How Marketing And the Communications Industry Transformed to the Digital Marketing Era - Research Paper Example

?Exam case study Contents Contents 2 Executive Summary 3 Introduction 4 Analysis 4 Industry Based View 4 Resource Based View 6 al Based View 8 Strategic Options and Incumbent Risks 8 Conclusion and Recommendation 12 Reference 12 Bibliography 14 Executive Summary Publicis group is a company which has many agencies under its umbrella and it is operating globally. The marketing and communications industry is transforming for the past 20 years. Publicis group also need to take steps for matching their footsteps with the industry. So the company management has acquired a new company named Digitas which is a digital advertising agency. Then the company management has felt the need for integrating the agencies for offering value added product to the clients. As a result they have launched Vivaki to improve the advertisers’ investments in marketing and boost the growth of the group. Vivaki’s operation was combined of the operation of the four companies including Digitas. But the company’s performance was not up to the mark in the initial phase. The fact is that Vivaki was launched in the time of financial crisis. At that time the performance of all the companies in the industry was below average, so it was not a matter of concern for the company management. The industry based view of the company describes that Publicis has taken the right step with reference to the industry and the current situation after 2006. It has acquired Digitas and integrated different agencies. The latest approach was the launch of Vivaki. The resource based analysis of the company describes the VRIO framework of the company. The company has some rare resources like their innovation capability and reputation and maintain the culture of all the agencies which increases the value of the company. The institutional based analysis of the company describes that the company is maintaining the rule of the game of the marketing and communications industry. The company is also transformed its process towards digital marketing from the traditional process. At the end the researcher has advised that the company should allocate the responsibilities to the agencies as they are working together, also they should take care of the cultural issues. They should also develop the framework for getting feedback from the employees and the clients. Introduction Publicis group is a multinational company based in Paris. The group provides media services, traditional and digital advertising, marketing services and consulting services to the clients. In the era of globalization the medium of advertisement has been changed and the type of advertisement also getting modernized. In the marketing and communications industry there was a transformation seen from the 1990s decade. The agencies change their campaign approaches. They are trying to communicating with the customers instead of communicating at the customers. The Publicis group wants to transform the group’s operation as they have bought Digitas. They have begun to identify a new model and for this they have to change the company’s agencies. Vivaki is a new strategic initiative designed to improve the advertisers’ marketing investments and thus boost the growth of the Publicis group. In this modern era of marketing and communications industry needs some innovative approaches for retaining the market share. The approach of Publicis group was innovative as four agencies came under one umbrella through which Vivaki can provide good services to the clients. Since launch Vivaki has not performed well but because of the financial crisis. The paper is an attempt to research about the problems with the group using various tools of analysis like TOWS and strategy tripod. The researcher has tried to provide some recommendations that what the company should do in this situation for their long term and short term profit. Analysis The strategy tripod model is the tool a company with respect to three major perspectives of strategy. The three perspectives are industry based view, resource based view and institutional based view (Keillor and Kannan, 2011, p.250). The discussion about the factors is as follows. Industry Based View Industry based view of a company determines the strategies taken by the firm in the current condition. The marketing and communications industry has transformed in the past 20 years. They are building global creative agencies and the new media buying functions. The objective of the companies is optimizing the ad spend and providing better rate to the clients. The industry is regarded as a competitive one. So a company has to make a robust and innovative strategy for retaining the market share in the industry. Instead of pushing the product to the people the companies of the industry is taking the strategy of pulling the people. The transformation was from the traditional advertising to the digital advertising. By the year 2006 Publicis group had no digital shops in the top ten shops when the major competitors have occupied most of the rankings. In that situation the chairman and C.E.O. of the group Mr. Maurice Levy has realized that the in- house expertise of the group has to be complemented with the capabilities developed by the independent direct marketing, digital advertising and technology firms in the era of rapid development of the web’s interactive features, media convergence and growth of mobile. Digitas was a purchase made by the group in this scenario. The company is an integrated digital advertising agency. The strategy of the group was maintaining the independence of the agencies and expanding the global reach and Digitas should spearhead the digital transformation of the group for become competitive with its competitors. The group chairman wanted to design a new model through which the whole group will move towards a new digital era. When the competitors of the group used the acquired many companies then the Publicis group top management also felt the need that the agencies should help one another. For moving towards the new digital era spearheading by Digitas group, the group decided to unbundle the Digitas group. Also they have outsourced the activities to low cost manufacturing areas through Prodigious which was made independent later by the group management. TOWS analysis is the framework for identifying the threats, opportunities, weakness and strength of the company and formulates the strategies on the basis (Proctor, 2000, p.138). Threat: The company is a multinational company. So they have to manage different industries in different countries and the differences of the culture. Moreover the local competitors may create a threat for the group. As the agencies under the group are collaborating for performing the works one misstep by a partner could damage the relationships with the client and also between the agencies. Opportunity: The opportunity of the company lies in if they try some different ways for doing their work. In the changing world and in an important industry like advertising and communications the change of representation the products may open a new window for the group. Weakness: The weakness of the group is that the group need to help one another when they are competing with the major competitors (WPP, Omnicom, Microsoft, Yahoo etc) but at that time subsequently they faced the difficulty while they are responsible for their individual goals and financial targets. As the agencies are working together there may exist a conflict. The group lost the AT & T bid to WPP as they were failed to focus on the clients and defining clear roles for the group members. Strength: The strength of the group is the diverse nature of the agencies. So the agencies can help one another and as a result the group would be the beneficiary after all. The Digitas company, which was a digital advertising company went global (Digitas global) when it was a U.S. based company just two years ago and eventually it was helpful for the new venture Vivaki as the presence of Digitas was global. The challenge for the group was to integrate the media, creative and digital agencies successfully and Vivaki was the initiative of the group as the operation of the new agency combined of the individual operations of Digitas, Denuo, Starcom mediavest and ZenithOptimedia for developing new services. Resource Based View The resource based view of a company emphasizes on the organization’s internal capabilities and the organization can formulate the strategies for short term and long term to gain the competitive advantage in the industry (Peteraf, 1993, p.180). The success depends hugely on the resources available to the company. A resource based framework of the company focuses on the value of the resources of the company, rarity of the resources. How imitable are the resources of the company also being judged and the organizational aspects of the company are judged also. This framework is known as the VRIO framework for resource based analysis (Peng, 2008, p.71). Through this framework the strategic scheme of the company is judged. The VRIO framework for the Publicis group is as follows Value of the company: The value of the firm refers to the resources which increase the effectiveness of the products of the firm (Sanchez, 2008, p.26). The value of the company lies in the working of the diversified agencies of the company. They can generate more value for the clients when they integrate the different agencies under them. It can be said that the resources of the firm is valuable to the company. Digitas also added value in the group. The group had no digital shops of the Publicis group was in the top ten in the year 2006 but when Publicis group acquired the company then the group acquired the number one spot among the top ten companies. Certainly this added value in the group as the work process of the company is very fast as the Digitas people was accustomed to rapid decision making. As the Digitas Company went global there was an opportunity to use the global talent for the company. Rarity of the Resources: The rarity of the framework is useful to measure that the resources of the company is unique or not (McCabe, 2010, p.126). Publicis group is the company which operating globally and there are many agencies under the group. The firms are diversified in the marketing and communications industry. The group controlled creative agencies, media- buying firms and specialized direct marketing, events planning and Public Relations Company. It is the rarity of the group. The group has integrated all the firms and generating highest profit margin among the major competitors of the industry. The revenue of the company gradually increased in the period 2004-2008. The company has outsourced their activities where they can make products of low cost through the Prodigious group which was latter independent. The group has put the media companies under Digitas and provide them a digital mission which introduced Vivaki and that was a nice and innovative initiative of the group. The main competitive advantage of the company is the group has entered in a partnership with Google, the biggest search engine of the world. This collaboration helps the company allowed the group to make the transaction more robust and reduce the costs of the company. The question of Imitability: If the resources of a company are impossible or very difficult to duplicate by the other competitors then that is regarded as the competitive advantage of the firm (Kazmi, 2008, p.127). The advantage of the Publicis group is the ability of the group to collaborate with other companies and make it successful. The companies which have collaborated with the Publicis group able to sustaining their own culture as well as get many positive point from the Publicis. Digitas was acquired by the group and it has acquired an important position in the group for the capabilities, they was spearheaded the new venture of the group. The reputation of the Publicis group is not imitable by the other companies. The question of the organizational aspect: The organizational aspect of the company means the question that the company is ready to exploit the potential of them or not (Witcher and Chau, 2010, p.126). The marketing and communications industry has moved forward from the traditional process to digital marketing. The Publicis group one of the big share holders in the industry. The group has launched Vivaki which has a mix of different agencies of the group. Though the group has not performed as per the expectation because of the financial crisis of 2008 to 2010, it is expected the company will perform better in the future if they obtain right strategies, as the mixing of the group was well. It is also a fact that the competitors of the company has not also performed well. Publicis group’s collaboration with Google has created major opportunities for the group. Institutional Based View This is the third leg of the strategy tripod. This defines that the companies must take account the formal and informal rules of the game means the industry culture. In case of the marketing and communications industry the companies are moving towards a digital marketing process instead of the traditional process of marketing. The Publicis group has also taken steps for matching their steps. They have acquired Digitas and subsequently launch a new venture Vivaki. Vivaki is the company which has agencies under them and they are ready to provide new services for the clients. The company’s operation is the combined operation of four different agencies which provide different services and this would fulfil the client need. Strategic Options and Incumbent Risks The case study highlights a case of integration and how changes in the external environment can affect the business prospects of an organization. In this case Publicis Groupe is being highlighted as one of the most reputed global advertising and media consultant firm that has a huge scale of operations across the globe. This has been funnelled by its strategy of strategic alliances and collaborations involving either partnerships of mergers and acquisitions. However the organization now faces a considerable challenge of aligning its business units in the wake of the changing tastes of the consumers. This change of taste has been fuelled by the growth of other forms of communication channel that mainly use the digital and online platform. The challenge for the organization lies in effectively aligning its large number of business units together so as to ensure that the company does not lose out in the digital media communications race. Some of the possible strategies for the company would include using the expertise of Digitas to venture into the online and digital communications arena. This would also include harnessing the reach and effectiveness of the online social networking websites that have a huge following and are quite popular with the target audience across the globe. The aspect of viral marketing can be very well used by the company to leverage upon the advantages of this channel (Woessner, 2010, p.16). The VivaKi program can be more effectively used by using it in synchrony with online social networking sites so as to ensure that the intended message reaches out to the target audience. It can also collaborate with search engine majors like Google by using its Google analytics program such as Ad words and Ad sense to provide greater value and returns to the marketers. Search engine optimisation is another area that can be used to enter and diversify into digital marketing. This is essentially because a large number of consumers are using search engines like Google to locate the product of their choice. In this regards a good page ranking can help marketers to increase visibility of the products and services and gain a strategic edge in the market. There are however certain risks in this strategy as the channel is very open and even minor flaws in the process can lead to disastrous consequences for marketers. Monitoring of social networking sites is another risk aspect as it would require access for every employee to the social networking sites. These can lead to serious issues in leakage of vital data. In addition to this privacy and monitoring of the content of these sites has also become an issue that is increasingly threatening its open nature. The openness of this channel also makes it prone to vulnerable attacks from competitors that can jeopardise the process of marketing communications (Bodnar & Cohen, 2012, p.186). With regards to integration issues the company can bring about the similar business units that have similarity in their functioning can be brought under one single umbrella. This would enable the company to ensure that there is proper integration within the organization. It is also important for the organization to ensure proper hierarchy and have an effective channel for communication that can help generate smooth flow of information within the organization. Integration would also help in creating greater consolidation within the company so as to help in generating better co-ordination and ensure effectiveness in planning. Having an integrated unit would also save upon the aspect of cost and would also help channelize resources that include both monetary as well as non monetary resources so as to better help the company harness the benefits of the aspect of increased market opportunities. Using an integrated framework would also help in generating operational expertise like economies of scale and scope. This would help the company cut down on the costs and help generate financial leverage for the organization. The cost savings can in turn be passed on to the customers so as to help generate competitive advantage by offering lower prices to the customer. This strategy assumes significance considering the fact that the market environment the wake of economic downturn is not very positive and therefore marketers are using cost cutting measures. In this regards providing services at very low costs can very well provide considerable advantages to the organization in terms of gaining business from clients. It would also help in generating competitive advantage for the organization in terms of creating entry barriers for new entrants in the market. This is particularly important in the current competitive business environment where competitors are overflowing in the market and it is very essential for a firm to stay in a position that it cannot be threatened by its competitors in the market. However this strategy also has its share of risks as most of the business units of the company are spread into diverse geographies that have a varied set of culture. Moreover being distinctly separate entities there is a lack of common culture within the different units of the organization. This can lead to considerable conflicts within the organization as it would be very difficult to manage the change across different verticals of the organization. This can hamper the normal functioning of the organization and can lead to issues in which the productivity and quality of the services would come down drastically. The aspect of ensuring integration also involves cultural risks as a lot of the business units of the company are in located across multiple verticals. Therefore a planned and careful time bound program must be carried out so as to ensure that there are no cultural issues involved within the organization. The case analysis also shows lack of task allocation and responsibilities. The case in which the company lost its lucrative business contract with AT&T was a very well indication of the fact that the company did not have proper hierarchy as well as responsibility sharing within the organization. In this regard the company must undertake a change management approach. The change management would help in ensuring a common culture across all the business units of the organization. The process of change would ensure a flat organizational hierarchy so as to facilitate smooth flow of information within the organization. There should be clear demarcation of the tasks and responsibilities of each of the employees within the organization. This would help in proper monitoring of the tasks of the organization. The change management would involve complete demarcation of the key responsibility and basic responsibility areas of the employees and managers so as to ensure accountability and greater responsibility of the employees. However the process would again involve cultural risks as the cultural factors are very different in each of the sub units. Therefore planned and co-ordinated as a well as a strategy of thinking globally and acting locally must be used in the HR context so as to ensure that the change management achieves it objective and a proper integration can take place within the organization so as to ensure consolidation in the business (Culpan, 2002, p.60). Lastly one of the critical aspects of strategy for the organization would involve initiating a system for control and monitoring of the objectives and their accomplishment. This is important because of the fact that it is very important to ensure that the strategies meet their objectives and also to ensure that bottlenecks are identified in the early stages so that these issues do not eventually harm the greater objectives of the organization. In this regard the use of a balanced scorecard system can help the company to not only evaluate its financial but also its non financial strategies as well. This would help the organization to have a time bound process that would help ensure that all the objectives that are being set by the organization meet their stated goals (Balanced Scorecard Institute, 2011). The presence of a control mechanism should however be accompanied with proper responsibility and accountability with individuals. This form of a control mechanism can be used in all the objectives formulated by the organization to ensure timely feedbacks so that corrective actions can be initiated by the organization. This would help the organization take up proper steps well in advance and would aso ensure that the errors are rectified in their initial stages and these do not affect the overall positioning of the brand in the market. Incorporating these strategies along with proper risk management would not only help bring about greater integration and consolidation but would also help generate long term sustainable competitive edge for the organization in the rapidly fluctuation and turbulent business environment. Conclusion and Recommendation Marketing and the communications industry has transformed to the digital marketing era from the traditional marketing. Till 2006 there were no digital shops in the top ten spots so the group has acquired Digitas. Digitas is an integrated digital advertising agency. In 2007 Digitas was in the first spot in the ranking of the top digital stores. After that the chairman of the company feels the needs to integrate the agencies that were under the group and then provide products to the clients. So the management has launched a new venture Vivaki which offers the combined scale of operations of four different agencies of the group. At the inception the group has not performed well because of financial crisis. In this report the researcher has analyzed the situation. It has been found that the reputation of the company is good as it has got success in collaboration with various agencies and it has taken some innovative steps like outsourcing the activities for the low cost production. The researcher has recommended that the firm should take care of the cultural issues arising as this company is multinational. The company should allocate the responsibility of the agencies who are working in collaboration so that the group can avoid the events like AT & T. They should use the balance scorecard for review the feedback of the clients and employees. As the approach (Vivaki) of the company is innovative it can be said from the analysis that the group will be able to increase its market share if they apply the suggestions made by the researcher. Reference Balanced Scorecard Institute. (2011). What is the Balanced Scorecard? [Online]. Available at: http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx. [Accessed on January 9, 2012]. Bodnar, K. & Cohen, J.L. (2012). The B2B Social Media Book: Become a Marketing Superstar by Generating Leads with Blogging, LinkedIn, Twitter, Facebook, Email, and More. John Wiley & Sons. Culpan, R. (2002). Global business alliances: theory and practice. Greenwood Publishing Group. Kazmi. (2008). Strategic Management and Business Policy. 3rd ed. India: Tata McGraw Hill. Keillor, B. and Kannan, V. (2011). International Business in the 21st Century, Volume 1. United States of America: ABC-CLIO. McCabe, S. (2010). Corporate Strategy in Construction: Understanding Today's Theory and Practice. Malaysia: John Wiley & Sons Ltd. Peng, M. (2008). Global Strategy. 2nd Ed. United States of America: South-Western Cengage Learning. Peteraf, M. (1993). The Cornerstones of Competitive Advantage: A Resource-Based View. [Pdf]. Available at: http://business.illinois.edu/josephm/BA545_Fall%202011/S11/Peteraf%20(1993).pdf. [Accessed on: January 9, 2012]. Proctor, T. (2000). Strategic Marketing: An Introduction. United Kingdom: Routledge. Sanchez, R. (2008). A focused issue on fundamental issues in competence theory development. United Kingdom: Emerald Group Publishing. Witcher, B. and Chau, V. (2010). Strategic Management: Principles and Practice. Hong Kong: South Western Cengage Learning. Woessner, S. (2010). Increase Online Sales Through Viral Social Networking: How to Build Your Website Traffic and Online Sales Using Facebook, Twitter, and Linkedln--In Just 15 Steps. Atlantic Publishing Company. Bibliography Kelley, K. (1992). Issues, theory, and research in industrial/organizational psychology. United States of America: Elsevier. Stahl, G.K. & Bjorkman, I. (2006). Handbook of research in international human resource management. United States of America: Edward Elgar Publishing. Read More