What does Sapient buyout mean for future of independent agency sector - W+K, Karmarama, Zone and more discuss
This morning Publicis Groupe revealed its intentions to buy Sapient - owner of independent ad agency SapientNitro for $3.7bn - as the advertising giant looks to strengthen its digital offering.
The news will see one of the few remaining independent agencies snapped up by a major holding group, which has already bought the likes of DigitasLbi and Razorfish.
Described by Sir Martin Sorrell as the “behaviour of a jilted lover”, as it came on the back of the failed Omnicom and Publicis merger, experts from Wieden + Kennedy, Karmarama, Zone, Iris, Total Media and Code Computerlove gave their views on the deal, how it will affect the independent agency landscape and the rise of digital.
Meanwhile independent digital agency Zone's chief executive James Freedman has suggested only independent agencies care about their indy status, while Jon Wilkins, executive chairman of Karmarama, believes the deal will have a slow burn; and Ian Millner, Iris joint global chief executive has said it could signal that the independent agency model will be "short-term".
Neil Christie, managing director, Wieden + Kennedy
It's obviously a big deal for Publicis and follows on from a string of digital acquisitions including Razorfish, LBi and Digitas. It follows through on Maurice Levy's statement after the failed Omnicom merger that Publicis would become "much more an internet company than an advertising group".
What does it mean for the independent agency scene? It's just another example of the consolidation that is leading to increasing homogeneity amongst the holding company-owned agencies. That can only be a good thing for those independents who are able to offer something individual and different.
Jon Wilkins, executive chairman, Karmarama
Interesting times in the marketing communications industry with the news of the acquisition of SapientNitro by Publicis. A sign of the times as the classic marcoms groups try to strengthen their global reach and deepen their ability to deliver deep digital solutions.
SapientNitro was part of a group of tech enterprises that seemed keen to meet the comms groups and fight them toe to toe for lead agency status. Nitro, through several incarnations, did this with variable degrees of success. But obviously the Publicis deal is an offer they couldn’t refuse.
I would suspect this deal with be a slow burn as the businesses are very very culturally different. SapientNitro is in deep with many USA corporates but that doesn't give Publicis a god given right to its advertising accounts.
On a broader note what does this deal mean? Well I'd say there will be a significant and multi layered flurry of mergers and acquisitions over the next couple of years. The industry is in complete transition, investors and pension funds are demanding returns, the old model is faltering and its feels like it could be the start of a the next marcoms arms race!
Ian Millner, joint global chief executive, Iris
It's a significant deal – both for Publicis, and for the industry.
Publicis now holds a number of agencies with digital capabilities – after acquiring Lbi and Razorfish. With SapientNitro however, its infrastructure and skill set means that it should be able to take Publicis deeper into client relationships – and into the 'partner' space where so many agencies want to get to with brands. Publicis will most likely become more influential amongst client organisations, and have more power and control over where budgets are going.
Clients are always looking for more benefits and most see a benefit linked to scale and depth of capability. With that in mind, the independence model is arguably a short term one.
Independency is designed to create innovation in the category – that is its purpose. To disrupt, innovate and evolve. To challenge the status quo. The way the whole industry works is around fragmentation, innovation and consolidation – that's the way it's always been and always will be.
With every bigger independent looking for more synergy and development to stay competitive – as with this deal – there's a hundred small start-ups just getting going, that will serve to bring innovation and change to the agency landscape in the future
James Freedman, chief executive, Zone
It’s a clear indication that digital technology has come of age and that’s where the focus of the big networks is going to be in the future. Simply put, it shows we’re a long way from the old advertising model: this is a proper technology and digital business with expertise. From the outside, it’s a sign that the world is going to move and is beginning to move.
I don’t think it means anything for the independent agency landscape. I think independent agencies are obsessed with the notion of being independent but I don’t think any client goes ‘I’ve found this amazing agency, they’re independent’. They say ‘I’ve found an agency that is ambition, that has true expertise’. I don’t think independence in itself means anything. There are some great agencies that are part of networks and there are some crap agencies that are part of networks: same goes for independence.
We [at Zone] are a long way away from being SapientNitro but what they have done is a fantastic achievement. Our focus is on building a brilliant agency, and we’re very ambitious. We’re really focussed on building great work for our clients and that’s what comes first and foremost.
Tony Foggett, chief executive, Code Computerlove
It’s good to see the continued appetite for acquisition of independent agencies and I can understand the need for businesses like Publicis to continue to expand in to the large platform, digital space, that is a cornerstone for helping clients to transform their businesses and relationships with their customers.
Digitally native independent agencies have significant value to networks like Publicis because they not only allow them to shift their revenues into technology, platform ownership, design and build and consultancy, but they also fundamentally speed up the transformation that the networks themselves are having to make in reply to the way that digital and technology is disrupting their industry.
Guy Sellers, chief executive, Total Media
On paper, Publicis Groupe’s acquisition of SapientNitro appears to be a much better fit than the doomed Omnicom merger, which fell apart earlier this year.
In view of its recent RUN acquisition – and now the addition of SapientNitro – this will further boost Publicis Group’s digital and technology services, enabling Publicis to square up to network giants like WPP.
From Total Media’s perspective, this acquisition will further polarise the market for clients: from those who want to work with bigger and less personalised networks, versus those who require a more individualised approach, typically offered by independents.
This will be a merger the industry watches with interest.