ARTICLE IN PRESS

international
business
review
International Business Review 17 (2008) 235249
www.elsevier.com/locate/ibusrev

Global strategy in the international advertising industry

Peter G.P. Waltersa,, Paul Whitlab, Howard Daviesc
a

C.P.C.E., Hong Kong Polytechnic University, Hung Hom, Hong Kong

Department of Marketing and International Business, Lingnan Unviersity, Tuen Mun, Hong Kong
c
Faculty of Business, Hong Kong Polytechnic University, Hung Hom, Hong Kong

Received 11 March 2006; received in revised form 27 February 2007, 28 May 2007, 7 November 2007; accepted 11 January 2008

Abstract
The strategic behaviour of international advertising agencies is studied using Yips global strategy framework. In most
cases, rms 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 signicant uniformity of branding and
positioning policy is the norm. However, uniform patterns of industry-specic behaviour are not evident in many of the
areas investigated, with wide variance in agency strategy at the rm level. These differences indicate that factors such as
rm resources and administrative heritage are frequently at least as important as the industry environment in affecting
strategy in international markets. The behaviour identied 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. Yips framework, which emphasises the impact of industry structure on rm
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 rm resources, when seeking to understand strategic behaviour in the industry.
r 2008 Elsevier Ltd. All rights reserved.
Keywords: Global strategy; International advertising agencies; Yip strategy framework

1. Introduction
Research in the eld of international advertising has focused primarily on standardisation and contextual
issues (Douglas & Craig, 1992; Shoham & Albaum, 1994; Kotabe, 2001). Study of the overseas operations of
advertising agencies is limited, with gaps in knowledge of international strategic and managerial behaviour.
As a result, we know remarkably little about how such international advertising agencies operate (Grein &
Ducoffe, 1998, p. 1).
This study focuses on the global strategy of international advertising agencies operating in Britain. The
conceptual framework developed by Yip (1992, 2003) is used to describe both strategic behaviour and its
Corresponding author. Tel.: +852 3746 0003.

E-mail address: pfpgpwal@inet.polyu.edu.hk (P.G.P. Walters).

0969-5931/$ - see front matter r 2008 Elsevier Ltd. All rights reserved.
doi:10.1016/j.ibusrev.2008.01.005

ARTICLE IN PRESS
236

P.G.P. Walters et al. / International Business Review 17 (2008) 235249

antecedents. When studying the factors affecting strategy, a distinction is made between the impact of the
external industry environment and internal variables, such as rm resources. The analysis therefore makes a
contribution to knowledge of the overseas operations of agencies and the debate on the impact of the
environment versus idiosyncratic rm capabilities as antecedents to strategic behaviour.
1.1. Theoretical framework
The global strategy concept has been interpreted in different ways, with initial discussion of the construct
emphasising the idea that multinational rms should present a unied face in overseas markets
(Fayerweather, 1969), and the notion of the global village with centralised manufacture of standard
products for unied markets (Levitt, 1983). Bartlett and Ghoshals (1995) inuential work builds on this
discussion, and they view global strategy as an efciency-driven approach to competition in homogeneous
overseas markets, realised through scale economies from concentrated production of standardised products.
Hout, Porter, and Rudden (1982) suggested that strategic options range between the polar points of a fully
global or multi-local approach. This view was endorsed by Prahalad and Doz (1987) and Jain (1989), who
argue that companies need to balance the pressures for responsiveness and efciency when setting a strategy.
Concurrent with this discussion, there was a growing interest in the antecedents to strategic behaviour and
the application of ideas drawn from the industrial-organisation approach to business strategy, with industry
structurethe nature of the business environmentseen as the key determinant of conduct and
performance (Porter, 1986; Morrison, 1990).The key environmental dimensions proposed as strategy
antecedents included the nature of overseas markets, conicting pressures for homogenisation and
responsiveness, decreased transport costs and trade barriers, improved communication technology and
integration pressures.
At the rm level, strategic behaviour is now seen to embrace more than a focus on uniformity driven by a
desire for cost efciency, and the idea that coordination and integration across national boundaries is the key
dimension of globalisation has gained currency. The Yip framework, used in this research, conceives global
strategy as multi-dimensional in nature, based on an orientation that integrates and manages for worldwide
business leverage and competitive advantage (Yip, 1992, p. 7).
1.2. The Yip framework
The conceptual framework developed by Yip (1989, 1992, 2003) is not universally accepted, but has the
important advantage of deriving from a comprehensive interpretation of global strategy and its antecedents
(Stonehouse, Hamill, Campbell, & Purdie, 2000; Zou & Cavusgil, 2002). A signicant literature has
developed around Yips analysis (Kotabe & Helsen, 2004), including some empirical work (Johannson & Yip,
1994).
As shown in Fig. 1, Yip identies four sets of drivers which represent the industry-level environmental
factors determining the extent to which the adoption of global strategies is more or less rewarding. Variation
in these factors across industries implies that greater or lesser use will be made of the ve global strategy
levers. These are participation; products and services; location of activities; marketing; and competitive
moves. Each lever is conceptualised as varying along a scale, anchored at one end on multi-local behaviour,
which is when business units in each location are autonomous and respond only to local circumstances. At the
other end of the scale, global behaviour is characterised by an integrated approach to attain worldwide
competitive advantage.
In response to the industry-level environment, rms seek to align their strategy levers with industry
drivers. While the central focus of the Yip framework is on the drivers to levers relationship, derived from the
structureconductperformance paradigm, the adoption of the levers is also seen to be inuenced by
company-level factors including resources, business position and ability to implement a global strategy. Some
account is thus also taken of the resource-based view, where emphasis is given to a companys internal
capabilities as the key to understanding the nature of a rms strategy and success (Barney, 1991). However, it
is clear that Yips framework places most emphasis on the impact of the external environment on strategic
behaviour.

ARTICLE IN PRESS
P.G.P. Walters et al. / International Business Review 17 (2008) 235249

237

Position and Resources

of Business and
Parent Company
Global Strategy Levers
Global Market Participation
Global Products
Global Location of Activities
Global Marketing
Global Competitive Moves

Industry Globalization Drivers

Market
Cost
Government
Competitive

Benefits /
Costs of
Global
Strategy

Organizations Ability
to Implement a
Global Strategy

Fig. 1. Yips global strategy framework.

1.3. Global strategy in advertising agencies

International advertising industry research has highlighted several developments. Leslie (1995, p. 428) notes
more globalisation of accounts, global or pan-regional media planning, cross-cultural research and, in some
cases, global creative executions or themes. Global clients are seen as instrumental in driving this behaviour as
they seek international planning, account management and implementation capability from agencies able to
operate on a one-stop basis in international markets (Yip & Madsen, 1996; Tharp & Jeong, 2001).
The extent to which global coordination is occurring in the industry has been questioned since this requires
a culture favouring integration and good international communication channels, something agencies nd hard
to achieve (Gould, Lerman, & Grein, 1999; Shi, Zou, & Cavusgil, 2004), with conict between agency
headquarters and overseas ofces being common (Vardar, 1992). Advertisers tend to separate domestic and
foreign advertising, and local account managers often enjoy autonomy overseas (Rosen, Boddewyn, & Louis,
1988), and both Banerjee (1994) and Grein and Ducoffe (1998) found that agencies have difculty in
reconciling the conicting pressures to be both globally integrated and locally responsive.
In summary, the existing literature supports the view that there is a tension between the integration of
geographically dispersed activities and local responsiveness overseas. However, no systematic attempt has
been made to investigate comprehensively strategic behaviour and its antecedents in international advertising
agencies and, in particular, the relative importance of the external environment, as opposed to idiosyncratic
resource endowments, as a driver of strategy.
2. Methodology
The rms selected for this study are all heavily engaged overseas and listed in Britain, but are not necessarily
British owned. The Financial Times listing provided the starting point, and an evaluation was made of the 20
top advertising agencies, with the objective of identifying rms with investment in overseas ofces. This led to
the identication of nine rms with signicant international business activity. One agency refused to
participate, and the remaining survey sample is shown in Table 1.
Given that research in this eld is under-developed, an interview-based, qualitative methodology was
adopted (Das, 1983), with data collection carried out in two stages. In the rst phase, industry experts were
interviewed on the nature of the drivers characterising the external industry context. A group of seven experts

ARTICLE IN PRESS
238

P.G.P. Walters et al. / International Business Review 17 (2008) 235249

Table 1
International advertising agencies studied

JWT (US)
Ogilvy and Mather (US)
Saatchi and Saatchi (UK)
AMV/BBDO (UK/US)
BMP/DDB (UK/US)
Bates (US)
M&C Saatchi (UK)
Bartle Bogle Hegarty (UK)

Corporate parent

Number of
countries

Number of
ofces

Number of
employees

WPP (UK)
WPP (UK)
Publicis (France)
Omnicom (US)
Omnicom (US)
Cordiant /WPP (UK)
Independent (UK)
Independent (UK)

80
81
82
76
96
75+
10
5

315
411
138
323
206
162
13
5

9200
10,000
7000
18,000+
N/A
7750
600
550

from industry associations, nancial institutions and academia was identied after evaluating contributions to
the literature and public discussion of the industry. The information from the industry experts provided the
basis for estimating the strength of each advertising industry driver following Yip and Coundouriotiss (1991)
approach. Based on the experts interpretation of the industry environment, a number of propositions were
developed regarding the expected use of strategy levers.
In the second stage, managers from the eight advertising agencies were interviewed on company practice
regarding the global strategy levers. All interviews took place in Britain, following contact with the most
senior manager who had direct oversight of international strategy. In six cases the interviews involved a single
key informant, all of whom were at the director level, while in the other two cases an additional senior
respondent was involved.
The interviews followed a semi-structured format (Stroh, 2000), using clearly dened initial questions,
which were adapted as the conversations progressed (Marshall & Rossman, 1989). All interviewees agreed to
be recorded and interviews were transcribed, generating some 350 single-spaced pages of script.
The interview information was supplemented by additional material gathered on each agency from
company reports, websites and archival materials made available during the interviews. Cross-case analysis
and inter-rater reliability checks were facilitated by deriving quantitative indicators for some of the
information gathered, but no statistical analysis was undertaken (Yin, 1989).
In order to guard against premature or false conclusions (Miles & Huberman, 1984), each transcript was
coded using NUD*IST (Volume 4) software, which allows pattern searches and comparisons to be run on the
data sets generated for each case (Gahan & Hannibal, 1998). On completion of this work, the ndings from
the individual agencies were aggregated to develop an industry-level analysis (Glaser & Strauss, 1967).

3. Environmental forces
3.1. Cost factors
Yip argues that, in industries where signicant cost savings can be achieved through standardisation and
centralisation, rms will adopt global rather than multi-local strategies. However, the industry experts did
not see cost factors as being of great signicance in the advertising industry, with a general view that cost
minimisation would not heavily inuence strategy. On the contrary, maintaining ofces in high-cost centres
such as New York and London was seen as essential in order to be close to clients and attract talent. Little
reference was made to economies of scale or xed cost reduction as a primary policy driver, and the experts
did not see cost economies as a means to develop competitive advantage through offering lower prices, a
nding supported by Patterson and Cicic (1995). It was noted that the fees paid to an agency are normally only
a small proportion of advertising campaign expenditure, and that most clients are not overly price sensitive
and consider quality advertising is worth paying for. The consensus view was that cost savings is not a

ARTICLE IN PRESS
P.G.P. Walters et al. / International Business Review 17 (2008) 235249

239

powerful force favouring standardising output or centralising control and that competition between agencies
is not cost based. As one expert put it:
You know the business is a creative, entrepreneurial, people oriented business y people are not that
focused on moneyy if they (agencies) set out their stall to be a cost-focused business, the chances are they
wont recruit the right talent.
3.2. Market factors
In contrast to cost factors, the experts identied market forces as highly inuential in the advertising
industry. It was noted that multinational clients had initially pulled many agencies into international markets
and then stimulated the development of the global policies needed to service their needs. As one interviewee
suggested:
If you had to pick one catalyst-over the past twenty years youve had a globalisation of the client base of the
agencies.
The interviews also indicated that client needs varied. Some wanted to work with one agency in all markets
and sought globally standardised campaigns; others wanted a high degree of local adaptation in their
advertising and were prepared to work with different agencies in different countries. Advertising agencies
therefore need to be exible, utilising global account managers for clients who integrate their advertising
internationally, and local account managers where clients devolve advertising decisions.
The expert view was that even in cases where clients believed in localised marketing, they still often worked
with a single agency worldwide to develop advertising campaigns that, although locally adapted, are
coordinated across national boundaries with a view to promote consistent advertising quality and a global
image. Representative quotes indicate that:
What the advertisers want is sort of global reach, global strategy but local execution and understandingy
and sort of tweaking campaigns but conveying the same brand values.
As they have learned more about the markets they are in ythey have been able to see a genuine difference
in culture, that customer motivations are different, personality types and all that good stuff, market by
market, sector by sector, so one might have one overall guiding strategic mission and intent for a particular
brand, but people are saying we need to tailor that to the local conditions because one size does not t all.
The feedback from the industry experts suggests, therefore, that market drivers are particularly critical in
the international advertising industry. Agencies must be able to follow customer needs and demands in
whatever direction clients chose for their international advertising. However, while market drivers are very
important, they do not mandate the adoption of uniform global strategies because clients demand both
global reach and local execution. This nding aligns with the conclusions of Grein and Ducoffe (1998), who
suggested that advertising agencies are subject to simultaneous pressures for both global integration and
local responsiveness.
3.3. Government and competitive factors
The experts commented that variations in the regulation and oversight of advertising content can constrain
the adoption of globally standardised campaigns. However, their overall assessment of the inuence of
government forces was that they are relatively unimportant. In general, there are no signicant investment
barriers impacting the industry and few restrictions on cross-national ownership. Agencies enjoy operational
freedom, with little government interference, and government owned competitors are not a factor of
importance.
The industry experts identied the existence of signicant international competitive pressures, with the
leading agencies competing against each other in major markets, and failure in one location having
implications in multiple markets. Hence, rms are pressured to maintain their standards and cannot afford to
relax in any of their overseas markets.

ARTICLE IN PRESS
240

P.G.P. Walters et al. / International Business Review 17 (2008) 235249

3.4. Propositions
In the light of the experts analysis of industry drivers, and the relationships modelled in Yips framework, a
number of propositions can be derived regarding the strategy of advertising agencies operating in international
markets.
With respect to Global Market Participation, Yip (2003, p. 37) suggests that in industries which serve global
customers the business needs to be present in all the customers major markets, and that although suppliers
may not nd a particular country protable on a stand-alone basis, they still need to be there to support the
total global business. The experts conrmed these conditions in advertising, noting that clients demand that
agencies maintain ofces in each market where the client is active, and that cost factors are relatively
unimportant as compared with market drivers. Government constraints on market entry are limited, allowing
rms to operate in most markets, and competitive pressures are deemed to be strong, indicating a need for
extensive market presence. Hence:
Proposition 1. Agencies will establish a network of overseas offices characterised by broad geographic scope.
Regarding Products and Services, the literature highlights the cost benets of standardisation
(Bartlett & Ghoshal, 1995), and Yip recognises the importance of cost drivers for use of this lever (Yip &
Coundouriotis, 1991). However, although uniformity normally results in cost savings for the agency and
clients, the experts consistently rated such savings as insignicant compared to the costs of media placement.
They also stressed that effective localised advertising will normally be preferred over cheaper, but less
well-received, uniform advertising. This implies that there will be limited pressure to standardise
internationally due to cost factors.
Yip also suggests that the extent to which different customers in different countries have the same needs
and tastes provides the primary determinant of how much to standardise (Yip, 2003, p. 99). The industry
experts conrm the impact of market forces, with some clients requiring globally standardised campaigns,
while others prefer localised advertising. Agencies thus need to be able to meet both requirements.
Competitive drivers reinforce the need to satisfy clients, and government-imposed legal controls over
advertising output are not seen as a signicant constraint on strategy.
In terms of agency processes and management practices, client demands for consistency and uniform service
are seen by the experts as driving agencies to leverage best practice and standard working procedures
internationally. Although uniform practice may sometimes have cost benets, this is often not the case because
assuring quality is expensive. Hence:
Proposition 2. Agencies will implement management systems and procedures to deliver uniform service overseas,
but standardised international advertising output will be much less common.
Yip highlights the impact of market drivers on the Global Marketing lever, in particular the need to sell to
global customers who require the marketing mix to be uniform (Yip, 2003, p. 38). The experts conrm the
need to present a common international face to multinational clients, and it is anticipated that the agencies
will wish to avoid confusion arising from inconsistent positioning and marketing policies in overseas markets.
Competitive drivers are also seen to have a signicant impact in encouraging strategies promoting customer
recognition and integrated marketing activity. Hence:
Proposition 3. The international marketing policy adopted by agencies will be characterised by significant
uniformity in positioning, branding and promotional strategy.
In the case of the Location of Activities lever, global-level scale economies encourage businesses to centralise
production (Yip, 2003, p. 102). However, according to the experts, many multinational clients demand
responsiveness, requiring rms to have full-service operations in most international locations despite the extra
cost. Variance in customer requirements across international markets thus constrains the ability of agencies to
rationalise their networks and centralise activities. Scale economies are viewed as having limited impact and
market drivers are, once again, perceived as having a greater inuence on strategy than costs. Local customers
are also important for many international agencies, and they demand full service locally. As a result, the expert

ARTICLE IN PRESS
P.G.P. Walters et al. / International Business Review 17 (2008) 235249

241

view is that agencies will maintain most functions in foreign ofces. Government drivers are seen to have little
impact and competitive forces push agencies to offer a full range of services in each location. Hence:
Proposition 4. Most business and creative activities are decentralised to overseas offices.
Regarding Competitive Moves, Yip notes that if one industry participant can leverage its competitive
advantage in one country to build an advantage in other countries, then all its competitors need to develop a
global strategy too (Lovelock & Yip, 1996, p. 76). The experts see powerful competitive drivers in the
advertising industry. Accordingly, signicant use of competitive moves, such as cross-subsidisation and
counter-parrying activity, is expected. Hence:
Proposition 5. Agencies develop integrated global competitive strategies.
Yips work primarily reects the industrial organisation focus on external environmental factors as the key
drivers of rm strategy, and the rst ve propositions align with the structurestrategy paradigm where
industry-level contextual factors, as interpreted by the experts, are seen as the dominant inuence on strategic
behaviour. Thus, the external industry environment, as described by the drivers, determines the use made of
the strategy levers, with the expectation that companies operating in the same industry will adopt similar
strategies overseas, as suggested in each of the propositions developed above.
However, Yips framework acknowledges the resource-based view (Wernerfelt, 1984; Barney, 1991), with
rm level resources and capabilities also seen to affect the strategy levers. Firm resources constrain the impact
of the external drivers, and thus the degree to which industry level strategy is dominant. Accordingly, the
greater the relative impact of rm resource factors, the greater the variance in rm-level strategy in the
advertising industry. Although Yips discussion highlights the impact of external drivers, it is relevant to
evaluate explicitly the potential impact of rm resources. Thus a nal proposition emerges, rooted in resourcebased theory and counter to those proposed so far, that differences in rm resources and position are the
dominant force affecting strategic behaviour. If this is the case, then instead of a pattern of homogenous
strategic behaviour in the industry, there is an expectation of a high level of strategy variance at the rm level.
Hence:
Proposition 6. Global strategy in the advertising industry is characterised by significant variance in behaviour at
the firm level.
4. Strategy implementation: the use of global levers
In order to evaluate strategic practice in the survey rms, and the six propositions, the information provided
by the senior executives was analysed in terms of the levers identied by Yip. Using the interview transcripts as
the basic source of data, the researcher responsible for the interviews rated the dimensions of strategy reviewed
in each of the eight companies along a continuum running from 0 multi-local to 5 global for each of
the ve levers. Two other researchers then independently evaluated these ratings, and discussion took place
between the three to resolve any disagreements. Finally, a fourth external judge independently examined the
results and his ratings were compared with the original scores. There was a high degree of consistency in the
ratings, with inter-rater reliability exceeding 90%. Fig. 2 indicates the summary ndings for each rm across
each strategy lever.
4.1. Global market participation
International participation proved to be highly variable. The number of countries in which the agencies
were represented varied from 96 to 5, and the number of overseas ofces established ranged from 411 to 5.
Following examination of agency-participation strategy, shown in Fig. 2, three clusters of rms were
identied. The four agencies located close to the fully global approach have ofces in many overseas markets,
often as a result of organic growth, and run their overseas networks with strong central control. Those in the
second cluster also engage in many markets, often entered through acquisition, but their overseas ofces have
greater autonomy. That arrangement can be characterised as a coordinated federation as compared to the

ARTICLE IN PRESS
P.G.P. Walters et al. / International Business Review 17 (2008) 235249

242

Use of the Global Participation Lever

Multi-local

Global
DGIF
|
5

CH

EB
|
0
Global Market Participation
Use of the Global Products and Services Lever
Multi-local
C

EDI

Global
B
|
5

FG

|
0
Product / Services Standardization
Use of the Global Marketing Lever

Global

Multi-local
H

DI

FGB
|
5

|
0
Marketing Approach
Location of Value-Added Activities

Global

Multi-local
CHE

BI

FG

|
0

|
5
Location of Value-Added Activities
Global Competitive Moves
Global

Multi-local
EBI

GF

HD

C
|
5

|
0
Global Competitive Moves
Fig. 2. Use of global levers.

centralised hub structure of the rst cluster (Bartlett & Ghoshal, 1995). The remaining two agencies have a
restricted global presence, establishing a small number of foreign ofces supported by a network of
independent local partners, primarily used as advertising distributors, where direct control is limited.
All of the agencies recognised that their position in one market has implications for their performance in
others, and entry decisions were sometimes determined by a need to satisfy the requirements of global clients
rather than local prot potential. The strategic importance of representation in the Japanese market was most
frequently mentioned in that regard.
Broad geographic scope is seen to be important, and all the rms claim to be able to offer the worldwide
coverage needed by clients. Some agencies offer full service in every major market, arguing that this is
necessary to ensure essential local knowledge. One interviewee noted that:
In order to have a meaningful offer in the market you have to be rooted in a market which means you have
to understand the culture, the tradition, the dynamics of the market because otherwise you cannot advise
your client properly.
The two agencies with a limited overseas presence argued that they have the ability to support the
international needs of clients without wide global participation. Their objective is to establish a small number

ARTICLE IN PRESS
P.G.P. Walters et al. / International Business Review 17 (2008) 235249

243

of centres of excellence overseas, each of which is able to develop creative campaigns, and to concurrently
work with local partner agencies in other countries for operational and media-placement activities. Their
perspective is that:
Anyone can nd an agency network that has ofces everywhere; what is in short supply is creative thinking
and quality of ideas. And thats our starting point, the world doesnt need another advertising network,
doesnt need any more agency ofces, what is needed is a lot more big ideas that can make brands famous
on a global level. That to us seems to be where the premium is highest. So if you start with that point of
view, you dont end up building a network, you end up concentrating your talent base in those key areas
where you can nd the talent.
4.2. Products and services
In the Yip framework, global products and services are treated as a single lever. The interviews indicate
that this is problematic, and that a distinction should be drawn between the advertising developed and the
creative and managerial processes involved.
In terms of procedural standardisation, most of the agencies developed common perspectives and
working methods, which are leveraged internationally. Managers frequently spoke of the need for all agency
employees to be on the same page and to have a common understanding of how campaigns should be created
and run. Procedural and operational uniformity in overseas ofces is seen as necessary to meet clients goals,
with consistency viewed as a source of advantage when bidding for global accounts. One respondent
commented that:
When you walk in our ofces anywhere in the world the people talk about advertising in the same way, they
use the same language, they use the same proprietary techniques and yeah you just plug yourself in and
away you go. You dont have to explain to them what you are talking about when you talk about brand
stewardship and brand audits and this or that because they have all been trained in the same way. And, as I
say, I think this is a great competitive advantage, people like IBM want us all around the world because
they know they are getting the same thing.
The implementation of standardised procedures varies and, although required in some of the agencies, is
optional in others. Rather than enforcing the use of prescribed working methods, some agencies rely on
interaction and output controls. For example, frequent meetings of senior creative staff from overseas ofces,
where advertising is discussed, information shared and quality standards evaluated. Perceptions of the role of
local ofces varied. A minority of rms see their local ofces primarily as translators of campaigns devised at
head ofce, but most agencies encourage overseas subsidiaries to play a much more pro-active role.
The primary forces driving procedural uniformity are the need to improve service consistency and quality,
and a desire to leverage best practice internationally. Reducing service variability does not lead to substantial
cost savings or lessen the need for local responsiveness. Indeed, efforts to implement global systems may
increase costs because of the need for expensive training programmes and the development of appropriate
controls.
In the case of advertising output, there is considerable variance in practice. Agencies less well represented
overseas are most interested in promoting international uniformity, and sought clients favouring standardised
campaigns. They emphasised their skill in developing advertising that works well across markets with minimal
local adaptation. They seek to develop strong ideas and creative campaigns which can be run in many
countries, aiming to minimise overheads and to avoid variable quality and inconsistency. Partner agencies are
used in local markets, mainly for distribution of advertising. That approach was described as follows:
The formula that we went to clients with was that what they needed was to limit the number of countries
that actually produce yyou dont need to be constructing ads in the countryyou need a handling house
in the country arguably to actually supply, translate. What you dont need is the expensive overhead of
creativity and all the issues that brings, because every creative person, if they are worth their salt, wants to
add something, change something and therefore the consistency disappears.

ARTICLE IN PRESS
P.G.P. Walters et al. / International Business Review 17 (2008) 235249

244

In the rms with worldwide networks, the common view is that localisation is often needed and that when
global campaigns are created, these normally need to be adapted to some degree based on an understanding
of local consumers. For example:
Where we have been successful with global campaignsywe have had a profound consumer understanding
market by market. There is no global consumer, there is a local consumer to whom we can express globally
y businesses still have a continuing need for someone in a local market, either the client or the agency, to
continue to evaluate whether the brand proposition in their market is the relevant one. And in order to have
a meaningful offer in the market you have to be rooted in a market which means you have to understand
the culture, the tradition, the dynamics of the market otherwise you cannot advise your client properly.
The larger agency networks typically take on a wide range of clients and have to service demand for both
standardised and localised advertising. Firms that are part of a centralised hub structure are more
predisposed to standardise output; those from coordinated federations are more likely to work with clients
demanding a more localised approach. One interviewee noted:
Changing technology and consumer habits, consumer fragmentation and media fragmentation are
undermining a process system driven network to manage uniformity, and what clients need is a network
that understands when global or regional is right, but also understands when that is wrong.
The industry expert view that cost-saving potential of standardisation is limited, and is not a primary reason
for either agencies or clients to seek uniformity of advertising content, is supported by the research ndings.
The evidence also indicates that client views of the need for advertising uniformity are primarily driven by
perceptions of the possibility of inter-market segmentation and the importance of projecting a consistent
global image.
4.3. Global marketing
In three rms, overseas marketing policy was well aligned with the expectation for signicant uniformity,
although in no case were all elements standardised. However, as Fig. 2 shows, the rms surveyed were
generally less concerned with standardisation than anticipated.
Brands are well established, but agencies did not always make use of uniform international branding. Local
branding is not uncommon, often in conjunction with the international network name. For example, in one
agency:
Sometimes if the name is very strong, like in Spain our partner for years has been Louis Pasat which is the
second largest agency in Spain and hes one of the most famous men in Spain so we would be foolish not to
use his name, so in Spain we are known as Pasat, Ogilvy and Mather and we will keep that going because
we have a strong advantage to doing so.
The interviewee in the only agency insisting that international ofces operate under the single parent brand
name criticised the branding strategies of the other agencies, noting that:
You know this is absolutely nuts and just self-justifying. If any of their clients came to them you know, if
Pepsi came to them and said hey we think calling Pepsi different things in different countries is a really
good ideawhat do you think guys? Do you think they would say we think this is a great idea chaps.
Come on!!!
Direct selling through face-to-face contact between the agency and the client is a key promotional tool, and
normally agencies organised their sales activity in multiple congurations to meet the client needs. If a client
prefers to buy globally and run the business from one location, then the agency will situate a global account
manager directly beside the client. Where the client buys locally, then a whole range of people may be working
on that one account internationally. The thinking in many of the agencies is:
Across our spectrum of clients we will have variations in how we work, but this is always driven by how the
clients themselves are organized. So you have to be very sensitive to how each of the clients is working and

ARTICLE IN PRESS
P.G.P. Walters et al. / International Business Review 17 (2008) 235249

245

how each of the brands is being run and then structure and tailor-make your own organization for the
handling of that client to mirror what he is doing.
Few agencies do much advertising of their own services. When undertaken, a general expectation is that
overseas advertising will conform to the agencys style and look, but normally this does not require HQ
approval. No clear picture emerged regarding international pricing practices, with agencies reluctant to
provide pricing information.
Interest in developing uniform positioning overseas that differentiates rms from their competitors is
strong. Some agencies position themselves as a creative hot-shop; others emphasise their overseas reach and
ability to deliver a uniformly high standard of service globally, as noted below:
In most countries, we are in the top ve, so you can say to people at a global level, you dont have to take
the rough with the smooth with usyif you buy us you get the power of the network without having to
accept local weaknesses or inconsistencies.
4.4. Location of activities
In most of the rms, overseas ofces operate as full service agencies. Many activities are conducted
locally, with overseas agency ofces enjoying signicant autonomy within a framework of nancial
reporting control. Thus, most foreign ofces have a role which goes well beyond the translation and
implementation of centrally derived advertising. This is primarily due to local clients accounting for a
majority of overseas business in most international agencies. Other factors driving policy include reluctance by
local managers to give up control over activities, and the relative unimportance of cost minimisation in the
industry.
A small number of agencies centralise value chain activities in areas such as nance, and several concentrate creative work in a single centre of excellence. Despite signicant local autonomy, the evidence
suggests increasing interest in the integration of international activities; more networking; increased
information and expertise sharing; and greater collaboration between overseas ofces to develop campaigns
and projects.
Client demands for consistency and reliable quality are driving the development of communication and
control systems which involve agency staff around the world in all stages of campaign development. This
requires the use of advanced information technology, in particular intranets, to build integrated control and
information systems. The intranet can provide each overseas ofce with access to agency information on a
particular client and examples of work created for that client in other markets. Additionally, it facilitates the
analysis of market-research data and collaboration with other national ofces on a global or regional
campaign. Investment in the development of IT technologies, and related methods for cross-border work
coordination, is an important trend. As noted by one executive:
This will allow us to group people together to work on a given project for a certain period of time through
the means of technology, because I mean to y someone from Shanghai to London to work for a few days
is probably difcult because they have other obligations. On this project, you work together through
technology, and hopefully you will have results that reect a more international viewpoint. What we are
talking about is not exporting a piece of copy but truly creating international advertising.
4.5. Competitive moves
There was limited evidence of competitive moves being pursued in the industry, and the notion of globally
coordinated action targeted at particular competitors is not well understood. Indeed only one agency appeared
to be implementing an integrated global competitive strategy. Cross-subsidisation occurs occasionally when
prots booked from a client in one country are used to support a loss-making position with that client in
another market. But systematic effort to monitor and forecast competitive action is rare, as are aggressive
policies targeting competitors. Cutting prices is not a priority, and such policies are not seen as the optimal
way to achieve growth.

ARTICLE IN PRESS
246

P.G.P. Walters et al. / International Business Review 17 (2008) 235249

Agencies compete strongly for business, but market share is not a primary focus in a fragmented industry
where client-conict issues limit an agencys ability to handle competing customers. This militates against a
single agency dominating the market and constrains the use of competitive levers.
4.6. Variance in strategy
The rst ve propositions reect the structureconductperformance paradigm, with the expectation of
common patterns of strategic behaviour in alignment with the industry context. In contrast, Proposition 6
draws on the resource-based view, with the expectation of signicant variance in strategy given differing rm
resource endowments.
Examination of Fig. 2 makes it clear that Proposition 6 is well supported by the evidence. Apart from the
global participation lever, where most of the agencies are close to the global end of the scale, there is only
limited evidence of a single dominant pattern of strategic behaviour in respect of the other four strategy levers.
Thus, although some other elements of international strategy are similar across the agencies, much was
different, and it is evident that the environmental conditions prevailing in the international advertising
industry do not result in homogeneous patterns of strategic behaviour in most of the areas investigated.
5. Conclusions and discussion
The research ndings indicate that, at the rm level, there is considerable variation in the international
strategies pursued by the survey rms. At the same time, average behaviour aligned fairly well with the rst
four propositions. This is particularly the case regarding the dominant strategic thrust to establish broadly
based overseas ofce networks. There is also evidence of common strategic directions in respect of the
development and implementation of more internationally uniform management systems and procedures,
and growing interest in developing IT systems and related processes to enhance communication and
integration between the overseas ofces. In the case of agency international marketing strategy, there is
signicant uniformity in the branding and positioning policies pursued overseas, but the development of
standardised international advertising content is not a high priority in most of the agencies. It is also notable
that although competition is strong in the industry, only one agency pursued an integrated international
competitive strategy.
In many policy areas there is little support for the notion of industry-specic patterns of strategic behaviour
at the rm level. Thus, in respect of important dimensions of the product and services, global marketing and
location levers, the behaviour of the individual agencies was often different from what was expected, with no
single dominant pattern of strategic activity observed. It is also the case that strategy was frequently less
global than anticipated. This appears to be primarily due to the decentralisation of many advertising
activities, and a need for agency responsiveness in the industry as a result of the dominance of market forces
over cost drivers.
It is evident that the idiosyncratic resources and capabilities of individual advertising agencies rms have an
important impact upon strategic behaviour. At the same time, the industry environment is often of signicance
in moving international strategy in a characteristic direction. Thus, analysis of the industry experts feedback
on industry drivers, using the Yip framework, resulted in propositions that, more often than not, aligned
reasonably well with average strategic practice, despite wide variance in behaviour at the rm level. This
indicates that although Yips framework has value, more emphasis should be given to the impact of agency
resources on strategic behaviour.
There is some evidence that rm size may inuence global strategy by affecting an agencys ability to
exercise strategic choice. The two smallest rms have limited overseas networks and needed to rely on
independent overseas agencies in many markets, and this constrains their ability to develop responsive
advertising. Not surprisingly, these were the only survey rms strongly committed to developing standardised
international advertising content. The larger agencies control more resources and their own overseas
networks, and could more readily respond to pressures for localisation and serve a wider range of clients.
But it is also noteworthy that strategic practice varied across agencies of broadly similar size. In the two
smallest agencies surveyed, global strategy varied sharply in respect of three of the ve levers investigated.

ARTICLE IN PRESS
P.G.P. Walters et al. / International Business Review 17 (2008) 235249

247

Similarly, in the two largest rms, policy varied in most of the strategy areas discussed. This indicates that rm
resources and capabilities should be interpreted broadly to include factors such as administrative heritage
(Bartlett & Ghoshal, 1995), organisational culture and internationalisation experience. Viewed from that
perspective, the survey rms can be grouped into three categories.
First, there are four agencies which have developed strong common corporate cultures, three of them
through a process of internal growth and the other by a process of assimilation. This facilitates the
development of integrated overseas networks well positioned to implement global policies. Then there are
two agencies which utilise an associated network structure, built upon a history of takeovers and mergers
between independent agencies allowed to retain their identities and signicant autonomy. Those rms nd
integration, coordination and the adoption of global strategies more difcult to achieve because of
continuing differences in corporate culture. Thirdly, the two smallest agencies both developed a centres of
excellence structure, maintaining key talent in a small number of locations, complemented with loosely
coupled relationships with local partners who provide less critical inputs. While those agencies are well placed
to achieve integration of their own overseas ofces, they are constrained by the limited geographic scope of
their network and lack of control over their partner agencies.
Although much activity in the agencies is decentralised, there is evidence of integration with overseas
ofces working together developing international advertising campaigns. More coordination and networking
is also occurring as information and expertise is shared more widely. Client demands for consistency
and reliable quality are key forces driving the development of communication and management systems
designed to involve staff around the world in all facets of advertising activity. Consequently, instead of
being primarily implementers and translators of centrally derived advertising, overseas ofces enjoy a
more proactive role. These developments mirror progress in other knowledge-based industries (Winch &
Schneider, 1993), where the building of networked organisations and the effective leveraging of intellectual
resources has become critical to success (Quinn, Anderson, & Finkelstein, 1996; Yeniyurt, Cavusgil, & Hult,
2005), but within a context where the local presence and understanding demanded by clients remains very
important.
Managing cross-national groups of highly motivated, creative advertising professionals in
a manner that allows for effective co-ordination, in a non-hierarchical context of decentralisation,
poses many managerial problems. In the advertising industry, the development of more uniform
intra-rm systems and procedures that allow for exibility, within a context of universal standards,
is an important direction in the pursuit of international integration. The research also conrms the importance of technological innovation in the IT area as a driver of globalisation (Lovelock & Yip, 1996), with
many agencies investing heavily in IT to support cross-national collaboration, communication and
coordination.
The preceding discussion provides insights into how rm resources and systems innovation may affect
patterns of globalisation in the advertising industry. Further study is needed in addressing these key issues
with the ndings suggesting that idiosyncratic, rm-level factors are at least as signicant, as antecedents to
international strategy, as the environmental drivers highlighted by Yip.
It follows that more attention should be given to the potential contribution of the resource-based
perspective when seeking to understand strategic behaviour at the rm level, and this has important
implications for Yips framework. In addition to the need to take greater account of resource factors, it can
also be noted that Yips analysis of the connection between drivers and the levers is difcult to operationalise
in a rigorously consistent manner, and these linkages need further renement.
The focus on British-based industry experts and advertising agencies constrains the contribution of this
study (Nachum & Rolle, 1999), and important issues, not covered in the research, arise in respect of
developing cultural norms, organisational structures and systems that support the development and
implementation of global strategy. Additionally, the impact of managerial perceptions, mindset and objectives
deserve more attention. Along with the issue of whether rm nationality affects strategy, these are topics for
future research. Despite these limitations, the participating rms are all major players in the international
advertising industry, subject to the full range of inuences present in the international marketplace. The
ndings are therefore important in their own right, and also provide a solid platform for further work in
indicating directions for future investigations.

ARTICLE IN PRESS
248

P.G.P. Walters et al. / International Business Review 17 (2008) 235249

References
Banerjee, Ashish (1994). Transnational advertising development and management: An account planning approach and a process
framework. International Journal of Advertising, 13(2), 95124.
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99120.
Bartlett, Christopher A., & Ghoshal, Sumantra (1995). Transnational management. Chicago: Irwin.
Das, T. Hari (1983). Qualitative research in organizational behaviour. Journal of Management Studies, 20(3), 301314.
Douglas, Susan P., & Craig, Samuel C. (1992). Advances in international marketing. International Research in Marketing, 9, 291318.
Fayerweather, John (1969). International business management: A conceptual approach. New York: McGraw-Hill.
Gahan, Cekia, & Hannibal, Mike (1998). Doing qualitative research using QSR nudist. London: Sage Publications.
Glaser, Barney G., & Strauss, Anselm L. (1967). The discovery of grounded theory: Strategies of qualitative research. London: Weidenfeld
and Nicholson.
Gould, Steven J., Lerman, Dawn B., & Grein, Andreas F (1999). Agency perceptions and practice on global IMC. Journal of Advertising
Research, 720.
Grein, Andreas, & Ducoffe, Robert (1998). Strategic responses to market globalization among advertising agencies. International Journal
of Advertising, 17(3), 301319.
Hout, Thomas, Porter, Michael E., & Rudden, Eileen (1982). How global companies win out. Harvard Business Review, 60(5),
98108.
Jain, Subash C. (1989). Standardization of international marketing strategy: Some research hypotheses. Journal of Marketing, 53(1),
7079.
Johansson, Johny K., & Yip, George S. (1994). Exploiting globalization potential: US and Japanese strategies. Strategic Management
Journal, 15, 579601.
Kotabe, Mike (2001). Contemporary research trends in international marketing: The 1990s. In Alan M. Rugman, & Thomas L. Brewer
(Eds.), The Oxford handbook of international business (pp. 457502). Oxford: Oxford University Press.
Kotabe, Masaaki, & Helson, Kristiaan (2004). Global marketing management. Hoboken, NJ: Wiley.
Leslie, D. A. (1995). Globalization scan: The globalization of advertising agencies, concepts and campaigns. Economic Geography, 71(4),
402426.
Levitt, Theodore (1983). The globalization of markets. Harvard Business Review, 61(3), 92102.
Lovelock, Christopher H., & Yip, George S. (1996). Developing global strategies for service businesses. California Management Review,
38(2), 6486.
Marshall, Catherine, & Rossman, Gretchen B. (1989). Designing qualitative research. Newbury Park: Sage.
Miles, Mathew B., & Huberman, A. Michael (1984). Qualitative data analysis: A sourcebook of new methods. Beverly Hills: Sage.
Morrison, Allen J. (1990). Strategies in global industries: How US businesses compete. Westport, CT: Quorum Books.
Nachum, L., & Rolle, J. D. (1999). Home country and rm-specic ownership advantages: A study of US, UK and French advertising
agencies. International Business Review, 8(56), 633660.
Patterson, P. Gaul, & Cicic, Muris (1995). A typology of service rms in international markets: An empirical investigation. Journal of
International Marketing, 3(4), 5783.
Porter, Michael E. (1986). Changing patterns of international competition. California Management Review, 28(2), 940.
Prahalad, Coimbatore K., & Doz, Yves (1987). The multinational mission: Balancing local demands and global vision. New York:
Free Press.
Quinn, James B., Anderson, Philip, & Finkelstein, Sydney (1996). Leveraging intellect. Academy of Management Executive, 10(3),
727.
Rosen, Barry N., Boddewyn, Jean J., & Louis, Ernst A. (1988). Participation by US agencies in international brand advertising:
An empirical study. Journal of Advertising, 17(4), 1422.
Shi, Linda Hui, Zou, Shaoming, & Cavusgil, S. Tamer (2004). A conceptual framework of global account management capabilities and
rm performance. International Business Review, 13(5), 539660.
Shoham, Aviv, & Albaum, Gerald (1994). The effects of transfer of marketing methods on export performance: An empirical examination.
International Business Review, 3(3), 219241.
Stonehouse, George, Hamill, Jim, Campbell, David, & Purdie, Tony (2000). Global and transnational business: Strategy and management.
Chichester: Wiley.
Stroh, Matt (2000). Qualitative interviewing. In Dawn Burton (Ed.), Research training for social scientists (pp. 196214). London: Sage.
Tharp, Marye, & Jeong, Jaeseok (2001). The global network communications agency. Journal of International Marketing, 9(4),
111131.
Vardar, Nukhet (1992). Global advertising: Rhyme or reason?. London: Paul Chapman Publishing.
Wenerfelt, B. (1984). A resource based view of the rm. Strategic Management Journal, 5(2), 171180.
Winch, Graham, & Schneider, Eric (1993). Managing the knowledge based organization: The case of architectural practice. Journal of
Management Studies, 30(6), 923937.
Yeniyurt, Sengum, Cavusgil, S. Tomas, & Hult, G. Thomas M. (2005). A global market advantage framework: The role of global market
knowledge competencies. International Business Review, 14(1), 119.
Yin, Robert K. (1989). Case study research. Newbury Park, CA: Sage Publications.
Yip, George S. (1992). Total global strategy: Managing for worldwide competitive advantage. Englewood Cliffs, NJ: Prentice-Hall.
Yip, George S. (2003). Total global strategy II. Englewood Cliffs, NJ: Prentice-Hall.

ARTICLE IN PRESS
P.G.P. Walters et al. / International Business Review 17 (2008) 235249

249

Yip, George S., & Coundouriotis, George A. (1991). Diagnosing global strategy potential: The world chocolate industry. Planning Review,
Jan. Feb., 414.
Yip, George S., & Madsen, Tammy L. (1996). Global account management: The new frontier in relationship marketing. International
Marketing Review, 13(3), 2442.
Zou, Shaoming, & Cavusgil, S. Tamer (2002). The GMS: A broad conceptualization of global marketing strategy and its effect on rm
performance. Journal of Marketing, 66(4), 4056.