Canadian Adverising Industry Essay, Research Paper

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 1960?s 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 Canada?s 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 isn?t 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 resources, and the inability to attract top personnel.

FTA and NAFTA haven?t had a strong impact on daily operations as much as client sectors. The Canada-U.S. Free Trade Agreement and the North American Free Trade Agreement have only made relations between countries easier and clearer. The impact of free trade is affected by the client or general economy. Any economic increase will impact clients to use more money towards advertising and this will bring further business to advertising agencies. The structure of an agency will depend strongly on the economy.

There are four main sub-sectors of the advertising industry. Advertising agencies create and publish advertising in the media. Media representatives sell time and space for media. Outdoor display and billboard advertising companies rent space for signs, billboards, and displays only. The final sector is other advertising services, which are firms that provide different services ranging from commercial art to copywriting. These sub sectors allow for higher rates to be placed on indivualized and special services (Strategies).

The field of communication offers such a vast amount of jobs. There are many opportunities in this service field. The field of communications makes up eight percent of Canadian work (Pang). Canadians are able to be a large part of the communications field because the Canadian Radio-Television and Telecommunications Commission states that sixty percent of all programs must be written and performed by Canadians (Pang). This high percentage ensures Canadians will be a dominant figure in the creation of television and radio programs. The four sub-sectors of advertising allow for many jobs in the communications field, anything from photographers, copywriters, graphic artists, editors, publishers, account executives, and management or upper level positions. Depending on the agency you can make above average salary for your position if you work in a multinational agency. Multinational agencies can offer better salaries, working conditions and training, possibility of overseas postings. These factors also attract a more skilled employee. Canadian firms that are not multinational can offer these opportunities as well and they have the same quality employees as foreign owned agencies. The companies offer many of the same perks you would find at many U.S. agencies including benefits, company cars, free travel expenses and paid vacation. The Canadian human rights code states that employers must give their employees two weeks paid vacation (Shepard). The employees are also protected by labor laws that prohibit employers from letting employees work more than forty-eight hours per week. The minimum wage is frequently reviewed to determine whether or not changes need to be made because of the economy or inflation. The All Canadian Congress of Labor (A.C.C.L.) was established in 1927 and controls these labor regulations (Shepard). The Congress of Industrial Organization (CIO) and the Canadian Congress of Labor (CCL) also help regulate and control labor laws.

There are 27 million people who live in the ten provinces and two territories of Canada. Sixty-two percent of the population is concentrated into Quebec and Ontario. Canada is a multicultural and a multiracial society where all aspects of culture are accepted (Grabowski). Canada is referred to as a ?mosaic? because many cultures exist but they each retain their distinctive characteristics. This quality is very helpful in target marketing. This empowers agencies to concentrate on different cultures in a smaller area. It creates the possibility of reaching the people that are targeted by their culture or ethnicity. This can be extremely helpful when marketing and advertising.

The growth in the advertising agency can be linked to technology that helps facilitate global marketing with global companies. The adoption of computer technologies has allowed for many changes to take place. Consumer monitoring, market segmentation, and consumer targeting are easily reached through the use of computers. The addition of the Internet has helped tremendously. After an agency designs the campaign they can easily send it to any location in Canada or any location anywhere in the world. Because consumers can be targeted more precisely and ideas can be created much more quickly sales can go up as a result of quicker development and more clients. The Internet and the electronic highway have created a demand by clients to be on the net. Companies now this is a new way to reach a large and affluent market. Advertising agencies must hire new employees capable of creating these sites and they must adjust their approach to enter this new medium. The adoption of computers has changed the advertising workplace and the amount of work that can be completed in such a short period of time. Changes in television have allowed for more access to more consumers. The increased number of channels will allow for advertising agencies to reach their potential audience. An important change in television is that consumers are becoming more program driven rather than channel driven, allowing advertising agencies to better position their advertisements.

Another external factor that will influence the advertising agencies is the impact of the government?s regulation policies. A series of checks and balances has been established to prevent advertising agencies from carrying messages which are factually incorrect, deceptive, or misleading. There are many federal and provincial regulations established to direct food and drug products as well as children?s advertising. The FDA and the CRTC regulate the advertising.

Canada is one of the only countries to have two official languages, French and English. Because there are two official languages everything must be printed or available in both languages. There are French and English newspapers, magazines, television and radio stations, even street and road signs. All public notices must be written in both French and English. Toronto is a mostly English-speaking city and Montreal is a French speaking area. This bi-lingual standard causes advertising agencies to make adjustments that will accommodate both languages. This means there is less room for copy in small ads and will limit the amount of information mailings, posters, and other advertisement can carry (Strategies). Advertising agencies must make the necessary adjustments to adapt to this dual language society.

Conclusion

Advertising in Canada has taken measures to assure that it will not be overcome by the United States or any other foreign country. They have established rules that keep Canadian citizens prevalent in the Canadian advertising industry. These regulations make it possible for Canadian advertising industries to survive and succeed. Canada has grown their advertising services tremendously over the last forty years and will continue to do so. This has been possible with the change towards global marketing. Advertising agencies have done a great job in adapting to the increase in multinational accounts and firms. Canadian advertising agencies have formed strategic alliances with international companies to make this possible (Strategies). Canada?s advertising agencies will continue to grow in size and profits to better themselves, the consumers, and their clients.

Bibliography

Pang, Guek-Cheng. Cultures if the World: Canada. Marshall Cavendish. New York. ? 1994

Grabowski, John F. Modern Nations of the World: Canada Lucent Books. San Diego. ? 1998.

Shepard, Jennifer. Enchantment of the World: Canada. Children?s Press. Chicago. ? 1987.

http://strategies.html.

http://CASI.com