Porters Five forces for Advertising and Branding Industry
Premium foods-ad campaign for global QSRs’ in India Advertising and Branding IndustryDDBMudra - McDonalds McSpicy Vs O&M - KFC Fiery Grilled Chicken EGMP – 04 Bangalore
Advertising - Industry Overview Role of advertising: For any organization, it’s resources and core competencies alone cannot bring the competitive advantage, unless it is able establish the brand and penetrate the market for the same. Effective advertising and branding plays a vital role in the strategic positioning and growth. Key Services: • Creating brand position & advertising campaigns for their clients. • Offerings include creative services, production, account management, and media planning. • Major companies include Interpublic and Omnicom, (both headquartered in the US); WPP (Ireland); Publicis (France); Dentsu (Japan); and Hakuhodo DY Holdings (Japan).
Industry structure• Long term relationship with the client.• Campaign objectives and metrics are established between client and agency.• Contract with fee structure which is based on Commission.• Campaign performance measures are obtained from neutral platform based on platform related metrics.
Industry Size India advertising spending - 2010 Internet 7.5 OOH 0.17 Live Entertainment 0.18 Music 0.74 Million INR Radio 12 Print Media 195 Filmed entertainment 153 Television 427 0 50 100 150 200 250 300 350 400 450 Source : Media Gyaan Accessed on 24 Jan 2013
Competitive Landscape• Creative skills and Client relationships.• Large companies serve varied needs of major customers.• Small companies compete in niche markets by offering lower pricing.• Industry is fragmented.• Provide end to end solutions in line with strategic goals.• Rapid advancements in technology - cost effectiveness.
Threat of New Entrants • Entry Barriers – Engagements based on long term relationships. – Attracting , nurturing & retention of creative talent is expensive & challenging. – Difficult to attain deep connect with regional demographics, behaviours, attitudes and values. – Constraints in getting access to key media channels or space. Expected Retaliation • Use of client relationships. • Leverage regional presence. – Conclusion : Threat of new entrants is low.
Bargaining power of Suppliers• Premium ad spaces are limited and supply is less compared to demand.• Seasonal campaigns puts pressure on supply.• Product launches demand better integration with the supplier.• Supplier concentration to firm concentration ratio.• Suppliers are industry independent.• Forward integration is a possibility.• Conclusion : Bargaining power of suppliers is high.
Bargaining power of Buyers• Long term relationships with static fee structures.• Buyers are large and can demand concessions.• Identity of buyer adds prestige to sellers list of customers.• Backward integration by buyer not possible.• Bargaining power of Buyers are high.
Threat of substitute products• No absolute substitutes for an Ad-Campaign.• Constant evolution of technology such as e-Commerce, Social Media tools etc offers new channels for forward integration with low switching costs.• Conclusion: Threat of substitutes is Low
Rivalry among existing competitors• High stakes with each campaign to build credibility.• Large budgets for ad campaigns.• High profile client base adds to premium.• High premium on scarce resources.• Conclusion : Rivalry among existing competitors is high.
Five Forces conclusion• Threat of new entrants : Low• Bargaining power of Buyers : High• Bargaining power of Suppliers : High• Threat of substitute products : Low• Rivalry among existing competitors: High• Overall the advertising industry is not an attractive industry to earn above average returns.
The CampaignMcSpicy Fiery Grilled Chicken• Tagline • Tagline – How Spicy is the McSpicy. – Sets You on Fire.• Campaign • Campaign – Social interaction using QR Code with a – 360-degree marketing campaign. Microsite. – Thematic TVC launch, radio• Results promotions, innovative digital activations, outdoor – 50876 CTR’s and 15th most watched and in-store promotions. video on Youtube India. • Results – 250,000 people and getting 10,000 page – 1500 videos recorded, and 70,000 new users views on YouTube joining the growing ranks of KFC Facebook fans† – 275% of projected sales target. – Established KFC as the leader in the segment. – Second best selling item on the menu.**Source : DDB Mudra website † Source : Exchange4Media website
Campaign Comparison• Ogilvy’s Fiery grilled Chicken campaign – worked far better and drove more footfalls compared to DDB Mudra’s McSpicy. – Ogilvy nominated for Cannes Golden Lion award.• Ogilvy’s campaign created continuous engagement, Mudra’s onetime engagement.• Ogilvy’s Integrated campaign across all channels worked effectively whereas Mudra focused one dimensionally.• Ogilvy engaged effectively with target audience with a lot more interactivity compared to Mudra.