Global strategy in the international advertising industry

Abstract

The strategic behaviour of international advertising agencies is studied using Yip's global strategy framework. In most cases, firms seek broad international engagement to leverage agency advantage; the development of uniform international management systems has a high priority; and “responsive” advertising output is common. Many agencies have developed IT systems to facilitate international communication and integration, and significant uniformity of branding and positioning policy is the norm. However, uniform patterns of industry-specific behaviour are not evident in many of the areas investigated, with wide variance in agency strategy at the firm level. These differences indicate that factors such as firm resources and administrative heritage are frequently at least as important as the industry environment in affecting strategy in international markets. The behaviour identified is also generally consistent with an industry environment where market drivers are very important, with most agency clients demanding consistent performance and quality internationally, along with responsiveness. Yip's framework, which emphasises the impact of industry structure on firm conduct, is useful in indicating how the environment tends to drive some dimensions of strategy in a ‘characteristic’ direction. However, it is also evident that more account needs to be taken of ‘resource-based’ theory, and thus the impact of idiosyncratic firm resources, when seeking to understand strategic behaviour in the industry.