Los Angeles, CA (PRWEB) December 13, 2013
Billboard advertising has a buyer power score of 3.8 out of 5.0. The higher the score, the more leverage a buyer has in negotiating a favorable price. This score reflects a medium level of buying power in the market. “Despite a high level of market share concentration and significant switching costs, buyers have power in the market due to low price volatility and low product specialization,” says IBISWorld procurement analyst Kayley Freshman-Caffrey.
The top four billboard advertising service providers, including CBS Corporation and Lamar Advertising Company, own a majority of the market. As a result, buyers do not have many suppliers from which they can choose, which hurts their negotiating power. In the three years to 2013, market concentration has been increasing because of market consolidation, which is reducing buyer power. Additionally, it is costly for buyers to switch between suppliers after one has been secured. “Typically, buyers are committed to contracts with specific durations, and they are penalized financially if they try to cancel their services before a contract expires,” adds Freshman-Caffrey. “These costs further decrease the leverage buyers have when negotiating pricing and contract terms.”
Slight price increases during period resulted from growth in the demand for advertising services. As consumer spending boosted revenue for major buyers of billboard advertising services, those buyers purchased more billboard advertising to improve their competitive standing against market rivals. As a result of higher demand, billboard advertising suppliers were able to boost prices, slightly lowering buyer power. During the three years to 2016, prices are expected to continue slowly rising along with consumer spending.
Generally, the price of billboard advertising is subject to low volatility, allowing buyers to effectively plan purchases in advance. Product specialization is also low, allowing buyers to solicit services from any supplier in the market. When a buyer has more options from which to choose, they have more buying power; consequently, low product specialization and relatively stable pricing keep buying power for billboard advertising at a moderate level. For more information, visit IBISWorld’s Billboard Advertising procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help buyers of billboard advertising. Billboard advertising refers to the use of a large outdoor board to convey a promotional message. This definition includes bulletin billboards, digital billboards, poster billboards, wall displays and spectaculars. Suppliers of billboard advertising services vary from large-scale national media companies to small-scale, localized firms. This report does not include magazine advertising, newspaper advertising, coupon advertising or transit advertising services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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