Maurice Levy Points Finger at Rival WPP Over Client Conflicts
For newly-minted colleagues Maurice Levy and John Wren, it's been a parade of conference calls and question-answering about the merits of their deal to create the biggest ad firm in history.
For journalists and analysts, it went from radio silence last week to a crescendo of communications scheduled haphazardly and at inconvenient times. The first press conference was announced this past Saturday afternoon to take place early on Sunday morning. Another three have taken place since, the latest one being announced at 6:30 pm on Tuesday to take place at 7am on Wednesday.
The flurry of discussion around the Publicis Omnicom Group merger has set the tone for what's shaping up to be a months-long process during which Messrs. Levy and Wren will be pressed repeatedly to justify the reasons for the deal and address just how they plan to integrate the two companies that just a week ago were competitors.
Unlike the first few analyst and press calls in which they touted the virtues of the deal and stressed their enduring respect for one another, on today's call, which lasted 90 minutes, they went on the defensive to refute critics of the union -- or as Mr. Wren at one point referred to them, "flare-throwers."
Mr. Levy -- who once again dominated the discussion (he and Mr. Wren were joined on the call by their chief financial officers, Jean-Michel Etienne and Randy Weisenberger) -- spent time repudiating the idea that conflicts between clients would be one of the deal's biggest risks, something many obsevers have suggested. His take? Those that think Publicis Omnicom Group can't navigate their way through clients' concerns are wrong, and clients are far more flexible on the issue than they used to be.
"There are some people who are flagging conflict as an issue that will create enormous problems," he said. But, that's something that was a problem primarily back in the 1970s. Today, clients are generally more pragmatic about it. What's more, although he didn't come right out and say it, Mr. Levy suggested that big clients are unlikely to be able to avoid conflicts anymore -- and aren't going to find a better workable solution by going to work with other holding companies.
WPP and conflicts
"WPP is a holding company that is handling, as just one example, Colgate Palmolive toothpaste and other things, Unilever toothpaste and other things, Procter & Gamble beauty cosmetics and a few other things, and a large piece of Kimberly-Clark," pointed out Mr. Levy. And, he said, those companies wouldn't have felt comfortable with such an arrangement "only 10 ten years ago."
"Some conflicts are more difficult than some others," said Mr. Levy. "Beyond the fact you are putting some clear firewalls in, there are emotional aspects. We are not dismissing the emotional aspects ... so we discussed that and looked at the possibilities and we do believe that we will be able to offer solutions to all our clients."
He later added: "I'm telling you on both sides, we had numerous emails from clients who said this is great for us." In discussing WPP, Mr. Levy did not, however, mention the team approach the company has been employing to create firewalls and up-sell new marketing services. Such a team is used for client Colgate-Palmolive, and this strategy of building dedicated-agency structures is one WPP has been actively pitching to big marketers.
Asked to respond to Mr. Levy's remarks, WPP CEO Mr. Sorrell said: "I think conflicts still matter if not managed and organized appropriately. There's still a problem if they're not discussed openly and approvals aren't given in a studied way with thought-through appropriate organizational structures. All depends on what the motivations and circumstances are. There may be a diseconomy of scale operating in this particular area, particularly if things are rushed through for other reasons. In other words, it's about putting clients first."
Minimal distraction and risk
Later in the call, Mr. Wren attempted to dismantle the notion that the merger wasn't done for scale or personal enrichment. To those people who have been "throwing flares," he said: "We're not doing this for size, and not simply for financial reasons. Neither of us is going to get a lot wealthier because of it."
Mr. Wren twice during the call said he wouldn't have contemplated this type of deal with anyone else besides Mr. Levy and Publicis, stressing that the merits of it are proven by the boards' support. It's been more thought out than "some of our competitors would like you to believe," he said.
Mr. Levy also took pains to remind press and analysts that they are both grey-haired men with a lot of experience, vowing to make the integration of the two companies seamless and distraction-free. "I remember when we did the Saatchi deal and analysts said this is a problem company and it's the most broken company on earth. But at the end of the day it's been fantastic." Same with D'Arcy, he said, recalling that people said about Publicis Groupe that "they will lose their soul, they will be distracted."
"This transaction is very big but the risks are very, very low," said Mr. Levy. "There will not be distraction because we are not planning to merge BBDO with Leo Burnett, we are not planning to merge OMD with Starcom. People feel a lot of anxiety because this is generating a lot of changes in the industry. But "it will be run swiftly, easily and there will be minimal distraction and minimal risk. You will be extremely surprised."