The advertising market is part of the economic system is functioning in unity with other markets and developing within the framework of the general laws of the market economy, ensuring social demand for advertising services. In 1980 – 1990, it was the active development of the advertising industry almost worldwide. Particularly active this process took place in all over the world.
Currently, the advertising market is a segment of the developed economies of many countries in the world and includes an extensive system of economic, legal, social, cultural and other relationship to emerge and develop between the main actors of the advertising market, advertisement producer, advertisement distributor and consumer advertising.
There is a close economic relationship between them, which is the basis of the advertising process and the functioning of the market as a whole. The state of the advertising market in the framework of a given economy is directly dependent on the general economic situation in the country, so the promotional activity in the market is sometimes seen as a kind of indicator of economic development.
The Basic Tendencies Of Development Of The Advertising Market
1) Globalization: Modern advertising market is an integral part of the global economy, and therefore on it with one hand, the same processes as in the global economy as a whole, on the other hand has its specific phenomena. The overall trend for the world economy – globalization, i.e. the integration of social and economic process, in which the world is transformed into a single market. The process of globalization is due to several factors, such as the activities of multinational companies active on a global scale; increase in the concentration process and monopolization; the accelerated development of global media and global information exchange; interpenetration of different cultures and the introduction of uniform cultural standards, and others.
2) Integration: The activities of transnational and multinational companies in the global market has led to the integration processes, combining its economic actors, deepening their cooperation, the development of relations between them. Economic integration has proved, especially in expanding product market and technological relations, sharing of resources, combining the capital, creating favorable conditions for economic activity, removal of barriers to mutual. These processes have led to the fact that multinational companies and promote their brands have become leaders in the global consumer market with a turnover equivalent to the budgets of many states. Who is the leading global advertisers lead the markets of most countries in the world, and their advertising costs account for a significant part of the national advertising market.
3) Concentration: The high level of competition on the market led to processes of concentration of its subjects through mergers and acquisitions: the advertisers in the face of industrial and commercial enterprises, and distributors of advertisements in the face of the media. As a result of mergers and acquisitions is an increase in economic efficiency, since they are accompanied by a reduction of parallel structures (administrative, research and organizational). Benefits of the merger for the subjects of the advertising market are manifested in the following …
- Reduced competition and intro enhanced the company’s position in a particular market;
- Cost reduction is achieved by combining the serving production units with the same function;
- Increasing the market value of the merging companies;
- Deepening diversification of production;
- There is a strengthening of economic power at the expense of attracting new financial mechanisms, access to sources of information, and so on.
4) Network: One of the important features of modern advertising market is the development of a global network of advertising agencies due to the fact that advertising has become transnational, and advertising agencies – international. With the development of globalization and the increasing level of competition more and more important in the advertising market becomes fast and flexible adaptation of the internal structure and external linkages agencies to increase global needs of advertisers.
In order to share the risks, improve efficiency and optimize control systems, new forms of organization are formed, inter-institutional coordination and cooperation both vertically and horizontally, which are called “networks”. One of the most important characteristics of the network is considered to be a mutual agreement of the parties to adhere to common priorities and interests within the framework of the overall development strategy. Network helped reduce multiple parallel administrative, research, and organizational structures, as well as reduce the negative features of the administrative hierarchy of the system, on the one hand, and the fierce market competition – on the other.
For the modern advertising market is characterized by the consolidation of the process – the absorption of large advertising agencies small and the formation of holding companies. This allows the advertising holding company to minimize costs and provide a diverse range of advertising services to large advertisers that are interested in expanding markets for their products or services. Formation of large advertising agencies of their global networks began in the mid XX century. Currently, the global advertising market leading several groups of companies that collect the most profitable part of the advertising business, which allows them to control a significant share of the global advertising market.
These groups were formed by the process of mergers and acquisitions around the world many agencies and companies specializing in the field of strategic communications, public relations, market research, promotion, creativity and related activities. Now almost all of the largest advertising agencies are networked and include global advertising holding companies, while continuing to operate under their own names. With its customers network advertising agencies linked to exclusive contracts of advertising campaigns around the world or in particular regions. The close, long-term cooperation with the customer, established traditions adaptation of advertising campaigns to local conditions and monitoring their effectiveness make the communication network advertising agencies and companies with which they cooperate, strong enough.
5) Diversification: The concept of “diversification” expresses one of the trends of the modern advertising market, is associated with increased activity of market participants, primarily advertising agencies, and the output of their activities beyond the core business. The process of diversification due to increased competition in the market and the increasing complexity of advertising.
Diversification allows the subjects of the advertising market at the same time act in several market segments and insures in case of an unforeseen situation worsening on one of them, helping to respond flexibly to changes in the situation. Diversification in the advertising business has been widely developed in recent decades; it has contributed to increase business agility and integrated to meet the diverse demand for advertising services. Diversification businesses advertising services combined with specialization and combining of different types of promotional activities, allowing them to benefit in maintaining its leading position in the market.
The Development Of The Global Advertising Market
The global advertising market is a sphere of international promotional activities related to the systematic sustainable operations on purchase and sale of advertising services, organization resting on the global networks of advertising agencies. The global advertising market emerged and developed in the process of deepening and expanding economic integration, the development of world economy and international trade, transnational and international companies.
Between the global and the national advertising market, there is a close relationship and interdependence. Now there is a convergence of conditions of world and national advertising market, and consequently the working conditions to them. Under the influence of the global advertising market changing quantitative and qualitative parameters of the particular national markets by their preferential alignment to a higher level: the transition to uniform standards of production and services, alignment of the global and national levels, standardization of forms and methods of work, and so on.
State and prospects of the global advertising market are closely linked to the general economic situation in the world. At the same time, the global market has features that distinguish it as against any national market, as well as their combination. The subjects of the global advertising market does not formally belong specifically to one country, so it is assumed that the global market has a relative autonomy, independence and special conditions of the organization of advertising services. The material basis for the formation and development of the global advertising market – the international division of labor, while national advertising markets are based on the social division of labor within the states. However, despite the relative independence and autonomy of the global advertising market, its development is directly dependent on the state of the economies of developed countries of the world.
Development Of The National Advertising Market
National advertising market is a sphere of advertising activity on the scale of a country. State of the national advertising market is largely due to the specific features of the country’s development. Its formation began in the early 1990s, with the first stage of this process was spontaneous, owing to the lack of experience in the advertising market conditions and the legal framework governing the advertising business. In the mid-1990s, there is an integration of the network advertising agencies. As a result of the integration was a process of selection of leaders, at the same time part of the subjects of the advertising market was becoming more homogeneous.
In the second half of the 2000s resulted in the basic processes of formation of the advertising market : formed legislative framework, the basis of which was the Federal Law “On Advertising”, complete the process of consolidation of major advertising agencies, the level provided in the advertising market has grown considerably, there has been some harmonization of relations operators of the advertising market with customers and the media. There was also a system of self-regulation, including non-profit organizations, capable of regulating lying outside the sphere of legislative regulation of the relations between market participants. Currently, at the initiative of these organizations is developing the general principles of cooperation in industry standards.
In recent years, the ratio of the volume on the main sectors of the advertising market looks the same as in developed countries; with the only difference that the advertising market while lagging far behind in terms of the world level. On this basis, it is possible to identify the still developing, not developed. If we consider such a measure the degree of development of advertising in the country, as the ratio of advertising expenditure to Gross Domestic Product (GDP), it remains more than modest in the economy. Backlog also exists in the level and effectiveness of advertising services offered by agencies. However, the main feature of the national advertising market is a dynamic development due to the relatively favorable economic situation, the flexibility of the industry structure, quick response to market developments, the high rate of turnover of capital and the ever-increasing demand for advertising services.
The advertising market has traditionally be divided into national (where the advertising carried out by a national media) and region. Regional market, in turn, can be divided into capital and other regional markets. As a regional market of advertising are considered regions, territories and country. The basis for the differentiation of the national advertising market is the geographical, economic and administrative division.
The advertising market, as the world is heterogeneous, its different segments has its own peculiarities of development. In recent years, the fastest growing segment of the advertising is Internet advertising or Online Advertising: its growth rate twice the performance of the advertising market as a whole. At the same time, the segment of advertising in the press continues to reduce the dynamic that is already close to zero growth. One of the key factors influencing the state of the national advertising market is government regulation, both at the federal and local levels. This factor largely determines the dynamics of individual advertising segments, in particular segments of outdoor advertising, development of which has a negative impact many legislative restrictions at the local level.
National advertising market remains today on the opaque, so the official data on its volume does not exist. A number of organizations on a periodic basis to release their expert opinions on the development of the situation on the advertising market, based on their data. Data from multiple organizations are published in the form of periodic reports and include an overview of the current state of the national advertising market, estimate the amount of the overall market and individual segments, as well as development forecasts.