5 February 2013 - 4:53pm | posted by | 0 comments

News Analysis: What next at Publicis following Digitas and LBi merger?

News Analysis: What next at Publicis following Digitas and LBi merger? News Analysis: What next at Publicis following Digitas and LBi merger?

The LBi and Digitas merger has been coming for some months now – rumours and speculation over what the takeover by Publicis would mean for LBi have spread, but it seems, for the time being, much of the status quo will be maintained.

At the time of announcing the deal, few were shocked that Publicis has responded to the £348m AKQA buyout by WPP in June,
and it was predicted by The Drum’s own blogger Tony Walfordthat LBi would be a prime acquisition target prior to anything being agreed.

"The one to watch now is LBi, another huge digital business also backed by private equity which will have an equally high price tag. If it is not already being heavily targeted by the global marcoms groups who, let's face it, are the only players capable of paying such sums, then it certainly will be shortly,” he wrote

Sources within LBi have confirmed to The Drum that the agency had held discussions with a number of potential suitors around the summer time, with Publicis making its move after the AKQA deal had gone public. The company is said to have had several options and discussed the possibility of even continuing on as an independent.

The deal that saw Digitas acquire 98 per cent of LBi was agreed in September last year, with Publicis CEO Maurice Levy (pictured) describing it as "Another step forward in further strengthening our digital operations."

This morning (5 February), having made the announcement to the markets, The Drum understands that around 2,500 staff across 25 countries at both agencies were informed through a ‘Communications Cascade’ although obviously those at the top have seen it coming for some weeks, ahead of the €416 million (£333 million) acquisition being cemented last Thursday (31 January).

As to what happens next is seemingly anyone’s guess at this stage, with an ‘integration team’ set to be formed, made up of executives from Publicis, LBi and Digitas set to be handed the task at the logistics resulting from the deal. This will include any overlap of roles and any possible office moves – although with the two companies strong in differing regions - UK and Europe (LBi) and Digitas (US), The Drum has been informed that significant overlap is not expected.

It’s been announced today that the merger will see LBi CEO Luke Taylor become global CEO of DigitasLBi, reporting to the CEO of Publicis Groupe’s Digital Technology Division, Bob Lord.

Publicis is rumoured to be aiming to offer a more integrated offering going forward, and speculation has reached The Drum that Saatchi & Saatchi, the legendary London ad agency, will move to work closer with DigitasLBi going forward, in order to heighten its creative and digital offering.

Whether this will include any relocation is also yet to be established.

An integration board will look at how the logistics will move forward, although with the geographic footprint seeing little overlap, with Digitas mainly in the states and LBi in the UK and Europe, it may not be seen as a major issue.

Marc Nohr, CEO of Kittcat Nohr Digitas moved quickly this morning to state that the deal would have no impact on the future strategy of his agency. “There will be no disruption to the management of our much valued client projects,” he concluded in a statement.

Following today’s announcement, Miles Welch, partner at Results International offered his reaction, stating that “little of particular note” takes place within an acquired organisation following its sale or merger for the first few months to almost a year.

“If you look at agencies like Razorfish and Digitas when they were acquired that was definitely the case. They were left alone to operate and succeed as businesses in their own right. In other words, it was really a case of business as usual.”

Welch explained that the reason for this was that agencies are acquired when they are successful – so why make “foolhardy” changes or tinker?
 “The Digitas/LBi merger is in essence a consolidation to develop a truly global digital entity - something none of the networks has yet truly achieved.  Combining the huge scale of Digitas in the US (and subsequent but limited scale expansion into the UK, France and China over recent years) and LBi's obvious strengths in Europe (and likewise some international expansion outside Europe) you create something of true scale and global significance.”

Welch also highlighted the significance of ‘digital transformation’ business Vivaki as another significant element of the group’s offer and “effectively brings together agencies within the group with different skills sets to work on global client briefs. It will be an excellent way for the newly merged entity to further bolster the attractiveness of the VivaKi proposition to Publicis clients.”

At the time of writing, the Publicis Groupe share price had varied throughout the day, between 47.83 - 48.40 since the announcement of the merger.
 
History will now state that DigitasLBi was born on 5 February 2013.

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