Large advertising agencies lose market share to rivals
Posted Thursday, August 30 2012 at 20:25
Increased competition in the advertising agency business has loosened the grip of established firms with the industry becoming increasingly fragmented.
Data from research firm Ipsos shows that the market share of the top five companies has shrunk from 96 per cent in 2009 to 88 per cent in the first half of the year, with ScanGroup being the only established firm to grow its market share.
The other four — Access Leo Burnett, Ogilvy East Africa, ZK, Young & Rubicam — lost between one and nine per cent of their market share in the same period to ScanGroup, Shekele, Saracen and Transcend, among others.
The Ipsos data also show that advertising agencies with at least one per cent market share nearly doubled from seven in 2009 to 13 in June, signalling increased competition.
“The market has become dynamic and some new players are doing good business,” said Joe Otin, the media monitoring director at Ipsos, noting that the start-ups’ growth is driven by acquisition of new clients and takeover of others from the established rivals.
There are about 30 players in the market, with new entrants like Media Edge, Redhouse Group, and TBWA further fuelling competition.
Access Leo had the largest market share loss, from 13 per cent to four per cent, followed by ZK advertising whose share fell from eight per cent to less than 0.5 per cent.
ZK’s market share erosion has been linked to the loss of the lucrative Airtel account that was taken up by ScanGroup in 2010 on its ability to offer the telco marketing services in more African markets.
Ogilvy, which is 50 per cent owned by ScanGroup, saw its market share drop from 10 per cent to four per cent while Y & R’s share shrunk by one percentage point to three per cent.
ScanGroup bucked the trend, raising its market share from 61 per cent to 75 per cent, boosted by its purchase of a 51 per cent stake in Ogilvy & Mather Africa that gave it access to 14 markets in the continent.
This wider reach has helped the firm acquire more multinationals in multiple markets in Africa, including Airtel, KCB, and Unilever.
“Our thinking is that if we can offer more marketing services in more markets then we can secure more business from multinationals for our growth,” said ScanGroup CEO Bharat Thakrar.