Canadian Adverising Industry Essay

This essay has a total of 2203 words and 11 pages.

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 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
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