Sizmek: Organization of the Day

Sizmek: Organization of the Day

sizmek-slider

By: Sarah Sackett

MBA 617: Organizational Theory

March 13, 2015


Table of Contents

  1. Company Overview

  2. Current Changes

  3. Problem

  4. Critical Evaluation and Recommendations

  5. Conclusion 

  6. References

  7. Appendix 


Company Overview

The Organization
who

Their pitch:

“About Sizmek
Come on in. The door is open. 

Sizmek fuels digital advertising campaigns for advertisers and agencies around the world with the most cutting-edge technology to engage audiences across any screen. For the last 15 years, Sizmek has proudly pioneered industry firsts in digital, including rich media, video and online targeted advertising across channels. Just to name a few.

Today, our open ad management stack provides all the sophistication for the most creative and impactful multiscreen digital campaigns: across mobile, display, rich media, video and social. Radiating throughout the Sizmek MDX platform is a data engine so powerful, it defies imagination. The result: previously unimaginable levels of campaign optimization and targeting across creative, media, audience and context.”

Sizmek Inc. (Sizmek) is a global company that has been around for 15 years yet just recently spun off Digital Generation Inc. (DG). DG sold off their television department and spun off to an online company with no debt (Joe 2014). Sizmek does online advertising management via a variety of services.  This spin off has kept Sizmek in the market sector of consumer discretionary but moved Sizmek into a single industry: advertising agencies – though they do deal a lot with technology. They break down their customers into three main categories: advertisers, agencies, and publishers.

 clients

Sizmek is represented in 48 countries yet has run campaigns in over 70. Their regions are brokenCapture4 down into: North America; Europe, Middle East, and Africa; Asia Pacific; Latin America. Each of these regions have a number of offices. The list of these locations can be found in Appendix A.

According to Yahoo Finance their main competitors include private companies: Razorfish LLC, Dentsu Inc., and R/GA Media Group, Inc. and public companies: Publicis Groupe SA and Omnicom Group Inc. The majority of these competitors are a lot bigger. Omnicom has a market cap of 19 billion, enterprise value of 21 billion, revenue of 15.32 billion, and 246 million shares outstanding. Publicis has an enterprise value of 15 billion and revenue at 7 billion – market cap and shares outstanding values were unavailable. Compare that to Sizmek who has a market cap at 237.96 million, enterprise value of 154 million, revenue at 170 million, and 30 million shares outstanding. The industry in general claims a market cap at 260 million and 166 million in revenue. Compared to the industry Sizmek is right where they should be, however compared to top competitors, Sizmek is quite small. More on the environment surrounding Sizmek and of Sizmek can be found at the Environmental Complexity post. The strengths, weaknesses, opportunities, and threats can be found at the SWOT post.

Capture6

The People

As Sizmek is a public company they have a board of directors (Appendix B). The CEO is on the board, but also answers to the board. The executive team is made up of the CEO – who is the head, a Chief Financial Officer, Chief Marketing Officer, Chief Technology Officer, Chief Revenue Officer, SVP Global Operations, and SVP Strategic Business Development. Answering to the CEO is also General Counsel and Human Resources. The organizational chart for this global team is Appendix C. “Sizmek has a structure that breaks down by function” – according to HR lead at the New York Office, Jessica. Each region then has a lead for each department and then each location has a head (Appendix D). I would say the structure that fits Sizmek the most closely is the global matrix structure with functional grouping. Globally there are 900 total employees – which is a small number compared to their competitors who have around 70,000.

The website portrays a sleek company with a fun innovative atmosphere. Majority of their job descriptions include a lot of interesting adjectives such as radiating, unimaginable, and impactful. Their press includes articles of employees giving back to the community – such as the gentleman who . There was no clear value/mission statement on the website. The text defines culture as “the set of values, norms, guiding beliefs, and understandings that is shared by members of an organization and taught to new members as the correct way to thing, feel, and behave (Daft, 374). Sizmek starts all of their job descriptions with the beginning quote. To me this portrays a culture of new edge, true marketing atmosphere, creative and fun yet with high performance expectations. Based on a variety of press releases, job descriptions, and the website I am inclined to say that Sizmek has a clan culture. The external environment is anything but stable as technology and the needs of clients is always changing. However they encourage and expect high involvement from their employees. They have a compensation committee that decided on bonuses and taking care of their executives. I would like to assume that the executives then did this for the lower employees as well (for those that it is stated in their contract).

The Offerings

Capture5Capture

“Online ad serving technologies can be broken into three categories: distribution technologies that deliver the creative content to the user, analysis technologies that provide reports to advertisers and agencies about their campaigns, and logic technologies that bring all of these functions together and control the process.” – according to Sizmek’s 10-K report. One of their biggest products is the Sizmek MDX. This is a platform that combines all of this so that the customer can manage multi-screen advertising campaigns. Their offerings empower their clients to better manage their online advertising to a wider base with a more consistent quality.

Capture1

Current Changes

The spin off was a recent occurrence so I am sure time is needed to iron out what it means for Sizmek to be an independent, global company. Sizmek recognizes that data, technology, and trends are all key in their industry. They claim in their 10-K:  “Moving forward, our key strategic initiatives include:

  • enhancing our HTML5 and cross device capabilities to ensure our formats work and we can measure delivery across all devices (including devices that don’t support cookies) and channels (including programmatic bought inventory and exchange bought inventory);
  • developing our data collection and processing infrastructure for targeting and multi-touch attribution;
  • increasing the compatibility between the Sizmek MDX platform and other companies in the advertising ecosystem to improve workflows and syndicate more data; and
  • extending our global platform and service capabilities into emerging markets.

All of these will entail some change.

There does not seem to be any upcoming changes in their top management though they are looking for a variety of new managers in different locations. While this shouldn’t involve too much change for the company overall – there could be a catalyst in those who will be employed.

DG had too much debt and revenues were a concern for Sizmek. Therefore Sizmek created the role: Chief Revenue Officer. Liz Ritzcovan took the position and should help increase solutions and sales – as she has done for her past employers (Sizmek 2014). She started in December 2014 so change may be in the air with what she proposes.

Sizmek appears to be a solid business, with many impressive offerings and customers. Their product MDX platform should continue to succeed and improve. If they can grow and keep up with the times Sizmek should be very successful.

Problem

Sizmek needs to grow and maintain a competitive advantage in order to remain relevant in the industry.

Critical Evaluation and Recommendations

In order to truly compete in their chosen industry, Sizmek needs to grow, stay ahead of the trends in online marketing and technology, as well as consider changing/adding a way to do business.

Sizmek realizes their need to grow – as previously stated in their 10-K forward looking strategies. Emerging markets are a great place for them to expand. Geographical expansion is a solid place to grow. According to Investopedia “Emerging markets generally do not have the level of market efficiency and strict standards in accounting and securities regulation to be on par with advanced economies (such as the United States, Europe and Japan), but emerging markets will typically have a physical financial infrastrucustcture including banks, a stock exchange and a unified currency”. This will expand them geographically and introduce them to new clients.  I would recommend also expanding their current client base. They have some big names as their clients – if they can keep adding those big names as well as up and coming big names their revenue can continue to grow. By enlarging these areas the can become more of a competitor to firms such as Omnicom. cust2

They currently have an R&D base in their Israel office  with support from other locations (according to Jessica,  the head of HR in the NY office). I would recommend that they increase their R&D as much as possible. They claim (as seen in the beginning quote) to have “cutting edge technology”, “industry firsts”, “most creative and impactful” campaigns, etc. For this to continue they need to keep an eye on the market, customer needs/wants, technology, and trends. Their MDX platform is a competitive advantage but it needs to continually improve. Having a larger R&D department can help this occur.

Finally, I would recommend either changing or at least adding a continuous revenue stream. Currently, if I understand their 10-K correctly, majority of their clients are one time customers with the option to retain Sizmek. I would encourage them to set up something similar to a subscription and/or incentive program. Their 10-K says that their business is seasonal with the best sales during the 4th quarter. It would be beneficial to keep 4th quarter sales high but also increase the 1-3 quarters revenue. An incentive program or subscription system would bring in revenue on a more regular basis – and not always in one large sum.

Conclusion

Sizmek is a successful organization with a lot of potential. They are a firm in the advertising agency industry that specializes in digital marketing campaign management. Their MDX platform continues to improve and meet clients’ and the markets’ needs. Their revenues have grown and should continue to do so annually. While smaller than some of their competitors they still have a good market share. In order to remain a lead in this industry Sizmek needs to continue to expand, both in clients and locations. They also need to advance with (or better yet ahead of) technology and marketing trends. In addition I would recommend them finding some way to maintain a consistent revenue stream – so that they can support both their expansion and R&D. This is possible in a variety of ways, two of which I recommended being a subscription offering and incentive plan. Sizmek. See and Be Seen.

References

About Sizmek. (2014). Retrieved March 13, 2015, from http://www.sizmek.com/about-us/meet-sizmek

Daft, R. L. (2010). Organization Theory and Design (10. ed.). Mason, OH: South-Western Cengage Learning.

Jessica.  (2015). Phone interview with Sizmek Head of Human Resources, New York, NY.

Joe, R. (2014, February 6). DG Sizes Down And Rebrands As Sizmek. Retrieved March 13, 2015, from http://adexchanger.com/omnichannel-2/dgs-sizmek-rebrand/

Sizmek 10-K. (2014, March 14). Retrieved March 13, 2015, from http://www.sec.gov/Archives/edgar/data/1591877/000104746914002422/a2218618z10-k.htm

Sizmek Announces Board of Directors. (2014, February 18). Retrieved March 13, 2015, from http://www.sizmek.com/about-us/press_detail/sizmek-announces-board-of-directors

Sizmek Appoints Media Expert Liz Ritzcovan as Global Chief Revenue Officer. (2014, December 11). Retrieved March 13, 2015, from http://www.sizmek.com/about-us/press_detail/sizmek-appoints-media-expert-liz-ritzcovan-as-global-chief-revenue-officer

Sizmek Inc. (szmk). (2015, March 13). Retrieved March 13, 2015, from http://finance.yahoo.com/q?s=szmk&fr=uh3_finance_web&uhb=uhb2

Sizmek Inc (SZMK) Revenue. (2015, January 1). Retrieved March 13, 2015, from http://www.gurufocus.com/term/Revenue/SZMK/Revenue/Sizmek+Inc

Sizmek Offices. (2014). Retrieved March 13, 2015, from http://www.sizmek.com/about-us/offices

Sources with no clear way to cite:

Bloomberg terminal

http://www.sec.gov/Archives/edgar/data/1591877/000104746914002422/a2218618z10-k.htm

file:///C:/Users/smsackett/Downloads/SZMK_Investor_Deck_March%202015.pdf

Appendix

Appendix A: Sizmek Locations

locations

Appendix B: Board of Directors

board

Appendix C: Organizational Chart

Sizmek_top management

Appendix D: Organizational Chart 2

Sizmek_regional

Appendix E: Word document with correct formatting

Sackett_MBA 617_Sizmek Case1

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