• by David Kaplan , September 9, 2004

On the same day it released positive earnings numbers for the first half of 2004, Publicis Groupe, the French ad agency holding company, is forming a new media management board to oversee and enhance the buying power of its two global media shops, Starcom MediaVest Group and ZenithOptimedia.

In its earnings report, Publicis cited organic growth of 4.5 percent with revenues of $1.85 billion and its operating margin was 14.4 percent--up 110 basis points over the same period last year. Operating income before depreciation and amortization increased 3.2 percent to $324 million. Net new business was $1.9 billion for the first six months of 2004.

All of this is designed to keep growing with some help from its new media services structure. The media management board has been dubbed Publicis Groupe Media, and will be led by Roger Haupt, chief operating officer of Publicis Groupe. PGM will also include Jack Klues, chief executive officer of SMG, and Steve King, chief executive officer of ZenithOptimedia.

"While the two global networks will remain totally independent and continue to focus on providing outstanding service to their clients, the members of Publicis Groupe Media will carefully evaluate and pursue Groupe-level investments and improvements that simultaneously empower each network with greater resources, talent and tools, while also preserving the exclusive and proprietary nature of our clients," said Maurice Lévy, chairman and CEO of Publicis Groupe, in a statement.

PGM's mission will also be to encourage the sharing of the diversified service business units that exist within ZenithOptimedia and SMG. These include Relay Sports and Events marketing, SMG Directory Marketing, Play, Sponsorship Intelligence, and Ninah Consulting, the brand investment and accountability consulting unit of ZenithOptimedia. These businesses will be available to all brands within the PGM umbrella and the broader family of Publicis Groupe companies, and all will report to Frank Voris, chief financial officer of SMG.

The creation of PGM was a long time in coming, Klues said. In forming the new board, there was a conscious effort that PGM not be seen as merely "a big stick representing the combined clout of SMG and ZenithOptimedia," Klues added.

"I know that it is not [Interpublic Group's] Magna and I know that PGM is not a 'brand,'" Klues said. "Its charter is not to consolidate buying clout globally and to use a big stick to get better prices. As for [WPP Group's] Group M, my sense of it is that it seems to be more of a management group that helps handle WPP's two global media brands. So by way of comparison, PGM is more like Group M, in that sense."

Rounding out PGM's roster are Adrian Sayliss, global chief financial officer of ZenithOptimedia; Renetta McCann, chief executive officer of SMG/Americas; Rich Hamilton, chief executive of ZenithOptimedia/Americas; Mark Cranmer, chief executive of SMG Europe/Middle East/Africa, and Rishad Tobaccowala, head of the SMG Next unit.

"The formation of PGM is about large holding companies making sure that people get paid and the stock goes up, which is all well and good. It doesn't really affect the actual work that they do," said Steven Fajen, general manager, Morgan Anderson Consulting. "Most of the people who have traditionally been in charge of media agencies have not had a business background--they know media, but [not] necessarily how to run a large company. A PGM helps bring a greater level of coordination to a business that finds itself surrounded by multiple marketing disciplines."