Maurice Lévy, chairman of Publicis’ supervisory board and the firm's CEO until 2017, described a “sea change” in the industry, and said the company’s takeover of Epsilon represents an attempt at “metamorphosis”. It needed to gamble.
“We are in a new world where you have to react very fast,” he told the Financial Times. Even compared to a few years ago, the operational reality of an agency holding group has changed enormously. He discounts the hangover of the “mad men” of an adland now long disappeared. “Now that’s not enough.”
As consumers shift from mass media to more personalised digital media, the company is betting on a treasure trove of data and the plumbing through which to use it. To do so, however, Publicis had to make the largest acquisition of its 93-year history.
“The future is based on data. It is not based on any mass media. We know that mass media is [declining] every day,” he told the FT. “And if an advertising agency wants to have a future, data is absolutely indispensable.” He goes further: “The fastest-growing segment in our industry is data, technology, internet. Period. All the rest is suffering.”
In mid-April, the Group bought Alliance Data Systems’ Epsilon unit as part of a stated strategy to become “the preferred transformation partner for its clients”.
The Epsilon business, which specialises in loyalty and email-marketing, brings the holding company a hoard of data – covering 255 million people – and an army of scientists to deal with it.
CEO Arthur Sadoun explained that the deal was an attempt to help clients through increasing consumer expectations.
At first, Epsilon has not yet helped to navigate the third-largest advertising company to still waters. Moody’s, the credit rating firm, downgraded its outlook on Publicis stock, noting increased leverage, the risks of such a large integration, as well as “structural and cyclical challenges” in the ad industry.
Like most agency holding groups, Publicis has felt the pressure of financial markets that expect costly pivots and healthy quarterly profits to coexist comfortably. No holding group appears to have found a magic bullet. Greater integration across business segments, simplification, a focus on digital transformation and consultancy offerings have grown in prominence across the board.
By comparison, the world’s largest advertising company, WPP, announced in December a transformation plan under a new CEO in which traditional communications – advertising, media, brand strategy – forms just one part of a four-pronged position. The remaining three all tout technological or data capabilities.
Sourced from the Financial Times, WARC, Moody’s; additional content by WARC staff