Like The Best Tech Companies, Publicis Launches A Great Strategic Pivot

Author: Adam Hartung / Source: Forbes

People like to discuss “strategic pivots” in tech companies. The term refers to changing a company’d strategy dramatically in reaction to market shifts. Like when Apple pivoted in 2000 from being the Mac company to its focus on mobile – leading to the iPod, iPhone, etc. But everyone needs to know how to pivot, and some of the most important aren’t even in tech.

Take for example Netflix. Netflix won the war in video distribution, annihilating Blockbuster. But then, when it seemed Netflix owned video distribution, CEO Reed Hastings pivoted from distribution to streaming. He cut investment in distribution assets, and raised prices. Then he spent the money learning how to become a tech company that could lead the world in streaming services. It was a big bet that cannibalized the old business in order to position Netflix for future success.

Analysts hated the idea, and the stock price sank. But CEO Hastings was proven right. By investing heavily in the next wave of technology and market growth Netflix soared toward far greater success than had it kept spending money in lower cost distribution of cassettes and DVDs.

This week Arthur Sadoun, the CEO of the world’s 3rd largest advertising agency (Publicis) announced he was betting on a strategic pivot. And most in the industry questioned if he made a good decision.

Simply put CEO Sadoun announced at the largest ad agency awards conference, the Cannes International Festival of Creativity, that Publicis would no longer participate in Cannes. Nor would it participate in several other conferences including the very large South by Southwest (SXSW) and Consumer Electronics Show (CES.) Instead he would save those costs to invest in AI (artificial or augmented reality.)

In an industry long dominated by highly creative people, who love mixing with other agency folks and clients, this was an enormous shock. These conferences were where award winners marketed their creative capability, showing off how much they were admired by peers. And they wined and dined clients seeking to build on awards to gain new business. How could anyone drop out – especially an agency as large as Publicis?

In changing markets strategic pivots make sense

But strategically this makes a lot of sense. The ad industry was once dominated by ads placed in newspaper, magazines and on TV. But today print journalism is almost dead. The demand for print ads is a fraction of 20 years ago. And TV is no longer as prevalent as before. Today people spend more time looking at their smartphone than they do their TV. The days of thinking high…

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