Canadian Adverising Industry Beth McNeill Introduction The topic of discussion in this paper is advertising in Canada. It will argue that the Canadian advertising industry strives to protect themselves from competition in the United States. The paper will discuss how the Canadian advertising industry allots their money to different forms of media to ward off the United States competition. Tracing the history of advertising from the early 1960s to the present day, will help to show why Canada concentrates on the television and radio portion of the media. The paper will display the philosophy or reason behind their advertising, as well as the structure of their industry. The audience and the jobs and training that take place will also be examined to better understand the Canadian advertising industry.
The external environmental factors such as technology, language, and the economy will also affect the advertising industry. This issue should be addressed to understand the importance of international competition and how it can affect or even control an industry. To better understand the advertising industry in Canada we need to look at some facts. The communication lines in Canada are expanding daily. These communication vehicles are how advertising is spread.
The more Canada strives to be evident in the communication lines, the less influence the United States can have on the Canadian industry. There are 18.5 million telephone lines and 3 million cellular phones in use. There are 32.3 million radios in Canada and there are 535 AM stations and 53 FM stations. As of 1997 there was 80 television broadcast stations (with over 100 repeater stations) and 21.5 million televisions. In 1999 there was an estimated 750 Internet service providers (CASI).
There are 120 daily newspapers, 108 are in English and the other 12 are in French (Pang). There are also seventy-five ethnic weekly papers published (Pang). Communication is part of the second largest service industry in Canada. With such a large country and such few people Canada relies on strong communication to tie people together. Canada was the first country to launch a communications satellite and has been in the forefront of developing communications technology. With more and more changes in technology, the government, and the economy Canada can communicate to all citizens in many ways, keeping the communication lines tight. CBC is Canadas national radio and television service.
It was developed in 1936 to help prevent the threat of American programming to dominate Canadian culture (Shepard). Canada has strived to keep their culture of Canadian decent. The United States and Canada have a very strong relationship because they share the longest undefended border in the world and are close allies as members of the North Atlantic Treaty organization (NATO). The United States is the largest investor in the Canadian industry and the largest market for Canadian trade. So Canada could be easily influenced or even controlled by the United States.
The United States does tend to exploit its greater power and affect relations between the two countries. The function of advertising is to develop awareness and recall of a product or service that results in market increase. Canada uses all of the same mediums as the United States, to expose the consumer of products and services. In 1993 the gross advertising revenues for all media reached $9.0 billion. Newspaper advertising accounts for 26.8 percent of this total revenue.
Radio and television make up 27 percent of the total. Catalogues and direct mail account for 21.8 percent, periodicals use 15.9 percent and outdoor and miscellaneous uses the remaining 8.5 percent (Strategies). (See pie chart) All of the advertising in Canada can be divided into two components, local and national advertising. Local advertising represents about sixty percent of all media (about $5.4 billion) (Strategies). This advertising is placed into the industry by a companies media representative and usually does not require the help of an advertising industry. National advertising accounts for the remaining forty percent of all the media (about $3.6 billion) (Strategies). This component is responsible for the revenues of the advertising agencies.
Large businesses, which market their products worldwide, are a part of national advertising. Ad agencies coordinate the production, creation, and placement of the advertising. Television is the primary medium, but not exclusively. Print media such as direct mail, catalogues, magazines, newspapers, and radio are also vehicles used in national advertising. There isnt one national newspaper or magazine for Canada because it is so large.
This is the main reason why the Canadian advertising industry will spend more on broadcast media, such as television and radio. The CBC is a major broadcasting corporation of Canada. These vehicles have national broadcasts for the country (Grabowski). The consumer is able to listen to a station or watch a program or newscast that is nationally recognized and available. This type of media will reach a larger group of consumers.
The structure of advertising in Canada is very important to understanding the industry. Canadian advertising agencies have restructured themselves to meet customers demanding needs. Agencies are becoming more productive by establishing separate subsidiaries that provide different services. They have developed separate departments to meet the individual needs of each company. There are fifteen top agencies in Canada and thirteen of them are foreign owned, compared to 1960 when only three of them were (CASI).
This is because Canadian owned agencies are domestically oriented and are at a disadvantage in attracting international advertisers as clients, for a fear that they cannot produce results that are accepted internationally. Most Canadian firms handle the local or small accounts that are advertising primarily in the country. This directly affects the highest possible revenue a Canadian owned agency might get. The foreign owned agencies will therefore receive all of the top advertisers as clients. These will also bring in the highest revenues.
U.S. owned advertising agencies have successfully operated in Canada, yet Canadians have not been able to successfully enter the U.S. market. This is a result of lack of knowledge of the United States market, insufficient client contacts, inadequate financial.