Advertising Industry - Market Segmentation

The total media advertising spend in Canada is estimated to grow from USD 9.64 billion (CAD 12.41 billion) in 2015 to USD 13.46 billion (CAD 17.32 billion) by 2021. (Refer The graph beside)

Nowadays, with a plethora of entertainment media available such as TV, DVDs/Blu-rays, the internet and games consoles, the audience is less concentrated and so advertising through a variety of media formats must be considered.

A more diverse range of potential formats to reach customers serves to increase buyer power. As buyers shift towards more digital means of advertising, the advertising agencies are now required to shift their business plans to fit with their customers’ needs.

Digital advertisements may serve to increase specialization within the advertising industry, reducing buyer power, as only select advertising agencies can provide these specialized services. Customers in this market are not typically loyal as alternative agencies can complete the same action; the buyer is able to select the cheapest option for their needs from a range of advertising agencies, thus increasing buyer power.

Mainstream adoption of inexpensive digital cameras, smartphones and easy-to-use photofinishing software packages has drastically changed the structure of the Photography industry in recent years. Digital photography has lowered barriers to entry for this industry, creating a major influx of independent photographers, accounting for more than 90% of all operators.

The Photography industry has started to regain its focus over the past five years, after suffering the twin effects of the economic downturn and rising external competition fueled by the rapid innovation of digital technology. While improved economic conditions, shown in falling unemployment and rising per capita disposable income, have driven consumers to increasingly spend on photography services over the current period, industry revenue growth has been tempered by an ongoing transition to business models that suit digital conditions.

Industry revenue has been increasing over the past five years, as rising total advertising expenditure has boosted demand for industry services. Commercial photography’s strong performance has compensated for weak growth from the industry’s household and school market segments.

In response to dwindling sales, many professional photographers have broadened their offerings to include photo-editing work and other valueadded products to attract consumers. Such products include personalized albums, canvasses, mugs, mouse pads or T-shirts, which stand out from generic products that can easily be replicated at home. Broader adoption of these products has also provided an avenue for greater creativity within the industry as a whole.

As industry participants seek to add value to their services, some photographers are also leveraging online social networks, such as Flickr and Instagram, to share photos of clients with their friends and families. Other photographers are focusing on niche markets and products, such as offering professional portraits that can be used as profile pictures for LinkedIn or Facebook. Smaller commercial photographers are increasingly helping local businesses market their brands more effectively.

Client recommendations via online services, such as Yelp or Facebook; online photo sharing; and a strong presence on social media, are increasingly becoming key success factors for smaller companies. Profit margins have climbed due to lower production and purchase costs associated with adopting more efficient photo developing methods.

The era of technically advanced, yet highly accessible personal digital cameras has forced photographers to go beyond simply taking pictures to stay relevant.