$142.5B 2015 U.S. ad spending for 200 LNA
Publicis Groupe today announced a reorganization that creates more buying scale across Publicis and aligns previously fragmented media agency networks. While it's a massive change, it's not necessarily revolutionary.
Steve King, who was recently named CEO of the newly created Publicis Media network within the holding company, talks to Ad Age about why consolidating six agency brands to four, along with reshuffling leadership, is not a "first-mover" approach, and why that's O.K. He also covers the impact on staff, pitchapalooza and why the Vivaki brand had to go.
Ad Age: Why this agency consolidation approach?
Steve King: Zenith was the first media business we ever set up, but it's more advantageous to have a last-mover advantage, and that's what we're doing here. We need to focus this business around trust, talent and transformation. Those are huge challenges for our industry and for us. Every magazine, every retailer and auto manufacturer -- their business is being disrupted. Media agencies have as good an opportunity as any to play a part in that transformation. We understand about brands. We understand about consumers. Now we have the ability to leverage data and analytics in a powerful way, and we have relationships with digital media distributors like Google, Yahoo, Facebook, Snapchat, etc.
Ad Age: When you say last-mover, do you mean similar to other models like GroupM's? Because this looks similar to what they've set up.
Steve King: Yes. Some parts of our organization have been world class, and some areas lacking. Across the business as a whole, we had the leadership position, but we were not scaled. Scaling [seven] practices in particular areas, like tech, data and analytics, draws a line in the sand from what we've done across geographies and brands. This has to be very simple, because the business is complex. Sometimes we forget that the reason clients come to us is to help in communications and investments they make in reaching consumers. Sometimes we overcomplicate our story by showing everyone the engineering in technology, but the reason people buy a BMW over another car is because of the benefits the driver experiences. This is an attempt to simplify, to have leaner and less P&Ls.
Ad Age: How much of this is about buying clout across one larger buying engine?
Steve King: We've got scale that is enormous not just in terms of buying, but in terms of insight and intellect alongside that. We've got [four] distinctive brands and have to deliver through those brands. This is not a model where the holding company is sitting above the brand, effectively dominating and telling them where they need to allocate their investments. We're investing and delivering for clients without compromise. The [agency] brand looks for the lowest pricing, scaling that, but delivering against custom needs of individualized clients.
Ad Age: Why did you eliminate Vivaki?
Steve King: I wanted to do everything we could to eliminate layers and make the business simpler. The more brands you have out there, the more complex the performance is for the clients. When Laura [Desmond] and I took over the chairmanship for Vivaki, we took the managed service level of [Audience on Demand, the central trading desk that lived within Vivaki] and moved that back into the [agency] brands. Suddenly, everyone says 'I get this.' They're more transparent, they're not buying in an outsourced buying unit. They understand that business, and they know how that works in an overall media plan.
Ad Age: How does this agency consolidation affect headcount across agencies?
Steve King: What this will allow us to do is make some efficiencies. When removing P&Ls, it makes the business easier to manage. One of the advantages is we can help our clients by directing and redirecting roles and responsibilities and some of the administrative [roles] we have in multiple brands. There will be efficiencies in that area. We'll be redirecting those efficiencies into areas where we'll consolidate and accelerate the presence of data, analytics, content and technology.
Ad Age: It's been a rough year for SMG during pitchapalooza. Will some of these changes safeguard the group should there be another crazy pitch year?
Steve King: Every agency competitor has gone through periods where they lose clients. Sometimes, they come to the end of their cycle; sometimes it's the cost of being the incumbent; sometimes it's pricing; sometimes these things come together and they go, 'Oh this is a broken business model.' We've seen and learned that if you invent in the very best people that business will prevail. I definitely think this organization will give us a much better chance of succeeding. Who knows what will happen with other clients in the future. I think this organization is a step in the right direction.
Ad Age: What are your future goals once the group has finished adjusting to this new structure?
Steve King: Every client is challenging the way they communicate and promote and sell and connect with consumers -- the way consumers receive info, the way we measure that. The whole supply chain, if you like, and the brand experience map, is entirely disrupted. Every client is desperate for a simpler business model. We're talking about media organizations today. For me it's about how do we deliver across the totality of Publicis Groupe.