InterPublicis Groupe – who would run it?

August 3, 2012

The market, as I said last week, is awash with rumours that Publicis Groupe is about to pounce on poor old Interpublic.

No, really – seriously awash. So much so that IPG stock had jumped more than 10% to $10.87 when I last looked, on speculation that PG is considering a $15-a-share paper-and-cash knock-out deal which would value IPG at $6bn. Rothschild is said to be working feverishly behind the scenes with other banks.

And IPG, what is it saying? “It is our policy not to comment on market rumors or speculation.” So, that might be a yes then. Publicis Groupe? Impenetrable silence. The rumour has got the investment community hooked, that’s for sure:  “We think the reports are credible,” Pivotal Research Group analyst Brian Wieser tells us in a research note.  Wieser is a former Interpublic executive who worked at its MagnaGlobal arm.

But how credible? Sure, from a financial engineering point of view it looks plausible. It would catapult Publicis Groupe to second largest marketing services group by revenue, behind WPP – creating a spectacular rejoinder to Dentsu’s stunning $5bn takeover bid for Aegis. And mean that PG pdg Maurice Lévy could exit the stage after a high ‘C’ that cracks all the chandeliers.

Client conflicts? Not as bad as they might seem at first sight – given the size of these two behemoths. For example, they share L’Oréal and Nestlé; they have shared General Motors. On the other hand, I wouldn’t have minded being a fly on the wall when Paul Polman, CEO of Unilever, and Robert McDonald, CEO of Procter & Gamble, first heard the rumour. It’s not just a question of client conflict – the two rivals reputedly loathe each other.

But here’s my real question. Who is going to run the new show? A sophisticated French adman who is too old and keeps telling us he is about to retire? Or a US former corporate lawyer (step forward Michael Roth) whose track record in running a publicly quoted marketing services company is at best indifferent? Would anyone except a Frenchman be allowed to run such a company, given that Publicis Groupe is such a national treasure? And if a Frenchman, who has the stature?

Over two years ago I flagged up the possibility of just such a merger. Then, like now, IPG’s share price was depressed and the moment seemed opportune.

At that time, PG had recently acquired an expensive M&A expert from Goldman Sachs called Isabelle Simon, whose skills were exactly matched to crafting just such a financial operation. And the PG succession crisis seemed a lot less pressing than it is today.

Simon clearly got fed up waiting. Last year she defected to a Monaco gambling organisation.

UPDATE 6/8/12: It turns out IPG bid fever is no more than a symptom of mid-summer madness. Publicis has released, tardily it must be said, the following statement: “Publicis Groupe denies having engaged in any discussions with Interpublic Group of Companies and confirms that it has not commissioned any bank to undertake any such discussions.” There is of course room to manoeuvre within the terms of this statement. Notice, for example, that Publicis does not exclude the possibility of having planned such a bid, merely having “discussed” it with IPG or one of its investment intermediaries. Nevertheless, the denial puts the dampers on a merger which, these days, doesn’t add up so compellingly for PG.

Reckitt Benckiser chief executive Rakesh Kapoor reshapes the world of marketing

February 9, 2012

Lapac and Rumea sound a bit like those ancient continents Gondwana and Laurea, which straddled the Earth before tectonic plates carved them into the world map we’re all familiar with.

Actually, the parallel is not so very far off the mark. Except, the carving of these new continental landmasses is being done, even as we speak, by Rakesh Kapoor, recently appointed chief executive of healthcare-to-household conglomerate Reckitt Benckiser.

This is part and parcel of his new vision of the commercial world, articulated as a kind of antidote to some not-overly-impressive full year figures which have been announced at the same time.

As Kapoor sees it the motor-force markets of North America and Europe will, at best, stagnate in the years to come, so he’s taken the radical step of downsizing them into a single operation, centered on Amsterdam, in order to cut costs.

At the same time emerging markets, where almost all RB’s future growth is expected to come from, have been recast with new and emphatic importance. Hence “Lapac”, or Latin America and Pacific countries; and “Rumea”, Russia, the Middle East and Africa.

These are no mere geographical expressions either; Kapoor intends to put RB’s money where his mouth is. At the moment, only half the company’s capital expenditure goes into these regions. By 2016 this will rise to 80%. And we can expect little less revolution in the way the marketing budget be allocated: the bias towards emerging markets will shift from 44% to 55% over the same period.

It can hardly have escaped notice that a strategic realignment of this kind was implicit in Kapoor’s appointment as CEO in the first place. He is the first Indian to lead RB’s stalwartly Caucasian board. As such, he is part of a growing trend in multinational companies: the displacement of WASP leadership.

Look around you and you will see Coca-Cola and Pepsi rearming for an all-too-traditional cola war, with greatly increased marketing budgets. But one corporation is now led by a Turkish-American Muslim, Muhtar Kent, and the other by Indian-born Indra Nooyi. They’re not there by historical coincidence. A lot of that money will be spent over the next 4 years encouraging people in emerging markets to drink cola; rather than simply refreshing the palates of jaded North Americans.

We might note the same trend at Citigroup, whose chief executive is Vikram Pandit, and Deutsche Bank, which has picked Anshu Jain as its new co-chief executive. Or even at that redoubtable WASP establishment Harvard Business School, whose dean of two years is Nitin Nohria.

The big surprise is that Unilever did not take this route when appointing a successor to Patrick Cescau, instead plumping for a Dutch outsider with a P&G and Nestlé pedigree, Paul Polman. Maybe appointing a non-European would have been too far ahead of the curve in early 2009.

That said, the two most promising internal candidates for the CEO job, Harish Manwani and Vindi Banga, were – as their names clearly indicate – both Indian. If Polman decides to move on, I’ll wager that the next Unilever CEO will be Indian.

Polman gambles on sustainability paying off

December 7, 2010

Paul Polman, chief executive of Unilever, is either a very wise or foolish man. At this stage it is difficult to tell which. All we can say is that he has embarked on a courageous and momentous enterprise.

Ogilvy & Mather, which recently won Unilever’s multi-million pound corporate development account from Fallon, will shortly unveil details of the company’s 10 year sustainability strategy – Polman’s brainchild – to a largely unsuspecting public.

We’ve heard a lot about companies commitment to the mantras of corporate social responsibility – the Triple Bottom Line (3BL) of People, Planet and Profit. But frankly not much action, since Marks & Spencer’s milestone Plan A initiative in 2007. Polman’s plan is a lot more ambitious than M&S’s – and a lot more risky in the open-handed commitments it makes to supporting causes that may boomerang on core corporate objectives of profit and brand share, if mishandled.

To give the flavour of the plan’s ambition, it commits Unilever to source 100% of its agricultural-sourced products sustainably; to halve the environmental footprint of all its products – not just at the manufacturing stage, but from suppliers through to consumers; and to tangibly benefit the health of 1 billion people. All this in ten years. Even Polman admits he does not know how it’s going to be accomplished – yet.

The measure of the risk is this. Unilever is a major public company dependent upon the goodwill of institutional investors and their financial advisers. These people deal in quarterly earnings assessments, not ten-year plans based upon ‘idealistic’ notions. There’s still very little appetite in the City for the “Planet” element of the 3BL. So far, so good for Polman’s reputation: he has delivered 6-quarters of uninterrupted earnings growth. For now, they’ll humour him. But what happens if, at some future date, ‘Planet’ gets in the way of ‘Profit’?

Similarly marketing and brands. Polman has taken the visionary step of placing marketing, communications and Unilever’s sustainainability policy in the hands of its chief marketing officer, who for the first time is a board-level executive. That certainly advances the cause of joined-up strategy at the highest level. But it may give Keith Weed, the CMO in question, a few headaches when he comes to reconcile the consumerist ethic with a creed which is, in some respects, anti-consumerist.

There’s more in my Marketing Week column this week, not least some speculation on why Polman is prepared to take such an enormous gamble with his hitherto unblemished career.

The truth about Simon Clift’s exit from Unilever

March 23, 2010

We all know that Simon Clift, chief marketing officer of many years’ standing at Unilever, is stepping down. What’s less apparent is whether the imaginative, regenerative campaigns associated with his tenure are also on the way out. Clift inspired or was responsible for, among others, Dove Real Women, the award-winning Axe/Lynx campaigns and Persil’s Dirt is Good.

There are some reasons for supposing campaigns such as these may be casualties as new Unilever chief executive Paul Polman tightens his grip on the organisation and cements in place a new top team. Polman, in a move unprecedented in Unilever’s history, was parachuted in over stiff internal competition to fill the role somewhat over a year ago. Immediately he came from Nestlé, but the important thing to remember is his 27 years of experience at arch Unilever rival Procter & Gamble. He’s a marketer, Jim, but not as Unilever knows it.

Some commentators see the hidden hand of P&G training in accelerated product extensions and more emphasis on “moment of truth” style promotional advertising since Polman’s arrival. They surmise that action-oriented Polman – who has had a fair degree of success so far – was unsympathetic to Clift’s subtler, slow-burn approach. They detect a more dictatorial, metrics-driven attitude to agencies, which bodes ill for “open source” creativity.

But that view is by no means universal. One former Unilever employee (who will remain nameless, but spent 15 years at the company) sees Polman as a breath of fresh air, sweeping away the cobwebs of “nepotism and empire building”. “The fact was,” the source tells me, “Unilever never was a meritocracy and every move had to be ‘sponsored’ by a corporate elder. Clift epitomised this culture more than anybody.”

So two very different perspectives on the Clift era. Further insights (on a strictly confidential basis) very welcome. In the meantime, there’s more on Polman cracking the whip and changing the guard in this week’s magazine column.

Polman picks Weed as Clift successor with turbo-charged communications role

March 5, 2010

Congratulations to Keith Weed, who has just been appointed Simon Clift’s successor as global CMO at Unilever.

In fact, there’s a little more to it than that. Weed’s actual title is chief marketing and communications officer. Which means that in addition to Clift’s former responsibilities, ranging from strategy down to marketing communications appointments, Weed will also have PR under his belt.

Paul Polman, the Procter & Gamble-bred chief executive of Unilever, has made no bones about this representing an elevation of the marketing function at the company: “This is the first time Unilever has had a CMO at the top table and is a key step to having a sharper consumer focus in the company.” All of which might seem a little hurtful to Clift, whom many of us had supposed was pretty near the top table himself. One thing he did not have, it seems, was the ear of the chief executive – or not this one at least.

Weed, 48, is – like Clift – a Unilever lifer. An engineering graduate, he joined Unilever in 1983 as a trainee and is currently executive vice president of home care, oral care and water. He’s well known and liked in the industry and was president of the Marketing Society for three years from 2003-06. In his spare time he’s also a non-executive director of Sun Products Corporation and Duchy Originals.

The fact that Polman has picked an insider would seem further proof that the rift between Clift and Polman was personality-driven rather than something precipitated by differences of opinion over “strategy”.

CMO Simon Clift to quit Unilever

February 9, 2010

Word reaches me in Austria that Simon Clift, chief marketing officer of Unilever, has quit.

The reason for his departure remains unclear,  but may stem from an uneasy relationship with Unilever chief executive, and ex-P&G and Nestle man, Paul Polman, to whom Clift reports directly.

Cambridge graduate Clift has spent his entire career at Unilever, which he joined as a management trainee in 1982. He has held senior positions right across the world and covering all Unilever’s categories.

He was Unilever’s first global chief marketing officer, responsible for how Unilever develops and executes marketing across all categories – including worldwide advertising agency policy, market research, media buying, marketing capability, recruitment, training and career development.

He is also a non-executive director of BBC Worldwide.

The news of Clift’s departure broke as Unilever appointed MindShare to about $1.7bn media planning and buying, after a lengthy consolidation review.

UPDATE: Unilever has now confirmed Clift’s departure. Officially he is retiring from the company, in several months’ time.

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