Naouri’s path to the top at Publicis leaves Pinder stranded

March 31, 2011

This week, a famous media-oriented company, family-built yet globally traded, publicly acknowledged its succession strategy. No, it’s not NewsCorp I’m talking of here (though it certainly fits the description), but Publicis Groupe.

It seems that my tentative question of over a year ago – Will Jean-Yves Naouri be the next ceo of Publicis Groupe? – has been strongly answered in the affirmative.

Little alternative interpretation can be placed on Groupe CEO Maurice Lévy’s statement to the Financial Times that Naouri “is clearly in a leading position for winning the race” to taking over as chief executive when he himself departs in “a few more years.”

As it happens, Publicis insiders have long since been placing their bets on Naouri, albeit with a few reservations about his candidature. Like any leader-in-waiting, Naouri has gradually been acquiring the instruments of power. He’s on the Groupe senior management board, he’s its chief operating officer and, thanks to his reputation as an experienced trouble-shooter, he’s been given “special powers” to shore up Publicis’ strategic weakness (relatively speaking) in China.

However, what marks out his transition from heir presumptive to heir apparent is the decision to install him as executive chairman of Publicis Worldwide. This really is entrusting the heir with the crown jewels. It means putting Naouri very much in the public eye, by letting him run a high-profile creative network.

Not any high-profile creative network, either. It is the Groupe’s flagship – quintessentially Gallic yet global – and very much Lévy’s personal fiefdom.

That is certainly one explanation for why, under first Rick Bendel and then Richard Pinder, it has effectively been run by chief operating officers rather than a formal CEO. In effect, it didn’t need one, since Lévy kept a watchful but fatherly eye on its activities.

Publicis has, of course, been here before. In 2006, Lévy poached Olivier Fleurot, a former FT Group chief executive, as executive chairman of the creative network, at the same time that Pinder was brought in as COO. Then, as now, the honorific appointment gave rise to speculation that Lévy was grooming his successor. However, by Spring 2009 Fleurot had moved off the boil (or at least off the board): to head the holding company’s PR operations, leaving Pinder soldiering on alone at Publicis Worldwide – with effective responsibility for the network, but not full empowerment.

This being so, it is understandable why Pinder should choose to quit now. Being British in a top French company is not quite the barrier to top-flight promotion it might appear at first sight – as David Jones’ recent elevation at Havas Groupe demonstrates. Even so, the odds on Pinder being further promoted – despite his successful 5-year tenure at Publicis Worldwide – seemed remote. In effect, the appointment of Naouri was the coup de grâce to his career advancement. It’s a loss for Publicis, too, because the relentlessly itinerant Pinder gave the network a genuinely cosmopolitan aura.

As far as I can make out, the parting has been amicable enough: Lévy appears to have been keen for Pinder to stay on; and was financially generous when it became apparent he would not. Pinder seems to have a clear idea of what he wants to do next, though what that is I do not know.

Anyway, back to Naouri. Is there any reason to suppose that he may suffer the same fate as Fleurot? Not really. For one thing, time is pressing in a way it was not back in 2006. Lévy is now in “extra time” as group CEO, and shareholders will want a definitive solution sooner rather than later. True, Naouri still has to be anointed by the most important shareholder of them all, Elisabeth Badinter (daughter of Publicis’ founder and the single-biggest stakeholder). But that’s beginning to seem more and more a formality as the alternatives ebb away. The job is now Naouri’s to lose, not someone else’s to win.

The more interesting question is: what will happen to Lévy himself when Naouri is formally given the top job. Will he really retire?

As a candidate, Naouri certainly ticks many boxes. He comes from the right French social and educational background. His relationship with Dominique Strauss-Kahn could be invaluable, should the current managing director of the IMF ever run for president (polls indicate he would beat Nicolas Sarkozy). But charismatic he is not.

The possibility therefore exists that Lévy might be asked to stay on in some capacity. Perhaps as lifetime president.

Facebook drives soaring digital ad expenditure

March 29, 2011

Recession, what recession? None at all where expenditure on digital advertising is concerned. After the merest hint of a stutter the year before last, the engine of growth has surged to new heights of performance. Annual spend is up nearly 13% according to the latest, and much awaited, biannual study by the Internet Advertising Bureau and PwC. That’s close to double the rate of recovery in the rest of UK media spend (7.2%) over the same period.

The easiest way to grasp the overall significance of the survey’s data – which is rich to the point of indigestion in statistics and trends – is to remember the 3 Quarters.

One quarter of all UK media spend – or £4.1bn – now goes online. That makes it nearly, but not quite, the biggest medium. Television remains ahead by a whisker (26% versus 25%), but is likely to experience slower growth. You can draw your own conclusions about what is happening to press and the rest.

One quarter of that £4.1bn (£945m precisely) is now spent on display. Search is still dominant (57%), but is enjoying a growth rate of “only” 8%. IAB chief executive Guy Phillipson attributes the power of digital display to 3 underlying factors: the general recovery in advertising confidence during 2010;  more importantly, “the power of online to build brands” (an issue which has held it back in the past); and faster and more reliable broadband delivery, which has helped to stimulate video streaming.

One quarter of all time spent online in the UK is dedicated to social media, of which by far the largest component is Facebook. According to ComScore, cited in NMA, the social network accounted for 81.6bn page impressions in Q4, 2010 alone. More than anything else, we could speculate, it is Facebook – with its enviable reach, dwell time, and video opportunities – which has given advertisers the confidence to plunge into online display in such a committed way.

Two other accelerants of growth are worth noting. First, packaged goods companies, for long sceptical about dipping their toes in the digital pond, are now within the top three digital online spending categories, outgunned only by finance and entertainment and media.

Second, mobile advertising budgets more than doubled (116%) last year to reach £83m. That may still be a small figure, compared with the online total, but it demonstrates beyond doubt advertiser confidence in smart phone platforms. While on this subject, a report just out from US consultants Borrell Associates identifies mobile as the key revenue driver in the internet’s most hotly contested battlefield, “local” (see Groupon, Craigslist etc).

For more on the IAB survey, check out its website.

Would you put this orange muppet in charge of your brand?

March 25, 2011

How edgy should your social media strategy be? Bland and corporate is bad: no one looks at the viral or reads the tweets. But step over the line and you become a social laughing stock, shortly before your agency becomes redundant.

Readers will recall the notorious case of Coca-Cola and the Dr Pepper pornographic movie episode on Facebook (it’s here if you don’t). Which proved disastrous for its social media agency, Lean Mean Fighting Machine (sacked ignominiously from the Coke Zero account as well as Dr Pepper).

More recently, the risks have been highlighted by a couple of episodes over at Motown. Chrysler sacked its social media agency, New Media Strategies, after one of its employees “inadvertently” tweeted from the @ChryslerAutos account: “I find it ironic that Detroit is known as the #motorcity and yet no one here knows how to fucking drive.”  It seems pretty rough justice at first sight: agency and employee victims of hypocritical puritanism. By way of explanation, Chrysler Communications staffer Ed Garsten noted shortly afterwards: “The tweet denigrated drivers in Detroit and used the fully spelled-out F-word. It was obviously meant to be posted on the person’s personal Twitter account, and not the Chrysler Brand account where it appeared. So why were we so sensitive? That commercial featuring the Chrysler 200, Eminem and the City of Detroit wasn’t just an act of salesmanship. This company is committed to promoting Detroit and its hard-working people.” That bad, eh?

How interesting, then, that Ford should put a lecherous, politically incorrect puppet, suffering from attention deficit hyperactivity disorder, behind the steering wheel of its Ford Focus US launch. Admittedly Doug – a kind of Kermit with jaundice – hasn’t used the F-word (at least, not yet) or denigrated the good people of Detroit. But he does spend a good deal of his time making a mockery of stuffy Ford executives, and doesn’t have much regard for any social conventions. So far, he’s steered the right side of edgy, “post-modern” humour (though I wonder how many of the people who like the virals would ever buy a new Focus – it’s a $17,000 car, for God’s sake, not a pair of jeans). But he’s definitely a loose cannon. How long before Doug overdoes it and simply becomes a tiresome distraction? The ultimate star, after all, is always the product.

Sorrell’s slap on the back for George Osborne

March 24, 2011

What a felicitous endorsement. Chancellor of the Exchequer George Osborne had no sooner erected his “Open for Business” sign than in stepped his first customer: none other than Sir Martin Sorrell, chief executive of the world’s largest marketing services company, WPP. Where Sir Martin treads, other multinationals will follow in droves – or so Osborne piously hopes. It’s the crystal in the copper sulphate solution, the grit in the oyster – the first serious step towards reflating the economy, just in time for the next General Election in 4 years’ time.

So why has Sir Martin become one of George’s best buddies, exactly? Corporation tax: the salivating prospect of paying a lot less of it. In political circles, it’s a matter of some national embarrassment that one of Britain’s biggest and most successful companies isn’t British at all, any more. Since 2008 it’s been Irish. And all because Dublin has been warm and inviting, with the most enticing corporate tax regime in Europe; while Britain’s had become one of the most hostile, with increasingly uncompetitive tax rates and, more ominously, a piratical approach to profits earned outside our territorial waters.

But no longer. Thanks to the Budget, all that onerous tax is a thing of the past. Rates will come down by 5% in 4 years to 23%, making Britain once more the cheapest place to do business in Europe. And Osborne has simultaneously promised to reform those punitive overseas levies as well. A cagey Sir Martin says he’ll wait to see the legislation enacted, but we can be pretty certain – judging from his chipper performance on the Today programme this morning – that it’s all over bar the WPP board meeting plus assent from its shareholders.

And, frankly, that’s a formality. Ireland’s once unbeatable welcome pack now looks a will o’ the wisp. Corporate tax rates will soon soar – a quid pro quo to the European Central Bank’s bail-out of its economy (which in any case looks poleaxed for years to come). The fair-weather corporate friends can’t wait to get out: it’s not just WPP; media company UBM is also packing its bags. Besides, all those flights, just to attend a meeting over the water…the tedium, the expense.

Don’t tell George, though. He thinks Martin’s doing him a big favour. It must be worth a peerage at some point. Or, at very least, the Conservative Party advertising account. Services to British industry, and all that.

Is the Neural Network the answer to McCann’s prayers?

March 22, 2011

You may not think there is much of a connection between a new car launch and what young McCann Erickson advertising executives get up to in a night-club.

But to Lee Daley, McCann Worldwide’s global chief strategy officer, making connections like that is fundamental to a new way of unlocking his agency’s intellectual assets, providing effective consumer insights at a fraction of their normal cost and repositioning the McCann name at the same time.

McCann has always been awarded penalty points in the agency world because of its sheer size. Its machine-like reputation probably dates back to a period of acquisition megalomania in the early sixties, when the agency was under the stewardship of Marion Harper. Result: it is valued for the sophistication of its global services and its account management skills, but rarely for its creative thinking.

In fact, this reputation is somewhat misleading. In the fifties, McCann was highly regarded for the quality of its consumer insights. Through Herta Herzog, director of creative research, it became high-priest to the mysteries of motivational psychology, the then voguish domain of Dr Ernest Dichter and the School of Motivational Research. It powerfully influenced the thinking of one Vance Packard, author of the Hidden Persuaders (1957).

In a sense, Daley is tapping into that “smarts” tradition. But his focus is on unlocking the hidden talents of McCann’s staff and thereby turning a perceived disadvantage, McCann’s cumbersome size, into an asset. “In a way, it’s simply a numbers game,” he tells me. “McCann has 22,000 employees worldwide. That’s a massive talent pool, but it’s fair to say we haven’t always exploited that creatively, partly because of our brand image. Compare that with so-called creative agencies, Wieden & Kennedy, Mother or whatever. Full of talent, no doubt, but a fraction of our pool.”

Ah yes, but how exactly does he intend to release that pent-up intellectual capital, and to what end, exactly? The answer is something called the Neural Network, a project Daly has been working on for about 5 years – and which now involves some 8,000 of McCann’s employees.

Expressed simply, NN is a kind of internalised social media platform (although Daly recoils in horror from the suggestion that it is Facebook for McCann). It builds up a profile which matches every employee’s formal status in the organisation with their private interests and areas of specialism outside their current expertise. It encourages the setting-up of special interest communities and dialogue between their members.

The advantages are clear. It’s a levelling tool in an hierarchical organisation, which can be used by management as a kind of crowd-sourcing resource or virtual pitch team. Also reasonable to assume, judging from the number of people who have volunteered to join the database: it’s quite motivating for staff – for whom it may open up new career opportunities.

The challenges are equally clear: it’s a levelling tool in an hierarchical organisation, about which senior management must initially have had considerable misgivings. Without suitable controls, it could indeed become a kind of office Facebook. And even when exploited professionally, anarchy might ensue if senior managers were allowed carte blanche in appropriating extra resources via the Neural Network.

For this reason, all requests are carefully monitored by a group of senior executives called “Neural Network Gods”. In London, the key executive is group chief Chris Macdonald. Others include Daly himself and McCann Worldgroup CEO Nick Brien. The process of control is still being mapped out as the Neural Network is gradually extended to the other 14,000 Worldwide employees.

Equally important, from Daly’s point of view, is the challenge of monetising ideas thrown up by the Neural Network as McCann’s intellectual property. As is well known in agency circles, ideas are what you give away in a pitch: it’s very difficult to patent them. Clients might well welcome the idea of a me-too Neural Network, persuade McCann to set it up, and then run off with it.

Daly has partly answered this problem by setting up a 3-year rolling contract with Santa Barbara-based IntroNetworks – the company that devised the software – which gives McCann exclusive licensing rights.

If other agencies want to jump on the NN bandwagon, they may of course do so. But they will have to build their own software, and that takes time. And time is what Daly hopes will give McCann its leading advantage.

Wanted: CMO of government to head son of COI

March 18, 2011

The COI is dead; long live the Government Communication Centre. That is the distilled recommendation from senior mandarin Matt Tee in his snappily titled ‘Review of Government Direct Communication and the Role of COI’, just published.

It may be a recommendation, and Tee himself may be about to depart for pastures new, but we can rest assured that his word has the force of writ. It’s all over for the COI, bar the quibbling. The rupture with past traditions going back to 1946 is so fundamental that only a rebrand, in Tee’s considered opinion, will do it justice.

So what exactly are the implications of Tee’s vision? The first is that the GCC will be smaller in size and scale of ambition than its predecessor. When fully set up in around 18 months’ time, it will have a staff of about 150, as opposed to the current complement of 450 (after 40% cuts). It will be more strategic and more confined in its role, but this should not necessarily be interpreted as “less powerful”. On the contrary, Tee intends to strip power not from the centre, but from communications divisions within separate departments of state (or feuding baronies, as they are sometimes known). Part of this realignment is driven by a pledge (frankly avowed) to bring down the deficit: so expect plenty more redundancies in various communications departments in the coming months. But the over-arching idea is a better, joined-up, communications programme, more economically expressed, which will rid government of substantial duplication in the way it puts out messages. In other words, the programme will be theme-led rather than departmentally-led. And the messages will be “brigaded” around the GCC, which will act as ringmaster rather than as a trading centre.

What’s interesting is just how few of these master “themes” there will be: six in all. Even if this figure is more arbitrary than it appears (why not five, or nine?) it signifies a massive compression of the existing direct communication service – not to mention a great deal more command and control from the centre. Indeed, Tee makes it crystal clear that less will mean more: more effectiveness “through better evaluation and insight”; and relentless focus “on value for money and return on marketing investment”. The thinking is that, by 2013 at the latest, all existing departmental communications executives (excluding press and internal comms) will be pooled into something called the Government Communication Network (GCN), which in turn will pour nearly 500 into the 6 theme teams and a further 150 into GCC. The remainder (estimated at about 1300 personnel) are likely to find themselves surplus to requirements.

Superficially, all this looks unpromising for the marketing services community, for whom COI spend was long a gravy train. There has been an increasingly bleak assumption across the industry that government would attempt to saddle the private sector (agencies and brand owners) with a growing burden, under the guise of pro bono collaboration, in place of the healthy income stream to which agencies, at any rate, have hitherto been accustomed.

In fact, Tee has been highly pragmatic about the role of paid-for communication. For one thing, he has junked the hated US Ad Council concept, touted late last year. Had this prevailed, ad agencies and media owners would have been expected to contribute their wares free of charge: Tee reckons this is simply “not workable, nor desirable”. Instead, communication will be divided into a tripartite framework: pro bono; collaborative; and fully paid-for. In place of the Ad Council is a boiled-down Common Good Communication Council, “facilitated” (and presumably financially underwritten in some way) by government, dealing with such public information topics as “literacy” or “road safety”. Then, a stage up: partnerships with like-minded commercial and civic organisations (Green issues and obesity are cited; business4life comes to mind). And finally, and wholly financed by taxpayers’ money, government-only issues, such as recruitment to the armed forces or taxation.

Similarly, paid-for media will survive, although buyers and planners now have to demonstrate good reason for elbowing aside placement on government-owned assets (websites; poster sites on government buildings; Directgov etc), which the report estimates to be worth £50m a year in media value.

There’s even some unequivocally good news, for those – at least – involved in digital communications: Tee thinks the government doesn’t do enough of it.  “My conclusion is that government should make greater use of digital channels in direct communication and that digital considerations should be built into all communication activity from the start,” he says.

Last but not least, now that COI ceo Mark Lund has decided to move on, who will be running the new organisation and how much power will he or she wield?

Despite the anticipated shrinkage in budget, the new executive director (ceo) will in some ways be more powerful than any COI predecessor. Not only will the GCC act as an “intelligent gateway”, with a veto on all government marketing and advertising spend over £100,000, its chief executive will also be closer to the heart of government. The ceo will sit on a cabinet sub-committee, chaired by the minister for the cabinet office (currently Francis Maude) and will also be charged with producing a marketing strategy for government at the beginning of each parliament.

An insider tells me: “What we’re talking about here is a CMO for government. Who could fill the role? Well, the brief is going to require very careful construction. The job won’t automatically go to an agency or business person. Obviously, sophisticated political skills are required. But the centre of gravity should lie in marketing. Experience of large and complex marketing operations is the vital pre-requisite. And it’s clear you’re not going to get those kind of skills in the public sector, are you?”

Along with a new executive director, the government will also be recruiting a Government Oversight Panel consisting of “three people who have experience of and high credibility in the communications industry”. Their job will be to ensure GCC head remains up to snuff. It’s not dissimilar to the current COI non-exec role. So I would not be surprised to find the two present incumbents, Chris Wood chairman of Corporate Edge, and Simon Marquis, filling two of the seats. They would offer sensible continuity at a time of radical change. But who will be the third?

PS. Tee’s official title, Permanent Secretary for Government Communications at the Cabinet Office, will be abolished when he leaves this month. The COI/GCC project will thereafter be overseen by Emma Lochhead, HR Director at COI/Cabinet Office (Government Communications).

Brands get the better deal out of alcohol responsibility

March 15, 2011
The 6 health public interest organisations which abruptly withdrew from the government’s “responsibility deal” on alcohol appear to have thought they were pulling the rug from under health secretary Andrew Lansley’s love-in with industry. That’s certainly the implication of the timing of their announcement, which came 24 hours before Lansley unveiled pledges by 170 brands to support responsible drinking, eating, behaviour at work and in the home.

If that was their intention, they are sorely deceived; at least, in the short term. These public interest groups comprise sober-minded people: The Royal College of Physicians, the British Liver Trust, the British Association for the Study of the Liver, the Institute of Alcohol Studies, the British Medical Association and Alcohol Concern. Yet they have acted like children, throwing their toys out of the pram because they cannot get what they want.

Worse, the gesture politics have actually back-fired. They have left Lansley’s new brand buddies looking adult, mature, responsible (albeit ever so slightly smug). Achieving clear unit labelling on more than 80% per cent of alcoholic drinks by 2013 may seem a fairly nugatory achievement in the wider public health battle against binge drinking and youthful alcoholism. But at least it’s a positive headline.

Whereas, the strategy of the breakaway NGOs is simply dumbfounding. Either they were extremely naive, or extremely cynical, in subscribing to the “responsibility deal” in the first place. Naive if they thought Lansley was going to do anything other than sign a concordat with industry – in lieu of (as he himself expresses it) expensive and time-consuming legislative restrictions. Or cynical, if they knowingly signed up for a project in which they had no confidence, merely to scupper it at a politically sensitive moment.

Professor Sir Ian Gilmore, formerly president of the Royal College of Physicians – and one of the defectors’ most articulate spokesmen – put his finger on their dilemma nearly 6 months ago. He signed up to the alcohol responsibility deal network even though he was sceptical of a “meaningful convergence between the interests of the industry and public health, since the priority of the drinks industry was to make money for shareholders, while public health demanded a cut in consumption… On alcohol, there is undoubtedly a need for regulation on price, availability and marketing – and there is a risk that discussions will be deflected away from regulation that is likely to be effective but would affect sales.”

In fact, Lansley had made it clear right from the start that he wanted a voluntary, not a regulatory, approach; and that the pricing of alcohol as a regulatory consumption mechanism was not part of the deal’s terms of reference.

Quizzed yesterday on why the 6 had pulled out, Gilmore observed: “It is not acceptable for the drinks industry to drive the pace and direction that […] public health policy takes.”

That may seem like pique (and indeed it is), but it shrewdly hints at a wider problem facing Lansley and the Department of Health. In the short term, cosying up to industry during these times of austerity might seem a smart and pragmatic thing to do. In the longer run, however, the DoH cannot afford to alienate its core constituency, the medical profession.

As one industry insider put it: “The health lobby is now screaming from the sidelines with placards on its chest. That doesn’t serve the public health interest; and it doesn’t serve ours, either. To paraphrase President Johnson, we’d rather have them inside the tent than outside it.”

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