What Is Advertising Industry Analysis?

Advertising industry analysis involves studying data related to the performance and activities of advertising companies. These firms typically review this data before making budgetary decisions or marketing plans. Other companies take the results of advertising industry analysis into account when deciding how best to market new and existing products.

The analysis of advertising industry data relates to a particular period of time such as a month, quarter or year. The information used in study also covers either a particular geographic region or information pertaining to the advertising activities of firms in a particular industry. Analysts gather information to determine how much money firms spent on advertising during period in question. The analysts employed by advertising firms review this information and attempt to identify trends such as which type of firms are spending less on advertising and which companies have increased spending. An advertising firm may use this information to good effect by focusing its marketing efforts on firms with large advertising budgets or by trying to salvage relationships with firms that have reduced spending.

In addition to gathering information about advertising expenditure in general, analysts also compile reports that detail how much money is being spent on advertising through different mediums such as television, the Internet or commercials on the radio. Advertising industry analysis enables marketing firms to compare the cost of promoting products and services through these different mediums. A company may decide to shift its focus away from one medium due to price hikes that are highlighted in the analytical reports. An advertising firm that focuses on advertising through one medium such as television may embrace another medium if industry wide data suggests that firms are keen to promote products through the Internet or another medium.

Many advertising companies operate globally in which case these firms pay particular attention to industry data at the national level. Recessionary periods may cause firms to spend less on advertising in which case revenues for advertising and marketing firms are likely to decline. An advertising firm can use industry analysis to predict economic trends and it may decide to focus its marketing efforts in a country that is experiencing an economic boom rather than a recession.

Aside from advertising firms, various different types of businesses use advertising industry analysis during the budgeting process. Firms can see how much money competitors typically spend on advertising costs. Additionally, these companies can also use industry data to compare the cost of working with existing marketing partners with the cost of working with other companies. A firm may find that it can significantly reduce its operating costs by advertising its products through a new medium or switching its advertising contract to a new partner firm.