Swot analysis of the advertising industry

Written by john p. gross
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Swot analysis of the advertising industry
SWOT analyses evaluate strengths, weaknesses, opportunities and threats (Chart analysis image by Dmitriy Lesnyak from Fotolia.com)

SWOT analyses evaluate the strengths, weaknesses, opportunities and threats of a business operation. A SWOT analysis of the advertising industry would address these four criteria, and provide management of advertising agencies a better understanding of their industry, both in terms of shortcomings and areas of excellence. Although a SWOT analysis can be commissioned for the advertising industry as a whole, a SWOT analysis could also be commissioned to evaluate a single advertising agency, one marketing campaign or even a line of commercials within a campaign.

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Strengths

The strengths component of the analysis should identify the advertising industry’s internal strengths, such as where the industry excels compared to other industries, and how it is maximising its physical resources and personnel. For example, this section may list low staff turnover, high staff morale, low overhead, high profit margins, multiple revenue streams, product and service diversification and a sustainable business model.

Weaknesses

The weaknesses component should identify the advertising industry’s internal weaknesses, such as where improvements need to be made and where physical and human resources are not being maximised. For example, this section may list low client satisfaction, high production costs, low return on investment (ROI) or an untrained or ageing employee base. These examples may not apply to all advertising agencies, but for a SWOT analysis of the industry, these examples would be generalisation of the industry.

Opportunities

The opportunities component should list how the industry could grow or expand. The items listed in this section tend to be environmental factors that can be leveraged by the previously listed strengths. For example, opportunities may include rising marketing budgets, large client bases, a growing economy, a larger number of media outlets, lower advertising rates or new advertising mediums. It’s important to note that these examples are listed as opportunities, but some could also be listed as threats, depending on the circumstances of each individual agency.

Threats

The threats listed on a SWOT analysis should list the external elements of the advertising industry where the industry could potentially be harmed. The features listed here should be areas of the industry where outside forces could possibly harm current growth or even harm the status quo. For example, threats listed could include a shrinking economy, less demand for marketing services, higher health care costs or a change in tax legislation.

Building the SWOT Analysis Chart

SWOT analysis charts are two-by-two charts with the opportunities, strengths, threats and weaknesses listed in each box. The strengths are listed on the top-left and the weaknesses are listed in the top-right. The opportunities are listed in the bottom-left and the threats are listed in the bottom-right.

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