IndustryIndustry Outlook
Digital Advertising Agencies in the US industry outlook (2021-2026)
The Digital Advertising Agencies industry will continue to grow over the five years to 2026 as more effective advertising tools are developed to measure consumer demographics. In particular, many digital advertising agencies will attempt to implement tools that measure how an advertising campaign drives customer purchasing behavior across numerous digital platforms. For example, the industry has contended with limited tools available to examine consumer demographics for individuals who may have switched from one device to another, potentially causing them to view an advertisement twice. The industry will benefit from more clients allocating their advertising budgets to advertisements that integrate with numerous technologies, including smartphones.
Biggest companies in the Digital Advertising Agencies industry in the US
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.
The companies holding the largest market share in the Digital Advertising Agencies industry include WPP PLC, The Interpublic Group of Companies Inc. and Omnicom Group Inc.
Markets:
The digital advertising market consists of the sales of advertising services by entities (organizations, sole traders and partnerships) that plan, develop, create and manage advertisement and promotional activities in digital media. Only goods and services traded between entities or sold to end consumers are included.
Digital advertising delivers promotional content to users through various online and digital channels such as social media, email, search engines, mobile apps, affiliate programs and websites to show advertisements and messages to audiences.
Digital advertising allows companies to reach the right people with the right message at the right time, thus generating a better return on investment.
Digital advertising allows companies to track the performance of advertising campaigns in real-time which is not possible in traditional forms of advertising. Digital advertising can allow companies to collect data on consumer insights such as; demographics, interests, and habits of the people viewing and interacting with digital ads.
Companies invest in digital advertising for increasing brand awareness, improving product sales, generating qualified leads, and driving repeat purchases. Digital advertising provides the opportunity for the company to create an advertising budget based on their needs and demand.
The market by value in this report is defined as the revenues that enterprises gain from services within the specified market and geography. It does not include revenues from resales either further along the supply chain or as part of other products.
Only services traded between entities or sold to end consumers are included. Whether specifically stated or not, the markets for goods include related services and the markets for services include related goods.
The revenues for a specified geography are consumption values – that is, they are the revenues generated by organizations in the specified geography within the specified market, irrespective of where they are produced. Value is defined as revenues generated from goods or services in a given geographic market through sales, grants or donations in terms of currency (in USD ($) unless otherwise specified).
The market covered in this report includes sales of digital advertising by platform such as mobile ads, desktop ads, digital TV, and others. The report also includes sales of digital advertising by ad format such as digital display ads, internet paid search, social media, online video, and others. The market covered in this report includes sales of digital advertising for various industrial verticals such as; media and entertainment, consumer goods & retail industry, banking, financial service & insurance, telecommunication IT sector, travel industry, healthcare sector, manufacturing & supply chain, transportation and logistics, energy, power, and utilities, and others.