Vive la différence

Vive la différence

Maurice Lévy has long had the best office in advertising. The wood panelling and highacreage desk are not anything special. It is the view that really makes the place.

From the sixth floor of 131-133 Avenue de Champs Elysée the private terrace puts you on first name terms with the Arc de Triomphe.

For a long time, the view from the site of the former Hotel Astoria and the slew of awards that fill one cabinet may have been some consolation for the fact that Paris was a bit of a backwater when it came to the global advertising business.

That has now changed, after a three-year deal-making blitz the French capital now ranks on a par with London and New York.

A couple of mega-buys have turned Publicis from a middle-ranking player into one of the big kids on the network block. In 2000 it snapped up Saatchi & Saatchi for $1.9bn and in 2002, the $3bn deal with BCom3 added Leo Burnett and Starcom MediaVest to the mix In between, there was the small matter of consolidating the ownership of Zenith, merging it with Optimedia and, in 2003, finally buying from WPP for £75m the last remnants of the confused ownership that had hampered the former’s growth.

And those are just the successful deals. It had also sought to buy Young & Rubicam in 1999 but was outbid by Sir Martin Sorrell’s WPP and lost out in the fight for Cordiant in 2003, again to WPP.

Publicis may have been a late starter to merger mania but the Paris-based network has done the deals that have given it what is probably the final place at the top table, alongside Omnicom, IPG and WPP. Its longstanding, home-grown rival, Havas, has been left firmly in its slipstream. International media research company Recma now ranks Publicis as the biggest network in media, thanks to the contributions of Starcom MediaVest Group and ZenithOptimedia.

Lévy says the group has grown in three stages. Firstly, in the mid- to late-1990s, there was the desire for global coverage for Publicis, expanding from a strong European heartland and improving its scale in the US.

“We’d been buying agencies all over the world in order to create Publicis Worldwide network,” he says. “We needed to serve our clients everywhere and, for this, we had to be global very quickly.”

The Saatchi & Saatchi purchase in 2000 was then driven by the need to create a second network and at that point, says Lévy, Publicis was content: “We were quite happy – we didn’t believe we needed to make any other acquisition.”

However, continued consolidation by his rivals left the network slipping back down the food chain. “You move very quickly from a top tier to the second tier, we thought we had to get out of this second tier,” he adds.

The acquisition of Bcom3 in 2002 solved that problem and turned Publicis into the world’s biggest media buyer, although Lévy says this was not the key driver for the deals. “It wasn’t the primary goal, it was nice to have,” he says. “It was clearly an offensive strategy in order to be considered by the advertisers as one of the very best operations in the world to service them.”

His thinking is that, by removing any doubts about the future, clients will be much happier to work with the agency.

“It wasn’t so much that we were fearing to be bought, but, much more strongly, we were thinking that the advertisers would be looking at the top tier.

“There are very few advertisers who are willing to work with small, fragile operations.

Most of them want to work with the strongest because these are the operations that can pay for the talent, that can hire the best in the industry and that can invest in the new tools and the talent,” he says.

And he points out that, with the exception of Havas, Grey and the Japanese operations, the other mid-table players have disappeared.

However, he remains convinced that the price of Publicis at that time would have put off potential purchasers.

Highest rate of growth

“Publicis could have been a target. I don’t believe it would have been in a position to be bought,” he says. “During that period when we were in the second tier we had the highest rate of growth, as well as the highest profitability and the highest multiple, therefore we were quite expensive to be bought, to pay a premium on top of this would have been quite expensive.”

And he confirms recent press reports that there is still some strategic purchasing. In particular, Publicis is looking at boosting Saatchi & Saatchi in some European markets as well as improving its resources in marketing services specialisms such as events, CRM, product PR and healthcare sectors.

The relationship with Dentsu, which has a 15% share in Publicis following the BCom3 deal has already spawned a sports content and marketing agency, ISe. “Without Dentsu, we wouldn’t be in a position to do what we have done with ISe because we’re not equipped for such a field. They’ve known how, which is very good,” he says.

While other ventures may still come out of this partnership, the equity relationship will remain the same for some time. As part of the BCom3 deal, Dentsu will keep its stake at current levels for a decade.

Lévy says the relationship has already succeeded beyond the expectations of both sides and also allows Publicis the competitive edge of being able to include Japan as part of its global media and advertising offer.

According to agency bosses, the ecolo“My primary goal was to have the full range of services and being ranked among the top tier of operations. We are there”  gy of the Publicis network is that it usually lets the disparate arms of his empire get on with things, as long as everyone hits their targets.

Under Publicis, Saatchi & Saatchi has continued with its “ideas”-based positioning, while Leo Burnett’s more “holistic” approach has been helped by being able to work with the likes of Frankel, Semaphore Partners and Arc.

“When Leo Burnett joined us they were struggling in order to get more assets in the area of marketing services because they already were believing in marketing services and holistic approach,” he says. “Today they have all the means of communication to cover all the techniques, which they had not before the merger.”

At the same time, he has not been afraid to close down operations that he felt had no future. In 2002, he shut ad agency d’Arcy, putting an end to 96 years of advertising history.

Lévy says his management style is handson, leading by example and demanding only the best. When he says “sometimes I think that I’m pushing too hard” his attitude sounds similar to that of the Decaux family, which takes everything very personally.

So is there something French about this way of working? “If the underlying consequence [is] that we’re not well organised, it is French. If it is that we are highly committed, it is French. If it is that we are very respectful of the cultures and the differences, it is French. If it is that it is efficient, it is international,” is his response.

Rapid promotion

Lévy started his career in IT coming into Publicis in 1971 to run the data processing and information technology side of the business.

He was rapidly promoted by founder and wartime resistance hero Marcel BleusteinBlanchet, whose picture still adorns the lobby and can be found on the walls of Lévy’s office.

In 1988, he became only the second chief executive or président du directoire of Publicis Groupe.

The founder’s legacy remains in the head office in the form of the restaurant and shops that he established to allow the public to buy newspapers, wine, food and, even, cigars.

Additionally, the predominance of the Publicis lion-head logo on the walls and doors, which is a reminder of Bleustein-Blanchet’s star sign.

Lévy is urbane and gently humorous and French advertising life clearly engenders more time for discussion than Anglo-Saxon culture. There is clearly more flexibility in his schedule than those of some of his contemporaries.

He says his background has enabled him to apply more rigour to some of the challenges he has faced, but the key is getting the balance right with creativity. “I think that what you learn when you do studies based on maths, physics and electronics is the rigour,” he says.

His advice for anyone who wants to make it to the top today is to be fearless. “To be absolutely fearless in every aspect. Above all, to be fearless about breaking rules, don’t hesitate to think differently,” he says.

“One of the secrets of Publicis and the success of Publicis has been la difference – the fact that we think differently to the others.”

Talent will always be recognised

And he says you have to have faith in your own ability. “In this industry, the beauty is that you can rely on your talent and your talent will always be recognised,” he says. “I would say to young people be fearless, don’t hesitate to push the old men, don’t hesitate to push the old model. Our industry has an appetite for ideas; this is one of the few things where brain, talent and imagination is more important than money.”

His desk may be chaos when we meet, midmorning, but it is said to be clear by the time he leaves the office every day. Others in the business say he can be too work-focused, but, possibly, that comes with the territory.

That attention looks to be paying dividends and the recent results show that performance is not slacking.

Lévy says that Publicis has been welcomed to the top table by advertisers who are pleased to see “a new challenger with a personality which is very dynamic and a lot of people wanting to engage, comment and a lot of very young talent, breaking the rules, determined to win.”

“As we’re not loaded with a lot of the structure and dust of the past we’re looking at the world with new eyes and new angles so we don’t hesitate to change,” he says. “We’re there to help our clients to build brands, gain market share, build their success. That must be our obsession, if we do our task right and focus on this, we don’t need to focus on our own management.

“We will gain market share, we will gain position, we will gain, also, more money, simply from the fact that we are delivering what we are paid for.”

When results for the first quarter of 2004 were announced at the start of May, Lévy felt confident enough to restate the group’s ambitions for a 15% margin by the end of the year.

Organic growth was 4.4%, driven by Asia Pacific and an improving market in the US.

Although Recma recently pointed out that media growth in Publicis was slower than some of his rivals, Lévy insists this is not the case and that rivals have been bolstered by purchases and restructuring.

Fastest growing agency

“In terms of wins, pure wins, we’ve had much more new business than any other agency. For example, WPP bought some operations of Cordiant.” He says that, if the transfer of media buying within larger goups is removed, Publicis is the fastest-growing.

He cites a recent Lehman Brothers report that handed the network its new business title for 2003. Wins for Sanofi, McDonald’s and Coke and Fromagerie Bel contributing to $900m-worth of extra billings in the year.

Additionally, he adds there are signs of recovery across the world, led by media and advertising, rather than marketing services.

The US has been improving since the last quarter of 2003 and even in sluggish Europe the picture is improving.

“The UK seems to be picking up quietly, but solidly. The growth in Latin countries, such as Spain and Italy, is strong but hectic,” he says, adding that France and Germany could finally start to perform later in the year.

“Germany is showing some signs of recovery and we believe that France might well be back during the summer.”

And he insists that, with the exception of one or two markets, he’s cautious about the possibility of Publicis following the path of WPP, Omnicom and IPG in creating a joint buying shop to combine the power of Starcom MediaVest and ZenithOptimedia.

UK sources insist that the fact that such a merger has not already been announced to coincide with the retirement of ZenithOptimedia boss John Perriss, which would have made sense, is a clear signal that it is not on the current agenda.

Lévy says other factors still remain more crucial. “If bargaining power is important, there’s something which is much more important today, which is innovation and tools and we are known for having today a far greater set of tools than any of our competitors.

“We’ve developed a lot of research programmes, proprietary tools that help us deliver to our clients the best return on investment that they can expect, to better connect with the consumer, to not waste their money and to reach the consumer at the right moment,” he says.

Lévy on...

Omnicom “I have great admiration for Omnicom and what they have built. It is consistent for years and it also has a spirit within the organisation which shows it goes beyond the numbers.”

WPP “I have a great admiration for the accounting abilities of WPP.”

IPG “IPG is currently under serious issues, I think it was the father of the holding company and it has done well during something like 30 years and it is facing a difficult period but I’m pretty sure it will come out of that period in the next few years. Currently it’s a model that seems to be facing some issues.”

Work to be done

Lévy stresses that there is still a lot of other work to be done.

“Consolidation of media into one or two media agencies is a process which is just beginning,” he says. “Now it’s starting to be on a global basis and there are a few competitions where we have a global approach.”

Publicis is clearly still at the early days of its own thinking on media consolidation.

“We haven’t yet decided which kind of structure we’ll be putting in place, but we do believe it will be of the utmost importance to leverage our position and our media buying power in many countries,” he says.

“At the same time, there are two very important considerations. One is that we want to keep our brands totally independent and to make sure that we are using the bargaining without jeopardising the personality of the brand.”

However, he admits that even an operation on the scale of Publicis can be missing the odd bit of muscle. “If we’re talking about media, I think that we’re in the biggest countries, we’re either number one or number two with the exception of France and Germany so we’re in a very strong position,” he says.

“If there’s more muscle to add to our operation it’s probably in these countries, France and Germany.”

Having hauled itself back to the top tier of the advertising table, Levy admits that there will certainly be more consolidation, partly driven by the fact that the number of clients is continually reducing.

“I believe there will be another round of consolidation. When you look at the advertisers, they’re continuing to consolidate. There are some mergers that are underway. You have Sanofi-Aventis, you had Safeway in the UK,” he says. “The fewer are the advertisers, the fewer also will be the ad agencies. The strategy of a communication group like ours is limited by the strategy of the advertisers.”

Unattainable level of scale

However, he believes that no one else will be joining the top table. “I think it is today quite impossible if you look realistically based on facts. Even if Havas and Grey come together they will be much smaller than Publicis. I think that they missed the opportunity and that today it’s almost impossible to reach the level of scale that we have.”

That is not to say that they do not have an independent future, chasing smaller advertisers and challenger brands around the world.

For Publicis, however, the decision is likely to be who to buy next, rather than how to avoid being the prey, and that, says Lévy, is a good sell to clients.

“It’s a lot better to work with a successful agency rather than the agency which will be the next to be bought,” he says

The career of Maurice Lévy

Lévy first joined Publicis in 1971 with responsibility for data processing and information technology. He rapidly moved into the agency’s core territory – advertising and marketing – and, by 1973, was secretary general of the company and, in 1981, president of Publicis Conseil.

By creating a group of specialised and generalservice agencies around the core business, he added scale to the operation in both France and Europe. By the early ’80s he had taken change of international developments for Publicis Conseil clients.

He became vice-president of the group in 1986 and, in 1988, became chairman and chief executive, or président du directoire,taking over from founder Marcel Bleustein-Blanchet.

He has also been president of the jury at the Cannes Advertising Film Festival, serviced on the French Government commission to combat drug addiction and is a member of the advisory committee of the Banque de France.

Born in 1942, he has three sons, four grandchildren and his interests include modern and contemporary art, antiques, chess and skiing.

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