If you thought Publicis Groupe's appetite for acquisitions was sated after a string of mega digital deals -- including LBi ($450 million) and Rokkan ($575 million) in 2012, Rosetta ($575 million) in 2011, Razorfish ($530 million) in 2009, and Digitas ($1.3 billion) in 2007 – then think again.
Publicis Groupe to Spend $4 Billion on Acquisitions Over Next Five Years
At Publicis Groupe's investor day on Tuesday, which was hosted in London for the first time to move closer to where the majority of the company's stakeholders and analysts reside, CEO Maurice Levy announced that the French advertising group is planning to spend almost $4 billion in acquisitions over the next five years. That means it plans to gobble up companies at a rate of between $650 million and $780 million each year.
The deals will form the backbone of an aggressive five-year plan for Publicis Groupe, during which time Mr. Levy is aiming for 75% of the company's revenue to come from digital and emerging markets.
His company and others have already snapped up the bulk of big digital players. So now, the holding company is now turning its focus will be to small and medium-size digital companies in emerging markets. He said, "There are very few big ones, if any. It will be a collection of acquisitions and it's a hard job to find the right ones. That's the reason it's a five-year plan and not a two-year plan."
Last week's acquisition of Neeve, an Indian technology-service provider, is more typical of the deals the market will see Publicis Groupe pursue over the next five years.
Another key theme of the day was to highlight the bond Publicis Groupe has created between Silicon Valley and his Paris headquarters. As evidence, Mr. Levy showed films of Facebook Chief Operating Officer Sheryl Sandberg and Google's executive chairman Eric Schmidt, praising both the Publicis Groupe, and Mr. Levy personally.
Ms. Sandberg talked about Mr. Levy's "beautiful corner office in Paris" and said, "No one understands this new world better than Publicis." Her much-talked about book, "Lean In," was included in the swag bags that attendees left with. Mr. Schmidt similarly waxed poetic about Mr. Levy. That Publicis Groupe is endearing itself to the tech community was further underscored by the deal its Starcom Mediavest Group arm struck with Twitter this week.
"We have changed the business and agency model," Mr. Levy said. "We are not only about media and storytelling, it's also marketing and sales, and we've moved into the space of technology and innovation. We expect high growth and improved margins because we've changed the model. There won't be one magical thing that changes growth or margins; we are doing a lot of things in different areas to give us the right solution."
In addition to Mr. Levy, 25 big hitters from Publicis Groupe around the world, including group COO and executive chairman of Publicis Worldwide, Jean-Yves Naouri; CFO Jean-Michel Étienne; and the Global CEOs of Leo Burnett, DigitasLBi, Rosetta, Razorfish, ZenithOptimedia, Starcom MediaVest Group and MSLGROUP' class='directory_entry' title='Ad Age LookBook'>MSL Group, were among those who made presentations to analysts at the event.
When asked if he would still be around in 2018 to announce the results of the five-year plan, Mr. Levy was unequivocal about the fact that he would be gone by then. "I'm disappointed that you didn't ask me if I was staying around until 2080, not 2018," he joked, before saying that he would not be there in 2018 and that, as he was busy being CEO, the board was in charge of finding a successor.
Mr. Levy, 71, has been CEO since 1987, and his decision to stay in the role so long has led to much speculation about who will take his place when he retires. His successor may have been among the execs gathered in East London, close to the area known as "Silicon Roundabout."