Publicis Groupe in Talks to Acquire Big Fuel

Booming Social-Media Agency Counts McDonald's, GM, T-Mobile as Clients

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Publicis Groupe 's Vivaki unit is in advanced talks to acquire Big Fuel, a New York-based social-media agency, Ad Age has learned.

Big Fuel, which bills itself as a "pure-play social-media agency designed for the needs of large brands," shares a number of clients with Publicis Groupe . Among them are General Motors, McDonald's, Microsoft and T-Mobile, which just tapped Big Fuel to serve as its first social-media agency of record earlier this week. GM has been a transformative client for Big Fuel; new assignments from the automaker have forced the agency to increase headcount substantially in the last six months, according to two people briefed on the company.

Big Fuel CEO Jon Bond and a Vivaki spokeswoman did not respond to requests for comment by press time.

Big Fuel was born in 2008, when TV producer Avi Savar renamed his existing broadcast production agency. Then focused on branded content, the agency has since evolved to handle social media for marketers.

The deal -- which people familiar with the situation say is in the advanced stages and could see a contract agreement materialize within a week -- comes as the third-largest agency holding company has expanded its budget for acquisitions, with a focus on digital companies and growing its footprint in China and other emerging markets.

Publicis has been extremely aggressive on the acquisition front in recent years. This past spring, Publicis announced plans to acquire digital agency Rosetta for $575 million. The deal has since closed, meaning Publicis has now acquired three of the top 10 digital agencies by U.S. revenue, according to Ad Age Data Center. No. 1 Digitas, the first major digital agency acquisition, was purchased for $1.3 billion in 2006; and No. 4 Razorfish sold for $530 million plus media commitments in 2009. Given that the agency is relatively young, Big Fuel is likely far from the hundreds of millions in revenue Publicis' triumvirate of digital agencies each bring in.

Publicis CEO Maurice Levy during the Cannes International Festival of Creativity last month told Bloomberg the company will spend more than initially planned on acquisitions, increasing the amount it has set aside for M&A activity in 2011 to just less than $1 billion compared to an earlier target of a little more than $700 million.

Of course, more than half of that amount was used up on the French company's acquisition of Hamilton, N.J.-based Rosetta.

As the acquisitions come in, the digital infrastructure becomes increasingly nebulous at the holding company: Digitas and Razorfish are part of Vivaki, which also includes Publicis' media agency umbrellas ZenithOptimedia and Starcom Mediavest Group. However, Rosetta is a standalone entity within Publicis, with no affiliation to Vivaki. Agency CEO Chris Kuenne reports directly to Jean-Yves Naouri, Publicis' chief operating officer, while Digitas and Razorfish execs report up through the Vivaki structure.

What's more, considering all these agencies contain social-media expertise -- some with social-media-only accounts -- only time will tell how Big Fuel will fit in with its new siblings if the deal goes through.

Early this year, Mr. Bond, a longtime ad man and co-founder of Kirshenbaum Bond Senecal & Partners, the New York ad agency he worked at for 23 years, left a personal venture to become CEO and equity partner of Big Fuel.

All told, the Big Fuel acquisition gets Publicis one step closer to achieving its goal of deriving 35% of total revenue from digital business. The company said the Rosetta acquisition will increase its digital business to slightly more than 30% of total revenue at that time.

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