Developing a business model and internal reports as a way for advertising businesses to adapt to recession

Abstract

Subject. The advertising business in Russia is characterized by high level of competition. Many areas of advertising activities showed a negative trend even before the start of the COVID-19 pandemic. In such unfavorable conditions, solutions to problems associated with the development of adequate business models of advertising agencies, become especially relevant. Objectives. Our aim is to underpin the need for transforming the business models of advertising agencies as a way of their survival in the face of future recession. Our working hypothesis is that under crisis conditions, organizations that continue to develop their business model tend to survive. Methods. The study employs general scientific methods, like comparison, deduction, analysis, synthesis. Results. We updated the definitions of ‘business model’, ‘optimal business model’, ‘internal reporting’, disclosed relationship between them. Based on foreign and domestic experience of advertising business functioning in conditions of the global financial and economic crisis of 2014–2015 and existing approaches to building business models, we offered an integrated business model. We also developed a form of management consolidated report, which reflects the specifics of advertising agencies. The recommended business model for an integrated group of companies and the adapted form of management consolidated report will provide the top management with integrated information about the total operating activities of agencies and enable adequate economic decisions. Conclusions. To address the threats of the looming crisis, companies should continue to develop their business model and improve in-house management reporting.