Sorrell: Publicis Groupe agencies struggling after failed merger due to over-selling digital

Martin Sorrell fields questions from Arnab Goswami

Martin Sorrell fields questions from Arnab Goswami today

Sir Martin Sorrell, the boss of WPP, said today that Omnicom has emerged the stronger from the failed ‘merger of equals’ with Publicis Groupe because the latter has been hasty in selling its digital capabilities at the expense of its traditional offering.

“What’s interesting post-POG – the merger that died – is that Omnicom has emerged much better from it that Publicis,” Sorrell said in an interview with Arnab Goswami, the editor-in-chief of Times Now at the Indian chapter of the International Advertising Association in Mumbai today.

The proposed merged between Publicis Groupe and Omnicom collapsed in May this year.

“Omnicom, particularly BBDO but not DDB or TBWA, have made a better recovery than Publicis [from the failed merger],” he said.

“Publicis Groupe agencies [which include Leo Burnett, Saatchi & Saatchi and Publicis Worldwide] are going through tough times because management has been stressing the importance of digital, but they have a legacy in traditional areas that is being undercut.”

The impact of beating the digital drum too hard was demotivating staff working in the traditional parts of the business, Sorrell said.

“If your business is both traditional and digital, you stress digital at your peril,” Sorrell said.

The 69 year-old WPP CEO then fielded a question from the audience from Sam Balsara, the chairman and MD of Madison World, the media agency that helped get prime minister Narendra Modi elected. Balsara, who acquired a controlling stake in the Indian operation of WPP buying agency MediaCom in 2008, is also treasurer of India’s Audit Bureau of Circulations.

Balsara suggested that visitors to India tended to “descend on us” and spend their time talking about digital while 88 per cent of India’s advertising market still goes on television and print, which is still growing unlike in almost every other major market globally.

Sorrell said that Balsara made a “valid point”, before referencing his time at Saatchi & Saatchi, where he was CFO before he started WPP.

“I’m told that Saatchi’s office in New York is now 120 people. When I left the agency, it had 800 people,” Sorrell said.

The advertising business is now all about “getting the balance right” between digital and legacy media, Sorrell said.

“If you stress digital, you’re in danger of devaluing the traditional side of the business,” Sorrell said.

“Putting all the attention on stuff that’s not generating any profit” is a big risk for a holding company to take, Sorrell said.

If holding groups “change too fast that’s another risk,” he said referring to comments Publicis Groupe boss Maurice Levy made recently where he said he wanted the firm to be seen as an “internet company”.

“You do it at the risk of damaging your core business,” Sorrell said.

The WPP boss also took a swipe at “frenemy” Google, praising the company’s “phenomenal power” but suggesting that the tech giant lacked transparency.

“Google is the world’s most powerful company with the biggest market capitalisation. It’s market powerful is phenomenal. But it’s not transparent.”

“Clients complain about agencies not being transparent. But Google is not transparent at all, because no one knows how its algorithm works,” he said.


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