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Publicis Groupe 2009 Toward a Digital Transformation Case Solution
Maurice Levy is the CEO and Chairman of Publicis Groupe, a marketing and communications company that stands fourth in the world after having successfully acquired a number of companies including BCom3 in 2002. Publicis Groupe controlled not only three international creative agencies, two of the world’s largest media-buying firms but also has a portfolio of specialized public relations, direct marketing and event planning companies. Levy then focused positioning the company for the future by integrating it with already established firms
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Case Analysis for Publicis Groupe 2009 Toward a Digital Transformation
In December 2006, when it became clear that the marketing and communications industry was being taken over by digitalization Publicis Groupe preceded with the acquisition of Digitas which was a leading interactive agency, making the largest digital acquisition in the market to date. Levy wanted to use Digitas to transform the current operations at his company. David Kenney, former CEO and Chairman of Digitas, was interested in combining his company with Publicis Groupe’s media assets, however Levy believed that not only should Digitas spearhead the digital transformation of Publicis Groupe but it should also maintain its agency independence and expand its global reach. Overtime Levy acquired and rebranded several agencies and integrated them into the Digitas network, with the profits of Digitas growing from 10% to 14%, nearly the same as that of Publicis Groupe which was 16.7%.
Working alongside Kenny, who was now the newest member of Publicis Groupe Directoire-P12, and Jack Klues the former CEO Publicis Groupe Media, Levy was able to identify a new model by January 2007. Kenny with his colleagues came up with the idea of putting key media companies under Digitas and giving them a digital mission – this idea was encouraged by Levy. With the increase of advertising companies and technology firms in the industry, it was difficult for firms to come up with unique competitive advantages and create a differentiation point in the market. Publicis Groupe however opted instead to treat the competitors like Google and other portals as partners. For them the challenge was to generate scale through using open technology.
Kenny and his team named their new project Feng Shui, referring to the Chinese practice of balancing elements. Publicis Groupe’s aim was to provide Feng Shui to the media world and strike a balance for consumers. The new project would act as a nerve center where agencies would collaborate and learn about tools and talent which would help them serve the customers better. Kenny and Klues worked on the project as co-managing partners owing to their complementary skills; Kenny having great digital knowledge and Klues having knowledge about media and the talent of communicating complex ideas to clients. Before the initiative became known to the public however the team renamed the project to VivaKi – Viva referring to Viva la Difference and Ki standing for energy in Chinese.
On June 25 2008 an event was held making the project public, facing questions from industry analysts regarding disintermediation. Levy clarified how their point of view was different and explained their belief regarding future relaying in open technology and collaboration. Kenny realized that as VivaKi would progress the work would become more delegated and since technology changes at a fast pace he and others would at times have to learn from scratch. However it has been six months since the launch of VivaKi and it is being run successfully so far.
2. Main Challenge
Over the years Publicis Groupe has successfully grown its digital offering through undertaking various actions such as acquisitions and integration, always finding new solutions to the various challenges faced by the company. It has realized that the future of advertising is via digital medium and amongst the several actions taken to cater to this new trend its newest intervention is the introduction of VivaKi.
The challenge at hand however is that an economic downturn is forecasted to take place in 2009 and beyond which places even more incentives in the use of digital marketing and communications. While marketers would have to work with tighter budgets they would want to adopt ways where the return per investment is greater. By offering this through the use of VivaKi, Publicis Groupe would be able to create a competitive advantage hence making profits even when the economy is not doing well. Moreover the strategy needs to be implemented quickly because of the fast paced changes taking place in the market. Levy believed that the future of the company depended upon reinvention as the future transformation had to more than just being digital. While he planned to retire in 2010 he knew he still had some work left when it came to VivaKi.
The objective of the company is to raise digital revenues to 25% by 2010 for which it depends highly on VivaKi. The success of VivaKi in turn depends on reinvention of wheel and strong supervision of an effective leader. There are three alternatives to deal with the challenge currently being faced by the company.
Firstly Levy can postpone his promotion and continue working in the company as the CEO and Chairman. The biggest advantage of this option is that he is already aware of all the functions and departments of the company. Being experienced and one of the prominent members in the launch of VivaKi, Levy is well equipped in deciding how to run the system and can use his knowledge and judgment in making forecasts and deciding how to tackle any problems faced. Moreover the integration of Digitas and Publicis Groupe took place under the leadership of Levy and therefore the employees are bound to be more loyal to him and to accept whatever decisions he takes. However the problem that arises here is that being the CEO would give him the responsibility of looking after not only VivaKi but other ventures as well. Having reached the age of retirement Levy might not have the capability of looking after so many functions at once. Similarly there comes a point when the organization faces stagnancy because of same ideas being revolved and therefore needs an outsider to input new ideas.
This brings us to the second option which is that Levy does retire and the person who becomes his successor is someone who is not already working in the company. When a new individual would lead the company he would be determined to prove himself and therefore work more actively for the betterment of the company. Having hired an outsider another advantage that the company will benefit from is that with him the CEO would bring in new ideas to the company – some viewpoints would be such that were not considered previously by the team, throwing light on a newer perspective. The disadvantages of hiring a new CEO however may deter the performance of the whole company. Firstly the employees may not be comfortable working under the new CEO as he may adapt practices or policies that were not previously part of the company. This can also affect the communication between the employees and the new CEO. Secondly since he has not worked in the company before, the new CEO might take some time to understand how the operations are run at Publicis Groupe which may lead to loss of sufficient time where important decisions could have otherwise been made.
Lastly what Levy can do whilst he does retire from the position of CEO he can still be part of the company like Jack Klues, looking after just the operations of VivaKi. The new CEO being hired would be someone who would have been a part of the company previously and would be well aware of how the operations are run. The biggest advantage of this option is that VivaKi would receive the supervision it requires and Levy can always make decisions regarding the changes in the operations that are needed.
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