Publicis S.A.

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Publicis S.A.

133, avenue des Champs-Elysées
75008 Paris
France
1-44-43-37-00
Fax: 1-44-43-75-60
Web site: http://www.publicis.fr

Public Company
Incorporated: 1926
Employees: 7,000 +
Sales: FFr21.9 billion
Stock Exchanges: Paris
SICs: 7311 Advertising Agencies

Publicis S.A. is the largest advertising agency in France, the largest advertising network in Europe, the number one agency in North America, and one of the top seven advertising agencies worldwide. Initiated in 1926 by the founder of modern French advertising, Marcel Bleustein-Blanchet, Publicis has developed a network of subsidiary and affiliated agencies in more than 60 countries, with annual billings of more than US$7.5 billion. Present in the United States since the 1950s through its Publicis-Bloom subsidiary, Publicis’s major growth beyond Europe has occurred especially in the mid-1990s, with acquisitions of shares in major agencies in Latin America, Asia, and Canada. About 59 percent of the company’s revenues are generated in Europe, excluding France; French billings account for 35 percent of the company’s revenues, while the United States, which itself represents more than half of the world’s advertising revenues, accounts for approximately six percent of Publicis revenues.

Publicis’s principal activities—advertising and media buying—are organized under two major divisions. Publicis Communications is the umbrella for the company’s advertising activities, both in France and abroad. Publicis Conseil provides the basis for the group’s French business, through some 40 agencies in 20 cities, including FCA/B.M.Z., Publicis Direct, Publicis Design, Mundocom, and Loeb et Associés. The company’s European activities are guided by Publicis Europe, formerly known as Publicis-FCB Europe, and includes subsidiary agencies and offices in every country in Western and Eastern Europe and Russia. Also grouped under Publicis Communications are Publicis-Bloom, the company’s U.S. wing; Publicis Centre Média, and Publicis Consultants. In Latin America, the company is represented through a 51 percent ownership position in Mexico’s Paulino Romero y Asociados and a 60 percent share of Brazil’s Norton Publicidade, both leading agencies in their respective countries and both acquired in 1996. Publicis’s Asian expansion, begun during 1997, includes a 60 percent share of Eureka Advertising, the largest independent advertising agency in Singapore, and a 30 percent interest in Basic Advertising, the second largest advertising agency in the Philip-pines. In 1996, Publicis also acquired 60 percent of Canada’s seventh largest advertising agency, BCP, which has been renamed Publicis-BCP.

Publicis’s second major division is its Medias and Media Sales division. Within this group are three main subsidiaries: Medias et Regiés Europe; Regié 1; and Métrobus. These subsdiaries provide press media sales and services, financial services, radio airtime buying, and billboard services throughout France and in Europe.

Beyond advertising, Publicis is also engaged in retailing, through its world-renowned Drugstores on the Champs-Elysées and in Matignon, both in Paris (a third Drugstore, on Saint-Germain, also in Paris, was sold in 1996 to Giorgio Armani). The company’s data processing subsidiary, S.G.I.P., provides multimedia solutions for the French Minitel system, the Internet, and CD-ROM and diskette-based products. In 1995, Publicis launched Publicis AdNet, an intranet system that allows Publicis advertisers and agencies to communicate in real-time throughout the world.

Publicis’s founder, Marcel Bleustein-Blanchet remained active as the company’s chairman until his death at the age of 89 in 1996. Since the 1970s, however, the company has been led by Maurice Levy. The Bleustein-Blanchet family continues to hold more than 65 percent of the company’s stock, which trades on the Paris Stock Exchange. In 1997, on consolidated revenues of FFr21.9 billion, the company posted net earnings of FFrl.7 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 emigrated to France from the Russian-Polish border and built a successful furniture business following the First World War; 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: “André, 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:

“Our Idea of Advertising: We feel that advertising is primarily all about ideas. Ideas that are meaningful, new, justified, long-lasting, forceful, disturbing, positive, seductive, convincing, funny, touching. Fresh new ideas that shake up old habits. Ideas that help the consumer appreciate the brand and the products, and get to know more about the manufacturers. Ideas that lead to other ideas: that urge one to try the product, compare it, buy it. Ideas that linger for a long while, much like a melody, or a poem. Ideas that are eager, likeable and simple like everyday life. Because we must never forget that advertising was born in the market-place and all stores carry its message. We have graduated from the University of the Street, our science and our art is knowing the consumers, speaking their language and of course, seducing them. We have a passionate need to convince. But it is not that simple to be simple. There is nothing more precious and fragile than an idea. And for a great idea we are ready to give it our all.”

Rebuilding after World War II

The outbreak of the Second World War 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 Regié-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 US$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. 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 the 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-today 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 fifteen 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 PublicisFCB, continued to solidify its dominance of the European market, acquiring, among other, 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 FFr20 billion, while net income saw steady declines, from FFr318 million in 1990 to a low of FFr220 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 ac-count 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.

Principal Divisions

Publicis Communications (Publicis Conseil; Publicis Europe; Publicis Centre Media; Publicis Consultants; Publicis Bloom); Media and Media Sales (Régie 1; Metrobus; Publex; Giraudy; MédiaVision; Regié T); Diversified Businesses (S.C.I de Etoile; S.G.I.P.; Publicis Drugstores; GPS).