Market Landscape Report: Enterprise Software for Advertising and Marketing Services

Enterprise resource planning (ERP) systems that address the needs of service industries such as advertising agencies represent a growing market. Although there are exceptions, business software vendors still approach the industry with a generalized set of functionality. This report aims to establish the areas of product functionality that this industry requires and identify a strategy vendors might take to improve the fit of their solutions to this market.

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Advertising spending in the USA alone in the first quarter of 2011 amounted to $32.5 billion, and advertising expenditures are exploding in countries like India, China, Russia, and Brazil. And where there is a thriving market, a parallel market segment for business software develops. Enterprise resource planning (ERP) systems that address the needs of service industries such as advertising agencies represent a growing market. Although there are exceptions, business software vendors still approach the industry with a generalized set of functionality. This report aims to establish the areas of product functionality that this industry requires and identify a strategy vendors might take to improve the fit of their solutions to this market.

While the need for certain functionalities is shared across services companies (e.g., financials and customer relationship management [CRM]), advertising and marketing services (public relations, promotions, marketing) agencies have some specific requirements, which are dictated by major changes in the media market. And as with any other business, their conditions are affected by the growth of the company.

In order to better understand their needs and pain points, Technology Evaluation Centers (TEC) interviewed information technology (IT) decision makers from agencies of different sizes—small (under 100 employees), medium-sized (100 to 1,000 employees), and large (more than 1,000 employees). More than half the agencies interviewed represent medium-sized companies; the remainder are evenly distributed between small and large or very large.

The patterns that emerged from these interviews reveal that media solutions (e.g., MediaBank, DDS, etc.) do not adequately support back-office functionality (e.g., financials, human resources [HR]) and project management, but they do very well at media buying. In contrast, ERP systems (e.g., Oracle, SAP, and Microsoft) offer very strong back-office and project management functionality, but provide very weak media-specific functionality.

Advertising and Marketing Services Business Software Functionality Requirements

In order to better understand how vendors are approaching the advertising and marketing services space, we need to first understand the specific business software needs of the agencies. Setting aside functionality that any services company needs (e.g., financials, CRM, etc.), the specific needs of advertising agencies are dictated by the major changes in the media market (such as new ways to deliver and new ways to monetize ads) and the growth of the company (whether organic or through mergers and acquisitions).

Generally speaking, advertising and marketing services companies need robust content creation and management tools, but also content distribution solutions, since these are the deliverables they provide to customers. Their systems need to be complex enough to handle the processes and workflows that come with managing large quantities of content, but also flexible enough to encourage creativity and collaboration.

Functional and non-functional software requirements vary by size and type of agency. Financials and reporting are two functional requirements very important to all agencies, while CRM functionality is not that important to most agencies.

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