Advertising Industry - Ganpat University Institutional Repository

“ IN DEPTH STUDY ON ADVERTISING INDUSTRY ”
MANAGEMENT RESEARCH PROJECT- I
Submitted
In the partial fulfilment of the Degree of
Master of Business Administration
Submitted by
Name of Students
Roll No
Patel Apoorva C.
13044311050
Patel Arpankumar M.
13044311053
Sharma Jayesh R.
13044311127
Vyas Parthkumar M.
13044311147
Patel Ronak D.
13044311103
Suthar Dipak R.
13044311137
Patel Vishalkumar S.
13044311113
M.B.A. Semester-III
Under the Guidance of
Prof. (Dr.) Mahendra Sharma
Prof. & Head
V. M. Patel Institute of Management
&
Dr. Harsha Jariwala
Dr. Abhishek Parikh
Faculty Members
V. M. Patel Institute of Management
Submitted To:
V. M. Patel Institute of Management
Ganpat University,Kherva
(December- 2014)
CERTIFICATE BY THE GUIDE
This is to certify that the contents of this report entitled “In Depth Study On Advertising
Industry” by Patel Apoorva (13044311050), Patel Arpankumar (13044311053), Sharma
Jayesh (13044311127), Patel Ronak (13044311103), Suthar Dipak (13044311137), Patel
Vishalkumar (13044311113), Vyas Parthkumar (13044311147) submitted to V. M. Patel
Institute of Management for the Award of Master of Business Administration (MBA
Semester -III) is original research work carried out by them under my supervision.
This report has not been submitted either partly or fully to any other University or Institute
for award of any degree or diploma.
Prof. (Dr.) Mahendra Sharma,
Professor & Head,
V. M. Patel Institute Of
Management,
Ganpat University.
Date :
Place :
i
CANDIDATE’S STATEMENT
We hereby declare that the work incorporated in this report entitled “In Depth Study On
Advertising Industry” in partial fulfillment of the requirements for the award of Master of
Business Administration (Semester - III) is the outcome of original study undertaken by me
and it has not been submitted earlier to any other University or Institution for the award of
any Degree or Diploma.
Name of Students
Roll No
Patel Apoorva C.
13044311050
Patel Arpankumar M.
13044311053
Sharma Jayesh R.
13044311127
Vyas Parthkumar M.
13044311147
Patel Ronak D.
13044311103
Suthar Dipak R.
13044311137
Patel Vishalkumar S.
13044311113
Date :
Place :
ii
PREFACE
Practical study plays a vital role in the field of education. It has been introduced for the
student to get practical knowledge along with theoretical knowledge only bookish knowledge
is not right way of learning anything especially for the management students. How
management principals are implemented in business can only be known through practical
study, students can be very well aware about industrial environment like problems,
opportunity, different situation etc. this helps the student to have better understanding and
also give them a chance to show their skills and ability.
The principal concern of this report is to reveal my learning of practical business scenario. In
writing this report I have drawn vast amount of the information from various senior people
and simultaneously supplemented by various other people, annual reports, letters, journals
etc.
Here, I am presenting a project on the different concept that I saw, fill and experience, while
the work on the project report. I have tried my level best to do the proper justification with
my work in this project.
Name of Students
Roll No
Patel Apoorva C.
13044311050
Patel Arpankumar M.
13044311053
Sharma Jayesh R.
13044311127
Vyas Parthkumar M.
13044311147
Patel Ronak D.
13044311103
Suthar Dipak R.
13044311137
Patel Vishalkumar S.
13044311113
iii
ACKNOWLEDGEMENT
It was really difficult for me to complete the management research project without getting cooperation of certain people. In other words there are so many external people who directly or
indirectly help me in my management research project.
First of all, I am very grateful to our collage H.O.D. Prof. MAHENRA SHARMA for his able
leadership and our project Report who providing their valuable time and guideline to me
regarding the management Research project report.
I am also thankful to Dr.Harsha Jariwala and Dr. Abhishek Parikhwho gives guideline our
group to do management research report in their college and helped me by giving all the
required information for a period . I am also thankful to my friends who help me and guide
me.
Name of Students
Roll No
Patel Apoorva C.
13044311050
Patel Arpankumar M.
13044311053
Sharma Jayesh R.
13044311127
Vyas Parthkumar M.
13044311147
Patel Ronak D.
13044311103
Suthar Dipak R.
13044311137
Patel Vishalkumar S.
13044311113
iv
INDEX
Sr. No
Particulars
Page NO
CERTIFICATE BY THE GUIDE
CANDIDATE’S STATEMENT
PREFACE
ACKNOWLEDGEMENT
I
II
III
IV
1
Chapter 1 : INTRODUCTION
Introduction of Advertising Industry
Advertising Features
Types of Advertising
Objectives of Advertising
Media of Advertising
Indian Advertising
History
Advertising Agencies
Function of Advertising Agencies
Types of Advertising Agencies
5
6
8
9
11
12
15
16
19
20
21
2
Chapter 2 : MAJOR PLAYER IN INDUSTRY
Top Advertising Companies of India
Market Capitalization
Size of the industry
Total contribution to the economy/ sales
Employment opportunities
Latest developments
Characteristics of Indian advertising industry
23
24
30
30
30
31
31
32
3
Chapter : 3 STRATEGIC ANALYSIS
Strategic Management Tools to be used to study for
Advertising industry analysis
Driving Force
SWOT Analysis
PESTL analysis of advertising industry
Michael Porter’s Five Force Analysis
Phase of life cycle
33
34
35
36
38
41
52
4
Chapter :4 Financial Analysis & B-Plan
Executive Summary
Market Analysis Summary
Service Business Analysis
Marketing Strategy
Competitive Edge
Business Ratios
54
55
58
60
60
61
68
4
Conclusion
70
5
Bibliography
71
CHAPTER : 1
INRODUCTION
Page | 5
Introduction of Advertising Industry
The objectives of all business are to makes profits and a merchandising concern can do that by
increasing its sales at remunerative prices. This is possible, if the product is widely polished to be
audience the final consumers, channel members and industrial users and through convincing arguments
it is persuaded to buy it. Publicity makes a thing or an idea known to people. It is a general term
indicating efforts at mass appeal. As personal stimulation of demand for a product service or business
unit by planting commercially significant news about it in a published medium or obtaining favorable
presentation of it upon video television or stage that is not paid for by the sponsor.
On the other hand, advertising denotes a specific attempt to popularize a specific product or service at a
certain cost. It is a method of publicity. It always intentional openly sponsored by the sponsor and
involves certain cost and hence is paid for. It is a common form of non- personal communication about
an organization and or its products idea service etc. that is transmitted to a target audiences through a
mass medium. In common parlance the term publicity and advertising are used synonymously.
What is Advertising:
The word advertising is derived from the Latin word viz, "advertero" "ad" meaning towards and
"verto" meeting towards and "verto" meaning. "I turn" literally specific thing".
Advertising is a non-personal form of promotion that is delivered through selected media outlets that,
under most circumstances, require the marketer to pay for message placement.
Advertising is, in fact, the most prominent and powerful medium in the present commercial world. It
creates an entire world view, shaping our attitude and beliefs. Advertisements permeate every aspect of
life and most of us are hardly aware of it. it largely depend on how an individual bring works and so
utmost care is taken to exploit the emotions that play an important role in establishing a firm memory of
an advertisement and predisposing the consumers to buy the brand that is being advertised. Over a
period of time, advertising has been undergoing morphing changes slowly and steadily with multi-facet
approach.
Advertising has long been viewed as a method of mass promotion in that a single message can reach a
large number of people. But, this mass promotion approach presents problems since many exposed to an
advertising message may not be within the marketer’s target market, and thus, may be an inefficient use
of promotional funds. However, this is changing as new advertising technologies and the emergence of
new media outlets offer more options for targeted advertising.
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Advertising also has a history of being considered a one-way form of marketing communication where
the message receiver (i.e., target market) is not in position to immediately respond to the message (e.g.,
seek more information). This too is changing. For example, in the next few years technologies will be
readily available to enable a television viewer to click a button to request more details on a product seen
on their favorite TV program. In fact, it is expected that over the next 10-20 years advertising will move
away from a one-way communication model and become one that is highly interactive.
Another characteristic that may change as advertising evolves is the view that advertising does not
stimulate immediate demand for the product advertised. That is, customers cannot quickly purchase a
product they see advertised. But as more media outlets allow customers to interact with the messages
being delivered the ability of advertising to quickly stimulate demand will improve.
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Advertising Features
By looking into the meaning and definition of advertising we can sum up the following features of
advertising.
 Non- personal presentation of message: In advertising there is no face-to-face or direct contact
with the customers; it is directed to the prospective buyers in general.
 Paid form of communication: In advertising the manufacturer communicates with prospective
customers through different media like, newspapers, hoardings, magazines, radio, television etc.
He has to pay certain amount for using some space or time in those media.
 Promotion of product, service or idea: Advertisement contains any message regarding any
particular product, service or ever an idea. It makes people aware about the product and induces
them to buy it.
 Sponsor is always identified –The identity of the manufacturer, the trader or the service provider
who issues advertisement is always disclosed.
 Communicated through some media- Advertisements are always communicated through use of
certain media. It is not necessary that there will be just one medium. All the media may also be
used.
Page | 8
Types of Advertising
If you ask most people what is meant by “type” of advertising, invariably they will respond by defining
it in terms of how it is delivered (e.g., television ad, radio ad, etc.). But in marketing, type of advertising
refers to the primary “focus” of the message being sent and falls into one of the following four
categories:
 Product-Oriented Advertising
Most advertising spending is directed toward the promotion of a specific good, service or idea, what we
have collectively labeled as an organization’s product. In most cases the goal of product advertising is to
clearly promote a specific product to a targeted audience. Marketers can accomplish this in several ways
from a low-key approach that simply provides basic information about a product (informative
advertising) to blatant appeals that try to convince customers to purchase a product (persuasive
advertising) that may include direct comparisons between the marketer’s product and its competitor’s
offerings (comparative advertising).
However, sometimes marketers intentionally produce product advertising where the target audience
cannot readily see a connection to a specific product. Marketers of new products may follow this
“teaser” approach in advance of a new product introduction to prepare the market for the product. For
instance, one week before the launch of a new product a marketer may air a television advertisement
proclaiming “After next week the world will never be the same” but do so without any mention of a
product or even the company behind the ad. The goal is to create curiosity in the market and interest
when the product is launched.
 Image Advertising
Image advertising is undertaken primarily to enhance an organization’s perceived importance to a target
market. Image advertising does not focus on specific products as much as it presents what an
organization has to offer. In these types of ads, if products are mentioned it is within the context of
“what we do” rather than a message touting the benefits of a specific product. Image advertising is often
used in situations where an organization needs to educate the targeted audience on some issue. For
instance, image advertising may be used in situations where a merger has occurred between two
companies and the newly formed company has taken on a new name, or if a company has received
recent negative publicity and the company wants to let the market know that they are about much more
than this one issue.
Page | 9
 Advocacy Advertising
Organizations also use advertising to send a message intended to influence a targeted audience. In most
cases there is an underlying benefit sought by an organization when they engage in advocacy
advertising. For instance, an organization may take a stand on a political issue which they feel could
negatively impact the organization and will target advertisements to voice their position on the issue.
 Public Service Advertising
In some countries, not-for-profit organizations are permitted to run advertisements through certain media
outlets free-of-charge if the message contained in the ad concerns an issue viewed as for the “greater
good” of society. For instance, ads directed at social causes, such as teen-age smoking, illegal drug use
and mental illness, may run on television, radio and other media without cost to organizations
sponsoring the advertisement.
Page | 10
Objectives of Advertising
You have learnt that the main purpose of advertising is to communicate massage or information to the
customers. But while communicating such message or information it also serves purposes beneficial for
the sponsor or advertiser. Let us look into the various objectives of advertising.
 To educate customers
Can you remember the advertisement of Dandi Namak on television? In this advertisement it is said that
Dandi Namak is good for health as it contains Iodine. This message educates you that iodine is good for
health and Dandi Namak contains iodine.
 To create demand for new product
You read in newspaper that a new type of pen called ‘Gel pen’ is introduced in the market, which is very
economical and convenient in writing. This motivates you to buy the said pen. Similarly, many students
like you shall also buy gel pen after coming to know about it through advertisement. This will create a
demand for the new product launched in the market.
 To retain existing customers
You might remember that Nirma washing powder was a very popular detergent. But, after Wheel
powder came to the market the sale of Nirma suddenly decreased. Then the manufacturers of Nirma
improved the product and advertised about the same in different media. After knowing this the persons
who were earlier using Nirma did not switch over to Wheel and continued using Nirma. In this manner
Nirma sustained its existing demand. Thus, advertising helps the manufacturers not only to create a
demand for a new product but also to retain the existing customers.
 To increase sales
We have learnt that advertising creates demands for new products and sustains the demand of old one.
Thus, with increase in demand, the sale of the product also increases.
 To assist salesman
In most advertisements the salient features of a product, its qualities and its uses are expressed in detail.
This assists a salesman to sell the product quickly without spending time in explaining and conniving the
customer.
Page | 11
Media of Advertising
 Print Media
Print media is a very commonly used medium of advertising by businessman. It includes advertising
through newspaper, magazines, journals, etc. and is also called press advertising.
 Newspapers
You must have read Newspapers. In our country newspapers are published in English, Hindi and in other
regional languages. These are the sources of news, opinions and current events. In addition, Newspapers
are also a very common medium of advertising. The advertiser communicates his message through
newspaper which reaches to crores of people.
 Periodicals
Periodicals are publications which come out regularly but not on a daily basis. These may be published
on a weekly, fortnightly, monthly, bimonthly, quarterly or even yearly basis. For example you must have
come across magazines and journals like Onlooker, India Today, Frontline, Yojana, Swagat, Femina, etc.
published regularly in English, Grihasobha, Nandan and Champak in Hindi. Similarly there are also
periodicals in Hindi and other regional languages. All these periodicals have a large number of readers
and thus, advertisements published in them reach a number of people.
 Electronic Media
This is a very popular form of advertising in the modern day marketing. This includes Radio, Television
and Internet. Let us look into detail about these.
 Radio Advertising
All of us are aware about a radio and must have heard advertisements for various products in it. In radio
there are short breaks during transmission of any programme which is filled by advertisements of
products and services. There are also popular programmes sponsored by advertisers. (One of the longest
run programme in Radio was a sponsored programme started as “Binaca Geetmala” and later renamed as
“Cibaca Geetmala”. It was sponsored by Hindustan
Ciba-Geigy Limited for its products like toothpastes, toothpowders and tooth brushes and it continued
for a period of 30 years on a weekly basis).
 Television Advertising
With rapid growth of information technology and electronic media, television has topped the list among
the media of advertising. TV has the most effective impact as it appeals to both eye and the ear. Products
can be shown, their uses can be demonstrated and their utilities can be told over television. Just like
radio, advertisements are shown in TV during short breaks and there are also sponsored programmes by
advertisers
 Internet
Are you aware about internet? Infact it is the latest method of communication and gathering information.
If you have a computer and with an access to internet you can have information from all over the world
within a fraction of second. Through internet you can go to the website of any manufacturer or service
provider and gather information. Sometimes when you do not have website addresses you take help of
search engines or portals. In almost all the search engines or portals different manufactures or service
providers advertise their products.
 Other Media
All the media of advertising discussed above are mostly used by consumers while they are at home or
inside any room, except radio and newspapers or magazines to some extent. Moreover in all these media,
the consumer has also to spend some money to access the advertisement. However, there are other media
available, where the consumer has to spend nothing and he can see such advertisements while moving
outside. Some of such advertising are hoardings, posters, vehicular displays, gift items, etc.
 Hoardings
While moving on roads you must have seen large hoardings placed on iron frames or roof tops or walls.
These are normally boards on which advertisements are painted or electronically designed so that they
are visible during day or night. The advertisers have to pay an amount to the owners of the space, where
the hoardings are placed.
Page | 13
 Posters
Poster are printed and posted on walls, buildings, bridges etc to attract the attention of customers. Posters
of films which are screened on cinema halls are a common sight in our country.
 Vehicular displays
You must have seen advertisements on the public transport like buses, trains, etc. Unlike hoardings these
vehicles give mobility to advertisements and cover a large number of people.
 Gift Items from manufacturers
When you buy a cycle, the shopkeeper sometimes gives you a key ring to hold the cycle key. Some
jewelers give small purse or boxes when you buy a jewellery. Sometimes manufacturers gives diaries,
calenders, purse, etc. to buyers and prospective customers. In all these items the name, address and
telephone number of the manufacturer, or trader or service provider as well as descriptions of the
products in which they deal in are printed. These items are normally items of daily use given freely to
the customers. While using, the user remembers the products as well as the producer.
Page | 14
Indian Advertising
India is an immerging market and Indian advertising has remained robust despite the signs of
sluggishness. The field of advertising has progressed in leaps and bonds; today, it is much more than a
few printed lines or more pictures with some printed text. It is like a kaleidoscope exhibiting different
perspectives enthralling, sundry and real. Advertising provides a free rein to the art of persuasion,
adapting itself to changes with passing time.
Indian advertising is a vast field where new trends are continuously emerging everyday. The language
used in the advertisement is influenced by many sociological factors like market, politics, sports, and
games, rural market, religious and education. The use of English words in between Hindi words or
Multilanguage to create a ‘special effect’ is becoming a fashionable trend it is more accessible to all. The
Amul ads were one of the first to use Hinglidsh to great effect “Amul Big boss of Makkans”. Practice of
Multilanguage an d translated syntax like Fruit salad ehk minute main or Ek dum fit appeals to people of
all regions across the country, as it simplifies the language. Thus, the trend of using Hinglish is gaining
prominence and emerging as a language most suited for Indian advertising and the fact that brand
ambassador like Amirkhan speaks this language in the ad reflects the confidence of the advertiser.
Indian consumer has developed a treatment for the swift transformation that has taken place in the
strategy and presentation of ads. With the development of print media, radio and television, advertising
also score high and various media strategies are now employed to meet different advertising needs.
Proper research is carried out to significantly reduce the risk involved in advertising task, and improved
the potential of the creative vehicle and the actual performance in the market. All these have the
potential to influence our rational consideration for making purchase
Brand ambassador are used by companies to attain some definite objectivity. Seeing his favorite
celebrity in an advertisement motivates the consumer to use the product. In the current scenario,
companies are experimenting with novel techniques to attract consumers. They are constantly looking at
new apertures to market. Today, online marketing and mobile marketing growing at rapid speed
targeting the ever increasing number of Indian web users in all possible promising ways.
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History
Advertising is attracting the interest of the public towards the goods and services by endorsements which
are performed with the help of a range of media. It is an important part of an overall marketing strategy.
Advertising is frequently considered as the compensated, public endorsement of a cause, proposal,
product, or service by a branded supporter endeavoring to inform or influence a particular target
audience. Advertising has adopted many dissimilar forms since the initial period of time. Examples of
this were discovered by archeologists’ ancient wall paintings announcing fights of gladiators. They also
discovered paintings on rocks that were used to advertise commodities.
At the commencement of advertising, it was simply a proclamation or an announcement; an example of
which is, the businessmen in early Egypt made use of caries to proclaim or announce the arrivals of
ships along with the arrivals of cargo. Evidence has been discovered by archaeologists of the fact that
advertising, outdoor display was the first to be recognized. This outdoor advertising was normally in the
form of an attractive sign which was painted on a building wall. The archaeologists have discovered
quite a few signs, particularly at sites like ancient ruins and caves. Some of these messages were signs
relating to certain real estate for purchase or rent and somewhere signs trying to bring to the notice of
travelers the availability of guest house located at another location.
It was discovered that in the era relating to the middle ages, the use of word-of-mouth to express
approval and administration for products, led to generation of an elementary but powerful form of
advertising. The people who performed word-of-mouth services were called caries and they were
citizens who were responsible for reading out public notification. This people were also haired by traders
to shout out and express approval and admiration of their articles which were being offered for sale.
Latter on this people become a regular feature on the streets of various colonial settlements. These
ordinary town criers were the people who gave rise to the concept of the current day announcer who
presents radio and television commercials.
Before the development of print media, carving on the rocks and pillar, and hawking were the means of
advertisement. Rajas and maharajas royal orders were displayed as fresco or work embedded in the
wooden planks. The religious messages inscribed on the Stupas in Sanchi are examples of such
advertising.
Page | 16
The origin of Hindi advertisement is not known or cannot be stated as clearly. Nearly, some two
thousand years back during the reign of Kumar Gupta, Indian Merchant’s Slik clothes weaver’s
cooperative association had in described an advertisement in the form of a poem on a wall of a sun
temple in Dasapur (now called as Madsour in MP) which is consider as one of the oldest advertisement
in the world.
The practice of using trade mark is seen ancient civilization also. With the development of civilization ,
robust changes are seen in advertising also.hordings and signage seen near bus stop and at the back of
the vehicle are the developrd version of information or messages with the trade mark on the wooden
planks, frescos, metallic plates or stones use in the olden days. Researchers revgeal that earlier hawking
was also one of the popular medium of advertising. Hawkers use to cry out the quality of their products
In a musical way to attract people in the states and lanes. Who can forget this popular jingle, which
touch the heart and leave an evergreen print in the minds of the mass ? “babu mein laya majedar
chananchor garam, mera chana bana hai aala……” yes, hawkers had a very unique musical style of
magnetizing people an popularizing their products.
The prospective of advertising escalated when manual press was invited in the 15th century. After that
the demand has been increasing. India’s first newspaper Bengal Gazette most published on June 29,
1780, where four pages were set aside exclusively for including ads, mostly of East India companies.
During the period success of the newspaper depend largely on the financial help received from the
advertisement published on it. Neither during the time of East India company not during the British reign
advertising was given much significance. Government advertisement contained only vacancies and
tender notices. If they were any other advertisement then they published in the government gazette
whose circulation was very limited and so was far above the reach of the common people.
Earlier, agencies were working a single sided basis and were not much interested in criticism or views
and response from others. The spread of jingoistic feeling and xenophobic attitude was echoing in the
advertisement published after 1902. for example the ad Poorn Bharatya parentu aayuthith bootom thatha
jootham ke samaan ( totally Indian but equal to imported boots and shoes) was published by Sttewart
factory , Agra. To popularized product identity, various properties of the products were elaborate using
idioms and phrases that helped to showcase them in a better way. The use of idioms and phrase was an
added advantage to create a strong identity for the product. Superior visual and portraits were used in
advertisement published after 1954 which targeted the larger consumers over a larger geographical\al
area. During the mid 1980s advertisement having a poetic style became very popular. Advertisers were
Page | 17
using language enriched with theoretical devices, which differed from the ordinary course of idea and
subsequently generated larger upshots. With the availability of products increasing manifold, modern
Indian consumers are moving towards experimenting conspicuous consumption
The consumer buys a produce most probably because the consumer identifies a requirement or want for
it. The consumer makes decision with respect to the brand to be purchased and whom it is to be
purchased from. The knowledge of their options and an assessment of the alternative have an effect on
the consumer’s decisions. Up to the 20th century, the main intension behind the advertising was only to
transmit the information. But, on the one brand, the effort behind contemporary advertising is to
“generate a demand” by manipulating the apparent wants or need or wish of the buyer. In primeval
times, the most widespread type of advertising was done by word-of-mouth. On the other hand the
message of the commercial nature and displays of the political campaigns have been found in the ancient
ruins of the countries like Egypt. Along with this other messages, sales messages and wall posters had
also been found in the ruins of Egypt. Similarly, messages and pertaining to lost and found contain were
a common from of advertising in the primeval times in countries like Rom and Greece. Painting on the
walls and rocks for the purpose of the commercial advertising is another demonstration of an early from
of media advertising, which still can be found to exit in quit few parts of Asia and Africa.
Even though pictorial type of advertising becomes visible early on history, printed advertising made
slight progress until the innovation of the printing press. With the development of the printing press,
printing also expended and developed, particularly during the period of the 15th as well as 16th centuries
During this period, advertising developed and went on to incorporate handbills. Latter on the period of
the 17 th century advertisement began to appear in the tabloids and newspapers. This initials
advertisement in the print media was made use of primarily to endorse books and newspapers. These
advertisements were economically priced, thanks to the advent of the printing press, and hence, such
advertisements were very much affordable.
During the period of the 19th century when the economy was growing at the frantic pace, the necessity
for advertising was also expanded at an even pace. During this period, classify advertising started
becoming accepted and gaining popularity. The newspapers were full of different types of products. The
effectiveness of this type of advertising paved the way for mail order advertising in the form of catalogs.
Page | 18
Advertising Agencies
“Ad agencies in India today are scared of their clients. Its time they make clients understand the two
are partners who have only one Client: the Consumer”
Piyush Pandey , Creative Director, O & M
A unique aspect of advertising is advertising agency, which in most cases, makes the creative and media
decision.
The first advertising agent Volney B. Palmer, establish an office in Philadelphia in 1841.for 25 per cent
of cost he sold space to advertisers in the various 1400 newspaper throughout the country.
By the turn of the century, agencies started to focus their attention on the creation of advertising for
clients. Probably the first agency with a reputation for a creative work was Lord and Thomas with two
remarkable copywriters, John E. Kennedy and Claude Hopkins. Kennedy believed that advertising was
“salesmanship in print” and always tries to provide the reason why people should buy the advertiser
goods.
Organization handles advertising in different ways. In small companies, advertising is handled by
someone who is in the sales or marketing department. A large company will often set up its own
department, whose manager reports to the wise president of marketing.
To perform all the advertising activities there are different advertising agencies. Different agencies have
different policy and criteria for its client and they create competitive edge on that basis only.
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Function of Advertising Agencies
Professionals at advertising agencies and other advertising organizations offer a number of functions
including:
 Account Management –Within an advertising agency the account manager or account executive is
tasked with handling all major decisions related to a specific client. These responsibilities include
locating and negotiating to acquire clients. Once the client has agreed to work with the agency, the
account manager works closely with the client to develop an advertising strategy. For very large
clients, such as large consumer products companies, an advertising agency may assign an account
manager to work full-time with only one client and, possibly, with only one of the client’s product
lines. For smaller accounts an account manager may simultaneously manage several different, though
non-competing, accounts.
 Creative Team –The principle role of account managers is to manage the overall advertising campaign
for a client, which often includes delegating selective tasks to specialists. For large accounts one task
account managers routinely delegate involves generating ideas, designing concepts and creating the
final advertisement, which generally becomes the responsibility of the agency’s creative team. An
agency’s creative team consists of specialists in graphic design, film and audio production,
copywriting, computer programming, and much more.
 Researchers – Full-service advertising agencies employ market researchers who assess a client’s
market situation, including understanding customers and competitors, and also are used to test creative
ideas. For instance, in the early stages of an advertising campaign researchers may run focus group
sessions with selected members of the client’s target market in order to get their reaction to several
advertising concepts. Researchers are also used following the completion of an advertising campaign
to measure whether the campaign reached its objectives.
 Media Planners – Once an advertisement is created, it must be placed through an appropriate advertising
media. Each advertising media, of which there are thousands, has its own unique methods for accepting
advertisements, such as different advertising cost structures (i.e., what it costs marketers to place an ad),
different requirements for accepting ad designs (e.g., size of ad), different ways placements can be
purchased (e.g., direct contact with media or through third-party seller), and different time schedules
(i.e., when ad will be run).
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Types of Advertising Agencies
Full service Agencies
A full service agency is one that includes the four major staff function-account management, creative
service, media planning and buying and accounting planning, which is also known as research. A full
service advertising agency will also have its own accounting department, a traffic department to handle
internal tracking on completions of project, a department for broadcast and print production (usually
organized between creative departments) and a human resource department.
Specialized Agencies
Many agencies do not follow the traditional full service approach. They either specialize in certain
function (writing copy, producing art, or media buying) audiences (minority, youth) or industries (health
care, computers, agriculture and business to business communication. In addition there are specialized
agencies in all marketing communications areas, such as direct marketing, sales promotion, public
relations, events and sports marketing and packaging and point of sale.
Industry Focused Agencies
Numerous agencies concentrated on certain fields or industries such as agriculture, medicine and
pharmaceuticals, health care and computers. These agencies handle a variety of client from within that
field, so they are able to apply their particular expertise in those areas, making them essential full
service.
Minority Agencies
Agency that focuses on ethic group or minority agencies is minority agency. This agencies are organized
in much the same way as full service agency ,but they as specialize in reaching and communicating with
their particular market.
Creative Boutiques
Creative boutiques are advertising agency, usually small (2 or 3 people to a dozen or more) that
concentrate entirely on preparing the creative execution of client marking communications. The focus on
the organization is entirely on idea, the creative product. A creative boutique will have one or more
writer for artist in staff. There is no staff for media, research, or strategy planning. typically this agencies
can prepare advertising to run in print media out doors and on radio and T.V. creative boutique usually
serves companies, but it sometimes retain by advertising agencies when they are overloaded with work.
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Media-buying Service
Media-buying Service specializes in the purchase of media for clients. They are in high demand for any
reasons but three reasons stand out. First, media has become more complex. As the no. of choices growsthink of the proliferation of new cable channels, magazines and radio stations. Second, the cost of the
maintaining of competitions media department has escalated. Third, media buying services offer by
media at a low cost because they can group several client purchases to gather to develop substantial
buying power.
Virtual Agencies
Virtual agency is agency that operates as group of freelancers and is paid accordingly. This type of
agency does not use conventional office space.
Advertiser
Agency
Media
Research Suppliers
The advertising agency is a representative between media and advertiser. A major roll of the advertising
agency is the purchase of media time and space. Large companies, at each levels of advertiser, media
and agencies will have their own internal research department, and each will also be purchasing data
externally from some outside research supplier.
An advertising agency is a firm that specializes in the creation, design, and placement of advertisements,
and in the planning and execution of promotional campaigns for products and services of their client
The basic techniques that is adopted by different advertising agency are
 Basic appeals
 Attention getting headline
 Slogans
 Testimonials
 Product characteristic.
 Comparison of product
 Repetition
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CHAPTER : 2
MAJOR PLAYER IN INDUSTRY
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Top Advertising Companies of India
Ogilvy & Mather
Ogilvy & Mather is an international advertising, marketing and public relations agency based in
Manhattan, and is a WPP company. It operates 450 offices in 161 cities of 120 countries worldwide with
approximately 18,000 employees.
History
Ogilvy & Mather was founded in 1948 by British born David Ogilvy, with backing by a previous
employer, the London advertising agency Mather & Crowther.
Mather & Crowther originally sent David Ogilvy to the United States in 1938. Over the next ten years,
Ogilvy worked in research at the Gallup polling company, worked for British Intelligence during World
War II, then spent a few years farming in Pennsylvania. Ogilvy in 1948 started a U.S. agency with the
backing of Mather & Crowther, who by then had merged with the U.K. based Benson agency group.
Ogilvy opened his U.S. shop as "Hewitt, Ogilvy, Benson, & Mather" in Manhattan with a staff of two
and no clients
Ogilvy was acquired by the WPP Group in 1989 for $864 million
In 2005, Shona Seifert and Thomas Early, two former directors of Ogilvy & Mather, were convicted of
one count of conspiring to defraud the government and nine counts of filing false claims for Ogilvy
overbilling advertising work done for the U.S. Office of National Drug Control Policy account. Seifert
and Early were sentenced to 18 and 14 months in prison, respectively. Ogilvy & Mather repaid $1.8
million to the government to settle a civil suit based on the same billing issues and continues to produce
anti-drug spots for the government.
Services
The OgilvyCulture division was formed in late 2010 and early 2011 to market products across different
cultures. Social@Ogilvy and Ogilvy Youth divisions were started in 2012 to provide social media and
youth marketing services, respectively.
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Subsidiary Ogilvy Public Relations (OPR) is a global public relations agency with its own wholly
owned subsidiaries:

Mind Resource: Acquired in 2011 Hong Kong-based healthcare communications firm Mind
Resource Healthcare Consulting Limited. Founded in 2007, Mind Resource is a healthcare
communications firm

Feinstein Kean Healthcare: Established in 1987, Feinstein Kean Healthcare
A former subsidiary, Dudley-Anderson-Yutzy, was acquired by the company in 1983 and folded into the
OPR practice in 1988.
In 2005, Ogilvy PR acquired a Republican lobbying firm called The Federalist Group LLC. The
company subsequently became bipartisan,[11] and its name was changed to Ogilvy Government
Relations. OGR operates from the same building as the office of its parent company in Washington,
D.C.[13] In 2010 Ogilvy Government Relations became a wholly owned subsidiary of Ogilvy & Mather.
OGR had a total lobbying income of over $21 million in 2009. This makes OGR the 7th largest lobbying
firm in the United States OGR was named a Top 10 financial services lobbying firm in the 2010
regulatory reform debate. Its top clients included the Blackstone Group, Highstar Capital, the Poker
Players Alliance, Chevron Corporation, and Verizon Communications. OGR employees and lobbyists
donated over $230,000 to Republican and Democratic Party primary candidates, politicians and PACs
during the 2008 election cycle.
Notable campaigns
The 2013 Google India advertisement (created by Ogilvy & Mather India) Reunion (about the Partition
of India) has had a strong impact in both India and Pakistan, leading to hope for the easing of travel
restrictions between the two countries. It went viral and was viewed more than 1.6 million times before
officially debuting on television on November 15, 2013.
Ogilvy caused some controversy in 2004 when a reportedly discarded video advertisement for the Ford
SportKa hatchback began spreading virally via email. The 40-second video, which shows a lifelike
computer-generated cat being decapitated by the car's sunroof was apparently rejected by Ford, but still
made its way onto the internet, sparking outrage among bloggers and animal rights groups.
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Ogilvy Government Relations, a wholly owned subsidiary of Ogilvy Public Relations, is credited with
playing an instrumental role in killing the controversial 2005 bid by Chinese oil company CNOOC to
buy Unocal Corporation, which would then go on to merge with Chevron Corporation, an OGR client.[26]
The company was involved with a controversy in May 2009 when a Clio Award was given to a
campaign for the A & E History Channel. One of the associated images compared the American deaths
at Pearl Harbor with the Japanese deaths after the bombing of Hiroshima.
In September 2010, an Ogilvy & Mather radio ad for ARCO, a U.S.-based oil and gasoline company,
caused a controversy when the advertisement which used a sped-up version of the Emergency Alert
System (EAS) header tones caused EAS decoders at radio stations across the country to activate, causing
a false emergency message to be sent out to monitoring television and radio stations as well as local
cable systems which had their programming locked out and replaced with the primary EAS station's
emergency message, which, in this case, ended up being the ARCO ad. The situation came to a head
when one radio station reported that its EAS decode activated at least 5 times during the week because of
the ARCO ad. The Society of Broadcast Engineers issued an alert bulletin to all broadcasters warning
them about the ad.
James Walter Thompson
James Walter Thompson (October 28, 1847 – October 16, 1928) was the namesake of the JWT
advertising agency and a pioneer of many advertising techniques.
History
He was born in Pittsfield, Massachusetts on October 28, 1847.
In 1864, William James Carlton started selling advertising space in religious magazines. The agency was
called Carlton and Smith, although almost nothing is known about the Smith partner. In 1868, Carlton
hired Thompson as a bookkeeper. Eventually Thompson found that soliciting and sales were much more
profitable and he became a very effective salesman for the small company. In 1877, Thompson bought
the agency for $500 and renamed it J. Walter Thompson Company. Notably, Thompson paid $800 for
the Carlton and Smith furniture in the same transaction.
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Realizing that he could sell more space if the company provided the service of developing content for
advertisers, Thompson hired writers and artists to form the first known creative department in an
advertising agency. He is credited as the "father of modern magazine advertising" in the United States.
Thompson, having served on the USS Saratoga in the Civil War, was a passionate sailor. He owned a
variety of vessels, including a seagoing houseboat, a steam, (Stella). He headed the New York Yacht
Club, for which his title as Commodore and his portrait became famous within the company. He lived at
11 East Sixty-eighth Street in Manhattan.
The J. Walter Thompson Company was incorporated in 1896. In 1899, Thompson opened an office in
London. An avid traveler, Thompson went abroad nearly every summer for twenty years, and rarely
came back without important accounts. He saw New York as "the flagship" office for a company with no
geographical restrictions. "It has no limitations. Any spot on earth where goods are to be sold by
advertising is inside the fence of the Thompson field", said Thompson.
In 1900, JWT published a house ad explaining trademark advertising. This was the first known
commercial explanation of what we now know as branding. Thompson soon became known for his
philosophy of drawing a straight line between the manufacturer and the consumer.
In 1916, Stanley B. Resor and several partners bought the company from the aging Thompson for
$500,000.
In 1930, a letter addressed to Thompson arrived from soon-to-be president, Franklin D. Roosevelt,
asking for a job for his son, Elliott, guaranteeing that "he has a perfectly good mind". JWT’s mother was
a distant cousin of FDR. Thompson had died in 1928.[2] Elliott never did work for JWT.
Mudra Communication Pvt. Ltd:
This is one of the renowned advertising companies of India. This advertising organization was founded
in the year 1980 at Mumbai. Recently the Ad Company declared the addition of public relations, rural
marketing, events etc. The head office of the company is in Bombay Area.
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FCB-Ulka Advertising Ltd:
One of the best companies in India in the advertising arena is FCB-Ulka Advertising Ltd. In US, this
advertising company ranks third and tenth in the world having about 188 offices in 102 countries. Their
aim is to reflect the needs of the brand and not the personality of the brand. It has about 500
professionals and no prima donnas.
Rediffusion-DY&R:
This Advertising Company of India has made a benchmark in the field of creativity. India's 5th largest
advertising company is Rediffusion. This advertising agency offers a wide array of integrated pr services
for external and internal communications. The primary strength of the company lies in the media
relations.
McCann-Erickson India Ltd:
The prominent name among the best advertising companies of India is McCann-Erickson India Ltd.
They define work in relation to the impact that advertising has on the lives of masses. The testimony of
the company in which it firmly believes is the campaign of Coca -cola-'Thanda Matlab Coca Cola'.
RK Swamy/BBDO Advertising Ltd:
It maintained the record of remaining consistently among the top ten advertising agencies in India.
Established in 1973, this advertising reached great heights. This is also India's No.1 research company in
the market sector and is fully run by Indians. Brand Equity is an integral part of the company.
Grey Worldwide (I) Pvt. Ltd:
A significant name in India in the world of advertising agencies is Grey Worldwide (I) Pvt Ltd. The
company is primarily based in Mumbai and has offices in Kolkata, Ahmedabad, Bangalore and New
Delhi. It is a subsidiary of Grey Worldwide. The company specializes in advertising and marketing
services.
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Leo Burnett India Pvt. Ltd:
It has a significant presence in about 96 offices in 10 countries. This advertising agency was awarded the
'Worldwide Agency of the Year' in 2004.They are proficient in explaining how a single image is worth
thousand words and can break the barriers of language but not at the cost of the ad's emotional power.
Contract Advertising India Ltd:
This advertising company of India is one of the leading advertising agencies in India. It is one-to-one
customer lifecycle management advertising agency. It was founded in 1992 and is situated in Mumbai. It
offers a wide range of services like online marketing and strategy and many others.
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Market capitalization
At the last Cannes Awards, the president of the Jury was Piyush Pandey, Group President and National
Creative Director of Ogilvy and Mather conveyed that India, is quickly becoming a viable online
advertising center. There is expectation that the online advertising market in India to heat up. As Lionel
Lim, Sun's VP and MD (Asia South), recently stated, "Over the next three to four years, we want to help
create up to 100 dot-com companies in India, each with a market cap of around $10 billion. That is,
perhaps, the biggest investment we can make in this country
Size of the industry
The size of Indian Advertising Industry depends on the following factors and industries.

Television Current size: Rs 148 billion Projected size by 2012: Rs 427 billion; CAGR: 24%

Filmed entertainment :Current size: Rs 68 billion :Projected size by 2012: Rs 153 billion; CAGR:
18%

Print Media: Current size: Rs 109 billion :Projected size by 2012: Rs 195 billion; CAGR: 12%

Radio: Current size: Rs 3 billion: Projected size by 2012: Rs 12 billion; CAGR: 32%.

Music Current size: Rs 7,000 million crore projected size by 2012: Rs 7,400 million; CAGR: 1%.

Live entertainment :Current size: Rs 8,000 million, Projected size by 2012: Rs 18,000 million;
CAGR: 18%

Out-of-home Advertising: Current size: 9000 million, Projected size by 2012: 17,500 million;
CAGR: 14%.

Internet Advertising: Current size: Rs 1.6 Billion, Projected size by 2012: Rs 7.5 billion; CAGR:
50%.
Total contribution to the economy/ sales
The turnover of Indian Advertising Industry is less than 1% of the national GDP of the country as
compared to 2.3% of share of US to the GDP which indicates the tremendous growth potential for India.
The Indian advertising industry is expected to grow by 13 %in 2012 to Rs 21,145 crore. According to the
PITCH-Madison Media Advertising Outlook 2012 analysis, the Indian advertising pie is expected to be
worth about Rs 21,145 crore this year, a 13 % increase over the previous one. The Indian media and
advertising industry clocked a size of Rs 18,670 crore in 2011 and that saw a dramatic drop of 10
percentage points compared to 2010, where the industry was worth Rs 20,717 crore.Total advertising
market grew 17% in 2010 and is projected to increase.
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Employment opportunities
There are tremendous opportunities in Indian Advertising Industries in the country and abroad. The
opportunities include that of account planner, executive, copywriter, visualizer, creative art director,
animator, multimedia expert, photographer, printer, TV producer, media planner, web developer jobs,
web planner, and marketing professional. Candidates qualified in Commercial Art have great
opportunities. MBAs can also play a significant role in client servicing. However, individual creativity
and ability for innovation are more important than academic degrees. The advertising industry always
has a perennial demand of talent.
Latest developments

The global Advertising Industry as far as scale of operations and scope is concerned the turnover is
close to USD 450 billion annually. Indian Advertising Industry contributes less than 1.5% which is
next to China and Russia. The Global Ad Industry is expected to reach a growth rate of 2% in 2012
which is better than 2011 while Indian Ad Industry in contrast estimates to reach the growth rate of
10% figuring about Rs.23700 crores. The reasons are because of the IPL, Foot ball World Cup and
the Commonwealth Games.

India contributes to 17 % of the world population but is only 0.7% of the world advertising market so
it has huge potential to grow in future.

Experts reveal that total advertisement spending by the political parties would be around Rs 800
crore. The Congress and the BJP alone could spend over Rs 400 crore on ads on television, radio and
newspapers. Most of the ads appear on going to general entertainment and regional TV channels and
hardly a small proportion in News channels.

Worldwide Partne rInc are the Ninth largest global network of more than 90 marketing and
communiation agencies in about 50 countries which has recently tied up with Indian Pressman
Advertising and Marketing Ltd following repeated enquires about India .
Indian advertising spends as a percentage of GDP -- at 0.34% which is comparatively low, as
opposed to other developed and developing countries, where the average is around 0.98%, which
requires a lot space for development and enhancements in the Indian Advertising Industry.
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Characteristics of Indian advertising industry
 It is both capital intensive and labor intensive.
 It has a medium complexity where are there are not much regulations and no complex operational
processes.
 It has large number of stakeholders that includes companies who contract with agencies, animation
centers, film industry people, models, set makers, painters, garment industries etc.
 There are a variety of consumer behaviors towards an advertisement. And the agencies have to assess
the consumer behavior according to the product or the fame of the company they contract with.
 Technology is emerging as the main asset of an advertising industry. As the innovations in digital
and graphic formats play a major role in capturing the eyeballs.
 In advertising industry there is a need for high degree of sensitivity to quality as the main purpose of
companies to invest in advertising is to make people aware and interested in their brands. This is
possible only when the quality of advertising is good and when the customer is able to match it with
his requirements, lifestyle etc.
The level of competition in this industry is high with so many small players in the market though
dominated by MNCs.
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CHAPTER : 3
STRATEGIC ANALYSIS
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Strategic Management Tools to be used to study for Advertising industry analysis
 Driving forces:
 Opportunities and threats analysis
 Pest analysis
 Porter’s five force analysis
 Phase of life cycle
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Driving Force
The force due to which the industry is driven and due to which its earning is directly affected, forces
may be directly or indirectly affecting working of the industry. The driving force for the print media is
government policies, literacy level, increase in industrialization, and increase in the young population.
 Government policies:
Government policies directly affect the working of the industry that is if the government make the
smaller change in the policy related to media it will directly affect the print media. When in budget the
service tax on the on the space for advertising was increased from 10% to 12% for the television but it
was not increased for the space for advertising in print media and due to that cost for advertising in
television media and due to that there was increase in the demand for print advertising and it is having
the maximum reach to different region of the country which is beneficial for the corporate.
 Increase in level of literacy:
Now the level of literacy also increases in India and due to that it is directly related to increase in
revenue of the print media, because people are more interested to know about things going around them,
and now the newspaper are also providing more information about stock exchange and people are also
attracted to know about the stock market which also plays an important role in the increase of print
media and so print media is directly affected by the increase in level of literacy
 Service Sector:
Services sector includes categories like Properties/Real Estate, Internet /SMS service, DTH Service
Providers, Hospitals/Clinics, etc. Top 5 segments accounted for more than 75% share of overall Services
sector Print advertising. ‘Hospital/Clinics' and 'Travel & Tourism' had close competition for the 2nd
position with 15% and 14% share respectively.
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SWOT Analysis
STRENGTHS:
1. Media and Entertainment is one of the most booming sectors in India due to its vast customer reach.
The various segments of the Media and Entertainment industry like television and film industry have
a large customer base.
2. The growing middle class with higher disposable income has become the strength of the Media And
Entertainment industry.
3. Change in the lifestyle and spending patterns of the Indian masses on entertainment. Technological
innovations like online distribution channels, web-stores, multi- and mega-plexus are complementing
the ongoing revolution and the growth of the sector.
4. Indian film industry is second largest in the world and the largest in terms of the films produced and
tickets sold.
5. The low cost of production and high revenues ensure a good return on investment for Indian Media
And Entertainment industry.
WEAKNESSES:
1. The Media and Entertainment sector in India is highly fragmented.
2. Lack of cohesive production & distribution infrastructure, especially in the case of music industry.
3. The lack of efforts for media penetration in lower socio-economic classes, where the media
penetration is low.
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OPPORTUNITIES:
1. The concept of crossover movies, such as Bend It Like Beckham has helped open up new doors to
the crossover audience and offers immense potential for development.
2. The increasing interest of the global investors in the sector.
3. The media penetration is poor among the poorer sections of the society, offering opportunities for
expansion in the area.
4. The nascent stage of the new distribution channels offers an opportunity for development.
5. Rapid de-regulation in the Industry
6. Rise in the viewership and the advertising expenditure.
7. Technological innovations like animations, multiplexes, etc and new distribution channels like
mobiles and Internet have opened up the doors of new opportunities in the sector.
THREATS:
1. Piracy, violation of intellectual property rights poses a major threat to the Media And Entertainment
companies.
2. Lack of quality content has emerged as a major concern because of the 'Quick- buck' route being
followed in the industry.
3. With technological innovations taking place so rapidly, the media sector is facing considerable
uncertainty about success in the marketplace.
4. Companies in India started online advertising to reach the public faster- it is in fact, a supplement to
traditional advertising
5. Declining reach in Urban : For any newspaper or magazine the most powerful factor is its reach that
how many people read it in particular area or region.
6. 24*7 news channels on TV : As the numbers of news channels are increasing, it will create a threat
for the newspaper, because the frequency of the advertisement is high as compared to the newspaper.
7. As the different types of magazine target to the different audience, the blogging on the internet is
also target to groups with equal interest. So it will create the competition for the circulation of
magazine and it will have an impact on the advertiser also. The advertiser will go for the online
advertising.
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PESTL analysis of advertising industry
Political factors:
 The Advertising Standards Council of India regulates the advertisement standards in India. It
introduced code for self-regulations in advertisements on automotive vehicles, food and beverages
directed at children less than 13 years of age and in Hindi. Recently it introduced guidelines for
advertising of educational institutions and programs.
 Ban on surrogate advertising, ads which try to sell something else under the same brand name like
tobacco and alcohol products, has been hitting the advertisement revenues.
 With Conditional Access System for transmission of Television programmes, consumers would have
the option to choose the channels they want to pay for and view rather than receiving the whole set
of channels made available to them by the cable operator. This alters the volume of viewership
distribution affecting the advertising agencies.
 The recent growth in Direct To Home market motivated how to work on a niche programming.
 The deregulation FM radio increased the media penetration helping in growth of advertising
industry.
Economic factors:
 Rural markets face the critical issues of Distribution, Understanding the rural consumer,
Communication and Poor infrastructure. Media reach is a strong reason for the penetration of goods
like cosmetics, mobile phones, etc., into the rural market which are mainly used by the urban people.
Increasing awareness and knowledge on different products and brands accelerate the demand. So
advertising had shown opportunities for income growth from the rural market.
 The turnover of Indian Advertising Industry is less than 1% of the national GDP of India whereas the
share of US ad industry in national GDP of USA is 2.3%. This indicates a tremendous growth
potential for the Indian Advertising Industry. In contrast the growth in GDP is fuelling the
advertisement spending.
 Foreign Direct Investment in India: The liberalized investment administration, rapidly growing
economy, good and strong macroeconomic policies, continuous de-licensing of industry sectors and
the easing in business transactions has attracted multinational corporations to put investment in India.
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Social Factors:
Advertising plays a big role in form information dissemination to the people of India, which of late
due to globalization have developed a high infinite for information. The impact of intense media
attention has brought about a more revolution in the social aspect and created a society which is
more enlightened and which appreciates the industry. Even though the Indians are known to be
conservative and traditional they attitudes towards the media industry are very positive.
 As in now-a-days we see that children and tweens play a major role in buying, they are the ones who
are targeted more. We can say that tweens are emerging as the most influential consumers for
advertising.
 We know that the maximum revenue is generated from the metropolitan cities as they have high
spending capacity. Basing on these segments the advertising strategies are made. But today’s Nonmetro cities in India are growing at a faster pace and so there is some influence of these on
advertising strategies.
Technological factors:
 Modern information technological advancement in media is making the industry players adapt faster
to the new environments they are participating. The technological advancement taking place in
industry is high and this calls for increased spending and research so as to be innovative in the
industry.
 Outdoor advertising is no more restricted to billboards. As the Indian consumer is bombarded with 1,
00,000 advertisements a day on more than 250 channels, outdoor advertising has shown promise to
break the clutter of advertising on traditional mediums. Clutter in advertising, the need to be present
at every touch-point, the relevance of OOH in local advertising and rural advertising have suddenly
brought OOH to the attention of all brand marketers. Innovativeness, flexibility, impact and coverage
that OOH can achieve are the feathers in cap of OOH media over other non-traditional medium. This
high competition brought in many technological innovations in OOH advertising. As it is now into
digital and graphic innovations like Televisions advertising in Malls, Banners, hoardings and on
travel medium like buses, air planes etc.
 There is a variety of opportunities for innovative, fast paced and collaborative mind. However, the
biggest consumer of computer animation is advertisement industry. From low end title scrolls to high
end visual effect for TV commercial, its animation all the way. This animation industry has become
the driving force for creativity in advertising.
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 Launch of INSAT satellite systems by ISRO enabled the rapid expansion of TV and modern
telecommunication facilities to even the remote areas and off-shore islands. Today, INSAT has
become the largest domestic communication satellite system in the Asia-Pacific region with ten
satellites in service. Recently, INSAT-4CR was launched on 2 September 2007 by GSLV-F04. This
satellite is used by Airtel Digital TV and Sun Direct DTH to broadcast their DTH services.
 Online advertising is penetrating into a large market with different ways mainly through social
networking sites like face book, twitter etc. And another form of advertising shaping now-a-days is
through bulk SMS, in other words mobile advertising. Aerial advertising is one of the new trends that
are followed upon.
Legal factors:
 The media industry in India is hot highly regulated as such, but there are laws and regulations which
are enforced for the industry to comply. However, in the recent past the government has become to
lessen to laws so as not to hinder competition in the face of increasing global challenges from the
external markets. Legislations such as anti-piracy laws have been enacted and the government tries
to enforce the fully even though it is difficult.
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Michael Porter’s Five Force Analysis
Assessing Your Marketplace
The economic structure of an industry is not an accident. Its complexities are the result of long-term
social trends and economic forces. But its effects on you as a business manager are immediate because it
determines the competitive rules and strategies you are likely to use. Learning about that structure will
provide essential insight for your business strategy.
Michael Porter has identified five forces that are widely used to assess the structure of any industry.
Porter’s five forces are the:

Bargaining power of suppliers,

Bargaining power of buyers,

Threat of new entrants,

Threat of substitutes, and

Rivalry among competitors.
Together, the strength of the five forces determines the profit potential in an industry by influencing the
prices, costs, and required investments of businesses—the elements of return on investment. Stronger
forces are associated with a more challenging business environment. To identify the important structural
features of your industry via the five forces, you conduct an industry analysis that answers the question,
“What are the key factors for competitive success?”
Bargaining Power of Suppliers
How Much Power Do Your Suppliers Have Over You?
Any business requires inputs—labor, parts, raw materials, and services. The cost of your inputs can have
a significant effect on your company’s profitability. Whether the strength of suppliers represents a weak
or a strong force hinges on the amount of bargaining power they can exert and, ultimately, on how they
can influence the terms and conditions of transactions in their favor. Suppliers would prefer to sell to you
at the highest price possible or provide you with no more services than necessary. If the force is weak,
then you may be able to negotiate a favorable business deal for yourself. Conversely, if the force is
strong, then you are in a weak position and may have to pay a higher price or accept a lower level of
quality or service.
Factors Affecting the Bargaining Power of Suppliers
Suppliers have the most power when:
 The input(s) you require are available only from a small number of suppliers
 The inputs you require are unique, making it costly to switch suppliers. This may be very costly to
you, thus you will have less bargaining power with your supplier.
 Your input purchases don’t represent a significant portion of the supplier’s business. If the supplier
does not depend on your business, you will have less power to negotiate. Of course the opposite is
true as well.
 Suppliers can sell directly to your customers, bypassing the need for your business.
 It is difficult for you to switch to another supplier. For example, if you recently invested in a unique
inventory and information management system to work effectively with your supplier, it would be
expensive for you to switch suppliers.
 You do not have a full understanding of your supplier’s market. You are less able to negotiate if you
have little information about market demand, prices, and supplier’s costs.
Page | 42
Reducing the Bargaining Power of Suppliers
Most businesses don’t have the resources to produce their own inputs. If you are in this position, then
you might consider forming a partnership with your supplier. This can result in a more even distribution
of power. For instance, Dell Computer uses partnering with its components suppliers as a key strategy to
be the low-cost/high-quality leader in the market. This can be mutually beneficial for both supplier and
buyer if they can:
 Reduce inventory costs by providing just-in-time deliveries,
 Enhance the value of goods and services supplied by making effective use of information about
customer needs and preferences, and
 Speed the adoption of new technologies.
 Another option may be to increase your power by forming a buying group of small producers to buy
as one large-volume customer. If you have the resources, you may choose to integrate back and
produce your own inputs by purchasing one of your key suppliers or doing the production yourself.
In advertising industry
 Since there are many suppliers who provide inputs like models, animation directors, people who
provide inputs in placing hoardings, paintings, printing, costumes etc., the bargaining power of
suppliers is low.
 As there is a shortage of creative talent, the bargaining power of efficient suppliers is high.
 In some cases it is costly to switch the animation directors, models etc, then the bargaining power of
suppliers is high.
Page | 43
Bargaining Power of Buyers
How Much Negotiating Power Do Your Buyers Have?
The power of buyers describes the effect that your customers have on the profitability of your business.
The transaction between the seller and the buyer creates value for both parties. But if buyers (who may
be distributors, consumers, or other manufacturers) have more economic power, your ability to capture a
high proportion of the value created will decrease, and you will earn lower profits.
How Much Power Do Your Buyers Have Over You?
Buyers have the most power when they are large and purchase much of your output. If your business
sells to a few large buyers, they will have significant leverage to negotiate lower prices and other
favorable terms because the threat of losing an important buyer puts you in a weak position. Buyers also
have power if they can play suppliers against each other. In the automotive supply industry, the large car
manufacturers have significant power. There are only a few large buyers, and they buy in large
quantities. But, when there are many smaller buyers, you will have greater control because each buyer is
a small portion of your sales.
Factors Influencing the Bargaining Power of Buyers
Buyers have more power when:
 Your industry has many small companies supplying the product and buyers are few and large. For
example, you may have little negotiating power if you and several competing companies are trying to
sell similar products to one large buyer.
 The products represent a relatively large expense for your customers. Customers may not price shop
for a quart of oil, but they will price shop if purchasing a new vehicle.
 Customers have access to and are able to evaluate market information. You have less room for
negotiation if buyers know market demand, prices, and your costs.
 Your product is not unique and can be purchased from other suppliers. If your brand is homogenous
or similar to all of the others, buyers will base their decision mainly on price.
 Customers could possibly make your product themselves. Anheuser-Busch, Coors, and Heinz are
examples of companies that have integrated back into metal can manufacturing to fill the balance of
their container needs.
 Customers can easily, and with little cost, switch to another product. For example, IBM customers
might switch to Gateway or Dell, but it may be inconvenient for them to consider Macintosh.
Page | 44
Reducing the Bargaining Power of Buyers
You can reduce the bargaining power of your customers by increasing their loyalty to your business
through partnerships or loyalty programs, selling directly to consumers, or increasing the inherent or
perceived value of a product by adding features or branding. In addition, if you can select the customers
who have little knowledge of the market and have less power, you can enhance your profitability.
In advertising industry,
 Since there are many small advertising agencies, buyers (like big and small companies who spend in
advertising) have many options and so the bargaining power of buyers is high.
 As the big accounts rule over the agencies, the bargaining power of agencies become high.
 Since in advertising the effect it makes on people counts, there are few companies which are unique.
Then the bargaining power of buyers is low.
 As there are some agencies that can make better ads with low costs, the buyers have the chance to
switch to competitors. This makes your negotiating power with buyers low.
Page | 45
Threat of New Entrants
How Easy Is It for Businesses to Enter Your Market?
You may have the market cornered with your product, but your success may inspire others to enter the
business and challenge your position. The threat of new entrants is the possibility that new firms will
enter the industry. New entrants bring a desire to gain market share and often have significant resources.
Their presence may force prices down and put pressure on profits.
Analyzing the threat of new entrants involves examining the barriers to entry and the expected reactions
of existing firms to a new competitor. Barriers to entry are the costs and/or legal requirements needed to
enter a market. These barriers protect the companies already in business by being a hurdle to those trying
to enter the market. In addition to up-front barriers, a new competitor may inspire established companies
to react with tactics to deter entry, such as lowering prices or forming partnerships. The chance of
reaction is high in markets where firms have a history of retaliation, excess cash, are committed to the
industry (see Rivalry Among Competitors), or the industry has slow growth.
Unique Barriers
Another type of entry barrier is regulatory. To produce organic food there is a three-year wait before
land may be certified. During the waiting period, producers must raise the crop as organic, but may not
market it as organic until the three-year “cleansing process” of the land is completed.
Overcoming barriers to entry may involve expending significant resources over an extended period of
time. Industries based on patentable technology may require an especially long-term commitment, with
years of research and testing, before products can be introduced and compete.
Factors Affecting the Threat of New Entrants
The threat of new entrants is greatest when:
 Processes are not protected by regulations or patents. In contrast, when licenses and permits are
required to do business, such as with the liquor industry, existing firms enjoy some protection from
new entrants.
 Customers have little brand loyalty. Without strong brand loyalty, a potential competitor has to spend
little to overcome the advertising and service programs of existing firms and is more likely to enter
the industry.
 Start-up costs are low for new businesses entering the industry. The less commitment needed in
advertising, research and development, and capital assets, the greater the chance of new entrants to
the industry.
Page | 46
 The products provided are not unique. When the products are commodities and the assets used to
produce them are common, firms are more willing to enter an industry because they know they can
easily liquidate their inventory and assets if the venture fails.
 Switching costs are low. In situations where customers do not face significant one-time costs from
switching suppliers, it is more attractive for new firms to enter the industry and lure the customers
away from their previous suppliers.
 The production process is easily learned. Just as competitors may be scared away when the learning
curve is steep, competitors will be attracted to an industry where the production process is easily
learned.
 Access to inputs is easy. Entry by new firms is easier when established firms do not have favorable
access to raw materials, locations, or government subsidies.
 Access to customers is easy. For instance, it may be easy to rent space to sell produce at a farmer’s
market, but nearly impossible to get shelf space in a grocery store. You are more likely to find new
entrants in the food business using the farmer’s market distribution system over grocery stores.
 Economies of scale are minimal. If there is little improvement in efficiency as scale (or size)
increases, a firm entering a market won’t be at a disadvantage if it doesn’t produce the large volume
that an existing firm produces.
Reducing the Threat of New Entrants
Enhancing your marketing/brand image, utilizing patents, and creating alliances with associated products
can minimize the threat of new entrants. Important tactics you can follow include demonstrating your
ability and desire to retaliate to potential entrants and setting a product price that deters entry. Because
competitors may enter the industry if there are excess profits, setting a price that earns positive but not
excessive profits could lessen the threat of new entry in your industry.
In advertising industry,
 As there is a dominance of top agencies in the industry, it acts as a barrier for a new entrant.
 India is gaining popularity as an emerging market and there are opportunities for new players to
enter.
 The processes are not much regulated, though the patent regulations are high, there are good chances
for a new entrant to enter into the business.
 Though the start-up costs are not too high, access to inputs and buyers is the main asset that makes a
good advertising agency, this makes the existing firms to enjoy protection from new entrants.
 Though the process to in making ads is easy, there is a little improvement in efficiency of the
company as size increases. This makes the new entrant to be very efficient than the existing agencies
to enter into the market.
Page | 47
Threat of Substitutes
What Products Could Your Customers Buy Instead of Yours?
Products from one business can be replaced by products from another. If you produce a commodity
product that is undifferentiated, customers can easily switch away from your product to a competitor’s
product with few consequences. In contrast, there may be a distinct penalty for switching if your product
is unique or essential for your customer’s business. Substitute products are those that can fulfill a similar
need to the one your product fills.
As an example, a family restaurant may prefer to buy the packaged poultry produced at your plant, but
if given a better deal, they may go to another poultry supplier. If you grow free-range organically grown
chickens, though, and you are selling to upscale restaurants, they may have few substitutes for the
product that you are providing.
Substitutes Can Come in Many Forms
Be aware that substitute products can come in many shapes and sizes, and do not always come from
traditional competitors. Pork and chicken can substitute in consumer diets for beef or lamb. Aluminum
beverage cans battle in the market against glass bottles and plastic containers. Cotton competes with
polyester from the petroleum industry. Barnes and Noble retail bookstores compete with Internet retailer
Amazon. Postal services compete with e-mail and fax machines.
When developing a business plan, it is critical to assess the other options your customers have to satisfy
their needs. To do this, look for products that serve the same function as yours. A threat exists if there
are alternative products with lower prices or better performance or both.
How Substitutes Affect the Marketplace
Substitutes essentially place a price ceiling on products. Market analysts often talk about “wheat capping
corn.” This occurs because wheat and corn are substitutes in animal feed. If wheat prices are low, corn
prices will also be low, because, as corn prices rise, livestock feeders will quickly shift to wheat to keep
ration costs low. This reduces the demand and ultimately the price of corn.
It’s more difficult for a firm to try to raise prices and make greater profits if there are close substitutes
and switching costs are low. But, in some cases, customers may be reluctant to switch to another product
even if it offers an advantage. Customers may consider it inconvenient or even risky to change if they
are accustomed to using a certain product in a certain way, or they are used to the way certain services
are delivered.
Page | 48
Factors Affecting the Threat of Substitution
Substitutes are a greater threat when:
 Your product doesn’t offer any real benefit compared to other products. What will hold your
customers if they can get an identical product from your competitor?
 It is easy for customers to switch. A grocer can easily switch from paper to plastic bags for its
customers, but a bottler may have to reconfigure its equipment and retrain its workers if it switches
from aluminum cans to plastic bottles.
 Customers have little loyalty. When price is the customer’s primary motivator, the threat of
substitutes is greater.
Reducing the Threat of Substitutes
You can reduce the threat of substitutes by using tactics such as staying closely in tune with customer
preferences and differentiating your product by branding. In some cases, the advertising required to
differentiate is more than one firm can bear. In that case, collective advertising for an industry may be
more effective.
In advertising industry,
 As there are few agencies who really add value to the companies in terms of sales, there are chances
that they can substitute advertising expenditure with direct marketing.
Page | 49
Rivalry among Competitors
How Intense Is Your Competition?
Competition is the foundation of the free enterprise system, yet with small businesses even a little
competition goes a long way. Because companies in an industry are mutually dependent, actions by one
company usually invite competitive retaliation. An analysis of rivalry looks at the extent to which the
value created in an industry will be dissipated through head-to-head competition.
Intensity of Rivalry Among Competitors
Rivalry among competitors is often the strongest of the five competitive forces, but can vary widely
among industries. If the competitive force is weak, companies may be able to raise prices, provide less
product for the price, and earn more profits. If competition is intense, it may be necessary to enhance
product offerings to keep customers, and prices may fall below break-even levels.
Rivalries can occur on various “playing fields.” In some industries, rivalries are centered on price
competition— especially companies that sell commodities such as paper, gasoline, or plywood. In other
industries, competition may be about offering customers the most attractive combination of performance
features, introducing new products, offering more after-sale services or warranties, or creating a stronger
brand image than competitors. In some cases the presence of more rivals can actually be a positive—for
instance in a shopping area, where attracting customers may hinge on having enough stores and
attractions to make it a worthwhile stop.
Factors Influencing Rivalry Among Competitors
The most intense rivalries occur when:
 One firm or a small number of firms have incentive to try and become the market leader. In some
cases, an industry with two or three dominant firms may experience intense rivalry when these firms
are battling to achieve market leader status. In other situations, when competitors with diverse
strategies and relationships have different goals and the “rules of the game” are not well established,
rivalry will be more intense.
 The market is growing slowly or shrinking. When the potential to sell products is stagnant or
declining, existing firms are unable to grow their market without taking market away from
competitors. In this situation rivalry is more likely.
 There are high fixed costs of production. When a large percentage of the cost to produce products is
independent of the number of units produced, businesses are pressured to produce larger volumes.
This may tempt companies to drastically cut prices when there is excess capacity in the industry in
order to sell greater volumes of product.
Page | 50
 Products are perishable and need to be sold quickly. Sellers are more likely to price aggressively if
they risk losing inventory due to spoilage or if storage costs are high.
 Products are not unique or homogenous. Undifferentiated products (commodities) compete mainly
on price, because consumers receive the same value from the products of different firms. Because
firms do not experience any insulation from price competition, there is more likely to be active
rivalry.
 Customers can easily switch between products. Intense rivalry is likely when customers in a given
industry can easily switch to other suppliers. In these situations, the businesses in the industry will be
vying for market share.
 There are high costs for exiting the business. If liquidation would result in a loss, businesses that
invested heavily in their facilities will try hard to pay for them and may resort to extreme methods of
competition.
Reducing the Threat of Rivals
Threats of rivals can be reduced by employing a variety of tactics. To minimize price competition,
distinguish your product from your competitors’ by innovating or improving features. Other tactics
include focusing on a unique segment of the market, distributing your product in a novel channel, or
trying to form stronger relationships and build customer loyalty.
In advertising industry,
 There is an immense competition as it has evolved as a concentrated market with MNCs as leading
companies battling to achieve market leader status.
 Advertising players setting up second agencies is making the competition even more tough.
 As there are many players in the market, there is a rush of the players for capturing the neighboring
markets.
Final Comment
 Not all of these forces are equally important when assessing the overall attractiveness of an industry.
In some industries, it is easy to gain entry, but very difficult to get out. Not surprisingly, these
industries tend to be mediocre investments.
 A full-fledged industry analysis would require extensive research, talking with customers, suppliers,
competitors, and industry experts. However, as a general overview, the five forces concept provides
entrepreneurs with an excellent tool to examine the profit potential in a particular industry. Gaining
an understanding of the way in which each of the five forces influences your profitability will
provide you with tactics for countering the strength of the forces.
Page | 51
Phase of life cycle
Another way of classifying industry industries is in a cyclical framework, that is, by how they react to
upswings and downswings in the economy. The general classifications in this framework are growth,
cyclical, defensive and cyclical-growth.
 Start-up:
This stage is also known as pioneering stage is typified by rapid growth in demand for the output of
the industry. In the earliest stage, demand not only grows but grows at an increasing rate. As large
number of companies attempt to capture their share of the market, there arise a high business
mortality rate, many of the weaker companies attempting to survive in this new industry are
eliminated and a lesser number of companies survive the initial phases of the pioneer stage.
 Consolidation:
The expansion or growth stage is characterized by the appearance of the companies surviving from
the pioneering stage. This few companies continue to get stronger, both in share of the market and
financially.
 Maturity:
The growth of the industry, which had moderated in the expansion stage, begins at some point to
moderate even further and perhaps even begin to stagnate. In other word sales may be increasing at a
slower rate than that experience by competitive industries or by the overall economy.
 Decline:
The industry is in decline stage, its indicates the rapid decline in demand for the output of the
industry. The reason behind decline stage may be the industry reach at the stage where more
innovation requires applying in the industry so that it helps the industry to reach at the profitable
stage.
 Life cycle stage of Advertising industry:
The industry has exhibited a growth of about 30% over the past four years and is expected to grow at
25% for the next two to three years, making it one of the fastest growing segments in the
advertisement. It is forecasted to reach 40% by 2017.
So from the above figure we can analyze that in this particular advertising industry, the stage of
introduction has been already completed. It is in its growing stage. This shows increasing
competition, demand, and requires higher investment on the other hand it will also give good return
to market player of the industry.
Page | 53
Chapter :4
Financial Analysis & B-Plan
Page | 54
Executive Summary
Advertising will offer marketing services to companies that are looking to employ email marketing
techniques as the cornerstone of their marketing program. It is estimated that in Year 1, over 250 billion
emails will travel across cyberspace. Email marketing is quickly becoming a cost-effective method to
reach a target audience. According to Jupiter Communication research, email ad-response rates
currently averages between five to 15 percent. At the same time, the report noted that only 15 percent of
Web users read all email messages in their entirety.
The potential is there but so is the risk that the target customer will completely reject the advertising.
Email marketing is a science. There are effective strategies that will assure that the company will reach
the greatest number of potential customers.
Advertising specializes in successful email marketing campaigns. Its owners, Robert Humphrey and
Cheryl Littlejohn have over eight years of experience in email marketing campaigns between them.
Robert was project leader for the successful Buy.com and Verison email marketing campaign. Cheryl
was technical lead of 800.com's successful email campaign before joining Robert as technical lead of the
Verison email campaign.
Advertising will design, build, test and deploy the email campaign. It will also report the progress of the
campaign in real-time to provide our customers maximum flexibility. At the end of the campaign will
analyze its success in order to improve the company's future campaigns.
Page | 55
Mission
Advertising will offer its customers the best methods and tools in planning and implementing a
successful email campaign.
Our campaigns will cut through the mumbo jumbo of mass
marketing, increase sales, and enhance customer satisfaction with the company. Promerit Advertising
email campaigns will grab readers immediately and drive home the right message to the right audience.
We will exceed our customers' expectations for campaign returns.
Company Summary
Ogilvy & Mather is an international advertising, marketing and public relations agency based in
Manhattan, and is a WPP company. It operates 450 offices in 161 cities of 120 countries worldwide with
approximately 18,000 employees.
Ogilvy & Mather was founded in 1948 by British born David Ogilvy, with backing by a previous
employer, the London advertising agency Mather & Crowther.
Mather & Crowther originally sent David Ogilvy to the United States in 1938. Over the next ten years,
Ogilvy worked in research at the Gallup polling company, worked for British Intelligence during World
War II, then spent a few years farming in Pennsylvania. Ogilvy in 1948 started a U.S. agency with the
backing of Mather & Crowther, who by then had merged with the U.K. based Benson agency group.
Ogilvy opened his U.S. shop as "Hewitt, Ogilvy, Benson, & Mather" in Manhattan with a staff of two
and no clients
Start-up Summary
Robert Humphrey and Cheryl Littlejohn will invest equally in the company. They will also secure
a long-term business loan. The following table and chart show projected initial start-up costs of
Promerit Advertising.
Services
The services offered by Advertising cover an email marketing project in its entirety, from original
concept to post-campaign evaluation. The service includes the following:

Design the campaign

Personalization and targeting

Email list management

Building deployment system

Testing the plan

Implementing the campaign

Tracking the campaign's progress in real-time

Instant measurability for ROI analysis

Post-campaign analysis
Market Analysis Summary
It was recently reported in an e-Marketeer online advertising report that online promotions are very
powerful with offline companies, as well as online companies. Though offline companies are offering
promotions that necessitate the customer going to one of the company's stores, consumers feel positive
about the online promotions. This opens up a new avenue for these companies to target customer groups
that use computers at work and at home.
Consumers said they cared mostly about return policies, customer service, and product selection. A very
impressive 94 percent of surveyed users reported they have shopped online before. About 76 percent of
those surveyed said promotions were a positive influence on their buying behavior. Some 50 percent
said online coupons were especially persuasive while 70 percent found offline coupons equally
attractive.
An email campaign can be used to reach target customers no matter how small a company's Internet
presence is, as long as the customer wants the product.
Page | 58
Market Segmentation
There are two distinct customer groups that Promerit Advertising is focused on:

Online companies with e-commerce

Offline companies
Market Analysis
2009
Potential
Customers
Online
Companies
Offline
Companies
Other
Total
2010
2011
2012
2013
Growth
CAGR
30%
630,900
820,170
1,066,221
1,386,087
1,801,913
30.00%
0%
0%
1,500,700
0
1,500,700
0
1,500,700
0
1,500,700
0
1,500,700
0
0.00%
0.00%
2,131,600
2,320,870
2,566,921
2,886,787
3,302,613
11.57%
11.57%
Service Business Analysis
By any measure, the Internet is one of the fastest-growing commercial phenomena ever witnessed by
society. Host computers, or servers, have exploded from 3.2 million in 1994 to roughly 79.2 million as
of July 2001. During the same time period, the number of websites roared to more than 6 million from
only 3,000.
A key factor in the recent growth of the Internet is the popularity of the sub-$1,000 PC. Rapidly falling
component prices have allowed PC manufacturers to pass cost savings on to their customers, resulting in
a more attractively priced product. Computers sold at or below the $1,000 level have appealed to firsttime PC users and lower income families. Because of the more affordable prices, PC penetration in the
United States is now approximately 50%, according to Dataquest, a market research firm based in San
Jose, California.
The United States accounts for more than half of the world's total Internet users. When consumers today
are asked why they purchased a personal computer, the most common answer is to connect to the
Internet to get their email.
Strategy and Implementation Summary
Advertising's strategy is to utilize the extensive network of contacts both Robert and Cheryl have with
companies already sold on the value of email marketing. In addition, Promerit will use its internal
expertise to launch an email marketing campaign directed at a select group of its target customers.
Marketing Strategy
With over two million potential customers, Promerit Advertising will focus an email campaign on a
select group of 50,000 businesses each fiscal quarter. We estimate a five percent response rate to the
campaign which will generate 1,250 leads. These leads will then be used to generate business contacts.
Over the year, we will generate 5,000 leads.
Sales Strategy
Advertising's sales strategy is simple. We will use the email marketing campaign directed at our
customer base as a model of what we can accomplish for them. We anticipate that online companies
will be most accessible to our services. We will be successful with offline companies overtime, but
initially sales will be weak with this group.
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Sales Forecast
The following is the sales forecast for three years. We have no cost of sales, as all of our deliverables
are electronic, and our labor costs are included in the Personnel table.
35000
30000
25000
20000
15000
10000
5000
December
November
October
September
August
July
June
May
April
March
February
January
0
Competitive Edge
Robert Humphrey has five years of experience in email marketing campaigns and ten years of
experience in direct marketing. He is a graduate of Ohio State University with a BA in marketing.
Robert worked with several advertising companies before arriving at Kemp and Johnson Advertising in
1997. With Kemp and Johnson, Robert created and grew the Internet marketing group. Robert was
project leader for the successful Buy.com and Verison email marketing campaign.
Cheryl Littlejohn graduated with a BS in computer science from UCLA in 1996. She immediately went
to work for the Internet start-up Temple Communication as an IT administrator. She left in 1998 to join
the start-up 800.com as the technical lead of its email campaign. In 2000, she joined Richard's Internet
group at Kemp and Johnson as technical lead of the Verison email marketing campaign.
Email marketing is an emerging marketing tool with few industry experts. Robert and Cheryl's
accomplishments over the past three years has been singled out by the industry as models for successful
email marketing campaigns.
Page | 61
Management Summary
Robert Humphrey will be responsible for tactical elements of the marketing campaign and Cheryl
Littlejohn will manage the technical aspects of the campaign.
Financial Plan
The financial plan is presented in the following topics.
Break-even Analysis
The monthly sales break-even point is is shown in the table and chart below.
Break-even Analysis
Monthly Revenue Break-even
19308.00
Assumptions:
Average Percent Variable Cost
0.00
Estimated Monthly Fixed Cost
19308.00
Projected Profit and Loss
The following table and charts outline the projected profit and loss for three years. We estimate that
the agency will not be profitable until the second year of operation. Promerit Advertising will then grow
by about 9% for the second and third year.
Pro Forma Profit and Loss
Pro Forma Profit and Loss
2011
2012
2013
Sales
225830.00
370000.00
530000.00
Direct Cost of Sales
0.00
0.00
0.00
Other Production Expenses
0.00
0.00
0.00
Total Cost of Sales
0.00
0.00
0.00
Gross Margin
225830.00
370000.00
530000.00
Gross Margin %
1.00
1.00
1.00
142000.00
181000.00
202000.00
Expenses
48000.00
60000.00
80000.00
Depreciation
0.00
0.00
0.00
Leased Equipment
0.00
0.00
0.00
Utilities
2400.00
2400.00
2400.00
Insurance
0.00
0.00
0.00
Rent
18000.00
18000.00
18000.00
Payroll Taxes
21300.00
27150.00
30300.00
Other
0.00
0.00
0.00
Total Operating Expenses
231700.00
288550.00
332700.00
Profit Before Interest and Taxes
-5870.00
81450.00
197300.00
EBITDA
-5870.00
81450.00
197300.00
Interest Expense
8916.00
6999.00
4999.00
Taxes Incurred
0.00
22335.00
57690.00
Net Profit
-14786.00
52115.00
134611.00
Net Profit/Sales
-0.07
0.14
0.25
Expenses
Payroll
Sales and Marketing and Other
Page | 64
Projected Cash Flow
The following table and chart highlight the projected cash flow for three years.
Pro Forma Cash Flow
Pro Forma Cash Flow
2011
2012
2013
Cash Sales
56458.00
92500.00
132500.00
Cash from Receivables
124685.00
248971.00
365839.00
Subtotal Cash from Operations
181143.00
341471.00
498339.00
Sales Tax, VAT, HST/GST Received
0.00
0.00
0.00
New Current Borrowing
0.00
0.00
0.00
New Other Liabilities (interest-free)
0.00
0.00
0.00
New Long-term Liabilities
0.00
0.00
0.00
Sales of Other Current Assets
0.00
0.00
0.00
Sales of Long-term Assets
0.00
0.00
0.00
New Investment Received
0.00
0.00
0.00
Subtotal Cash Received
181143.00
341471.00
498339.00
Expenditures
2011
2012
2013
Cash Spending
142000.00
181000.00
202000.00
Bill Payments
90432.00
133818.00
188745.00
Subtotal Spent on Operations
232432.00
314818.00
390745.00
0.00
0.00
0.00
Borrowing
0.00
0.00
0.00
Other Liabilities Principal Repayment
0.00
0.00
0.00
Repayment
20004.00
20004.00
20004.00
Purchase Other Current Assets
0.00
0.00
0.00
Purchase Long-term Assets
0.00
0.00
0.00
Dividends
0.00
0.00
0.00
Subtotal Cash Spent
252436.00
334822.00
410749.00
Net Cash Flow
-71294.00
6649.00
87590.00
Cash Balance
84206.00
90856.00
178446.00
Cash Received
Cash from Operations
Additional Cash Received
Expenditures from Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal
Repayment
Long-term
of
Liabilities
Current
Principal
Page | 66
Projected Balance Sheet
The table shows projected balance sheet for three years.
Pro Forma Balance Sheet
2011
2012
2013
Cash
84206.00
90856.00
178446.00
Accounts Receivable
44688.00
73216.00
104877.00
Other Current Assets
10000.00
10000.00
10000.00
Total Current Assets
138894.00
174072.00
293323.00
Long-term Assets
0.00
0.00
0.00
Accumulated Depreciation
0.00
0.00
0.00
Total Long-term Assets
0.00
0.00
0.00
Total Assets
138894.00
174072.00
293323.00
Liabilities and Capital
2011
2012
2013
Accounts Payable
8184.00
11251.00
15895.00
Current Borrowing
0.00
0.00
0.00
Other Current Liabilities
0.00
0.00
0.00
Subtotal Current Liabilities
8184.00
11251.00
15895.00
Long-term Liabilities
79996.00
59992.00
39988.00
Total Liabilities
88180.00
71243.00
55883.00
Paid-in Capital
100000.00
100000.00
100000.00
Retained Earnings
-34500.00
-49286.00
2829.00
Earnings
-14786.00
52115.00
134611.00
Total Capital
50714.00
102829.00
237440.00
Total Liabilities and Capital
138894.00
174072.00
293323.00
Net Worth
50714.00
102829.00
237440.00
Assets
Current Assets
Long-term Assets
Current Liabilities
Page | 67
Business Ratios
Ratios are the best tools for measuring liquidity profitability and management efficiency of the industry.
The importance of the ration analysis is discussed below.

It helps in analysing the probable causal relationships among different items after analysing the past result

This rations that are derived after analysing the past results helps the management to prepare budgets, to
formulate policy, and to prepare a future plan of action

It takes time dimension in to consideration by trend analysis

Ration analysis helps in making inter-firm comparison and also comparison between the different divisions of
the company

The short term liquidity position of the industry can be easily found by applying the liquidity ratio.

It helps the lender to evaluate the likelihood to collecting back loan.
Sales Growth
Percent of Total Assets
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative
Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
2011
0.00
2012
0.64
2013
0.43
Industry
Profile
0.09
0.32
0.07
1.00
0.00
1.00
0.06
0.58
0.63
0.37
0.42
0.06
1.00
0.00
1.00
0.06
0.34
0.41
0.59
0.36
0.03
1.00
0.00
1.00
0.05
0.14
0.19
0.81
0.36
0.42
0.81
0.19
1.00
0.43
0.13
0.56
0.44
1.00
1.00
1.00
1.00
1.00
1.00
1.00
0.00
1.07
0.21
-0.03
0.86
0.16
0.22
0.75
0.15
0.37
0.82
0.04
0.03
16.97
16.97
0.63
-0.29
-0.11
15.47
15.47
0.41
0.72
0.43
18.45
18.45
0.19
0.81
0.66
1.67
1.39
0.56
0.06
0.13
Page | 68
Additional Ratios
2011
2012
2013
Net Profit Margin
-0.07
0.14
0.25
n.a
Return on Equity
-0.29
0.51
0.57
n.a
Accounts Receivable Turnover
3.79
3.79
3.79
n.a
Collection Days
56.00
78.00
82.00
n.a
Accounts Payable Turnover
12.05
12.17
12.17
n.a
Payment Days
27.00
26.00
26.00
n.a
Total Asset Turnover
1.63
2.13
1.81
n.a
Debt to Net Worth
1.74
0.69
0.24
n.a
Current Liab. to Liab.
0.09
0.16
0.28
n.a
130710.0
162821.0
277428.0
Net Working Capital
0
0
0
n.a
Interest Coverage
-0.66
11.64
39.47
n.a
Assets to Sales
0.62
0.47
0.55
n.a
Current Debt/Total Assets
0.06
0.06
0.05
n.a
Acid Test
11.51
8.96
11.86
n.a
Sales/Net Worth
4.45
3.60
2.23
n.a
Dividend Payout
0.00
0.00
0.00
n.a
Activity Ratios
Debt Ratios
Liquidity Ratios
Additional Ratios
Page | 69
Conclusion
The Indian advertising industry is talking business today. It has evolved from being a small-scale
business to a full-fledged industry. It has emerged as one of the major industries and tertiary sectors and
has broadened its horizons be it the creative aspect, the capital employed or the number of personnel
involved. Indian advertising industry in very little time has carved a niche for itself and placed itself on
the global map.
Indian advertising industry with an estimated value of es13, 200-crore has made jaws drop and set
eyeballs gazing with some astonishing pieces of work that it has given in the recent past. The creative
minds that the Indian advertising industry incorporates have come up with some mind-boggling concepts
and work that can be termed as masterpieces in the field of advertising
Indian economy is on a boom and the market is on a continuous trail of expansion. With the market
gaining grounds Indian advertising has every reason to celebrate. Businesses are looking up to
advertising as a tool to cash in on lucrative business opportunities. Growth in business has lead to a
consecutive boom in the advertising industry as well.
The Indian advertising today handles both national and international projects. This is primarily because
of the reason that the industry offers a host of functions to its clients that include everything from start to
finish that include client servicing, media planning, media buying, creative conceptualization, pre and
post campaign analysis, market research, marketing, branding, and public relation services.
Keeping in mind the current pace at which the Indian advertising industry is moving the industry is
expected to witness a major boom in the times ahead. If the experts are to be believed then the industry
in the coming times will form a major contribution to the GDP. With al this there is definitely no looking
back for the Indian advertising industry that is all set to win accolades from the world over.
Page | 70
Bibliography
 www.researchandmarkets.com
 www.exchange4media.com
 www.articlesnatch.com
 www.ces.purdue.edu/extmedia/EC/EC-722.pdf
 www.gujaratwebs.com
 www.indianmirror.com
 www.referenceforbusiness.com
Page | 71