Business for Sale Industry Economics
2002 - 2021
2021 - 2027
The fast change from conventional print marketing to digital commercials has helped the Digital Advertising Agencies business during the last five years. Demand for digital advertising services from the retail, financial services, automotive, and telecommunications industries, in particular, has boosted industry income.
Many firms have hired digital advertising services to boost brand exposure across numerous screens and platforms, as more customers create website traffic via the usage of smartphones and tablets. In addition, as more product manufacturers offer their items straight online, more retailers are requesting industry services like search engine visibility services to help them compete.
Industry revenue is expected to expand at an average pace of 17.2 percent over the next five years, including a 5.6 percent increase in 2019 to $15.7 billion. Total industry operators are predicted to grow at an annualized rate of 16.2 percent to 4,471 in the five years leading up to 2019.
Many companies have asked for industry services to help them distribute ads in digital forms, particularly online for streaming video content. Additionally, some industry customers have shifted away from business models that need study and demonstrable outcomes prior to the launch of advertising in favor of a testing environment that has assessed the financial feasibility of new concepts.
For example, before introducing a product, customers have acquired digital advertising services that evaluate internet traffic demographics associated with their social media websites, which has benefited the sector considerably. Due to the rising demand for specialized and niche digital advertising services, industry profit is predicted to rise by 6.1 percent in 2019. In 2019, the total number of workers in the sector is predicted to rise by 16.5 percent annually to 71,049 people.
Digital advertising companies who can create novel technologies like data mining with applications for evaluating client purchase behavior will see a lot of demand over the next five years, up to 2024. Many firms will increase their spending on digital advertising as online media streaming services and social media continue to generate significant amounts of web traffic. As a consequence, industry revenue is expected to grow at a 4.4 percent yearly pace to $19.5 billion in the five years leading up to 2024.
The Digital Advertising Agencies industry comprises companies that create advertising campaigns for digital media outlets. Over the five years to 2019, the industry has exhibited strong growth due to more businesses requiring digital advertising services to strengthen their online presence.
In particular, the shift from desktop to mobile has bolstered demand for industry services; in 2019, mobile ad revenue is expected to constitute about half of all digital ad revenue, according to the latest full-year data from the Internet Advertising Revenue Report by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC).
Over the five years to 2019, industry revenue is anticipated to grow at an annualized rate of 17.2%, including a jump of 5.6% in 2019 to reach $15.7 billion. Profit, measured as earnings before interest and taxes, is expected to rise to 6.1% of revenue.
Over the past five years, digital advertising agencies have offered various pricing models to attract and retain clients. According to data from IAB, impression-based advertising, or cost per thousand (CPM), accounted for 33.0% of advertising revenue in the first half of 2017, down slightly from 34.0% in the first half of 2016.
Comparatively, performance-based pricing did not change since 2016, while hybrid pricing models (i.e. combining performance and CPM pricing) rose about 1.0%. Impression-based advertising, in which advertisers pay for the number of times an advertisement is shown to an internet user regardless of whether the user clicks on it, has fared well during the period.
Many businesses have demanded impression-based advertising due to the tangible results it provides; the number of user views is useful for targeting advertisements to consumers who stream videos online.
Pay-for-performance, a process in which advertising agencies receive a fixed commission in addition to a bonus based on the client’s qualitative evaluation of an advertisement’s effectiveness, has remained stable during the period. As more innovative tools have been developed to help clients measure the effectiveness of their advertisements in influencing consumers’ purchasing patterns, performance-based pricing models have risen in popularity.
As a result, advertisers have benefited from typically higher revenue streams, depending on the success of the advertisement, as well as strong incentives to develop innovative advertising tools, which may have been difficult to sell to clients that use other pricing models. For example, tools that measure the effects of online advertising campaigns on offline sales have been increasingly developed during the five-year period.
Over the five years to 2019, internet traffic volume is expected to skyrocket at an annualized rate of 23.5%. As more consumers access websites through their smartphones and tablets, more businesses are investing in digital advertising to broaden their reach.
Furthermore, many digital advertising agencies have streamlined their services to provide advertisements that integrate well with numerous devices, including mobile phones, computers, and tablets.
According to data from a 2017 SimilarWeb study, 55.8% of all internet traffic comes from mobile, though people spend about 60.0% of their total online time using a desktop. As a result, many advertising agencies have increasingly provided cross-device advertisements over the past five years.
The trend of users accessing websites through numerous devices has also posed a problem for advertising agencies. For example, measuring consumer demographics has become particularly arduous for advertising agencies over the past five years due to the difficulty of measuring which users may have switched from one device to another and thus seen the same advertisement twice.
Nevertheless, popular video-sharing websites such as YouTube are taking advantage of advertising opportunities. Advertisements can be placed on videos before, during, or after a user streams a video, enabling the industry to more effectively target specific demographics.
Video streaming sites such as Hulu have also provided more digital advertising opportunities by enabling viewers to customize what type of advertisement, they would like to view prior to watching their video. The trend of customization and the automated targeting of marketing materials is making advertising more effective and less intrusive to users, thus facilitating more seamless integration between advertisements and users’ online experience.
ENTERPRISES AND EMPLOYMENT
Over the past five years, many digital advertising agencies have entered the industry to take advantage of clients’ shift away from traditional forms of advertising, such as print media, and toward digital advertisements. Small, independently operated digital advertising agencies have fared well due to the strong demand for digital advertising from niche markets, such as local businesses.
Over the five years to 2019, the number of industry enterprises is expected to rise at an annualized rate of 16.2% to 4,471 companies, as digital advertisers have inundated the industry to provide services in a highly fragmented market.
During the same period, employment is expected to increase at an annualized rate of 16.5% to 71,049 people. This significant jump can be attributed to digital advertising agencies hiring more programmers to develop innovative tools that measure consumer demographics and advertisement effectiveness in driving customer purchasing behavior across numerous mediums.
As more efficient advertising methods to analyze customer demographics are created, the Digital Advertising Agencies’ business will continue to rise over the next five years, through 2024. Many digital advertising companies, in particular, will want to add systems that track how an ad campaign influences client purchase behavior across several digital platforms. For example, the industry has struggled with the lack of tools available to study consumer demographics for people who may have moved from one device to another, perhaps seeing advertising twice.
More customers will allocate their advertising expenditures to commercials that interact with a variety of technologies, such as smartphones, tablets, and desktops, which will assist the sector. As a consequence, industry revenue is expected to grow at a 4.4 percent yearly pace to $19.5 billion in the five years leading up to 2024.
A significantly slower increase in the number of mobile internet connections and the proportion of services done online will be linked to a significant slowdown, with the former approaching saturation owing to the strong increase in internet traffic levels. Slower growth is also likely to result in greater labor costs, lowering profit margins.
The landscape of the industry will continue to shift over the next five years. According to Forrester Research Inc., e-commerce sales will account for 17.0 percent of total retail sales in the United States by 2024, up from 12.7 percent in 2017. E-commerce revenues are also predicted to increase over the next five years, through 2024.
As a consequence, many of this industry’s consumers, especially merchants, will see the need of having a strong digital presence in order to increase sales. By 2020, half of all advertising expenditures spent globally will be spent online, according to Magna.
The amount of videos seen on the internet is expected to continue to rise, encouraging many organizations to engage in digital advertising services to target certain groups. As a consequence, the Interactive Advertising Bureau predicts that income from video advertising will increase in the next five years, providing the industry with a steady source of cash.
In the next five years, fewer people will use computers as their primary means of accessing the internet; as a result, many firms will invest in simplified digital advertising services that span several screens and platforms.
In the internet era, mobile advertising is rapidly expanding, and businesses are continuing to spend more in the format. The number of mobile internet connections is predicted to rise in the five years leading up to 2024, which will aid this trend.
The distinction between digital media and conventional advertising, particularly adverts targeted to television shows, is projected to blur during this time. Interactive commercials, such as those on social media that allow viewers to debate their favorite TV shows online, will grow more common.
THE STRUCTURE OF THE INDUSTRY
Many digital advertising companies will continue to join the market in the five years leading up to 2024, catering to the high demand for interactive commercials that simplify the user experience across several interfaces, such as smart TVs and tablets.
Many marketers, for example, may attempt to link advertising seen on television with the social networking profiles and websites of those same customers, so guiding internet traffic. In the five years to 2024, the number of industrial firms is predicted to expand at an annualized pace of 10.9 percent, reaching 7,486 firms, with the majority of them being non-employees, owing to growth prospects.
Over the next five years, the creation of novel industry technologies, such as those that analyze how advertising affects customer purchase behavior across several user devices, will become increasingly prevalent. As a consequence, more programmers will be required in the business.
Over the five years to 2024, employment in the industry is predicted to grow at a 7.6% annualized pace to 102,304 individuals as digital advertising firms hire more graphic designers, information technology professionals, and other skilled workers.
Advertisement campaigns are created by companies in this area and distributed via digital media venues. The agencies offer consultation, creative services, account management, creation of advertising content, media planning, and procurement via in-house skills or subcontracting.
The industry of Digital Advertising Agencies is in its early stages of development. Sector value-added, which represents the contribution of the industry to the entire economy, is expected to expand at an annualized rate of 11.1 percent during the next ten years through 2024. In comparison, GDP is predicted to rise at a pace of 2.1 percent on an annualized basis for the same time period.
As the number of internet traffic increases over the timeframe, more firms will invest in digital advertising services in order to increase sales. Strong demand for digital advertising services from the retail, financial services, automotive, and telecommunications industries, in particular, will boost industry income during the next ten years.
Due to a need-based demand for advertising services from specialized industries, such as local companies, small, independently run digital advertising companies have also flooded the market. Demand for industry services will rise as new technologies make it easier for digital marketers to track consumer demographics, especially how they travel between platforms.
Over the last five years, mobile technology has offered the industry new means to market goods and services, such as location monitoring, which will likely become more prominent in the next years. Furthermore, advances in software and analytics have improved the targeting and effectiveness of digital advertising distribution.