Digital Ebullience

French ad agency Publicis’ executive discusses the digital future, multiculturalism and the impact of global economic missteps

By Shamindra Kulamannage.

Published on September 27, 2012 with No Comments

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Advertising had its beginnings and is still dominated by Anglo Saxon firms. However Publicis – a French firm – stands out for its global success in an industry dominated by the Americans and British. It’s perhaps not surprising the ebullient French can be great story tellers. However Publicis is also a global leader in digital marketing with 30% of its revenue coming from digital activities, the largest digital share among the top four advertising groups including worldwide American Interpublic and Omnicom and the British WPP.

Advertising in traditional media is slowing down while online is growing. However advertising firms are not catching all the growth in online spending.  People consume online media on their computers, smart phones and tabs and this is posing complex challenges for brand marketers. Unlike traditional media like TV, radio and print – where spending decisions can be based on ratings and the audience can’t completely ignore the marketing pitch –digital companies are grabbing large chunks of the online spend. One reason for Publicis’ business growth in the digital space is its smart and well timed acquisitions.
The share of advertising spend on digital media in rich countries has shot up to nearly 30% in contrast to Sri Lanka where it’s estimated at less than one percent of marketing spend. But growth potential here is greatest. Tapping smart phone and tab users however is still a challenge because they either have screens too small to display advertising or operating systems are closely controlled by firms like Apple and Google who collect a substantial portion of the online ad spend directly.

Bertrand Siguier is Executive Vice President of Publicis Worldwide, the third largest global advertising group. He is also a Member of the Management Board of the group which runs over 1,200 agencies under the Publicis, Leo Burnett and Saatchi & Saatchi brands employing over 53,000 people. In this interview Siguier discussed the digital future, the impact of Publicis’ unique culture on its business and the challenge posed by global economic troubles. Excerpts of the interview…

Global economic growth has been sloppy during the last couple of years, what’s been the impact of this on your business?
Asia remains an area of strong growth, to put a figure I would say between 7% and 15%, it’s important. The U.S. in spite of the crisis remains the biggest market worldwide, roughly 50%. This is enormous and when the US goes down, then advertising worldwide goes down. US growth should be around 4% which isn’t bad for a market of that size, I mean it’s a monster, it’s an elephant. The third area of progress, we call it BRIC – Brazil, Russia, India & China. Now Europe is the sick man of the advertising business but Europe is doing less well in all areas so we can expect growth of probably say 3% which is minimal growth for a sector like ours because we have some fixed costs, we have to hire people, so 3% is not something to base our future on. I am optimistic for the market as a whole; we plan in 2012 to see around 5% worldwide growth, so there is hope, but it’s a much contrasted situation between various areas.

How does an agency of your size respond to low growth? In a practical sense how do you deal with 2% when you’re ideally geared for 5% plus growth?
Probably in certain areas like manufacturing for instance, people would say well, we have to reduce costs on personnel because they generally have lots of people. I would say I don’t think it’s particularly good management but certainly overnight this is what you can do. We don’t do that because our personnel are quite different. We have highly qualified people altogether. Our adjustments are easier in one way because we work with a lot of our clients on retainer fees, so we know roughly what is going to happen next year and we don’t hire.  Publicis started as a family company and family companies are good at keeping an eye on their money, so we have been used for many years not to hire. Yes we are going to win new business but you invest when the contact is on the table, I would say when the money is there, and so we have had no problem so far adjusting to this crisis. Obviously we recruited less, we have had a salary freeze for all the group. Sixty five thousand people and that has produced immediate results, but no layoffs, no layoffs. In my life with Publicis as an agency, not as the group, which is close to 40 years now, I have never seen one layoff. It’s simply that our industry is based on that, we are a service business, and in the service business, rule number one is, you hire when you have services to give. It’s not like if you are a factory, if you are a steel factory you cannot stop, if you stop, it takes months to get the ball rolling again. In our business, the machine goes down the elevator every day and they come back next morning.

At your level, what’s the focus right now on? On the one hand you have downturn in Europe, You have growth in other markets, you have the ever present disruptive technology. Look at how you are spending your time, what are you focused on?
At my level, we have a strategy and we try to follow this strategy and it’s already showing results. We want to concentrate on digital activities; we want to concentrate on emerging markets -the BRIC. But there are six or seven others like Mexico, Indonesia, Turkey, so we will concentrate also on this and we want to concentrate on our clients. This is one of the reasons why I have been coming to India for some years in order to accelerate as much as possible our growth whether it is for Publicis, Leo Burnett, or Saatchi because they’re all there, I thought it was a good idea to come to Sri Lanka for the first time. We have been talking of the Asian tigers and from what I can see, Sri Lanka has the potential to be a small tiger.

So you identified three areas of your strategy let me talk to you about one of those areas -the digital sphere, how’s that doing?
Today it’s 30% of our turnover; it used to be – needless to say – zero percent 15 years ago. We were one of the first to be on the bandwagon and to say yes this is a very important time for the business. This is not going to go away like other trends, this is not fashion, it is here to stay and it should be big. That’s what we have done in the past 15 years through organic growth of, taking new clients, educating them, and also acquisitions.

Tell me, what about the Publicis culture that made you one of the first agencies  to get on the digital bandwagon?
It will be a big mistake not to be on it, but certain people are better than others at that. I think we are different for many reasons and I take more of a helicopter view to start on this, this is also one of the reasons why I am here. We are different because we come from a different environment. We are not Anglo Saxon based even if advertising is a very Anglo Saxon activity. Advertising was not invented by us in any way, it really was born in the US and they are very good at that, and then it expanded naturally to the UK which is also very good at it. We came later and we were born in Europe. This was both an advantage and a disadvantage. The disadvantage is that Europe has always been a smaller market than the US, but the advantage is that when you start in Europe as we did in 1973, we said yes, we must be European so we started with clients and so on from Italy, Germany and all these European countries. This taught to us the concept of multiculturalism, we are very multicultural. If you are trying to sell coffee in France, in Germany and in Italy- for Nestle for instance – you soon understand that you might not be able to run the same campaign everywhere. In those days the American agencies thought they could. They came to Europe after the war, they looked at Europe and said, Europe is Europe, it’s like US. So in the US you run one campaign from New York to Los Angeles. In Europe you can, but it’s not easy and sometimes you have to be a bit more subtle and say well maybe for this country we need to focus on this a bit more and so on. So multiculturalism is fully in our roots and this has helped us, not only in Europe, but elsewhere in the world because this is a credo that a lot of countries including emerging ones are ready to listen to.

Your share of digital in the agency is close to the share of spend in the market. Is it not?
In the industry I wouldn’t know but I know our main competitors are the top 3 or 4 agencies which are less than 30%.

So what about your culture, apart from perhaps multiculturalism, which makes it possible to have a higher share of the digital market?
The honest answer is, I really do not know. There was a first internet bubble around 1990 and in those days, before the bubble exploded, people said Publicis is late in this area; why are you not investing more. And  we said well yeah we will invest but we’re not too sure about what’s exactly going to happen- is this going to be just a fashion, just something which passes, we’re not sure. We are a bit late, but we will invest, which we did in a small way. We discussed again at the board level in 1995 and thanks to Maurice Lévy who was originally a computer man from 40 years ago, we started to look really seriously at the market and make acquisitions. I certainly would not play down the influence of Maurice Lévy, not because he is the chairman of our group for many years now, but because by training as an engineer, he was quite instrumental in deciding this.

Let me ask you about other areas you are focusing on. One is the emerging markets. When you look at the challenges in these markets versus say the US or Europe which are far more mature markets, is the challenge any different?
Well there we find again, a multicultural attitude, and this is probably quite different in other Anglo Saxon agencies. We are not there to tell people what to do or how to do it. We are just there to show them, share with them some examples which they maybe could adapt, and we are there just to not teach but to guide. There’s a big difference between teaching and advising and guiding you. It’s a pact, not an act.
Look at Sri Lanka it’s not an immature market but not a mature market either. I’ve seen other markets like this many years ago. Now in Eastern Europe, after the communist bloc collapsed, suddenly people discovered capitalism, advertising, marketing, coming from nowhere, and in 10 years’ time they had very very decent agencies, started to train people. So I am very optimistic, already from what I have seen in Sri Lanka with regard to Leo Burnett here it is at a certain level but it will develop very quickly.

What would be great top line growth to have in a market like this?
Topline growth should be above 10%. It’s easier said than done but I think that we can achieve that.

Let me ask you about your mature markets, and something that’s said about Publicis, is the vast experience that its very senior team has including your chairman who’s been on the job for a long time.
He’s been on the job now for, I think 25 years. The French are supposed to be very versatile, ebullient exchanges and people are emotional and so on- we are not. We’ve been very stable. I have been with the company and the chairman for nearly 40 years. When I look at Japan which I follow very closely, I have seen their fourth chairman in 10 years. So I said to my Japanese friends, Japan is supposed to be very stable, but this is my 4th chairman in 11 years- while you are still dealing with the same people- Maurice Lévy, myself and a number of others.

Is that a strength in your opinion?
I think it’s a strength. Big clients like Nestle for instance, really appreciate the experience. This is true for Leo Burnett and also true for Saatchi. Leo Burnett has been working with Philip Morris for I don’t know how many years, Procter and Gamble a long time, so experience helps cement the relationship with large clients. We’ve had for instance in France Renault since 1965, this means that there is a sort of inbred knowledge of the brand in the agency.

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