'There Will be Casualties,' Warns Publicis Boss Lévy

16 December 2008

PARIS: Maurice Lévy (pictured), chairman/ceo of French marketing services titan Publicis Groupe appears to be something of a philosopher – a quality which when grafted onto his keen commercial savvy, could account for the group's broad operational base.

Which it's going to need in 2009 when, according to a recent forecast by Morgan Stanley, the holding company's revenues are set to take a 4% dive. [Although why anyone should ever again heed the opinions of an investment bank defies credibility.] 

Given the preponderance of automakers on  Lévy's client list – General Motors, Renault, Toyota and Fiat, accounting between them for around one third of Publicis revenues – he is clearly likely to need every gram of philosophy he can muster.

Perhaps Blaise Pascal's dictum guided him: 'We know truth, not only by reason, but also by the heart.'

And Lévy's heart told him a couple of years back that the looming economic crisis would accelerate the shift of advertising from traditional media to the internet.

In 2006 Publicis acquired Digitas, a specialist in online marketing, for $1.3 billion (€973.9m; £874.0m). By 2010, he says, 15% of global ad spending will be online.

Moreover Lévy has invested heavily in emerging markets, where ad spending has been growing more rapidly than in Western Europe, Japan or North America .

"This [trend to online] has recently become a higher risk strategy," opined Morgan Stanley, arguing that the belief that internet ad spending will be less affected by the downturn, is an unproven nostrum. Moreover, emerging markets can also be volatile.

But with another apparent nod to a Pascal axiom ('People are usually more convinced by reasons they discovered themselves than by those found by others) Lévy insists Publicis will stand by its strategy.

"It is important at a time like this not to spend a lot of time on chess games," Lévy said. "We are not looking at any game-changing operations."

He believes large and geographically diversified marketing services operations like Publicis, as well as small, boutique agencies with a creative reputation, will suffer less from the recession than midsize companies.

"There will be casualties," Lévy said, naming no names. "There will be consolidation. There will be companies that will not be in business when this crisis is over – advertisers, advertising agencies and media."

He is also caustic about the roots of the crisis, echoing a widely held European view that a "perversion" of capitalism drove Wall Street to try to profit from the idea of extending home ownership to the masses. "Capitalism cannot be only about maximizing profit," he declared.

Challenged his interviewer: "But aren't advertising and marketing all about fueling capitalism – about making people want bigger houses, and things to fill them with?

Lévy riposted: "We don't lie to them, we don't cheat them," he said. "We don't tell them something is a triple-A product when it is not a triple-A product."

Worthy of Pascal, n'est pas?

Data sourced from International Herald Tribune; additional content by WARC staff