Publicis Group Chairman Discussed Bcom3 Acquisition

by Paul Gough, Nov 22, 2002, 12:00 AM

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As Publicis Group SA integrates Bcom3 following its acquisition this fall, CEO Maurice Levy says that Publicis' standing among the top advertisers has made it a force to be reckoned with.

Speaking to analysts and investors at a conference Thursday sponsored by CIBC World Markets in New York, Levy points to Proctor & Gamble's recent announcement of its consolidation of accounts in favor of Publicis as evidence of the company's strength in key markets, including the U.S. and Europe.

"A client must look at us because of the sheer presence we have in these target markets," Levy says.

That presence was increased in September when Publicis acquired Bcom3, capping five years of growth that has led it in 1997 to being the 13th largest advertising agency in the world with $700 million in billing to its place today as the world's fourth-largest, with $4 billion in billings annually. It now owns Saatchi and Saatchi, Leo Burnett and Fallon. Publicis' holding company is also the largest media buyer in the world with Starcom MediaVest and Zenith Optimedia.

Years ago, Publicis saw the future as being one where there were very large agencies and there were smaller agencies but probably no room for the middle-sized agencies.

"We had to make some decisions to not be in the second class," Levy says.

Levy says its position in media buying - where with the acquisition it places slightly ahead of Interpublic and WPP - is part of the company's strategy to create three major advertising networks that share back office but are creatively independent. He said that Starcom and Zenith will continue as separate companies under the overall control of Publicis COO Roger Haupt and individual control of Starcom MediaVest CEO Jack Klues and Zenith CEO John Perriss. Levy stresses that both brands and their managements will remain completely independent.

Bcom 3's acquisition has led to some changes at Publicis, however. Bcom 3's head offices in Chicago and New York will be closed by March 2003. Its organization will be absorbed into the rest of Publicis within the next year. Another casualty will The D'Arcy Network, which will close its head office in New York and its operations merged into other Publicis companies. Levy says the company is working on that right now.

Levy also says that despite the publicized travails of a competitor, he didn't expect the advertising industry as a whole to follow the path of companies like Enron and WorldCom. He said strong management and attention to accounting practices are key although he did acknowledge that in some companies, the process can lead to becoming overly optimistic about costs and revenues. He also says that with Bcom3's acquisition, Publicis has instituted an internal auditing review.

He declined to discuss much about the immediate future of the industry, saying that he didn't have a crystal ball. But he says the there will be some increase in advertising within the next year. He also predicts that consolidation will continue among advertisers as soon as the stock market recovers. He said Publicis would resume acquisitions, perhaps in specialty fields, at some point but there would be nothing major.

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