What now for Publicis with Sapient safely in the fold?
Last year’s biggest (or should that be any year’s biggest) deal was supposed to be the $35bn Publicis-Omnicom merger, which collapsed last summer. Lesser men than that deal’s driving force Maurice Levy would have been shattered by the experience, but Levy showed he was made of much stronger stuff when he picked himself up, dusted himself down, and went off to do another (slightly less huge) mega-deal – the $3.7bn acquisition of digital, media and data network Sapient.
Maurice Levy
Late last week, all the final hurdles were overcome, the final boxes were ticked and the deal went through. (One potential hurdle was the fact that Sapient does a fair bit of defence business for the US government, so Uncle Sam would need to be reassured that he wasn’t being compromised by a French-owned company).
But what now? Sapient – which includes the highly-rated digital shop SapientNitro – gets a new name, Publicis.Sapient (which will include SapientNitro, Razorfish Global, Rosetta and DigitasLBi and Sapient consulting units Sapient Global Markets and Sapient Government Services). And Sapient retains its head honcho, Alan Herrick, the long-time CEO – who also gets a seat on Publicis’ Directoire+, the influential inner sanctum at the marcoms group, and the best way of catching Levy’s ear.
But what’s more important is what it means for Publicis Groupe moving forward, and Levy’s legacy. Levy, who is due to retire in spring 2017, has often said that he wants his legacy to be a digital agency. The sprawling Groupe includes all manner of famous marcomms names acquired over the years, from Saatchi & Saatchi, BBH and Leo Burnett through to Starcom and ZenithOptimedia, but what I suspect Levy will be most proud of is his “digital suite”.
Given the digital portfolio Publicis now has, it’s arguable that when it comes to digital, Levy has bought bigger and better than anyone else. Herrick said last week: “The combination of our two companies and the creation of the Publicis Sapient platform together create the most transformational offering in the market. No one is even close.”
That is sure to get Sir Martin Sorrell’s blood up, and the head of WPP may now be ready to bite the bullet and go for Tesco data house Dunnhumby, which has the potential to transform Kantar and the big data/research arms of his company. We shall see in the coming weeks.
But to return to Publicis, I would say that of all the big holding groups, the French operation is probably in the best shape digitally. This is what Levy wanted his legacy to be, and why, after many years of his leaving date being put back, he may actually step down in a couple of years’ time.
If he does go, this leaves the prickly problem of his successor. Levy, like his great rival Sorrell, is probably irreplaceable. Both men are true one-offs, swashbucklers and deal-maker in an era of company men; risk takers at a time when boards would prefer to appoint safe pairs of hands.
So don’t expect to see another Levy type. But what type should we expect? And who could fill those shoes? Over the past few years Publicis has seen a number of heirs apparent come and go, and the current favoured candidate is Publicis Worldwide boss Arthur Sadoun. But maybe now Herrick could be in the frame?
Herrick is cut from a different cloth from previous Publicis potential heirs. He’s the long-serving, highly-paid boss of a US public company (and even richer after the Sapient sale) who’s spent most of his career in digital, and at a distance from Publicis’ traditional centres of operation.
He may, of course, have decided to bed the company down in Publicis and then step down and do something else with his time and money; but if Publicis is going to get a decent return from this deal and increase profits and dividends after a disappointing 2014, it needs Herrick and his management team. As alluded earlier, the US government is a big client and having an American at the top may be key to retaining that business.
It’s always been thought that Publicis, still heavily influenced by the Bleustein-Blanchet founding family and regarded as a French “national champion”, could only ever be headed up by a French executive.
Could that have changed? After all, Publicis could now be said to be a fully-global, digital company with more than 50 per cent of the group's revenues coming from digital. If Herrick were to supplant Sadoun as the heir presumptive, he may well hang around.
And if he does eventually take over, what would happen to Publicis’ 'legacy' businesses? Would the plan be to transform the more 'traditional' agencies like Saatchi or Leo Burnett into fully digital shops? This would move the thinking beyond the usual scenario of (largely) offline agencies needing to think digitally as part of any strategy to a whole new level. Would Levy’s successor look to consolidate them, or even sell them?
We can’t know… but one thing we do know is that things may start to get pretty interesting over the coming months. I’m sure the WPPs, Omnicoms, Denstus and Havases of this world are taking note.
Tony Walford is a partner at Green Square, corporate finance advisors to the media and marketing sector