Related Images
Right and Left Brain From left to right: Maurice Lévy, Davig Droga, and David Kenny at Droga5 offices in Manhattan.
Related StoriesPublicis's network today, like those of the other big holding companies, extends to the far reaches of the globe. Historically, the networks have grown by picking up hot shops as they reached maturity, but in the past few years, as the race for digital assets has heated up, there have been fewer obvious targets -- and more competition for them. In the end, the move Lévy made was a surprise to just about everyone: the megadeal with Boston-based Digitas, the fourth-largest marketing-services agency and third-largest interactive agency in the country, with $390 million in worldwide revenue in 2006.
The plot was hatched three years earlier, when members of Publicis's executive committee, P12, sat down to ponder the company's future. The goal was to find an acquisition candidate that could handle clients' growing digital demands, from producing huge volumes of targeted ads to mining the resulting data for consumer insights. Rather than adopt Omnicom's strategy of building out digital capabilities within each agency network, the Publicis team wanted one shared entity for the entire Groupe. Sketching a line on a tablet of paper in his office overlooking the Hudson River, Kevin Roberts, the swashbuckling worldwide CEO of Saatchi & Saatchi, recalls the meeting. "I said to Maurice and the guys, 'I think the Groupe should play here and here,'" indicating endpoints labeled OPERATIONS and TECHNOLOGY. Then, drawing a circle at the center of the line, he told them, "The individual agencies should find competitive positioning to play here." The Saatchis, Leo Burnetts, and Fallons would each be free to establish their own creative reputations in the industry, leveraging a shared technological infrastructure and brain trust.
The group agreed that Digitas was the shop of choice, and Lévy vowed to make it happen. "Maurice was like a hunter in the jungle," Roberts says. But Digitas proved an elusive prey.
For one thing, David Kenny was not sure he wanted his company to be acquired. He and his team had survived the dotcom meltdown -- when the stock fell from $29.50 to $0.88 -- and were now thriving, picking up such tony accounts as Miller Brewing Co.,
"Maurice told me, 'I really like the idea [of acquiring Digitas], but you guys are so expensive, I don't see how I can afford it,'" Kenny says, adding that he had already turned away several suitors. "I told him, ‘Come back when you're serious.'"
After a rocky summer for Digitas in 2006, including the loss of three clients in the Chicago office, Kenny began warming up to a Publicis deal. "We began to get our heads around the fact that simply being the best digital agency on the planet wasn't a winning strategy," he says. Or, in Roberts's more acid assessment, "David had seen what the future was like -- that he wasn't going to break into
By joining Publicis, Kenny would not only get scale (and, eventually, every bit of his $1.3 billion), but also access to those elusive blue-chip clients. In mid-December 2006, an agreement was announced, the biggest ad-industry deal since WPP bought Grey Global Group in 2005.
The market applauded. "It's a huge opportunity to leverage what Digitas does in the Publicis network," says Thomas Singlehurst, an analyst with Citi Investment Research in London (Publicis recently delisted itself from the NYSE). "And Lévy," he adds, "is by far the best integrator of assets next to Omnicom. So far, he hasn't invested his capital base on a deal gone wrong."
But now it's mostly up to Kenny to figure out how that integration is to work. As he told Advertising Age in May, "I've got to transform [Digitas], to rethink it as having one kitchen with many restaurants."
Given the size of Publicis's operations, he has his cooking cut out for him.
Email
Digg
StumbleUpon
Facebook
Buzz Up!
LinkedIn
