Publicis: VivaKi Unites Digital, 2Q Global Revs Flat

by David Goetzl, Jul 25, 2008, 7:30 AM

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Although he provided few new details, CEO Maurice Levy touted Publicis Groupe's new alliance of media operations on Thursday, saying it has the holding company primed for the "digital transformation."

Levy said the four units comprising VivaKi will benefit from scale vis-à-vis the Internet giants, as well as a central research node that will keep them abreast of the latest technologies, a key service for clients.

Still, he seemed to waver as to how much cooperation there ultimately will be between the units: Starcom MediaVest, ZenithOptimedia, Digitas and Denuo. On paper, Digitas clearly is the maypole in VivaKi with its new-media expertise. But Levy said the units will continue to operate autonomously to avoid client conflicts, although there will be synergies, partnerships and no balkanization.

"The shift to digital is something which is, in many operations, constrained by the silo approach," Levy said during an event to discuss recent Publicis results. "With VivaKi, no silos. And there is no issue in shifting from analog to digital media."

The scale of the combined heft--be it in dollars or influence--gives VivaKi leverage in forging partnerships with Internet leaders such as Google and Yahoo, Levy said, echoing previous statements.

VivaKi's financial impact is still unclear, he said, given that it was announced in June--although that should come into focus over the next six months. The four units currently account for $2 billion in revenue and have 14,000 employees, Publicis said.

In the first half of 2008, Publicis reported a slight drop (less than 1%) in global revenues to $3.5 billion. The company attributed the decrease mostly to a weakening dollar, and said that discounting exchange rates, revenues would have been up 7.6%. Operating income dropped 3% to $502 million.

The holding company posted solid results, with organic growth up 5.4%. The company said that figure would have been higher, but for a weakened health-care category. Stripping out health care--which Levy said has been hindered, in part, by a slowdown in new product launches--organic growth was 7.1%.

Emphasizing Publicis' focus on building its digital businesses, the company said that in the first half of 2008, digital operations accounted for 19% of revenue, compared to 13% in 2007.

On the more traditional advertising front, Levy said Publicis has benefited from a revivification of Leo Burnett. The Chicago-based agency has been "facing a few tough years," he said, and has been somewhat of a financial drag. But he said in the first half of this year, it delivered the highest growth of all Publicis ad agencies. "Leo Burnett is back on track," Levy said.

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