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HUGE and Digital Strategy

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HUGE and Digital Strategy

  1. 1. HUGEAnd Digital Services Group 7 Gabriella Kawilarang Minjae Park Kripa Shroff Leanne Tremblay
  2. 2. What We Do • Digital Business – Creating products and services that transform organizations for the digital economy • Integrated marketing – Building brands and driving sales with a cross-channel, digitally-led approach to communications • Strong focus on UX – Simple, elegant, and easy-to-use platforms
  3. 3. “The value of our brand is synonymous with the quality of our work: Remaining excellent” Brand Mission
  4. 4. What Does it Take to Win?
  5. 5. What Does it Take to Win?
  6. 6. Incorporate both full digital services and traditional services What Does it Take to Win?
  7. 7. To reach revenue levels in the hundreds of millions that will put them in the top 25 digital agencies in the US by revenue level Strategic Goal
  8. 8. How could HUGE best grow without compromising the firm’s reputation for excellence? Core Question
  9. 9. • Steady as She Goes • Retainer Relationships • Geographic Expansion • Healthcare • Expanded Traditional Services Possible Solutions
  10. 10. Steady as She Goes Possible Solution #1
  11. 11. Continue with their current strategy Steady as She Goes
  12. 12. “HUGE had reached the point where the growth for which (Shapiro) was hoping- to revenue levels in the hundreds of millions- would require a shift in strategy” Challenge to Steady as She Goes
  13. 13. Retainer Relationships Possible Solution #2
  14. 14. • Expand the proportion of clients with which HUGE had a long-term retainer relationship with • Positioning itself as a recurring component of companies marketing budgets Retainer Relationships
  15. 15. “CMO tenure gradually decreased from 24 months in 2004 to 22 months in 2010- compared to about six years for CEOs and four years for CFOs.” Challenges to Retainer Relationships
  16. 16. “HUGE shied away from engagements primarily focused on campaign-based marketing, such as display advertising or PPC search marketing… this stance was not without significant opportunity cost…” Challenges to Retainer Relationships
  17. 17. “[If HUGE] was trying to expand the proportion of clients with which HUGE had a long-term retainer relationships… HUGE could find itself doing digital marketing projects - such as display advertising and search marketing.” Challenges to Retainer Relationships
  18. 18. “HUGE did not pursue [digital offerings forcing clients to come back for any revisions or enhancements] because senior management viewed it as unethical and ineffective to create digital products that client could not support or maintain themselves”. Retainer Relationships
  19. 19. Geographic Expansion Possible Solution #3
  20. 20. Exporting what had worked so well in New York to other cities and even other countries Geographic Expansion
  21. 21. “... difficult to scale due to scarce talent in the marketplace and conflicting client needs.” Challenges to Geographic Expansion
  22. 22. Only 5 countries of the countries in the “World eCommerce Statics 2009” have a higher ecommerce rate than USA 20% eCommerce rates indicate 80% retail commerce rates Challenges to Geographic Expansion
  23. 23. Average proportion of the population that are technologically savvy in US is 6% Challenges to Geographic Expansion
  24. 24. Health Care Possible Solution #4
  25. 25. Targeting a new market segment that spent approximately $1 billion online Healthcare
  26. 26. Heath Care growth rate is almost half the growth rate of search marketing and display advertising Healthcare
  27. 27. Health Care is a $1.5 billion market compared to display and search that are a $47.3 billion market. Healthcare
  28. 28. Digitas and Razorfish have established independent healthcare practices and already offer full-service digital services. Healthcare
  29. 29. Weak demand in the common consumers who say they would use social media, Chat/IM, and online forum channels with their doctors Healthcare
  30. 30. What people say is different from what people actually do Healthcare
  31. 31. Expanded Traditional Services Possible Solution #4
  32. 32. Expansion of offerings into more conventional marketing services, including heavier emphasis on display advertising and search marketing, as well as expanding IT offering to offer robust technical support, with possible efforts in PR, print, and TV advertising Expanded Traditional Services
  33. 33. “As networks, platforms, and programming became more central to modern marketing, digital evangelists emphasized that marketers ‘need to think like software companies’ and cultivate hybrid marketer/developer specialists ‘who understand tech from a marketing and brand perspective, and who have a consumer mindset’” The Optimal Solution
  34. 34. “Established marketing agencies like Ogilvy and Leo Burnett rapidly developed digital practices that often benefited from strong brand affiliation and well- established client relationships in the industry… IT providers such as Sapient and IBM, began to expand their practices to fuller digital strategy as firms began to move from internal systems to web-based platforms. Like traditional marketing, IT firms leveraged brand name and client relationships to become some of the largest digital consultants in the U.S. Their main challenge was mastering the creative and UX design side of digital marketing.” The Optimal Solution
  35. 35. “HUGE took great effort in positioning itself as a one-stop shop for clients seeking to navigate the digital convergence. Consistent with its founding emphasis on integrated digital marketing services, HUGE’s leadership felt that the future of the firm lay in being a digital ‘uber- firm’ that handled general marketing strategy as well as the design of digital products and campaigns, along with technical implementation. This one -stop shop approach shop approach was viewed as being critical to long-term success because Shapiro and his staff believed that within the next decade ‘there will be no specific digital industry because everything will be digital.’” The Optimal Solution
  36. 36. Search and display digital advertising, which HUGE has not offered in the past, accounts for about 70% of the overall digital budget FORECAST FOR 2016 The Optimal Solution Social Media Email Mobile DISPLAY SEARCH Total 4,995 2,468 8,237 27,600 33,319 76,619
  37. 37. Even though Internet is growing at 15.7%, the combined growth rate of other media excluding Magazines and Newspapers is larger than the internet growth rate. The Optimal Solution Source: Exhibit 9 Huge and Digital Services Case
  38. 38. Search and Display are growing at about 20% each year, which is higher than the yearly growth of the health market and also the other digital strategies they currently incorporate. The Optimal Solution
  39. 39. Competitors and Complements – “HUGE found itself constantly working to evolve its capabilities just as other industry players, change for us is the norm” –CEO Shapiro The Optimal Solution
  40. 40. HUGE will be able to expand their capabilities and maintain their flat organizational and entrepreneurial structure with their ability to move to a larger office space and have the creative talent to tap into as they currently have less than a half a percent hiring rate Feasibility
  41. 41. • We have understood the context for the decision and the overall strategic goals of the organization and thought in alignment with these goals • We have framed the problem correctly and asked the right question(s) and we can show that our framing is the best • We have identified the widest feasible range of options for the decision and established a fair and rational process for evaluating these options • We have made a decision and can demonstrate that our decision is the best from the available options • We have a realistic and achievable decision Evaluation
  42. 42. By implementing the expansion of traditional services, HUGE will be able to increase their revenues into the hundreds of millions of dollars while maintaining their commitment to excellence Conclusion
  43. 43. Thank You
  44. 44. We are happy to take any questions at this time.

Hinweis der Redaktion

  • HUGE was founded in 1990, it is 47th in the digital agency industry in the US in terms of revenue. It started with its competitors who are in the top 25 in the industry right now. In 2009, it was recognized as the fastest growing digital agency in terms of client base and revenue. It has a strong focus on user experience… Functionality over appearance
  • Of the Top 25 digital agencies in the US
    52% are full service digital agencies
    32% include traditional marketing services
    12% that focus on web development or IT

  • Therefore to win in this industry by higher revenues, a company should incorporate both full digital services and traditional services

  • Revenues have been growing explosively over the past five years
  • Of the 16 counties, only 5 were on par with the USA and does not indicate a strong market opportunity
  • Not a strong portion of population is tech savvy
  • and thus is not a sustainable option as compared to Display and Search Division
  • Thus a high opportunity cost of entering the healthcare industry
  • DEMAND - 31% and below CONSUMERS – age 46+
  • Will probably only equate to 24% using the 80-30 rule
  • Case indicated the traditional marketing industries having an increasing need for the services that HUGE specializes in
  • Ogilvy and Leo Burnett number three and twelve respectively of the top digital agencies in the US… Sapient and IBM are number two and number seven respectively on the top digital agencies in the US
  • Integrated digital marketing services
    Diversified not specialized in digital industry as all digital
  • In display and search
  • Traditional advertising methods collecting are growing as fast as internet
  • Growing at about 20% rate – double healthcare
  • Fighting for the same human capital and companies

    Is it okay to say “if you can’t beat them… join them” to lighten the mood haha
  • 8.3% tech savvy – higher than average 6% in US
    Unique company culture and a flat entrepreneurial organizational structure
  • Goals – Hundreds of millions of dollars of revenue
    Framing – Private Company; Their feasible options that they could see themselves implementing
    Process – How the win in the industry; which market had the most potential for growth and sustainability
    Optimal – This strategy must be implemented before they can expand in geography, industry, or in retained client base
    Realistic Implement – They have the qualified pool of applicants