The marketing sector has experienced growth over the past three years from a changing technological landscape. The rapid growth of digital advertising practices has boosted activity in the sector. Due to growth in the market and the rapid introduction of new entrants into the market, as well as factors like a declining concentration, most markets in the marketing sector have faced significant structural changes over the past three years.
- Businesses are moving away from traditional forms of marketing like print media, television and radio
- Businesses are quickly adopting digital marketing trends through online and social media ads to reduce costs and more effectively reach potential customers
- The increasing level of smartphone usage and mobile internet services have provided businesses with new ways to target their marketing services to the most likely potential customers
- New technology, such as location-based advertising, has boosted the overall demand for marketing services
Key Takeaway: Buyers should use these new methods of digital advertising as leverage when negotiating to purchase traditional forms of marketing.
- Prices for online advertising have been considerably less costly than traditional advertising methods due to the lack of material costs required
- Due to the fast-growing number of social media platforms, advertising on Facebook, Instagram and Twitter have increased competition and forced other marketing formats to lower their prices
- More efficient and less costly software and hardware have lowered the operating costs of marketing service operators, allowing them to reduce prices
Key Takeaway: Buyers will benefit from innovation in the marketing sector as advertising becomes less costly and more effective.
The concentration in the marketing sector has declined over the past three years as it has become less costly to provide marketing related services, especially in the digital space. Due to the low level of capital investments required to provide marketing services online, new entrants have quickly captured market share over the past three years. For example, social media platforms such as Facebook and search engines such as Google have quickly captured advertising revenue from traditional formats.
Over the next three years, ProcurementIQ projects that providers in the marketing sector will continue to face declining prices due to increased competition and reduced operating costs. Due to the low level of capital investments required to enter the marketing sector, the number of suppliers is forecast to increase over the next three years and push prices down. Also beneficial to buyers, the services that are being offered by marketing agencies are becoming more effective, as platforms and marketers can use big data to target the most likely potential customers. For example, Google collects a tremendous amount of user data from which they can estimate the most likely potential clients. As new marketing service providers enter the marketing sector, buyers will have additional room to negotiate prices for services, especially as concentration continues to decline and boost competition.