and advertising is not just a one-way feed.
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COMPETITORS:
LEO BURNETT COMPANY, INC.
BBDO WORLDWIDE INC.
McCann Worldgroup
Satachi & Saatchi
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Market share of these companies and how they are getting benefits of merger and acquisitions:
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SWOT analysis:
Strengths:
o 450 offices in 120 countries with 18000 employees
o Strong distribution all over the world
o High reputation for quality work to corporates
o High number of mergers and acquisitions for expansion
o One of the biggest names in the world of advertising
o Clearly understand the nerves of the society to create impactful advertisements.
o Creativity with which different mediums of advertisements are used.
o Offering Multiple services to clients ( branding, advertising, viral marketing,
sustainability )
o Hiring and nurturing best talents from the country locally helps them to create the
brand connect with the society.
Weakness:
o Market share is limited due to many competitors
o Pricing is high; there are only big budget customers. In giving a rich creative solution
for clients, O&M has always served the niche upper segment.
o There are some untapped markets for O&M ( South America, Middle east , Africa)
o Clients of Ogilvy And Mather are the same old clients that have been with them for
many years. IBM, BP, American Express are some big old clients. They will have to
look for adding new clients in the portfolio.
Opportunities:
o Online advertising is a new source of revenue.
o Adapting new strategies for market research using more of data will bring in more
revenues.
o Decentralized decision making is helpful as local marketing needs vary from one
region to another.
o Digital channels to be used in advertising. This gives a low cost medium to advertise.
Also with increasing time spent on digital mediums, digital marketing will be the
most sought after medium.
Threat:
o
o
o
o
Hire people, who are better than you are, then leave them to get
on with it. Look for people who will aim for the remarkable, who
will not settle for the routine.(David Ogilvy)
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Future of advertising:
Advertising Medium is the most important thing in advertisement which decides how many people will
be reached and how effectively. Medium for advertisement has been changing constantly and its fast.
From print media to visuals, from newspapers to smartphones and the most emerging of these is the
virtual reality.
The world after 10 years will have many innovative ways of advertising which is not easy to think upon.
People will be bombarded with advertisements everywhere, through watches, newspapers, billboards, 3d
generated images that can talk, signages, billboards.
Ogilvy is preparing for the future with more acquisitions, mostly in tech sector where they
can use the potential to analyze data, to give more insights to customer.
Ogilvy knows that TV will fade away slowly and with internet based smart TVs, everything
will be integrated. The advertising should take into account TV plus, youtube or twitter or
facebook to give the viewers a wholesome experience.
(Digital ad spending is growing every year and will be the best mediums for advertising)
Mobile usage is growing fast and its growing exponentially in developing countries. With
new devices coming which are replacing laptop and TVs will be the next market for
advertising. Most difficult point in mobile ads is the timing and the structure through which
ads will communicate.
This will need collaboration with clients and research departments to find what behavior of a
consumer is worth.
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Consumers today wants brand to communicate with them on what they are thinking and what
is trending. Real time ads are the new way of marketing that needs a quick response to an
event. Social Media is the medium through which real time marketing is possible and
effective.
Its easy to take the trending topic from social media. And then relating that topic to the
industry for which ads are targeted.
Taking an example of real-time marketing: Oreos response to the blackout that derailed the
Super Bowl XLVII in 2013.
Programmatic advertising is increasing and so the need for programmatic sale. The old way
of buying spaces for advertisements is changing. There is no need to buy whole lot of spaces
in bulk to keep the price lower. Earlier buyers have to purchase spaces fully through manual
process and that takes around 20 days. With Programmatic sale, buyers can bid for the space
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real time, where they find their advertisements to be more consumers specific and apt to the
situation.
Consumers today are intelligent and more planned; they need updates on telephone, listen to
radio during commute and want crisp news on television at night. Almost all of the
consumers electronics are connected through internet and everybody wants more of
information in less time. Todays consumer watches TV skipping ads, watch videos on
YouTube which can be skipped. There is a different need that needs to be analyzed and learn
and to give consumers an enriching experience.
Advertisements today dont start and die on television, they have an extended life on youtube,
facebook and twitter. To be able to create a long lasting effect, advertisers now have to create
a short story that connects with the consumers emotions. Storytelling is becoming more
popular and when an advertisment hits the emotional chord, there are more chances for it to
go viral.
Brand engagement with consumers is more effective than forcing ads to consumers. Today,
there are YouTube channels of each product, which create new ads frequently and archive the
older ads. And once when they are able to entertain the audience, the bonding between
consumer and product will be long lasting.
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CONCLUSION:
Advertising industry is a fast changing landscape in which its very difficult to predict how it will evolve.
Experts are tracking new trends and consumers behavior, but with a doubt in mind whether something
new will take-over this. Media landscape is creating new possibilities very fast competing for consumers
attention. Today, psychologists, anthropologists, technology wizards and gaming enthusiasts..all of them
might have a role to play in modern agency.
Some of the areas which can be identified out of all these uncertainties and on which O&M can have their
focus on:
Mergers and acquisition: To expand the reach to different countries and to get the benefit of
new innovative agencies, M&A is very important for O&M. O&M has been seen as a
company with old school of advertising, this needs to be changed in increasing tech world.
Data analytics of consumers behavior : Real-time ads are more attractive to consumers, as
they can relate easily to the story and creates a respect for the brand. Real time ads need a
constant thinking and its different from conventional advertising, where there was more time
to research, conceptualize and then display.
Story-telling in ads and viral marketing. O&M has a very strong background of storytelling in
their ads, which can be used to campaign through long video-ads and engrossing the
consumers.
Using more of technology in Advertising. O&M has been constantly trying to use technology
in their advertisements. For ex. Finding litterbug through DNA testing and displaying the
face on billboard in HongKong Making potholes tweet about their condition to municipal
authority in Panama city
New creative ideas to engage consumers in ad viewing. Like on websites there are video ads
going on in one corner, but the video is generally muted. Its rare that users will switch on the
volume. Now, this is the challenge for advertisers to create an innovative ad, that can catch
the eyes of viewer.
With more of digital display adding on day by day ( OOH, digital billboards, interactive
displays , 3D technologies), it has become essential to not force advertisements on
consumers.
More focus on programmatic advertisements and programmatic sale.
Green Advertising With more emphasis of consumers on how organic the product is, and
how green the idea is, there will be a responsibility on advertisers to create advertisements
that use minimum of resources and how organically they are presenting their products.
Reverse Grafitti is one of the concept where dust settled on walls is used to create graffiti
messages.
Facebook, twitter, instagram, pinterest and many more social networking sites are new
mediums to the agencies. The more likes it get, the more it will be shared and the more
viewers will attach to a product. Other than social networking sites, brands are also engaging
into creating apps and games, which target a very different segment of consumers.
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REFERENCES:
1) www.statista.com
2) www.plunkettresearch.com
3) http://www.slideshare.net/pradeep_loganathan/porters-five-forces-for-advertising-and-brandingindustry
4) http://b32g4.ntuentrepreneur.org/business-plan/market-analysis/porter-s-5-forces
5) https://prezi.com/hepdhjfyvb2l/advertising-agencies-industry-external-analysis/
6) Bloomberg Intelligence reports
7) www.adage.com
8) Adland: A global history of advertising ( Mark Tungate)
9) www.aef.com/pdf/arens_ch03.pdf (Advertising Educational Foundation - Web)
10) www.adweek.com
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