I’ve come across far too many articles in the recent past contemplating whether start-ups need PR at all. Questions like: Should start-ups spend on PR? Does your start-up really need help with PR?
This is an attempt to share my understanding of PR in the start-up world. Yes, start-ups have it tough because they’re new but that doesn’t necessarily make them insecure because of their lack of visibility. Don’t judge a book by its cover. There are plenty of start-ups that have their priorities right. They focus on operations, following through their business blueprint, and are constantly moulding with their evolving business model.
It is often portrayed that once a company gets funding, the upper management can’t handle the publicity and starts spending heaps on “PR”.
PR is very different from advertising.
Among other things, PR focuses on brand-building and reputation while advertising (whether online or offline) essentially highlights products/services to primarily increase sales. More often than not, start-ups that look for ‘quick fame’ end up confusing the two and get frustrated when, despite their investment, the PR company they’ve hired hasn’t been able to get them mentioned in a leading publication. Anyone who understands the world of corporate communications or has preliminary knowledge on media relations, understands that throwing money at the problem is not a solution when it comes to brand-building.
Creating a memorable brand takes time. A bit of research on brands will show you that it has taken years for brand giants to become recognisable, trustworthy and ultimately, THE go-to brand for consumers. PR helps start-ups establish their brand identity, personality, and approachability in terms of consumers. This comment by GG Benitez, CEO of GG Benitez and Associates Public Relations, Inc., helps make my case:
“Too many companies are focused only on the dollars ROI. While PR ‘hits’ are never guaranteed, when they do happen, they spur brand affinity. That results in an ROI that’s outside just the traditional dollar for dollar measurement.”
Start-ups can, however, risk throwing money at advertising. Since we live in a time of multiple online and offline platforms – advertising, to an extent, is truly experimental. For example, there are several different ways you can advertise on Facebook. Companies can choose from ‘where’ and to ‘whom’ they can advertise to. The list of preferences goes on. While one combination may work for a product/service, the same is not guaranteed to work for another. Hence, experimental.
While advertising is measurable, PR may not be.
When talking about Return-On-Investment in advertising, there is a simple way to measure it.
Having worked in a start-up for over two years, I understand strict marketing budgets. These concerns can lead start-ups to take charge of their own PR, which isn’t necessarily the best advice and can end up eventually harming the company’s image. Instead, start-ups should find the right PR consultant or agency to assist them in building their brand.
Today, a majority of start-ups are offering products/services that can help make the consumer’s life easier. The right amount of PR and advertising will only help them leverage their brand in the industry.
Penning down this uncomfortable part of my life for any student who may be in a similar situation.
Ironically enough, I am going to start this rather personal article telling you how I’ve never quit on anything in my life. Professionally speaking, working in startups requires 100% commitment, a can-do attitude and a strong-as-stone determination level. And I take pride as a hard-worker. Getting in the University of Melbourne (referred as unimelb) was definitely one of the best things that happened to me. But it also didn’t just happen, there was a lot of hard work and wishing that went behind The Decision.
Leaving the comforts of home is hard.
When I left my work-life and social circle in Delhi, I had no idea what I was in for. They say, you get more and more comfortable as you get older and it’s harder to study after working for a certain period of time, or to even live in a new country. And they’re right. Maybe different people react differently to dramatic changes, but this step was exceptionally hard for me.
My first semester at uni was tough.
They were the longest 4 months of 2016. I had anticipated difficulty in assignments and to be honest, it was a bit of a struggle to get used to the referencing style and citations but I thoroughly enjoyed the advanced level at which our professors made us think and research. I’m pretty proud of most of the essays and took the liberty to publish them on LinkedIn and my website.
Accommodation was another struggle but after a decent semester I was ready for the next.
For a lack of a better word, in the first week of our second semester I realized I was scared to commit to living a life in Australia after I graduate (which made sense after having spend thousands of dollars on education). Did graduating from unimelb hold any value if I didn’t see a future here to begin with? Of course it did. It’s one of the best universities in the world but who could explain that to someone having a major panic attack?
I talked to noone – just went ahead and withdrew from the course. Just. Like. That.
…The next day, I spoke to close family and friends who reminded me of the core reason I was pursuing post-grad in Melbourne – To be a qualified PR professional. People are unaware of how anxiety can play a large role in your demeanour. I came across a Quartz article elaborating on a significant percentage of graduate students in different countries suffering from depression.
A lot of people don’t know this but getting a job at LinkedIn was a huge motivating factor behind getting a post-graduate degree. No surprise that I absolutely love the platform that LinkedIn provides millions of people and it would be amazing to work for the largest professional network in the world. In the middle of all the craziness I also wrote to Mr. X, a senior guy at LinkedIn, asking for his opinion on whether I should continue at all. To my surprise, people, busy people, do reply to panic emails! And it was really nice of Mr. X to emphasize on me completing my degree.
Needless to say, I am thankful that my uni has a grace time period where you can apply for re-admittance. If you are a student and you have thoughts to quit college, do not panic. Easier said than done – but it’s better waiting a couple days and talking to people you look up to before signing yourself up for a ton of paperwork.
Remember why you made The Decision.
The following quote by Anne Lamott inspired me to write this article:
You own everything that happened to you. Tell your stories. If people wanted you to write warmly about them, they should have behaved better.
There’s a lot of weight in the name. Known as one of the best communications marketing firms in the world, what sets Edelman apart from its counterparts is the company’s culture that always look to the future. They are ahead of their game simply because they are always on their toes. Edelman not only analyses the current coarse of PR, they also predict future trends. And when they think PR, they don’t limit themselves to a city, country, or continent.
So how was it interning at Edelman?
At the risk of sounding cliché, here goes.
The moment I stepped in the office, I knew I was at the right place. This was exactly where I wanted to be. But I had never worked in a corporate setting before, leave along a giant like Edelman. It was exciting and nerve racking… soon after, I was introduced to my team members and jumped right in the middle of non-stop work. In the two months that I interned there, whoever asked me how I was settling in my new workplace, I could not help but mention how new it was for me to be handling work for more than one client in a day. While I attempted to find a balance multitasking, my colleagues were already pros.
A typical day in the office started with a quick inbox check, scanning for client news through print and online media, heaps of research and word/PowerPoint edits. Most of my tasks included connecting with journalists and bloggers to pitch stories and being a part of the ideation team while working on creating PR plans for new clients.
For public relations enthusiasts, here’s what I took away from my Edelman experience.
PR is bigger than you think.
There is genuinely so much team-work that goes on behind-the-scenes. Work is divided between departments and executed neatly. Edelman offices worldwide are connected in a very organic yet mythological way. All Edelman employees are interconnected – bound by international clients. Adding imperative value to this PR community, the president & CEO Richard Edelman regularly shares his futuristic views on the Edelman 6 A.M. blog – one of my personal favourites.
When a leader regularly communicates the company’s vision with its most important stakeholders – the employees – he creates a breathing machine more aligned with the company’s mission.
Don’t think before you say yes!
Yes – is the default answer. The moment you say yes, you open yourself to the possibility of getting things done. There are many instances where I noticed my brain hesitating for a micro-second – Did I know how to create a dossier in my first day at work? Nope. But I was open to learning and saying ‘yes’ got me places – always.
Get a glimpse of ‘the future you’
When I arrived at Edelman, I was instantly inspired by the strong, intelligent women who surrounded me and made me want to be a part of this team-based environment. A work space that Edelman offers enhances an individual’s PR strengths, and helps them realize the kind of work management style that suits them best. You might even decide the kind of work you’re interested to pursue and catch a glimpse of the future you working at the office, like me!
If you’re someone who’s going to start your internship at Edelman soon, don’t forget to own the moment.
I recently stumbled upon an article by Bala Srinivasa and Darshit Vora called ‘The Future Of Digital Content And Media Disruption In India’. Inspired by it, here is my take on how content is changing under the influence of digital transformation.
I vividly remember when a friend of mine asked me if I had a smartphone. This was back at the beginning of undergrad years when I used to think – just how smart can a smartphone be from my usual phone? Millennials, do you remember the time you used phones just to make and receive phone calls? I do. Cut to today, there are 220 million smartphone users in the country.
Video consumption – what’s the hype?
As of 2015, there were more than 110 million video viewers in India and this was primarily possible due to the introduction of inexpensive smartphones and faster Internet (Future of Digital Content Consumption in India, EY report). 2016 saw tremendous increase in individual consumption of digital content spreading across several formats. For instance, at my first semester in Melbourne, I discovered ‘#LoveBytes’, easy to consume because of its length (around 10 minutes/episode) and availability (YouTube). The series essentially deals with the issues an Indian couple faces while in a live-in relationship. Modern-day concepts, choices and struggles have become the subject of these web series. On further research, I found that #LoveBytes was in fact India’s first-ever show exclusively for the digital platform. In the past 2-3 years, similar advancements have been made to create short-form content for news (like the inshorts app), gaming (Rummy) and education (classteacher).
With aggressive marketing, there is undeniable competition and it’s getting harder for companies to maintain their brand recall. This is especially prominent in a world where people are exposed to several hundreds of brands each day. As Richard Edelman, CEO at one of the best public relations firms in the world, mentions in his blog ‘The Way Ahead: 2017’, ‘native advertising will have to change to survive’ by creating unforgettable video and graphic experiences for audiences.
Digital content is meant to be short, quick to consume and omnipresent. With the increasing number of smartphone users, social media platforms are introducing features that enable users to share more digitally. In the words of Bala Srinivasa and Darshit Vora, “Content – especially video is a key focus area for social platforms.” Facebook with its live video option, Twitter and Instagram with short ad videos, and of course Snapchat, with its perishable short video-sharing feature. More platforms that give users the space to share live video streaming are joining the current scenario like Periscope and the most recent introduction of 360-degree live videos on Twitter. Even traditional Indian media is experimenting with the online medium and successfully building audiences. Earlier this month, a study revealed that Times of India had the most viewed videos on Facebook, with over 112 million views in just a month.
Digital content and brand building
This is my personal favourite. Over the past couple of years, experts in their respective fields have been using digital platforms to publish their own video content. I’m talking about the likes of Vani Kola (MD, Kalaari Capital) and Shradha Sharma (Founder, YourStory) who take on professional spaces like LinkedIn to express their views through blogs, and now even videos.
Producing organic video content and publishing it on a relevant platform is helping these influencers build themselves into a brand.
There are possible opportunities in this space this year where I find that increasing number of C-suite level executives, CEOs, founders are recognising the significance of personal branding. 2017 will see a rise in the number of people sharing perspective, predicting future industry shifts and more. In addition, 2017 is going to be the year of three-way conversations, where thought leaders will share their expertise with their audiences, who, in turn, will create and share their own organic content–becoming an integral part of the conversation. This nature of conversation promotes a healthier, more transparent dialogue among corporations, brands, and their most important stakeholders – consumers.
Looking at Internet penetration as a whole, a recent Assocham – Deloitte study revealed that Internet connectivity has yet to reach Tier II and III cities and touch the lives of a staggering 950 million Indians. When this does happen, the country will witness a revolutionary wave of growth. In September, Reliance Jio launched services, including unlimited voice calls, SMS and high-speed data in 2,00,000 villages across India, further strengthening digitisation in India. Further on, the demonetisation has acted as a catalyst in helping people make the shift to digital payments.
While digital content consumption is on the rise like never before, opportunities for 2017 remain exciting and prominent. With several advancements in the digital space, it’s an inspiring time for us digital enthusiasts.
Howard R. Bowen is famous for having coined the term ‘Corporate Social Responsibility’ in his book called ‘Social Responsibilities of the Businessman’ in 1953. In his preliminary definition, Bowen (2013), who is known as the father of Corporate Social Responsibility (CSR), describes it as ‘the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.’ While several eminent businessmen and scholars have found CSR as a diversion from the main goal of ‘maximizing profits’, over decades, various studies conducted on CSR have shown positive results, especially from the point of view of its stakeholders, including investors. This has led corporations to include CSR reporting in annual reports and marketing strategies because of its recognized potential to further improve corporate image.
In relation to stakeholders, Corporate Social Responsibility can be elaborated as an ‘organization’s voluntarily effort in integrating their stakeholder’s social and environmental expectations’. CSR was essentially adopted to inculcate a sense of ‘social good’ in a business model. Contrary to what some believe, every step a company takes, ends up creating either positive or negative social consequence. As suggested, the concept of CSR is integrated with business models with the aim to positively contribute to the environment and, in turn, earn the trust of stakeholders, including investors, employees and consumers. Corporations use CSR to reduce legal risks by taking responsibility for their actions and incorporating high ethical standards in their business model. In an article co-authored by Michael Porter (2007), he mentions how prevalent approaches to CSR are disconnected from business and strategy, and how this fragmentation is keeping companies from benefiting society. Porter and Kramer add:
If, instead, corporations were to analyze their prospects for social responsibility using the same frameworks that guide their core business choices, they would discover that CSR can be much more than a cost, a constraint, or a charitable deed–it can be a source of opportunity, innovation, and competitive advantage.
There are other corporate leaders and scholars who support their views, encourage CSR and elaborate on the significant positive changes it brings to the relationship between a corporation and its stakeholders. A political theorist and philosopher, Edmund Burke (1999) introduced the concept of expectations between a corporation and its customers. He mentions how ‘a company and its customers can help each other achieve goals by reciprocating trust’. Another business leader who believed in corporates involving in philanthropy was William Norris, founder of Control Data. In the 1960’s, to stabilize community environment Norris took minority groups on-board so that they could help address social issues. Other authors like Harvey and McCrohan bridged the gap between the two extremes – corporates dedicated to supporting communities, and corporates solely focusing on efficiently using available resources to maximize profits. According to them, corporate giving is a blend of philanthropy and acting in the corporation’s own self-interest.
Corporate philanthropy, a part of the larger domain of Corporate Social Responsibility, has not always been a welcomed concept to corporate leaders and scholars.
Albert J. Dunlap, a former corporate executive stated that ‘philanthropy literally has no place in a business enterprise’. In his book ‘Mean business: How I save bad companies and make good companies great’, he explicitly mentions how businesses are meant to make profit and not indulge in social causes. An American economist, Herbert Stein (1996) had a similar perspective and expressed his view that ‘if societal problems were to be taken care by corporates – it would result as an unproductive diversion from doing their job most efficiently.’ Further on in his article titled ‘Corporate America, Mind Your Own Business’ in the Wall Street Journal, he continues to emphasize on ‘corporates using the nation’s resources most efficiently’ and not getting distracted by attempting to solve social issues (Stein, 1996).
However, rarely does Dunlap or Stein address the importance of the relationship between a corporation and one of its most important stakeholders – its customers.
The Relationship between Reputation & Corporate Identity
Companies engage in CSR-related activities, support communities and non-profit organizations for numerous reasons. Hall (2006) elaborates that these reasons could range ‘from self-interest to altruism’ and in a variety of ways ‘it could range from financial support to community relations activities’. Companies can engage in corporate citizenship, referring to the social responsibilities of businesses, for ‘ethical, reputational, political, and philosophical reasons’.
Corporate Identity has been used to describe concepts like corporate image, reputation and even corporate branding. In fact, gaining reputation through corporate identity, as Porter and Kramer state, is one of the 4 prevailing justifications for CSR. ‘Reputation is used by many companies to justify CSR initiatives on the grounds that they will improve a company’s image, strengthen its brand, enliven morale, and even raise the value of its stock’.
Marin & Ruiz (2007) have distinguished a direct relationship between how well people are able to identify with an organization and ‘the attractiveness of the organizational identity’. Their model based on social identity and organizational identification demonstrated that ‘the Corporate Social Responsibility (CSR) contribution to company IA [Identity Attractiveness] is much stronger than that of Corporate Ability (CA)’. Researchers Maignan and Ferrell (2004), Sen and Bhattacharya (2001) believe that CSR generates active support of consumers and their organizational identification theory possibly provides this claim a solid foundation. Bhattacharya and Sen (2003) suggest that the attractiveness of a company’s identity often creates an interest in the consumer to be linked with the company.
This goes beyond conventional approaches to relationship marketing and entices the consumer to strengthen his relationship with the company rather than the company attempting to link with the consumer.
This role switch has led consumers to demand more than simply ‘a product of quality at a low price’ and expect companies to be compatible with the community by acting as a significant positive contributor. However, Boulstridge and Carrigan (2000) bring to attention that despite the evolution of CSR, the concept is not yet remotely close to being a top priority for consumers making purchasing decisions. Consumers are at a stage where they purchase for personal rather than societal reasons, this includes criteria like brand familiarity, price and quality.
With the increase in media showcasing the significance of the well-being of society, consumers have started showing interest in engaging with companies who contribute to the society. A similar inclination to socially responsible companies can be observed in investors. A company’s positive image for meaningful contribution to society is used by investor relations managers to attract more loyal investors. Further research has helped distinguish investors into two kinds – first, the conventional investor and second, the socially responsible investor. The difference lies in their investment decision-making styles based on ethics and perception of morality. While the conventional investor seeks maximization of profits and inclusion in the corporate decision-making process, the socially responsible investor values reputation of the company more.
Does Corporate Social Responsibility equal to profit?
Despite having successfully dedicated themselves to contributing to society like Ben & Jerry’s and the Body Shop, corporations find it hard to measure how much of their social impact has benefited them monetarily. While focusing on the immeasurable quality of CSR in a business model, these scholars find that studies conducted to measure the effect of a company’s social reputation on consumer purchasing decisions or on company stock value have been ‘inconclusive at best’. CSR is infamous for its inability to relate to structural conditions such as globalisation and hence authors like Blowfield (2005) have characterized it as ‘the failing discipline’. He mentions that despite playing a role in connecting the private sector with society at large, CSR has gone largely unnoticed by other disciplines. At this point, CSR cannot be ignored and needs to be acknowledged when it comes to international governance.
CSR can also be used irresponsibly by corporations when determining certain business decision by turning significant elements into a topic for debate. It is possible that because of the ambiguous nature of CSR here, corporations could make important decisions based on relatively irrelevant factors than what matters most morally. Nevertheless, these scholars are convinced that with time CSR is becoming important for a company’s overall success. They acknowledge that corporations are not created to take on responsibilities to fix societal issues, but they strongly suggest companies to undertake specific societal problems – ‘from which it can gain the greatest competitive benefit’. In addition, socially responsible firms provide extensive disclosures than companies less associated to contributing to society. This further convinces Gelb and Strawser (2001) that ‘increased disclosure is a form of socially responsible behaviour’.
To summarize, many companies have started using ‘reputation’ building activities like CSR to improve its brand image and morally connect with its employees and consumers. Through extensive research I find that corporations should strongly consider CSR as a long-term investment which may be incalculable in many cases, but often raises value of the company stock over time. CSR activities help build corporate identity which speaks to the ‘social side’ of consumers and investors. Such engagements are increasingly raising interest among company stakeholders, thus creating loyal customers and investors who want to associate with the company. Long-term associations with consumers have led investors to acknowledge CSR as a beneficial approach to build corporate identity and differentiate company brand.
This research essay was first put together as a part of my coursework for master of marketing communications at the University of Melbourne.
Welcome to the world of Generation Z. Don’t get confused, this generation are the children of Generation X (population usually between mid-1960s and early 1980s, some may refer them as the Friends generation) but who also may have Millennials parents aka Generation Y.
Self-proclaimed ‘digital natives’, Gen Z is the first generation to be born into the internet technology and the world of smartphones. The new consumer generation is made up of pre-teens and teens who seem to take in information just as instantaneously as they lose interest in them. Famously referred to as ‘millennials on steroids’ by worldwide director at J. Walter Thompson, Lucie Greene, this generation is shaping up to be a mysterious puzzle that market researchers want to discover more about ASAP.
Trend forecasters are studying heaps of data on this new consumer generation, their hesitation and choices that make up their digital lives. The following pointers dab into areas of their dilemmas and the digital direction they’re headed to.
Why share my life with everyone I know?
Being a millennial myself, I remember when Facebook came into our lives. I was still in school and hesitantly signed up to this odd website that was prompting me to send friend invites to my friends IRL. We excitedly jumped right into the deep side of the pool of networking platforms and admittedly so, may have even overshared our personal lives online. Gen Z is not only wise enough to pick on this, they are cautious and take their privacy seriously. No, they’re not abandoning social media, they’ve just decided to lead distinct digital lives. This means they’re not interested in using Facebook and Twitter, they’re more interested in applications like Instagram and SnapChat where they can share media with a close group of friends and maintain a rather strong personal brand.
Why read when I can watch?
Gen Z is not interested in reading an article, as a matter of fact, they may even skip listicles. Living amidst screens their whole lives, it’s no secret that this generation has a small attention span and feeds off video content. To add to this, they even prefer expressing themselves visually, for instance via emojis, snapchatting pictures and short-lived videos.
Gen Z > Gen Y?
Teens today have more opportunities than us millennials. There are websites and mobile apps that are helping them monetize their skills and find them freelance work. There is a surge in the production of fresh content (podcasts, videos, articles) by Gen Z and promoting it online. A prominent example is how a wave of teen beauty bloggers on YouTube have turned their content into businesses and are being approached by big brands for endorsement. Some even say Gen Z is the most entrepreneurial generation yet.
Innovation is closely integrated with our lives today. Technology used to take upto a decade to upgrade and Gen X, Y and Z have to adapt to new technologies every 1-2 years. This significant change is reflected in human attitudes and is a contributing factor making generations shorter. Regardless, we will always need to find a way to push through digital dilemmas and make sure we come out wiser.
One of the biggest information technology companies in the world announced its merger with the world’s largest professional network on June 13th 2016. LinkedIn was bought by Microsoft in an all-cash transaction at $26.2 billion for $196 per share. Microsoft CEO Satya Nadella’s objective for the acquisition echoed in his statement “Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet.” (Microsoft News Center, 2016). In over 4 decades of Microsoft’s existence, the largest software-maker has been able to connect with over 1 billion users. On the other hand, LinkedIn has shown tremendous growth as the world’s largest professional network with increased membership to more than 433 million members worldwide. Adding this with the intelligent LinkedIn newsfeed, the year-on-year engagement growth are vital markers that prove their standing today.
In its attempt to penetrate the professional networking platform, Microsoft has chosen LinkedIn to join them on their journey to ‘empower people and organizations’ throughout the world. “Just as we have changed the way the world connects to opportunity, this relationship with Microsoft, and the combination of their cloud and LinkedIn‘s network, now gives us a chance to also change the way the world works.” “For the last 13 years, we’ve been uniquely positioned to connect professionals to make them more productive and successful, and I’m looking forward to leading our team through the next chapter of our story.” Read Weiner’s letter on the LinkedIn – Microsoft deal. (Weiner, 2016). LinkedIn’s vision to ‘create economic opportunity for every member of the global workforce through the ongoing development of the world’s first economic graph’ is ambitious, yet not impossible with over 400 million members in just 13 years. (LinkedIn, 2014) (Figure 1, Microsoft News Center, 2016).
LinkedIn’s acquisition by Microsoft can be seen as one which involves combining synergies that would ultimately would help develop new businesses. In this approach, Microsoft would use LinkedIn’s technology and integrate it in its software to provide their users the ‘ultimate professional experience’. Although this is speculated to be a reason for the acquisition, analysts find it hard to imagine the deal to be purely a ‘blend of businesses’ since Microsoft paid $9 billion premium (which is over LinkedIn’s market value).
Another reason why this acquisition may not seem to be a simple ‘mixing of synergies’ is due to Microsoft’s previous fail with a similar approach with Nokia. While the 2014 Nokia acquisition was initially made to add value to Microsoft’s services, the deal is perceived as a failure since after a year of making the deal, Microsoft wrote off Nokia for $7.6 billion (which is more than what it paid the phone business for – $7.2 billion). In 2015 Microsoft announced 7,800 job cuts and Satya Nadella stated that Microsoft was restructuring, further adding to his statement “Microsoft devices will spark innovation, create new categories and generate opportunity for the Windows ecosystem more broadly. Our reinvention will be centered on creating mobility of experiences across the entire device family including phones.” (Warren, 2015).
Another acquisition model that would make better sense is an integration of strategic mix with the private equity model. This deal would have the same benefits as combined synergies in addition to pumping business with resources and possibly, sell it high in the future. A better comparison to this type of acquisition is the ‘Google model’ also known as the ‘Alphabet model’. In this type of acquisition, the company evaluates businesses with potential, acquires them with the purpose to nurture them and at the same time let them run independently. If this merger is Microsoft’s way to follow Google, then LinkedIn is the first step towards Microsoft’s own ‘alphabet’. (Gomes-Casseres, 2016). The parent company would have numerous businesses, independently running yet a part of the same mission.
When the Microsoft’s acquisition of LinkedIn was announced, senior analysts and industry experts saw this move as a failure. One of them was Roger L. Martin, who in his Harvard Business Review article explicitly states that “Companies that focus on what they are going to get from an acquisition are less likely to succeed than those that focus on what they have to give it.” According to him a staggering ‘70%-90% of acquisitions turn out to be abysmal failures.’ (Martin, 2016). The question that everyone seems to asking is
‘What would Microsoft benefit from acquiring LinkedIn? ‘How would LinkedIn benefit from Microsoft after the acquisition?’
There could be two possible significant reasons for an acquisition of this magnitude. First, to provide the acquired business increased growth capital, second, to overlook the management and provide valuable skills wherever required. This transfer of rich resources and sharing capabilities between businesses is a risk for both to make a collaborative effort to deliver better services and products. But since Microsoft said that “LinkedIn will retain its distinct brand, culture, and independence”, it is better understood that overlooking LinkedIn’s management is not on Microsoft’s list. (Frick, 2016)
Microsoft has an established market presence and is also one of the top companies with the highest spend in the research and development (R&D) department. Another part of Microsoft, fully dedicated to conduct research in top universities across the globe is called Microsoft Research. Focusing on their users overall professional development, one of the many companies LinkedIn acquired called lynda.com is an online learning platform to help teach people business and technology skills. Both Microsoft and LinkedIn merged as one could encourage participation by professionals and help leverage user engagement. (Figure 2, Warren, 2016) The target segment for both LinkedIn and Microsoft include a majority of career-oriented digital enthusiasts. This list includes students, young professionals, executives and company employees. Microsoft has a reputation to create innovative technologies, having introduced products like Xbox 360 and Skype translator in the recent years. (Casey & Hackett, 2014).
If Microsoft has stood the test of time, LinkedIn stands as the dominant professional networking platform today, having acquired several hundreds of million users within a span of a couple of years. There is a visible growth in IoT (Internet of Things) market giving way to the growing mobile application servers. This fits with LinkedIn’s focus on its mobile presence with its recent year-on-year increase at a rate of 49%. (Microsoft News Center, 2016) Other major opportunities include introducing Microsoft users to their cloud computing services integrated with the LinkedIn platform. Microsoft can help organize the large LinkedIn database in a revolutionary way by converting them into ‘data products’ and selling them to members, recruiters and universities. (Davenport, 2016) Having said that, Microsoft and LinkedIn have had their share of legal issues where the latter even faced data privacy violations. Both these giants face extreme competition and with their ongoing legal proceedings, they may invite government regulatory laws.
Another point to ponder over is how these very two distinct company cultures are going to co-exist post-merger. While one has aged decades and stands as a bureaucratic giant, the other is young, energetic and constantly innovating. Not to insinuate that post-merger ‘culture-fit’ would be the number 1 problem between the companies but acquisitions where office cultures prove compatible have noticeably been more successful. (Knilans, 2009). Although most of LinkedIn’s revenue is generated from advertisements and selling subscriptions to corporate recruiters, pushing organic content creation on its platform is one of reasons why 100 million people visit LinkedIn pages each month.
LinkedIn is emerging as a hub for content.
People turn to LinkedIn for opinionated articles from influencers, company executives and experts, applauded journalists and multinational companies. In addition to using LinkedIn to get bigger reach in terms of social networking services and professional content, Microsoft will use LinkedIn’s social graph as an integrated selling tool alongside its existing CRM products. (Lunden, 2016). While the competition in the market is fierce, having merged into one force, the companies have notably become more powerful from what they were. (LinkedIn Corporation SWOT Analysis, 2016, pp. 4; Microsoft Corporation SWOT Analysis, 2016, pp. 4)
In their interview (Nadella & Weiner, 2016), both Satya and Jeff talk about how the merger would help them create an individual’s ‘entire professional experience’, transforming careers worldwide. The possibilities are endless with Microsoft delivering its users with the latest software technology with a choice to be a part of the world’s largest professional network. Having acquired intelligent businesses in the past couple years, Microsoft seems to be planning a huge comeback with its most recent purchase. Although Microsoft has bought Nokia’s Devices and Services division (only the smartphone department in Nokia), there is a possibility they join hands with Nokia’s Technology department in the future which is currently working on introducing the world to a ‘new era of communication’ through 5G. (Nokia Networks, 2016). LinkedIn, the world’s most influential, specialised, highly read, constantly-updated digital media companies (Feller, 2016; Figure 3, Gershbein, 2016) can play a strategic role in this comeback and help reposition Microsoft.
As on early 2016, there are about 87 million millennials on LinkedIn (LinkedIn Marketing Solutions, 2016) who spend 18 hours a day consuming media (Taylor, 2014). These numbers signify a surge in the need access this content from anywhere (read: mobility) and satisfy the need for immediacy of information. As social networking takes over our personal and professional lives, connecting online will be as vital as face-to-face meetings. Microsoft will attempt to transform our online experience into something more valuable through measurable reach and influence. If LinkedIn manages to retain its independence and continue to engage its audiences whilst under Microsoft’s years of wisdom, LinkedIn could change Microsoft’s history with acquisitions.
At this point, LinkedIn’s abilities to connect the world with every professional and Microsoft’s mission to empower each and every person through their services can be critically analysed as an attempt to outdo increasing competition in the industry. The risk of reputation lies with both, as both brands have earned significant value over the years. With the introduction of smartphones using Microsoft and Nokia’s technology in the near future, Microsoft’s relationship with LinkedIn will be tested.
This case study was first put together as a part of my coursework for master of marketing communications at the University of Melbourne.