Publicis Groupe

views updated

Publicis Groupe

133 av des Champs Elysees
Paris,
France
Telephone: +33 01 44 43 70 00
Fax: +33 01 44 43 75 25
Web site: http://www.publicis.com

Public Company
Incorporated: 1926
Employees: 36,384
Sales: EUR 3.83 billion ($4.84 billion) (2004)
Stock Exchanges: Euronext Paris
Ticker Symbol: PUB
NAIC: 541810 Advertising Agencies; 541820 Public Relations Services; 541840 Media Representatives; 551112 Offices of Other Holding Companies

Publicis Groupe is one of the world's leading advertising groups: the company claims the fourth spot in the world, the third in Europe, and the fourth in the United States. The company also operates the world's largest media buying and consultancy firm. Publicis has transformed itself from a largely France-focused group to a worldwide advertising empire including such global networks as Saatchi & Saatchi, Leo Burnett, and Publicis itself, as well as a myriad of prominent regional and local companies, such as Fallon Worldwide, 49 percent of Bartle Bogle Hegarty, Burrell Communications, The Kaplan Thaler Group, Cartwright Williams Direct, and, since 2005, Freud Communications. Publicis' Media Buying and Consultancy division is composed of two global groups, Starcom MediaVest Group and Zenith-Optimedia. The company also operates a third division, Specialized Agencies and Marketing Services, providing direct market, public relations, communications, and other services. Publicis is present in 104 countries, with nearly 200 offices, and more than 36,000 employees. The company is led by Maurice Levy, protégée of the company's founder, Marcel Bleustein-Blanchet. Publicis is listed on the Euronext Stock Exchange. In 2004, the group posted total revenues of EUR 3.83 billion ($4.8 billion).

THE FATHER OF FRENCH ADVERTISING

Marcel Bleustein founded Publicis (a combination of the French word for advertising, "publicité," and the sound of the French "six" to denote the year of the company's formation) in Paris in 1926. Bleustein was then 20 years old. His family had immigrated to France from the Russian-Polish border and built a successful furniture business following World War I; Bleustein was also related to the Lévitan brothers furniture empire (three of Bleustein's sisters married Lévitans). At the age of 14, Bleustein dropped out of school to work in the family's business, before completing his compulsory military service at age 18. Returning from the army, however, Bleustein decided to leave the furniture business and enter advertising, setting up France's fourth advertising agency.

"My son is leaving me to go and sell hot air," was Bleustein's father's reaction. Indeed, by the 1920s, advertisers had earned the disdain of French consumers, with ads that displayed little regard for the truth. Nevertheless, Bleustein's father gave his blessing, if only so that his son would not reproach him later. With only 40,000 francs in savings, Bleustein set up shop in a small office above a delicatessen on the Rue Montmartre, and set out to change the nature of French advertising. After studying the market, Bleustein drafted two edicts: the product must be entirely visible, and the product must not be tampered with, but shown as is. Bleustein began to search for clients, literally going from door to door.

Finding clients, however, proved difficult, as potential clients shared consumers' distaste for advertising. Bleustein's first break came through his family. His mother, who was active in many charities, prevailed upon a friend, the owner of the Comptoir Cardinet, who reluctantly agreed to allow Bleustein to draft an advertisement. Bleustein chose two products, a silver set and a clock, and asked his illustrator, Aristide Perré to illustrate them exactly as they were and in detail. Within two days after the advertisement appeared, Comptoir Cardinet sold 15 sets of silver and 12 clocks.

Next, Bleustein lined up Brunswick Furriers (for whom he created the famous slogan: "the furrier that creates a furor") and brother-in-law Wolf Lévitan and the family's Lévitan furniture stores (slogan: "Lévitan furniture is guaranteed to last," a promise few French furniture manufacturers could make in the postwar years). Publicis's first large advertising budget followed by the end of the decade. The owners of André Shoes, a chain of some 100 shoe stores, were equally wary of the need for advertising, but Bleustein managed to persuade them, and won a 600,000 franc full-service budget, and created another famous French advertising slogan: "Andre, le chausser sachant chausser" ("the shoe store that knows how to shoe you").

Bleustein's agency took off. By the age of 23, he was already a millionaire, and by the beginning of the new decade, he had taken the French advertising industry into a new era. Bleustein had traveled to the United States in 1929, where he discovered radio advertising. Returning to France, Bleustein made an arrangement to advertise Brunswick's furs on Radio Eiffel Tower. Brunswick was skeptical, but the radio ads proved immediately successful. Publicis was also gaining momentum. After winning the André contract and a contract with Sools, the largest hatter in Paris, Bleustein began eyeing the national market. He bought a plane—he already had a pilot's license—and began flying across France to sign up advertising contracts with radio stations in other cities. In exchange for exclusive rights to a station's advertising time, he offered a fixed yearly revenue. Twenty of the country's 29 public and private radio stations signed on, and Publicis soon became one of the largest agencies in the country, signing on such major clients as Max Factor, Procter & Gamble's Monsavon, Renault, and others.

In 1934, the government banned advertising from its public radio stations, leaving Publicis with only 11 private stations. These stations quickly demanded a larger share of Publicis's profits, with Radio Lyon, led by M. Pierre Laval, later the premier of Vichy France, among them. After meeting with Laval, Bleustein decided to buy his own station, rather than bow to the private stations' demands. Publicis paid 3.5 million francs for Radio-L.L., located in a Parisian suburb, changed its name to Radio Cité, in homage to Radio City Music Hall in New York, and promptly created a new sensation. Among Radio Cité's innovations was the institution of regular news broadcasts, in a deal with L'Intransigeant newspaper, which supplied the news staff in exchange for 25 percent of Radio Cité. Radio Cité would become a Parisian institution in the years leading up to the war and would be responsible for launching the careers of such noted French stars as Edith Piaf and Yves Montand.

COMPANY PERSPECTIVES

At the heart of Publicis Groupe, there is La Difference, coming from our networks and our agencies. Each specific approach builds our strength as a Groupe. Across each brand and entity, each team, we dedicate all our energy to the success of our clients, their projects and their campaigns.

REBUILDING AFTER WORLD WAR II

The outbreak of World War II put an end to Publicis's success. Bleustein flew in the French air force, then returned to Paris after France's defeat. He was soon forced to abandon Publicis and Radio Cité, after the German occupation of France and Vichy's France's promulgation of laws barring Jewish ownership of radio stations and other media outlets. Bleustein joined the Resistance, helping to smuggle British pilots back to London. However, when word came that he was wanted by the Gestapo, Bleustein, using the nom de guerre Blanchet, was forced to leave France. He spent three months in prison in Spain, then was allowed to leave for London, where he joined De Gaulle and flew as an assistant pilot on U.S. Air Force reconnaissance and bombing runs.

When Bleustein returned to Paris on the day of that city's liberation, Publicis had been destroyed by the Germans and Radio Cité had been taken over by the new French government, which banned the formation of private French radio stations. Bleustein, who added Blanchet to his surname, was forced to rebuild his business from scratch. In 1946, he won the advertising franchise for the newly created France-Soir newspaper, and formed Régie-Presse to operate his media-buying business. Soon after, Bleustein-Blanchet was able to resurrect his agency, as his former clients, also rebuilding their businesses, began to return to Publicis. With advertising banned from radio, Publicis began placing its clients' ads on billboards, buses, subway stations, and in the cinema.

Publicis again rose to the top of the French advertising industry. By the late 1950s, the company was posting yearly billings of more than $15 million per year. Its clients included 50 top French companies, and the French market for such international clients as Shell, General Motors, Dunlop, Colgate-Palmolive, Nestlé, and Singer Sewing Machines. At the same time, Publicis had helped to organize the French advertising industry trade association, which effectively ensured that companies could only use French agencies for the French ad market. Publicis continued its history of innovation as well.

KEY DATES

1926:: Marcel Bleustein founds Publicis in Paris, and becomes the "father of French advertising."
1929:: Company launches radio advertising, acquiring exclusive rights to much of France's radio network.
1934:: Bleustein buys his own radio station, Radio LL.
1940:: Bleustein joins French Resistance, adopting nom de guerre Blanchet.
1946:: Publicis is resurrected after its destruction during World War II; Bleustein changes name to Blanchet-Bleustein.
1954:: Publicis conducts France's first public opinion poll.
1957:: Company opens office in New York.
1958:: Company opens agency in Germany.
1970:: Company goes public on Paris Stock Exchange.
1972:: Publicis acquires Intermarco group, entering Belgium, the Netherlands, Sweden, and Spain.
1973:: Publicis acquires Switzerland's Farner group, adding offices in Italy and Austria.
1980:: Publicis acquires majority control of Media System.
1987:: Media buying group Optimedia, based in France, Switzerland, and the United Kingdom, is launched.
1988:: Company begins alliance with Foote Cone Belding (FCB) in United States.
1993:: Company acquires FCA of France.
1995:: Alliance with FCB (later True North) ends.
1996:: Marcel Blanchet-Bleustein dies; Maurice Levy takes over as chairman.
1997:: Company acquires Mojo Partners in Australia and New Zealand.
1998:: Company acquires Hal Riney & Partners and Evans Group (U.S.), Capurro (Argentina), Unitros (Chile), and Casadavell-Pedren (Spain).
1999:: Welcomm (South Korea), AMA (Philippines), Gramercy Group, Lobsenz/Stevens, and 49 percent of Burrell Communications (U.S.) are added.
2001:: Publicis acquires Saatchi & Saatchi; merges Optimedia and Zenithmedia to form ZenithOptimedia.
2002:: Company acquires Bcom3, including Leo Burnett and D'Arcy, becoming world's number four advertising agency; Dentsu (Japan) acquires 15 percent of Publicis as part of Bcom3 deal.
2003:: Dentsu and Publicis form iSe sports marketing joint venture.
2005:: Publicis acquires Freud Communications (U.K.), Pharmaconsult Healthcare (Spain), and Solutions Integrated Marketing (India).

In 1954, the company conducted France's first pubic opinion poll (Bleustein-Blanchet had met George Gallup on a trip to the United States in 1938). In 1957, Publicis made its first international moves, opening an office in New York (primarily to serve the company's French clients) and forming alliances with agencies in other European countries.

Since his youth, Bleustein-Blanchet's dream had been to own a building at the top of the Champs-Elysées. In 1958 that dream was realized when Publicis bought and moved into the former Astor Hotel (and later General Eisenhower's Paris headquarters) opposite the Arc de Triomphe. In that building, Bleustein-Blanchet introduced another of his American discoveries, the Publicis Drugstore, which quickly became a popular Parisian fixture. The following year, Bleustein-Blanchet, critical of the typical secrecy of French businesses, introduced the concept of institutional advertising, in which a company spoke about its business and manufacturing techniques, rather than its products.

During the 1960s, Publicis established a firm reputation as the most modern of French advertising agencies, particularly with its ad campaign for a pantyhose maker, which was one of the first advertisements to use a symbolic emblem, rather than the product itself, to promote the product. In the late 1960s, Publicis introduced advertising to television. The company also moved into crisis communication, successfully helping French glassmaker Saint-Gobain to defend itself from France's first hostile takeover in 1968.

STARTING AGAIN IN THE 1970S

Publicis's Champs-Elysées headquarters, and all of its records, burned in 1972, and the company was forced to rebuild yet again. Publicis built a new headquarters on the same location, but by then, the company, which had gone public in 1970, was itself evolving. Bleustein-Blanchet named his successor, Maurice Levy, who effectively took over the agency's day-to-day operations, leaving Bleustein-Blanchet as chairman.

During the 1970s, Publicis began to expand its international operations, acquiring Intermarco, which had been formed as the in-house advertising arm of Philips Electronics, and Farner, a leading agency for the Swiss and German markets. The combined Intermarco-Farner subsidiary brought Publicis representation into more than 15 European countries, including, with the acquisition of McCormick Agency, the United Kingdom. Publicis also opened a full-service Intermarco agency in New York. Meanwhile, Publicis was also branching out into the nascent data processing and graphics industry, establishing its S.G.I.P. subsidiary in 1973.

By the 1980s, Publicis had grown to become a worldwide leader in the advertising industry. In 1988, the company grew even stronger, signing an alliance agreement with Chicago-based Foote, Cone & Belding that gave Publicis a 20 percent ownership of FCB and its dominance of the North and Latin American markets. FCB, in turn, received 49 percent of Publicis's European network, which was renamed Publicis-FCB.

During the first half of the 1990s, Publicis, through Publicis-FCB, continued to solidify its dominance of the European market, acquiring, among others, the Dutch agency Overad, and moving into the newly opened Eastern European market with agreements with Hungary's Hungexpo, Czechoslovakia's Mertis, and Poland's Estra. From 1988 to 1996, the company shifted its revenues from 69 percent billed in France to more than 65 percent billed beyond the French border.

The international recession of the 1990s helped dampen Publicis's revenue growth. Despite a series of acquisitions, including the Feldman, Calleux et Associés (FCA) network in 1993, Publicis's revenues remained largely flat during the first half of the decade, hovering around FRF 20 billion, while net income saw steady declines, from FRF 318 million in 1990 to a low of FRF 220 million in 1994. Nevertheless, Publicis remained among the healthiest of advertising agencies, with zero long-term and medium-term debt. The agency also scored a major coup when it was awarded the international advertising account for Coca-Cola's Diet Coke and Coca-Cola Light products. The following year, the agency also won the British Airways account through its alliance with the New Saatchi Agency formed by former Saatchi & Saatchi founder Maurice Saatchi.

The Publicis-FCB alliance ground to a halt in 1995, when FCB changed its name to True North and announced its intention to create its own network of agencies. Publicis demanded to be released from the alliance, and in 1996, the two agencies reached agreement to separate. In 1997, the separation was finalized, with Publicis taking 100 percent ownership of the former Publicis-FCB European network, renamed Publicis Europe. Publicis was also freed to enter True North's Latin American and Asian territories, as well as to consolidate its position in North America. The agency moved quickly, purchasing interests in agencies in Singapore, the Philippines, Brazil, Mexico, and Canada. Marcel Bleustein-Blanchet, the father of French advertising, died in April 1996 at the age of 89.

GLOBAL LEADER IN THE 2000S

Marcel Levy took over as head of the company and launched Publicis on a new expansion drive that raised the company into the top ranks of the global advertising industry. With the end of the True North alliance, Publicis targeted entry into the United States, making a bid for Bozell, Jacobs, Kenyon & Eckhardt. Yet the company quickly found itself in a hotly contested battle with True North, ultimately losing to its one-time partner. The loss, however, set the stage for a flurry of U.S. acquisitions by Publicis, including Hal Riney & Partners and the Evans Group in 1998, Gramercy Group, Lobsenz/Stevens, and a 49 percent stake in Burrell Communications, a specialist in advertising for the African-American population, acquired in 1999.

The company's U.S. push continued into 2000, with the additions of Frankel & Co., Fallon McElligott (later Fallon Worldwide), DeWitt Media, and Winner & Associates. In the meantime, the company had also continued its expansion elsewhere in the world, buying up Mojo Partners in Australia and New Zealand in 1997, Capurro in Argentina, Unitros in Chile, and Casadevall-Pedren in Spain in 1998, and, in 1999, Welcomm (South Korea) and AMA (Philippines). The company also moved into China and India that year, establishing subsidiaries in both countries.

The breakup of Saatchi & Saatchi into Cordiant Communications and the "new" Saatchi & Saatchi set the stage for the tightening of the relationship between the "two Maurices." By 2001, the companies had agreed to merge Saatchi & Saatchi into Publicis, with Saatchi & Saatchi becoming one of Publicis's core global advertising networks. In that year, also, Publicis merged its two media buying groups, Optimedia and Zenithmedia to form a new worldwide powerhouse, Zenith-Optimedia. Publicis then acquired full control of Zenith-Optimedia.

By 2002, Levy was ready to shift Publicis into high gear. In March of that year, Publicis announced that it had reached an agreement to acquire Bcom3 in a deal worth more than $3 billion. The addition of Bcom3 brought two new global advertising networks into the Publicis fold, Leo Burnett and D'Arcy, and also elevated Publicis into the fourth place position in the worldwide advertising industry. As part of that deal, Publicis also entered into a relationship with Japanese leader Dentsu, a major shareholder in Bcom3, which agreed to pay nearly $500 million for a 15 percent stake in Publicis instead. Publicis and Dentsu cemented their relationship the following year, creating an international sports marketing joint venture, International Sports Entertainment, or iSe. That company got off to a good start, landing the contract for the 2006 FIFA World Cup, to be held in Germany.

By 2004, Publicis's revenues neared $5 billion. Yet the company appeared in no hurry to slow down its expansion. In June 2005, Publicis reached an agreement to acquire 50.1 percent of U.K.-based Freud Communications, one of that country's leading independent consumer public relations operations. Also that year, the company expanded its presence in Spain, acquiring the Pharmaconsult Healthcare publishing company. Publicis also stepped up its interest in building a position in the vast Indian market, one of the fastest-growing in the world, behind that of China. In August of that year, the company announced a proposal to buy up Delhi-based Solutions Integrated Marketing. In less than a decade, Publicis had succeeded in joining the top ranks of the worldwide advertising industry.

Updated, M. L. Cohen

PRINCIPAL SUBSIDIARIES

Bartle Bogle Hegarty Limited; Bcom3 (U.S.A.); Burrell Communications Group, LLC; Cartwright Williams Direct; D'Arcy Masius Benton & Bowles (U.S.A.); Fallon Worldwide; Freud Communications (U.K.); The Kaplan Thaler Group, Ltd.; Leo Burnett Worldwide, Inc. (U.S.A.); Mojo Partners (Australia); Publicis Welcomm (South Korea); Saatchi & Saatchi (U.K.); Zenith-Optimedia; Starcom MediaVest.

PRINCIPAL COMPETITORS

McCann-Erickson Worldwide Inc.; Ogilvy and Mather Worldwide Inc.; Aegis Group PLC; WPP Group USA Inc.; Young and Rubicam Inc.; Omnicom Group Inc.; Regian and Wilson/Grey Worldwide; BBDO Worldwide Inc.; WPP Group plc; Leo Burnett Worldwide.