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.

 

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Richard Pinder launches global network with Maserati as a client

March 26, 2013

Richard PinderAfter years of being a jet-setting senior suit in someone else’s service, Richard Pinder has decided to go global on his own account with the ambitious launch of international network The House Worldwide.

Pinder, it will be recalled, was head of Publicis Worldwide for five years until group succession politics (the imposition of Jean-Yves Naouri as executive chairman) made further tenure of his position unrealistic.

That was two years ago. Since then, Pinder has been pondering how to cash in on his experience with global clients (he’s worked for over 25 years in Asia, Europe and the USA; for Leo Burnett, Ogilvy & Mather and Grey, as well as Publicis) by building a new-model worldwide agency network.

No mean cliché, the cynic will object. We’ve heard the rhetoric before. What’s the reality?

It’s true that the agency world has long been struggling with a “post-analogue” structural solution to the increasingly financially unviable traditional creative agency network, with its army of regional bureaucracies. Some have proffered a solution in the form of the fleeter-footed international micro-network (step forward BBH, Wieden & Kennedy and – in its heyday – StrawberryFrog.

Pinder, however, has gone a step further in presenting a top-down managerial solution – or perhaps that should be management consultancy solution – in place of the piecemeal creative one. His starting point is that the traditional global advertising business – unlike professional counterparts such as lawyers and accountants – loses most of its senior talent to the management of regional geographic fiefdoms, which are there primarily because of historical legacy. What this talent should be doing is servicing the client’s agenda rather than their own corporate one. The exception, where the client really can insist on top-level personal service, is a vanishingly small number of mega-clients, such as Ford and Procter & Gamble, which have specially structured teams to pander to their requirements.

Pinder’s idea is to provide this level of service for global, or at least international, clients further down the budgetary league table. Each client should be serviced by no less than three senior people at any one time. To do this, he has joined forces with a core team of like-minded senior executives: initially, Peter Rawlings, former chief operating officer DDB Asia, Chris Chard, former chief strategy officer of Lowe Worldwide in New York and Ben Stobart, former senior vice-president (chief suit) of Burnett Chicago. These will deal directly with top clients on a day-to-day basis; the specialist skills base, on the other hand, is to be provided by a network of over a dozen associated network companies, of which the best known is Naked Communications (see AdWeek for a full list).

Note the absence of an overall chief creative officer. This is deliberate: Pinder does not believe a single individual can adequately address the creative needs of all client types.

Why is Pinder convinced this model can operate from a single fixed geographical location (well, actually two in THW’s case – London and Singapore)?  Because of consolidation on the brand management side. More and more marketing power is being concentrated into the hands of Chief marketing officers and indeed chief executives; less and less being delegated to regional and country power bases.

But, the acid test is: has Pinder got any clients? Yes he has. He has been collaborating with two over the past year in honing the organisational structure of THW, during what he calls “beta mode” (how digitally au courant).

And they are? Maserati and an upmarket specialist haircare brand, GHD (stands for “Good Hair Day”). Both, he tells me, are poised at an interesting fulcrum of development, from the brand and new product point of view.

Maserati, an ultra luxury sports car marque lodged in the Chrysler/Fiat stable, has been given a €1.6bn injection to broaden its model range and take on Porsche.

GHD – which produces premium-priced hair stylers – is also cash-rich after being bought for £300m by Lion Capital. Lion is investing in npd, with a view to bringing GHD out of the salon and onto the international stage. Inevitably, that is going to involve careful brand positioning as GHD moves into a broader market segment.

However, Pinder is coy on the subject of who, apart from Maserati and GHD, is bankrolling all of this. It seems likely that both principal founders (Pinder and Rawlings) have skin in the game. But a project of this scope is financially beyond most individual investors, even if they are relatively wealthy admen. Private equity seems to the answer. Among the list of network associates is, rather intriguingly, a UK-based hedge fund called Toscafund, whose chairman is former RBS bigwig Sir George Mathewson. Pinder claims Toscafund is very handy on the “analytics” side. No doubt. But my guess is it’s providing a lot more resource than that.


Avis drops classic ‘We try harder’ tagline – and a clanger with new ad campaign

August 28, 2012

Remember when Sir Richard Branson stole the national flag for his own airline after British Airways said it didn’t want it any more? Well, there’s a similar golden opportunity beckoning for any cheeky entrepreneur working in the car-hire sector.

After 50 years, Avis has decided to discard one of the most famous taglines in advertising: “We Try Harder.”

Apparently, no one thinks they do any more. Avis has slipped down the global batting order from second, behind Hertz, to third, behind Entreprise Holdings, which owns the Alamo, Enterprise and National brands.

Desperate times call for desperate measures. And these measures really are desperate, as will be seen.

It will not have escaped readers’ attention that things have changed a tad in the car-hire business over the past five decades. The main catalyst has been budget airlines, which have successfully turned the holiday hire-car proposition into a commodity. Where once you bought, or thought you were buying, a superior service, you now buy a much stripped-down rental price. Of course, this base price is a bit of illusion, because once you have added on sat-nav, baby-seats, ski-racks and extortionate premium and super-premium insurance cover (so you don’t have to pay a £700 excess on a scraped wing or £200 for a new tyre) – Hey Presto! –  it has doubled. But that’s the way it is today – if you don’t want to pay upfront, you don’t have to. Which means the car-hire companies have had to look elsewhere to fatten their profits.

And where better than expense-accounted businessmen turning a hard morning at the presentation lectern into a pleasant afternoon at the golf club?

That, at least, seems to be the thinking of new broom Avis chief marketing officer Jeannine Haas, who has fired McCann Erickson and brought in Leo Burnett to deliver her new baby.

And what a mewler and a puker it is.

Out this week, the new campaign – called “It’s Your Space” – tries to communicate in a “lighthearted way” how the space inside a rental vehicle can be a productive environment where business travellers can “recharge their batteries”. Health and safety executives might have something to say about the way they do it but, that aside, judge for yourselves the quality of the ads:

What a pity you can’t say they are so bad they make you laugh. But they aren’t: they’re just bland beyond belief. It’s Your Space might be more appropriately titled “A Waste of Space.” Which is all the more unfortunate given the brand’s legacy.

The line “We Try Harder” was introduced by DDB in 1962 after Avis CEO Robert Townsend turned in desperation to the agency after many profitless years. Bill Bernbach himself is supposed to have cracked the problem by asking a number of Avis employees what it was about their service that distinguished it. But it was copywriter Paula Green who actually came up with the line.

There are not many occasions when you can unequivocally point the finger at advertising as the agent of success, but this was one of them. Within a year, Avis had turned a profit for the first time in over a decade.

I can’t, somehow, see similar spectacular results arising from the present campaign.

So, arise Sir Stelios and steal this opportunity while you may.


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.


The jury’s out on Cannes’ creative verdict

June 27, 2012

One way or another the “C” word defined this year’s Cannes International Festival of Creativity. Naively, I came away from the ad industry’s annual Rivièra fest thinking “C” stood for Chipotle and Creative Artists Agency (CAA), the duo that pulled off the film grand prix and the top lion for one of this year’s new categories, branded content & entertainment. What a deserved breakthrough for the Colorado-based fast food outfit, whose wholesome message may one day may do McDonald’s some serious brand damage.

And here, just to prove that the Cannes judges not only know a winner when they see one but are prepared to back it without fear or favour, is that very “Back to the Start” grand prix winner, to the tuneful accompaniment of Willie Nelson:

How wrong I was about the “C” word, though. It turns out that “C” stands for Corruption. No sooner had WPP emerged as the top Holding Company of the Year for the second time in a row, and its subsidiary Ogilvy & Mather as Agency Network of the Year, than the allegations of vote-rigging began to fly. What, momentarily, had seemed WPP global creative director John O’Keeffe’s triumphal moment – in which he definitively proved that last year’s laurels were more than a passing fluke – was soon clouded by recrimination and counter-recrimination.

At the centre of the row is Amir Kassaei, worldwide creative head of Omnicom-owned DDB, who has accused WPP agencies on the Cannes jury of wresting what he clearly regards as Omnicom’s rightful crown from it by foul means. WPP racked up 1,554.5 points in the competition, and Omnicom – at number two – 1375.5, leaving Publicis Groupe trailing a distant third on 1032. Here’s what Kassaei had to say:

“We had a meeting in New York just ahead of Cannes, and I made a very, very clear statement to all our jury members that this festival is about integrity and responsibility. I said to them, you have to vote for the best work, no matter which agency is behind it.

“I have since been notified by no fewer than 12 jury members that people from other holding companies this week are being briefed to kill Omnicom, especially BBDO, DDB and TBWA, this is a fact.

“This is not about being a bad loser, or even supporting Omnicom, this is about the integrity and responsibility of the Cannes Lions Festival as a beacon of excellence around the world.”

Right on, Amir. But actually, no. It’s just part of the rough and tumble that afflicts Cannes voting patterns every year. Next year Omnicom may boycott Cannes, you say? Come off it. It’s about as likely as me selling my grandmother (if I still had one) into slavery.

The Great Holding Company Award Scandal is simply a continuation by other means of a long-running guerrilla war between WPP, Omnicom and Publicis Groupe over who’s best boy creatively. Before the award was given official embodiment two years ago, the bosses of the three big network groups used to engage in a covert but nevertheless acrimonious tally of who had actually bagged the biggest statue haul. Frankly, Omnicom used to win by a country mile, even after discounting any creative arithmetic; which meant that the most entertaining part of the contest – vigorously disputed by WPP boss Sir Martin Sorrell and head of Publicis Groupe Maurice Lévy – was over who had come second.

But with WPP out in front – and officially out in front at that – Omnicom seems to have lost its seigneurial disdain for such squabbling.

Not that WPP is exactly blameless in this regard. Clearly nettled by the fact that Omnicom-owned Manning Gottlieb OMD won the Media grand prix for a Google campaign, Sorrell recently told Mediaguardian:

“One thing I’ve noticed this year in particular [are] some practices creeping in that are a bit disturbing. Practices of pressure on the jury by [the chairman] of the judges. There are some techniques to these things. I was at a dinner and there was lots of chatter about one of the functional areas [awards categories] where lots of pressure was put on an organisation in terms of voting.”

Although Sorrell is not category-specific in his complaint Group M, the WPP media buying network that includes Mediacom and Mindshare, is known to have made a complaint to the Cannes festival management. While a little mischievous to do so, it is worth mentioning that the chairman of the media category judges was Mainardo de Nardis. De Nardis is, of course, chief executive of Omnicom-owned agency OMD Worldwide. But perhaps just as importantly, he is not best buddies with Sir Martin. The feud dates back to the Marco Benatti scandal, when de Nardis was a WPP employee.

Plus ça change, as they say at Cannes, plus c’est la même chose.


Newsweek’s Tina Brown flags Mad Men revival with retro ads fest

January 13, 2012

Creatives, sharpen your pencils. Tina Brown, editor of Newsweek and The Daily Beast, has a new challenge for you.

Well, not “new” perhaps; more “retro”. It’s a once-in-a-lifetime opportunity to hone those copy skills which you might, if you were extremely lucky, have learned at the knee of David Abbott or, very distantly indeed, Bill Bernbach (ob.1982).

The brief? To turn a whole edition of Newsweek into a celebration of Mad Men’s fifth season premiere, on March 25th, with 60’s-themed ads.

It’s difficult to know who’s been commercially cuter here, with this “life imitating art” fest: Brown, who needs to boost flagging Newsweek ad revenue; or Matthew Weiner, creator and executive producer of the critically acclaimed but hardly money-spinning Lionsgate TV series, who needs to give the long-delayed fifth series the best uplift possible.

It’s nearly a year and a half now since Don Draper and his chums last graced our screens, mainly thanks to a protracted dispute between Weiner and Mad Men’s TV sponsor, AMC Network. Last March, Weiner eventually emerged with a new $30m contract which, reportedly, will guarantee us another 3 series.

For Brown, the hope is that the March 19th Mad Men edition will provide the crowning glory to a low-profile turnaround for Newsweek. Ad pages dropped 17% in 2011, but the magazine has experienced a steady quarterly recovery since her well-received redesign, launched on March 14th last year.

Of course, that’s not what she’s saying in public:

Newsweek was very much on the cultural forefront at the time of the show. It covered the events that are so much of the background for the show’s drama — the burgeoning civil rights movement, the women’s rights movement, the Vietnam War. That was Newsweek’s cutting-edge beat and its flourishing journalistic subject. So it seemed like a wonderful marriage in a sense to take that and apply it to the magazine, to make the magazine an homage to the period.

As opposed to today when the magazine does… what exactly? Maybe it’s not such a smart idea to remind people of its past glories after all.

No matter. Here’s a great opportunity to dust down those copywriting skills. And this, by way of inspiration, is what you’ll be up against. A bit of Bernbach’s immortal VW Beetle advertising. And, from the same agency DDB, the scarcely less famous “We try harder” for Avis. No tobacco advertising, though. Historical authenticity doesn’t stretch to allowing parodies of a Lucky Strike campaign.

Alas, most of us in Blighty are going to have to bide our time with Mad Men Mark V. The BBC has lost the screening rights to: – subscriber-only Sky Atlantic. Roll on the series DVD, retailed by Amazon.


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