TRENDS IN ADVERTISING
The trends in advertising have evolved around the trends in society such as the usage of the Internet. Tapscott and Ticoll (2003) has provided a theory on the impact of the Internet in marketing industry. Furthermore, it has been speculated that the advertising trend in year 2013 will be in mobile advertising.
THE INTERNET EFFECT
In the last decade, the Internet has become integrated into everyday life. The vast amount of information available online has changed how many of us search for knowledge. In the marketing industry, according to Tapscott and Ticoll (2003), the Internet has made a large amount of market information available to consumers. Product information is also updated before each particular product is purchased. Consumers also have access to information about substitute products and their prices. The high availability of information about potential substitute products results in a more elastic demand. For example, Picture 1 displays a range of digital cameras available at different price points. Consequently, customers are able to select a digital camera that fits their purpose. The higher demand elasticity is, the greater the drop in quantity as prices rise, and vice versa (Sloman 2012). As quantity and availability of information on the Internet has increased so too has market transparency (all parties are able to observe information about the market), product transparency (information about the product is widely available) and price transparency (prices are exposed online) providing consumers with more information to consider before making purchases (Granados et al., 2005). The availability of this information has caused product prices to become more elastic since consumers are now able to compare information between sellers. Subsequently, companies may be tempted to enter a 'price war' in order to gain more customers. In a sensitive market, a small change in price of a product can affect the demand curve for the product. Figure 1 displays the changes in demand in terms of price elasticity resulting from the Internet effect. |
From the price elasticity of the demand curve above, we can see that at the same price (P1), with the internet effect, the demand has changed (Point a and Point b). This is because for the same product (a digital camera), customers have multiple options to choose from, each with their own unique attributes (price, quality, features etc). This increased variety will accomodate a larger range of customers, resulting in a larger market size. If companies lower the prices (from P1 to P2), the Internet effect increases the change in quantity demanded (Q4 – Q2 > Q3 – Q1) as a result of a more elastic demand.
ADVERTISING CHANNELS IN 2013
Furthermore, with prolific usage of mobile devices, advertisers have been incentivised to advertise in this area. A recent study by RediumOne, a leader in programmatic advertising, suggests that brands are likely to “look beyond vanity metrics to capitalize on mobile ad receptiveness and multichannel viewing habits” (Yahoo Finance, 2012). Moreover, the study has shown that consumers share sales offers to each other before making purchases.
REFERENCES
ADVERTISING CHANNELS IN 2013
Furthermore, with prolific usage of mobile devices, advertisers have been incentivised to advertise in this area. A recent study by RediumOne, a leader in programmatic advertising, suggests that brands are likely to “look beyond vanity metrics to capitalize on mobile ad receptiveness and multichannel viewing habits” (Yahoo Finance, 2012). Moreover, the study has shown that consumers share sales offers to each other before making purchases.
REFERENCES
- Granados, N. F., Gupta, A. and Kauffman, R. J. (2005) “Empirical Analysis of Internet-Enabled Market Transparency: Impact on Demand, Price Elasticity, and Firm Strategy” (Online), Available from: http://graziadio.pepperdine.edu/faculty/ngranados/granadosproceedings1.pdf [Accessed 24 December 2012].
- Pricerunner.co.uk (2012) Digital Cameras (Online), Available from: http://www.pricerunner.co.uk/cl/29/Digital-Cameras [Accessed 28 December 2012].
- Sloman, J., Alison, W., Garrat, D. (2012) Economics, 8th ed., Pearson.
- Tapscott, D. and Ticoll, D. (2003) “The Naked Corporation: How the Age of Transparency will Revolutionize Business”, Free Press, New York.
- Yahoo Finance (2012) Press release: RadiumOne Identifies Top-5 Trends in Advertising for 2013” (Online), Available from: http://finance.yahoo.com/news/radiumone-identifies-top-5-trends-193855209.html [Accessed 24 December 2012].