Merger as a Career Capstone for the Chief of Publicis
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Version 0 of 1. IN 1972 a fire tore through the Paris headquarters of a small French ad agency named Publicis. Rather than destroying the firm, it laid the foundation for the creation of what could soon be the world’s biggest advertising company. Publicis averted disaster because a young executive who ran the firm’s computer system, Maurice Lévy, saved the agency’s files on magnetic tape, helping it to get up and running again within days. That act of forward thinking caught the attention of the agency’s founder, Marcel Bleustein-Blanchet, who picked Mr. Lévy as his successor, putting Publicis on a path of technology-focused growth. That process culminated over the weekend when Mr. Lévy, now the 71-year-old chief executive of the Publicis Groupe, joined the head of another agency company, John D. Wren of the Omnicom Group, to announce plans for a $35 billion merger. Though the creation of the Publicis Omnicom Group, as the new company is to be called, is billed as a merger of equals, it has been widely seen as a coup for Publicis and a career capstone for Mr. Lévy, given that Omnicom is significantly bigger, with $14.2 billion in revenue last year, compared with $8.5 billion for Publicis. With blow-dried hair fixed permanently in place and a fitting bon mot usually at the ready — in French or English — Mr. Lévy exudes a courtly air rather than street smarts. Indeed, Mr. Lévy’s diplomatic skills have elevated him into the inner circle of business advisers to a succession of French presidents. But he has a “Mad Men” flair for showmanship, in a stark contrast to the accountant-like demeanor of Mr. Wren, who has preferred to let his company’s agencies, and Omnicom’s steady profits, do the talking. Aides to Mr. Lévy, who was born in Morocco in 1942 after his parents had fled fascist Spain and Vichy France, say he has also been driven by an outsider’s desire to prove himself to the French establishment and to the British and American advertising companies that have long dominated the business. “It’s ingrained in Maurice’s whole psyche that if you were a Jewish immigrant in France in the 1940s and 1950s, you had to fight like hell,” said Richard Pinder, a former top executive of Publicis who now runs an advertising venture called the House Worldwide. “He’s kicked, fought and scrabbled his way up with a tenacity and energy that is amazing.” Well into the 1980s, when firms like Saatchi & Saatchi in Britain were pioneering the concept of housing groups of agencies in holding companies, Publicis was still focused on the domestic French market. After Mr. Lévy took over as chief executive in 1987, his initial efforts to spur international growth did not go well. An unsuccessful partnership between the company and Foote, Cone & Belding, a leading American ad agency, quickly led to disagreements over strategy and a failed hostile takeover. Not until 2000 was Mr. Lévy finally able to land his first big prize: Saatchi & Saatchi, whose founders, the brothers Maurice and Charles Saatchi, had been ousted in a shareholder struggle several years earlier. In 2002, Publicis crossed the Atlantic Ocean, snapping up the parent company of Leo Burnett, the Chicago-based agency famed for creating the Marlboro Man. Having turned Publicis into one of the four biggest advertising holding companies, alongside WPP Group, Omnicom and Interpublic Group, Mr. Lévy turned his attention to two areas that he was increasingly convinced would provide the future growth of the industry: emerging markets and digital media. Publicis raced against WPP, led by Mr. Lévy’s archrival, Martin Sorrell, to snap up agencies in China and other fast-growing markets, as well as picking up firms that focused on online data and Web-based marketing campaigns, including Digitas in 2007, Razorfish in 2009 and Rosetta in 2011. “We looked at digital and we invested in digital early on,” Mr. Lévy said in an interview two years ago. “We then decided that the shift would be huge, so we invested massively. It happens that we were right.” The stock market has rewarded the Publicis strategy, lifting its market value to the level of Omnicom’s, both around $16.7 billion at Friday’s close. That was a key factor in the plan to merge as equals, despite the American company’s higher revenue. Some analysts have questioned the rationale of joining with Omnicom, which generates more than half its revenue in the United States and which has made less aggressive bets on new media. “It’s pretty hard to see any meaningful logic to the act or the timing — apart from ego, that is,” Dominic Mills, a former editor of a British trade publication, Campaign, wrote in an online commentary. To some critics, the Omnicom deal is simply a smooth way for Mr. Lévy, who had already delayed his retirement, to step down without having to hand over leadership to an internal successor at Publicis, where suitable candidates have proved hard to find. Under the merger plan, Mr. Lévy and Mr. Wren are to serve as co-chief executives for two and a half years, after which Mr. Wren will take over that responsibility alone, with Mr. Lévy becoming nonexecutive chairman. Others doubt whether the deal holds any benefits for clients of Publicis and Omnicom, which include Coca-Cola, Pepsi and many of the world’s biggest carmakers. Some of these clients, loath to keep their advertising in the same holding company working with a fierce rival, could move their accounts to other agencies. “Time will tell if the cultures will click and whether clients and talent benefit,” Mr. Sorrell said Monday on CNBC. Still, even critics were impressed by the boldness of the merger plan and by Mr. Lévy’s desire to plant a French flag atop the industry. “Advertising was created in the United States and the United Kingdom,” said Mr. Pinder, the former Publicis executive. “I think this is a monument to Maurice’s personal journey, and to the journey of a company that really had no right to be in this position.” <NYT_AUTHOR_ID> <p>Liz Alderman contributed reporting. |