Publicom and on and on and on

August 15, 2013

Maurice Levy, John WrenNearly three weeks on from the seismic news that Publicis Groupe and Omnicom are to merge and still no end in sight to the discussion of possible permutations.

Not, be it noted, among the clients involved – who are mostly too stunned, or too busy topping up their tans, to react – but within the industry trade press. At AdAge, the merger has virtually gained supplement status with a regularly updated online sidebar.

But pickings are increasingly thin, as the few facts to emerge shear into speculation. My current favourite ramification? Did Messrs Lévy and Wren not consider the impact of their merger on the industry’s premier creative and effectiveness award schemes? It seems they did not, with dire consequences for both the Cannes International Festival of Creativity holding company of the year award and its Effies equivalent. Alas, these hallowed categories, engineered with such care and precision over the past few years, may now be consigned to the scrapheap by the appearance of a juggernaut so colossal that it will  steam-roller any conceivable competition for the heretoafter. Quelle horreur!

Here’s one factoid that may be of more than passing interest. In the four weeks to August 12th, WPP was the only significant loser in market value within a sector that is generally on the upswing. Its shares shed 1.8% in value. I owe this pearl to Bob Willott, editor of Marketing Services Financial Intelligence, who speculates that the back-track reflects investment community anxiety that WPP may embark upon something big and silly as a riposte. In other words, a price-inflated mega-merger.

I doubt it, given that the only acquisition with appropriate critical mass would be Dentsu. Just think about it, but only for a nano-second. For once, Sir Martin Sorrell is likely to play a waiting game. The sole visible benefit of the Publicom merger to clients – in whose name such things are theoretically carried out – is consolidated media buying in North America. Of traditional media, that is. The very thing that may attract regulatory interest. “Big data”? Don’t make me laugh. It’s a smokescreen, though admittedly a trendy one. How much data, exactly, do Omnicom and Publicis own and farm compared to the specialists in the field (from Google downwards)? And, even supposing it were enough, how long will it take to merge the holding companies’ two very different platforms?

One other thing. Who is actually going to run the new show? There are an awful lot of chairmen, current and sequential – Bruce Crawford, Maurice Lévy and John Wren – but who is going to handle the grubby job of steering the global behemoth from day to day? A Frenchman does not seem likely (though a Frenchman handling the finances, that’s another matter) – because of a lack of global projection. Other than Lévy, the only French adman of global standing is, er, David Jones (well, he speaks fluent French and has a French wife). The natural choice might be Andrew Robertson, head of BBDO and indisputably a citizen of the world (he started off in Rhodesia). But maybe I’m in a minority of two on this. How’s your French, Andrew?

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Fallout from the Publicis/Omnicom merger

July 29, 2013

Richard PinderBy Richard Pinder

When first hearing the Publicis and Omnicom merger rumours you could have been forgiven for thinking it to be some silly season gossip.

But as we know POG is not a passing fancy, it is for real. Hats off to Maurice Levy who has consistently shown his ability to be daring, decisive and dynamic just when people least expect it.

So what drove it? And who are the winners and losers? First, two sets of observations:

The announcement was made in Paris, not New York. The Group will be called the Publicis Omnicom Group, not the Omnicom Publicis Group. The revenues of Publicis Groupe are some way below those of Omnicom Group though their market caps are much closer, but it will be a merger 50/50 owned by the two companies shareholders.
After the dust has settled and the merger is done, the silly co-CEO thing is finished with and the company starts to operate normally, the CEO will be John Wren, from Omnicom, the CFO likely to be Randy Weisenberger from Omnicom, the ticker marker on the NYSE will be OMC and largest market for the combined entity will be the USA.

Once the incredulity subsides, you can see the attraction to Maurice and John. And as the above simple summary shows, you can see the game that is being played by both to get the other to agree to the deal. The former gets to show the French establishment what world class really means, a brilliant retirement gig as non executive Chairman of the world’s number one advertising group and without having to go through with the charade of making good his oft delivered promise to Jean-Yves Naouri to be his successor. The latter, within 30 months, gets to run something nearly double the size of OMC today, in seriously good shape in Digital and Emerging Markets, the number one ad agency of the number one spending client in the world – P&G who had only just taken most of their business from OMC – and all without the pain and risk of taking the long road there.

For Elisabeth Badinter it’s a fabulous end to her tenure as Chair of Publicis – seeing the company her father founded in 1926 become number one globally, as well as securing the very strong valuation on her holding that today’s Publicis stock price provides. For a number of senior managers there will likely be the triggering of various unvested options, stock grants and other goodies, not to mention the special dividends, that will mean good will all round. So, off on the August vacances with a spring in their step? Well not everyone…

For a start there is precious little in the announcement about WHY this is better for clients. We can see it’s better for doing deals with the big media partners, old and new. Scale counts there. But when the bulk of the enterprise’s activity is still about finding, creating and executing inspirational ideas to motivate the world’s population to choose one brand over another brand, there is a point beyond which scale can actually be a disadvantage – talent feels lost, ideas get killed by people who have no idea what the clients’ needs are and everything takes too long and costs too much. Well that’s what a large number of large clients have been telling me this past two years since I left Paris as COO of Publicis Worldwide.

There is also the small matter of the $500m savings mooted in the announcement. Publicis Groupe runs lean. Margins are already industry best. So the chances of finding much of the savings there seem slim. It will be interesting to see how the board of BBDO reacts to the likely loss of their top tier international travel rights, or the agencies of DDB cope with tough bonus rules that tie every unit in the company to the performance of those around them, as happens at Leo Burnett or Publicis today.

As a footnote on the winners and losers, spare a thought for those who fought, lost and thought they had won in the long-running soap opera called Maurice Levy’s succession. Just as the game looked like it would soon be over, the sport got changed and everything was different.

It will also be fascinating to see what WPP do about this. They have got used to being the world’s largest and Sir Martin is rarely quiet for long on any topic, let alone one so close to home. Bookies will surely be giving poor odds on a shotgun WPP/IPG or WPP/Havas union.

And me? Well as client choice reduces, the need for new global alternatives will continue to increase. It’s why we started The House Worldwide and it’s why we think it will  be increasingly relevant to clients who want to get back to a world where the client and the brand are more important than the agent promoting it, and where the money is better off going to the talent than to the accountants counting it.

Bigger and smaller, that’s the future of the ad network game.

Richard Pinder is co-founder and CEO of The House International. He was formerly the head of Publicis Worldwide.

 


Emirates global account quandary as Strawberry Frog splits with Amsterdam

July 11, 2013

emirates46_460If what I hear is correct, Scott Goodson, chairman of micro-network Strawberry Frog, hasn’t been kissing enough princes lately.

The mercurial Goodson – famous for saying his agency wasn’t up for sale, while putting the finishing touches to a deal with PR group APCO – has had a bust-up with his Amsterdam agency, Media Catalyst. That’s Amsterdam agency number two. He also managed to alienate Amsterdam agency number one, headed by SF co-founder Brian Elliott, which now trades as Amsterdam Worldwide. And then he fell out with his Brazilian partner, Alexandre Peralta, of Peralta Sao Paulo – an agency that has gone on to rather greater achievement without him. So, there’s a bit of history to this kind of thing.

But I digress a little. The latest split is unusually serious, because SF Amsterdam/Media Catalyst is the lead agency for SF’s backbone client, Dubai-based Emirates Airline – one of the world’s largest. The Frogs won the account against considerable competition from the likes of BBDO and Grey, back in 2010. And what an account to win: lead agency for a global rebranding campaign worth (according to AdAge at any rate) $300m. This wasn’t just a feather in the cap, but full plumage for a small digitally-inspired creative boutique making its way in the world. Timely sticking plaster as well, given the above-mentioned ructions going on elsewhere in the organisation.

It’s important to point out that most of the credit for winning – and retaining – this account seems to have been down to Amsterdam CEO Hans Howarth, the majority shareholder in Media Catalyst. Goodson, with his habitual talent for self-publicity, owned about 30% of the agency from which he has now been ejected, but somehow managed to maximise most of the plaudits.

The Emirates brief was to turn the airline into an aspirant, lifestyle brand (isn’t one enough in the world?) and SF duly delivered with “Hello Tomorrow”, announced with great pizzazz last April by Sir Maurice Flanagan, executive vice chairman of Emirates Airline : “Our new corporate image and global marketing campaign both underline the confidence we have in our existing products and services, and the vision we have for the future growth of the airline. Emirates is not just offering a way to connect people from point A to point B but is the catalyst to connect people’s hopes, dreams and aspirations.” What this boils down to is getting a younger “audience” hooked on the brand by dextrous use of social media.

Only last month, Omnicom – in the guise of BBDO New York and Atmosphere Proximity – won Emirates North American business, against competition from WPP’s Grey and JWT. At the time, we were assured that the pitch would not in any way affect Strawberry Frog’s tenure of the global branding account. But that was before news of the split with Amsterdam broke. It would be surprising if some of these agencies’ biggest guns are not, at this very moment, on a Boeing 777 heading for Dubai airport. An Emirates one, naturally.

Where all this leaves SF – apart from picking up the pieces – is anyone’s guess.


HSBC’s £400m global review that never was

March 9, 2013

Chris Clark HSBCSo, what was all that about? HSBC’s group marketing director Chris Clark calls a review of the “£400m” (actually rather less these days) global account late last year. Well, not exactly a review. More a series of private meetings that happen to take in the incumbent agency’s rivals at Omnicom, IPG and Publicis – just in case they have any bright ideas. No fundamental discussions take place on either strategy or creativity, because none are called for, even from the incumbent JWT.

Sniffing a rat, McCann (IPG) and BBDO (Omnicom) pull out. Late yesterday (a good time to bury news) it trickles out that WPP has, er, retained the account. But there have been a few twists of the kaleidoscope. Most salient is that outsider Saatchi & Saatchi (Publicis) will now handle the small-spending (relatively speaking) retail banking and wealth business across Europe and in Latin America. JWT is still at the epicentre, with the global brand business, but will now share the rest of the account with its WPP sister agency, Grey London.

Is this a classic piece of agency punishment meted out by the client? We still like you, WPP: but you’ve gone a bit flabby. So, just to make sure you’re on your toes, we’ll keep you on tenterhooks for a few months and then award a chunk of business to one of your rivals – to see how hungry they are.

Was it simply an exercise in cheese-paring the fees, as JWT officially likes to see it, on the part of one of the world’s wealthiest institutions?

Or is this Chris Clark desperately trying to justify his job as CMO (in all but name)? A marking time exercise, while he and his boss, HSBC chief executive Stuart Gulliver, dream up a successor to the faded strap line, The World’s Local Bank?

Because, of course, it isn’t anymore. If you rolled the market capitalisation of Barclays, Lloyds Bank and RBS together, they wouldn’t add up to that of HSBC – which remains by far Britain’s largest bank. But internationally, Gulliver has been busy rolling back the borders, with the divestment of businesses from as far afield as Argentina, Russia and Singapore. The proceeds of which were one contributory reason for the humungous profits the bank was able to declare only last week.

In the recent past, Clark has talked up the need to spend more marketing pounds on the product side (i.e., the separate bank businesses) and less on the corporate brand. One reasonable interpretation of this stance is that banks, in these bonus-bashing times, would do well to get their heads down to providing some basic customer service, as opposed to extravagantly boasting about their global expanse.

Another (they are not mutually exclusive) is that Clark and his colleagues haven’t got a clue what they should do. “In the future” doesn’t quite do it, does it? And in any case, as Clark himself once quipped, it’s more of a start than an end line.


P&G’s Gillette strategy? Blame the messenger with a $150m account review

September 18, 2012

It seems Gillette advertising is the best a man can get not after all. Not at least when that man is Procter & Gamble Brand-Building Officer Marc Pritchard. Pritchard has just put the North American shaving, deodorant and body wash business up for review, which at a spend of $150m last year (according to Kantar) makes it the kernel of the Gillette worldwide business.

That, by the way, will also be up for review quite soon, and must be worth upwards of $300m in total.

In the world of advertising, this is a seismic event. BBDO has handled the Gillette account for ever. Or, to be a little more precise about the matter, since 1966 in America, when it bought the Clyne Maxon agency, which first won the business in 1931. In 1989 BBDO devised one of the most famous advertising tag lines of all time: The Best A Man Can Get. And in 2005, it successfully hurdled perhaps the biggest agency relationship crisis it had ever faced when P&G acquired the formerly independent shaving products company for $63bn, yet decided to retain BBDO as its global agency – despite it never having appeared on a P&G roster previously.

So why a review now? Why at all in fact? After all, highly public account reviews of this kind  – it’s going to last up to 6 months according to P&G – are as rare as hens’ teeth on Planet Cincinnati.

Naturally enough, P&G is playing down the significance of the review. It’s only a chunk of BBDO’s advertising contract that is under threat, they say – not Braun, not the Venus ladies range, not the media account. As if Hamlet could somehow continue to play without the presence of an insignificant character like the Prince. And they are at pains to reassure us that BBDO advertising is still “good” (according to Patrice Louvet, president global grooming and shave care). But, and here is the kiss of death for the Omnicom-owned advertising network:  “We believe there’s an opportunity to be even better and, importantly, to better integrate the product proposition with the overall idea.”

Let’s unravel all the marketing-speak for a minute. BBDO and its sister below-the-line agency Proximity are going to repitch for the business: sure they are, but with what chance of success? The present advertising stinks, is P&G’s subtext.

P&G has been losing share in some very trying market conditions. There’s a recession on out there. People are thinking of value for money but what they’re seeing in its place is an overpriced top-of-the-range Fusion razor system and a fading mid-market legacy brand, Mach 3, that’s being out-priced and out-promoted by Schick. Gillette’s ace in the pack is innovation: it prides itself on being able to charge its customers more for (literally) cutting-edge razor technology. A replacement for Fusion is coming up – probably in 2014 – and Cincinnati has got the jitters. If Fusion Plus (0r whatever it’s going to be called) doesn’t come up with the premium-priced goods, then P&G shareholders are going to be really unhappy. So, it’s time to blame the messenger – or at any rate keep him mean and keen with an extravagant display of market disciplining.

Wieden & Kennedy – the agency that can do anything, including handling Tesco, these days – is the roster favourite to win the account. But don’t underestimate Andrew Robertson, President and CEO of BBDO Worldwide, as he rises to the account challenge of his career.


Break-up of the odd couple that kept AMV BBDO on top of the league table

July 27, 2012

The decision of Farah Ramzan Golant, executive chairman of Abbott Mead Vickers BBDO, to leave the agency and become chief executive of independent production group All3Media, brings to an end one of the most remarkable partnerships in recent UK advertising.

Ramzan Golant was part of a managerial duumvirate, latterly triumvirate, that has made AMV BBDO indisputable queen of the Nielsen UK Agencies League table years after all the partners who created the agency’s original winning formula had departed the scene.

That in itself is a remarkable feat. One that the second generation of management at BBH has yet to prove it can pull off. Highly creative agencies rarely make a successful transition to second-generation maturity within a more corporate, international framework. Boase Massimi Pollitt tried it, as part of DDB, but arguably AMV has been a lot more successful. The credit for that achievement – and the collegiate leadership style that has effected it – must in some measure go to former group chairman Michael Baulk – the surprisingly self-effacing showman who was the agency’s fourth partner in all but name.

Baulk was the watchmaker. He set up the action and left. Two women have proved themselves the jewels in the works: Cilla Snowball and Ramzan Golant. Snowball was originally the agency chief executive but after a bit of a wobble and top management reshuffle in 2005, Ramzan Golant was brought in as agency CEO and Snowball moved up to the group chairman and CEO role formerly occupied by Baulk.

The ensuing partnership has been unique in itself: two women at the summit of the top UK advertising agency. But by all accounts, extra piquancy has been added by the, at times, difficult relationship between them. They are very unalike: the ‘odd couple’ comes to mind. Ramzan Golant is fiercely bright, an aggressive go-getter. Snowball has the emollient people skills that keep clients and staff on side.

If rumour is true, the ever-ambitious Ramzan Golant at one time aspired to follow in the footsteps of another of Baulk’s protégés, Andrew Robertson – as chief executive of the BBDO network’s premier US agency. Clearly she has readjusted her sights.

Like Baulk’s manoeuvrings behind the scenes nearly a decade ago, there is a strong hint of managed succession about Ramzan Golant’s decision to step down. For some time, Ian Pearman has been understudying her role. Pearman was brought in as agency managing director in 2008 and early last year moved up to CEO. Which left Ramzan Golant in the surely impermanent role of agency executive chairman. Pearman now takes on that role as well. He has already made a series of changes to the senior AMV management team, including the promotion of Richard Arscott, head of account management, to managing director.

Ramzan Golant leaves AMV in October after 22 years at the agency and starts at All3Media, which has made such TV hits such as Peep Show and Midsomer Murders, the following month.

UPDATE 3/8/12: The other shoe drops. AMV has hired three industry stalwarts to add extra fibre to the new management team headed by Ian Pearman. Most interesting is Michael Pring, who only three months ago quit Dare to become international managing partner of Leagas Delaney. Joining him as managing partners in the new set-up are Tom Vick – once of Duck Finn Grubb Waters, more recently joint managing director of JWT London – who has been “resting” at headhunter The Lighthouse Company; and Clive Tanqueray, who was client services director of Sapient Nitro. Both Tanqueray and Pring have had long experience of working at AMV. Interestingly, the three new members of the senior team report to Pearman directly rather than to new managing director Arscott. Their rapid appointment following Ramzan Golant’s announcement of her departure reinforces the notion of engineered management change.


£1.7bn global ad review is creative solution to Johnson & Johnson’s money problem

July 25, 2012

It would be nice to think that Johnson & Johnson’s newly announced review of its £1.7bn annual advertising spend was driven by a need for greater creative consistency. But it isn’t.

Money’s the thing – saving it that is. J&J may be one of the world’s biggest brands, but it’s also a company in trouble. Since 2009 J&J has suffered numerous recalls in the US, mainly of its over-the-counter drugs like Tylenol and Benadryl; but the prescription and medical devices businesses have also been hard hit. All in all, it’s said to have lost $1bn in sales, partly through bad luck and mostly through sheer incompetence.

At first it was the staff – including the marketing department – who paid, by being made surplus to requirements. Now it is the spend that’s being trimmed. Judge for yourself from the officialspeak: “Johnson & Johnson is conducting a global agency review and consolidation to build greater value and deliver innovative and fully integrated solutions for our consumer brands.” Well, they wouldn’t want less innovative solutions would they? And they could hardly be less fully integrated than they are at the moment.

In truth, there’s an easy win here for the new kid on the block, Michael Sneed – who became J&J’s top marketing (and PR) officer at the beginning of this year. There could hardly be a less efficient way of running your global marketing services than the one that exists at the moment. Uncle Tom Cobbleigh and All are at the advertising trough. It would be simpler to name a global marcoms group that isn’t on the roster.

WPP has business through JWT and AKQA; Publicis Groupe through Razorfish; Interpublic through Deutsch, Lowe, The Martin Agency and R/GA; Omnicom through DDB and BBDO; and Havas through Euro RSCG. That leaves, er, Dentsu and MDC off the list.

Sneed is a company lifer who, at various stages of his J&J career, has shown considerable sensitivity towards advertising creativity. It will be interesting to see whether this natural instinct gets overridden by the all-powerful imperative of saving the company money. Don’t expect a self-aggrandising Ewanick moment – Sneed seems too modest for that. Do expect a financial deal, of the “Team WPP” or more likely “Commonwealth” variety, that dresses up financial expediency as a coherent creative solution.

The most interesting thing about this review may be the losers. If Interpublic is among them, perhaps group CEO Michael Roth will at last seek to do a deal with Publicis Groupe. The air is certainly thick with rumours to that effect at the moment.


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