Publicis Groupe has forced its way into the top ranks of the world's leading marketing organisations through a string of canny and transformational acquisitions. Having learned painful lessons from a disastrous alliance with FCB during the 1990s, CEO Maurice Levy's acquisition of Saatchi & Saatchi in 2000 proved far more harmonious. Even more impressive was the agreed takeover of Leo Burnett two years later. Other jewels in the Publicis crown include multi-hub creative networks Bartle Bogle Hegarty, wholly owned since 2012, and Fallon. After a shaky start, Publicis has shown itself to be a worthy rival to established giants WPP and Omnicom. The group is especially strong in digital marketing. It acquired US-based Digitas in 2006, and broadened that network's footprint significantly. A deal to acquire rival digital agency Razorfish in 2009 allowed Publicis to overtake Interpublic as the world's third largest marketing services group. A series of further small and medium-sized acquisitions followed between 2010 and 2012, capped in July 2013 by what was intended to be CEO Maurice Levy's crowning glory, a transformational deal whereby Publicis and larger rival Omnicom would merge to create the world's #1 marketing services giant. Despite securing most regulatory approvals, the deal eventually foundered on disagreements over the final structure of a combined group and was called off in May 2014. Instead, Levy unveiled a new deal a few months later with an agreement to acquire digital group Sapient for $3.7bn. He finally announced his successor as CEO in early 2017, creative chief Arthur Sadoun.
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Adbrands Weekly Update 9th February 2017: Publicis Groupe's annual results announcement this morning contained, as usual, lots of grandiose self-descriptions like "exceptional strength" and "unique business model". However, it also contained a shock E527m loss for the year and a grim organic decline of 2.5% for the quarter. The latter figure was led by a horrendous 6.9% organic decline in North America and a 5.5% fall across developing markets. (Europe was up 5.1%). Despite all Maurice Levy's big promises over the past two years, this was a bad set of results. Most of the blame was pointed at weak performance Razorfish, but it's hard to believe that this alone was responsible for the whopping E1.4bn impairment charge taken against the whole Publicis Sapient digital division. A large part must surely come from the excessive $3.7bn Levy was prepared to pay for Sapient, which has yet to ignite group performance as promised. Publicis' full year revenues rose to E9.73bn (or around $10.8bn), a 3% increased on a reported basis but down 0.7% organic. It wasn't all bad news: stripping out the non-cash impairment, headline net income edged up 2% to just over E1.0bn, and this week also saw two major business gains by Publicis Media. However, it's quite clear that Arthur Sadoun has quite a task ahead of him to turn this ship around.
There was some compensation from two big media wins. Molson Coors wrapped up a global review of media, awarding the biggest prize to Publicis Groupe. Its MillerCoors division in the US, now wholly owned following the break-up of SABMiller, appointed a new dedicated unit of Publicis Media to manage the business, previously housed at Initiative. That marks a major gain for Publicis and an equally significant loss for Initiative, worth in excess of $400m in billings. Connect at Publicis Media will be headed by Americas CEO Tim Jones, and will be headquartered in Chicago. However, WPP's Kinetic will continue to oversee out-of-home media, while MEC was reappointed for Molson Coors Canada. In the UK, Publicis-owned Zenith was reappointed to the local business. Separately, it was also reported that the Groupe has captured Mattel's US media account, to be shared between MediaVest Spark and DigitasLBi. MediaVest had already held planning duties; buying moves from Mindshare.
Adbrands Weekly Update 2nd Feb 2017: As had been widely expected, Publicis Groupe confirmed Arthur Sadoun as its next CEO, only the third in its 90-year history. Maurice Levy will hand over the reins of the business on 1st June 2017, and will himself succeed controlling shareholder Elisabeth Badinter at that point as non-executive chair of the supervisory board. In a statement, Badinter warmly thanked Levy for his services over the 46 years since he first joined the company as an IT manager. In the 30 years since he became CEO, she noted "our headcount went from around 3,000 people to nearly 80,000; our revenue has multiplied by about 50 and our market capitalisation by close to 100." Publicis Media chief Steve King is also being elevated, and will join the group's four-person management board alongside Sadoun, CFO Jean-Michel Etienne and secretary general Anne-Gabrielle Heilbronner.
Adbrands Weekly Update 8th Dec 2016: Ad industry ethics came under the regulatory spotlight yet again this week following confirmation of an investigation by the US Justice Department into allegations that the major groups "rigged" new business pitches to favour their own inhouse production networks. According to evidence seen by the WSJ, selected unnamed agencies sought written cost estimates from independent production companies for work in order "to create a paper trail that justified to the advertiser its decision to award the project to an in-house facility, which provided a rival bid at a lower price". All the major groups now have their own inhouse global production networks, including WPP's Hogarth and Townhouse, Omnicom's eg+ and Publicis Groupe's Prodigious, as do many larger standalone agencies. Interpublic, Omnicom, WPP and Publicis all subsequently confirmed that certain unnamed subsidiary agencies had received subpoenas in connection with the investigation.
Adbrands Weekly Update 3rd Nov 2016: Former Starcom MediaVest chief and Publicis Groupe chief revenue officer Laura Desmond has officially stepped down from the group. She has been on a six-month sabbatical since June for family health reasons. "This sabbatical allowed me to consider where my greatest entrepreneurial and leadership opportunity existed," she said in a statement. "After thoughtful reflection and discussions with [Publicis CEO] Maurice [Levy] I have concluded this is the right step for me. I leave the Groupe with nothing but thanks and appreciation for the opportunities and support I’ve received throughout my career and during my leave." Chief strategy officer Rishad Tobaccowala, who had been managing Desmond's duties on an interim basis, will add them permanently to his portfolio.
Adbrands Weekly Update 20th Oct 2016: Publicis Groupe reported grim figures for 3Q. Organic growth for 3Q was a horrendous 0.2%, dragging down the YTD to 1.9%. Reported revenues slipped slightly year-on-year to E2.32bn. The weakest region was North America, down 4% organic in the wake of last year's "mediapalooza" review frenzy, and CEO Maurice Levy warned that 4Q results would be similarly affected. However, Asia Pacific was also down slightly, with the full impact of those two regions's declines offset by a solid 7.6% lift across Europe, and an even better 13.% (albeit from a low base) in Latin America. Levy promised that the benefits of the group's silo-busting "Power of One" reconfiguration would become evident in 2017.
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