‘Things are changing faster than expected’: why Publicis sees the Epsilon deal as a creativity play
Describing it as “maybe one of the most important days” in the history of Publicis Groupe, its chief executive Arthur Sadoun is spending Sunday fielding press calls having announced the acquisition of data business Epsilon for a total cash consideration of $4.4bn (£3.95bn after tax).
Arthur Sadoun on the $4bn acquisition of Epsilon
The deal with Epsilon owner Alliance Data Systems Corporation has been a long time coming, and Sadoun reveals in his usual energetic style that there were around 50 meetings between the two companies in order to advance over recent years. Even before he took on his current role in running Publicis Groupe, Sadoun spoke about the business becoming client-centric, and today he asserts that this deal is a step towards that goal, with a greater level of understanding now available of customers.
“This is the biggest acquisition that our sector has ever seen,” he states proudly. Although he, of course, also believes it brings real value for money despite its scale. Epsilon will not be placed into one of its solution hubs but will work right across the business and be integrated using lessons learned from the acquisition of Sapient over four years ago.
“The reason why we are doing this acquisition is that it generates the levels to allow us to go deeper in our own transformation… but also we need have the feeling that it is time to fast-forward our ambition because things are changing faster than expected.”
However, Sadoun is adamant that this is a creative play still and continues to stress his belief that Publicis Groupe remains a creative business first and foremost.
“This will help every aspect of our operation and it starts with the creative operation because what we should not forget, and this is why we are seeing Accenture buying Droga5 and similar agencies, is that the core of our business is and will always be creativity.
"But we need technology to make sure that we can bring to our clients the right level of transformation for their business models to adapt in this new world and this is what we did with Sapient… everyone is starting to understand that creativity and technology are fusing. What we are doing now with Epsilon is to make sure that all of our clients' ideas are more relevant, are coming at the right moment, are based on the right insights and are delivering the right message.”
He adds that Epsilon’s relationship with Publicis Sapient will allow its recently appointed chief Nigel Vaz and his team to have a ‘data-led approach’ to transformation that will help it stand apart from its competitors.
“You can have all of the knowledge of the consumer in the world and all of the technology to reach them but if the content and the idea you are delivering is not right for them, it won’t have any impact. You can spend millions on data and tech, but at the end of the day, if the idea that you are pushing, the creativity doesn’t bring the right level of emotion that persuades people to buy and justifies a price, there is no way things will happen. This is why Accenture is buying a business that is declining by 10% at high multiples, because they know that there is no way that the future does not need creativity.”
Asked why competitors did not make a bid for Epsilon, Sadoun says he believes it was down to Publicis possessing “the financial backbone” and being cash positive by comparison to others.
“We are not buying in a sense,” he claims. “We are accelerating our transformation. We set out a very clear plan 18 months ago which would be a gamechanger; data, dynamic creativity and technology would mean we would be at the core of the transformation of our clients. We want to put data at the core of platforms that will create ideas and set goals that will accelerate transformation at scale and with Epsilon that is exactly what we are doing.”
Of the recent pitch that has been called by client Audi in the UK, much to the surprise of the local advertising sector which saw incumbent BBH London as doing a good job, Sadoun would not comment directly with the process underway but did laud the work of the agency. “They have a very strong dynamic at the moment,” he stated of BBH proudly.
In announcing the completion of the deal, it was confirmed that Epsilon will continue to be led by chief executive Bryan Kennedy.
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Publicis Groupe is a French multinational advertising and public relations company, and is the oldest and one of the largest marketing and communications companies in the world, by revenue, headquartered in Paris.Find out more