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Sai Kiran Mimani

The document analyzes the advertising industry using Porter's Five Forces model. It finds that the industry has numerous competitors resulting in high rivalry. Entry barriers are low due to low costs and few product differences. The bargaining power of buyers is moderate due to transparency and some substitute options, while the bargaining power of suppliers is low. Finally, the threat of substitution is low due to high switching costs and the inability of substitutes to fully replace advertising.

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Industry Competitors IntensityOf Rivalry •  There are numerous or equally balanced competitors as the industry is highly fragmented. •  High growth in the industry, coupled by highly volatility, innovation and cyclicality. •  Very low fixed or storage cost •  Low differentiation between competitors and low switching cost Exit Barriers are Low Rivalry is High (The%Structural%Analysis%of%Industries,%1980)%
Threat Of New Entrants Entry to barrier is low Economic of Scale – Low it is a highly fragmented industry. Product Differentiation – There are few product lines such as Social Media, Mobile, Display Ads . Capital Requirement – It is low as startup cost is low. Advertising agency work on a percentage model or retainer model. Switching Cost – it is low because advertisers can easily switch from one agency to another.% Access to Distribution Channel – Easy access to distribution channel.% Threat to New Entrance is Low (The%Structural%Analysis%of%Industries,%1980)%
Bargaining Power Of Buyers Full Information – High as there is a lot of transparency in reporting and analytics. Substitute product –There are quite a few substitutes like print media, radio, TV and movies etc but substitution doesn’t solve the same purpose. The Bargaining Power of Buyer is Moderate (The%Structural%Analysis%of%Industries,%1980)%
Threat Of Substitutes Is LOW Threat Of Substitutes Products Low • Buyers%Propensity%to% SubsAtute%% Low • Switching%Costs%% Very high • RelaAve%Price%Performance% of%SubsAtutes%% (The%Structural%Analysis%of%Industries,%1980)%
Bargaining Power Of Suppliers The Bargaining Power of Supplier is Low – Platform Negotiation (The%Structural%Analysis%of%Industries,%1980)%

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  • 2. Industry Competitors IntensityOf Rivalry •  There are numerous or equally balanced competitors as the industry is highly fragmented. •  High growth in the industry, coupled by highly volatility, innovation and cyclicality. •  Very low fixed or storage cost •  Low differentiation between competitors and low switching cost Exit Barriers are Low Rivalry is High (The%Structural%Analysis%of%Industries,%1980)%
  • 3. Threat Of New Entrants Entry to barrier is low Economic of Scale – Low it is a highly fragmented industry. Product Differentiation – There are few product lines such as Social Media, Mobile, Display Ads . Capital Requirement – It is low as startup cost is low. Advertising agency work on a percentage model or retainer model. Switching Cost – it is low because advertisers can easily switch from one agency to another.% Access to Distribution Channel – Easy access to distribution channel.% Threat to New Entrance is Low (The%Structural%Analysis%of%Industries,%1980)%
  • 4. Bargaining Power Of Buyers Full Information – High as there is a lot of transparency in reporting and analytics. Substitute product –There are quite a few substitutes like print media, radio, TV and movies etc but substitution doesn’t solve the same purpose. The Bargaining Power of Buyer is Moderate (The%Structural%Analysis%of%Industries,%1980)%
  • 5. Threat Of Substitutes Is LOW Threat Of Substitutes Products Low • Buyers%Propensity%to% SubsAtute%% Low • Switching%Costs%% Very high • RelaAve%Price%Performance% of%SubsAtutes%% (The%Structural%Analysis%of%Industries,%1980)%
  • 6. Bargaining Power Of Suppliers The Bargaining Power of Supplier is Low – Platform Negotiation (The%Structural%Analysis%of%Industries,%1980)%