Advertising, NEC

SIC 7319

Companies in this industry

Industry report:

This classification covers establishments primarily engaged in offering advertising services not elsewhere classified, such as aerial advertising, circular and handbill distribution, distribution or delivery of advertising material or samples, and transit advertising. Establishments primarily engaged in direct mail advertising are classified in SIC 7331: Direct Mail Advertising Services; those that write advertising copy but do not place the advertising with media are classified in SIC 8999: Services, Not Elsewhere Classified; and those that provide services in commercial art, graphics, or other creative advertising services but do not place the advertising with media are classified in SIC 7335: Commercial Photography or SIC 7336: Commercial Art and Graphic Design.

The advertising services offered by this industry include coupon distribution; display service, except outdoor; independent media buying services; poster advertising, except outdoor; distribution of product samples; shopping news advertising and distribution; and sky writing. In 2010 approximately 7,285 establishments in this industry employed 43,290 workers, according to Dun & Bradstreet's Industry Reports. The leading states in terms of employment were California, with 6,770 employees in the industry, followed by New York with 5,535; Florida with 3,507; and Texas with 2,973.

Historically, one of the most active sectors of this industry has been media buying services. These companies are independent of traditional advertising agencies and serve their clients only by purchasing media. Responsibilities of media buyers include monitoring media space and purchase availability; verifying the accuracy of ads placed; and calculating rates, usage, and budgets. These services charge 3 to 5 percent of the cost for the ad, as opposed to the traditional 15 percent charged by agencies.

As clients have became more cost-conscious, many bypassed the traditional advertising agency and moved to independent companies to make their media purchases. For instance, in the early 1990s more than 22 percent of the 201 agency executives responding to a Advertising Age Beta Research Corp. survey reported that their clients used independent media services. Since 1989, many accounts have moved to independent media services. These include the $90-million American Isuzu Motors account, the $90-million Nike account, the $70-million Reebok International account, and the $50-million Bally account. In 1996, this trend continued when Bell South Corporation awarded its $185-million plus account to Western International Media (now Initiative Media). Efficiency of service and the power of media buying consolidation were two reasons cited for the switch to independents. In 1998, media buying services handled 6 percent of all advertising. By 2000, media shops had seen remarkable growth, with some $6 billion in billings movement. Due to the economic downturn and 9/11 attacks of 2001, media shops saw a more modest $4.7 billion in billings. In 2002, a mere $4.2 billion in media billings shifted hands. Total industry sales in 2010, according to Dun & Bradstreet, reached $6.4 billion in 2009.

The world's largest media planning and buying agency in 2010, according to Hoovers, was Starcom MediaVest Group Inc. of Chicago. The firm had 110 offices in about 70 countries. A subsidiary of Paris-based Publicis, Starcom MediaVest employed 5,800 people in 2010. Optimum Media Direction, also known as OMD Worldwide, was another industry leader. Headquartered in New York, OMD Worldwide had 140 offices in almost 80 countries in 2010. Other important players in the industry included McCann Worldgroup (New York), J. Walter Thompson Co. (New York), and Leo Burnett Co. Inc. (Chicago). The New York-based Initiative Media (formerly Western International Media until acquired by the Interpublic Group) was also important. Initiative Media had more than $10 billion in media billings and $325 in revenue in the mid-2000s. Clients included the U.S. Postal Service, GlaxoSmithKline, Big Lots, and Quizno's.

Promotional items and services made up another active segment in this industry. This segment was especially successful in grocery stores in the late twentieth and early twenty-first century. In the past, marketers of packaged goods used kiosks that dispensed coupons, along with advertising on supermarket floors and shelves to promote their products. The industry, however, developed a new generation of promotional services that capitalized on technology. In 1997, for example, J.C. Penney, Toys "R" Us, and Boston Market offered coupons from an Internet site. Developed by the Interactive Coupon Network (ICN), customers retrieved proprietary printing software that allowed them to customize and print their own coupons locally. Encoding assured that coupons were authentic. McDonald's and Domino's participated in another online experiment called Smart Save in 1997. Using the Internet and a "smart" card, consumers visited the Smart Save site, browsed for coupons, and transferred the information to the "smart" card for later use.

By the mid-2000s, a promotion industry survey revealed that markets spent nearly twice as much on consumer promotions (46 percent of their marketing budget) as they did on consumer advertising (24 percent of their marketing budget). Consumer promotion spending totaled $288.3 billion in 2003, up 9.7 percent for the year. The top three tactics in 2002 were online promotions (15 percent); research (13 percent); and in-store initiatives (10 percent), while in 2003, the top three tactics were direct mail (36 percent), retail merchandising (35 percent), and coupons (32 percent).

Transit advertising, which constituted advertising on vehicles such as buses and "street furniture" such as city benches, was another growth area for the industry. Gannett Outdoor Group operated transit displays in six major markets, including New York and Los Angeles, in the late 1990s. Gannett's subsidiary in Toronto, Canada, expected a growing market for transit advertising and added about 500 new travel shelters throughout Canada. In 1996, Outdoor Systems of Phoenix agreed to buy Gannet Outdoor Group for $690 million. In 2010, Clear Channel Outdoor Holdings of San Antonio, Texas, had 195,000 display spots in the Americas and another 640,000 around the world. Clear Channel was the first to utilize a new technology in transit advertising in 2005 when it placed LED screens above 78 New York subway stations. Clear Channel then launched its digital roadside billboards in Cleveland in April of that year. The company subsequently converted many of its static indoor signs to full-motion digital electronic signs. By the early 2010s another leader in the transit advertising sector, Captivate Network, had built a network of 8,200 TV screens in office building elevators with the aim of targeting business executives. Lamar Advertising Co. was another significant company in transit advertising in 2010, with almost 27,000 signs on buses and at bus stops in more than 15 states, as was CBS Outdoor, which sold advertising space in bus and train stations, in stadiums, and at malls. "Not all media can say technology is a friend. I don't think there is a technology that can hurt outdoor, short of people teleporting," said Nancy Fletcher, president and CEO of the OAAA.

By the early 2010s, the use of digital technology in advertising was becoming more common. Companies in the industry continued to capitalize on the latest technology to get consumers' attention. For example, in 2010 Clear Channel produced the "world's first 'real 3D' campaign," according to Campaign magazine, when it put ads for the movie Percy Jackson on 42-inch flat screens in bus shelters. The ads appeared to be 3D, without the viewers wearing special glasses.

Advertising employment was expected to grow 8 percent between 2008 and 2018, according to the U.S. Bureau of Labor Statistics, due to increased competition among industry participants and the need for more effective marketing.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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