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... s-TSB TBWA GGT Simons Palmer Ltd 2. 6 96. 3 - 1. 7 Energizer Bunny and Taco Bell's Chihuahua, Nissan and Apple Computer Publicis Ltd 2. 5 95. 2 (1996) 3 (1996) ASDA, Harp, Kilkenny and Mastercard J Walter Thompson 2. 4 257. 4 (1996) 5. 3 (1996) Mazda, Barclays Capital, P& O European Ferries-Stena Line McCann Erickson SA 2. 2 271. 6 3. 1 Royal Sun Alliance, Nestle and Unilever Ogilvy & Mather 2. 1 10. 3 (1996) 3 (1996) N/A DMB& B Ltd 2. 0 423. 6 6. 2 Southern Comfort, Gateway, Wickes, and Welfare-to-work from the government. M & C Saatchi Ltd 1. 8 41. 7 (1996) 4. 4 (1996) The Conservative Party Source: Euromonitor, Keynote (accessed March 2001) 2. 6 Key Success Factors The UK advertising industry is seen as the most creative. New technologies like the Internet and digital TV have lead to more advertising space and introduced new methods such as banner advertisement. Mergers and acquisitions are a constant source of growth for the big media holdings that dominate the market. The UK agencies operate internationally and are therefore able to attract world or European wide advertising customers. 2. 7 Customer Analysis Big Corporations When large business customers like ASDA advertise they are mainly concerned about an agency's reputation and creativity; they have high requirements on media used, quality and representing the companys image.
They dont care very much about the price. In 1997, Publicis Ltd held the 20 m account for ASDA. To illustrate which companies spend the most money on advertising and are therefore the most important and desired customers appendix 4 shows their expenditure. Small Business Customers Small stores want to disseminate knowledge about their business; they do not care much about the reputation of an agency and creative ideas. The decisive factors for them are the cost. Public Service Customers Besides the UK government, whose importance in this business is assessed under point 2. 8, there are other advertisers from the public sector.
This group has big advertising budgets and worries little about the price of their campaign. Their main concern is whether an advertisement can transmit their ideas or service clearly to the citizens. They also require the use of all media in order to have a perfect campaign. They do not care very much about the agency's reputation, but creative ideas are very important. In 1997, St Lukes Holdings Ltd won the Governments much-contested 18 m Welfare-to-work campaign, because of their innovative ideas.
Non-profit Charity The aim of non-profit organisations like UNICEF is to arise peoples concern of something e. g. environment, child labour or animal protection. The want to pass their idea to peoples mind therefore the perfect media and perfect ideas are needed. Even though these facts are important they also need to look at the price of an agency's service. Frequency In the advertising area, customers can change from one agency to another agency easily, and switching costs are low.
An example here is Abbott Mead Vickers BBDO Ltd who won six new accounts and lost seven in 1997. Leverage Because big customers like Unilever, Procter and Gamble or supermarkets like ASDA have multimillion-pound accounts, the financial success of many agencies depends on how many of these clients they can attract. Therefore it is important to try to keep the existing ones and constantly to win constantly new accounts. 2. 8 Stakeholder Analysis Customers Customers are very important stakeholders; their role has already been discussed under point 2. 7. UK Government Although it is often omitted from many advertising rankings, the UK government is one of the country's biggest advertisers and stakeholder.
COI Communications (or Central Office of Information as it used to be known) describes itself as the UK government's "executive agency for publicity procurement." Through stricter central government fiscal control and media buying competitiveness, the market is expected to slow down. This slowdown is bound to have an impact on High Street spending and subsequent advertising expenditure. Public The public who is targeted by advertising campaigns is an important stakeholder; their views have a great influence on the content of campaigns and therefore their opinions and views must be taken into consideration. The changing structure of the target audience is important. One factor that will influence the industry is the growing number of Internet users and companies. Web advertising is expected to become increasingly popular, with an estimated 50 million connections to the Internet by the year 2000.
Banks As many agencies are PLCs and part of big holdings, banks are important stakeholders. They have a substantial interest in the financial success of agencies and therefore can be in a very powerful position. Institutions With the move to digital television there will be creative new opportunities that will affect the industry. European Union (EU) copyright proposals on telecommunications and media will also have a direct impact on the switch from analogue to digital TV. Another important reason for such growth is the continued number of corporate mergers and reorganizations. 2. 9 Strengths, weaknesses, opportunities and threats Strengths: UK advertising agencies are worldwide market leader.
The introduction of digital television and the Internet has made more media space available. The diversification of services is attractive to customers because they only need to employ one agency. Weaknesses: The advertising agencies do not only depend on the economical situation in the UK but also in Europe, Asia and the USA because they have international customers. The switching of accounts is very easy this uncertainty about the future, if an agency is able to keep an account is problematic for business planning. The share price can decrease very quickly when an agency looses an account. Opportunities: Web advertising is growing strongly and offers new technological opportunities for targeting special interest groups.
The digital TV also allows targeting niche groups such as sport fans etc. The introduction of the EURO will lead to more European wide advertisement and this will give the UK agencies the opportunity to win more business from other European countries. Threats: A decline in any of the industry's major market is a serious threat to the agencies, because this could lead to a decrease in advertising spending. Legal restrictions by the UK Government or the European Union can make the development of sensational campaigns more difficult. 2. 10 Current Issues The new media like digital television and the Internet are an important issue for agencies at the moment because they are going to change the nature of advertising permanently. It is necessary to react and to learn to apply these new media to use them in the most effective way. Concentration of media ownership impacts the industry.
The power concentrated only in a few hands because of mergers and has as a result, increased prices There are growing concerns that the USA and Europe may slide into a recession. The Bank of England has just lowered interest rates to stimulate growth. However, the UK Treasury could be expected to counter future inflation with stricter monetary policies, impacting on company marketing and advertising budgets also affecting advertising rates. There are a few highpoint's that will generate additional income for the advertising agencies. A British General Election in 2001 / 2002, European Parliament elections, and the British bid for the 2006 World Cup and a future Olympic Games. IV.
Conclusion The future outlook for advertising agencies is very positive; even though there could be a recession all forecasts predict strong growth for all sectors. The already dominating media conglomerates will pursue their growth strategy by further mergers and acquisitions. Technological developments will change the nature of advertising and the importance of involving the new media will enhance. Agencies need to adjust to these changes to use them to their full potential; this is especially necessary to keep internationally competitive.
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Research essay sample on Welfare To Work Mergers And Acquisitions
