Gideon Spanier
Mar 11, 2016

Steve King on Publicis' simplified structure

The boss of Publicis Media claims its new structure with four media agencies will "simplify" and "reinvigorate" the business after losing a string of top clients.

King: Under pressure after loss of two major clients
King: Under pressure after loss of two major clients

Steve King, the global chief executive of Publicis Media, told Campaign: "We now have a very clear organisation."

He has axed Starcom Mediavest Group and ZenithOptimedia as mini-group brands in favour of four subsidiary agencies – Starcom and Mediavest Spark (which were both part of SMG) and Zenith and Optimedia Blue 449 (which have been formed out of ZenithOptimedia).

Vivaki, a trading arm, has also been axed as a brand and its staff will move into the four agencies.

King has appointed three regional chief executives for Publicis Media in the Americas, EMEA and Asia-Pacific and he plans to announce country leaders, including for the UK, after he hosts a meeting of senior executives later this month in Dubai.

He dismissed suggestions that Publicis Media was copying the structure of bigger rival Group M, WPP’s media-buying division, which also has four media agencies.

"The way we’ve configured this is entirely different," King said, noting he has also set up seven global practices, including data, content and analytics. "We’ve got some really distinctive brands."

But he admitted Publicis Groupe, the ultimate parent company, had been slow to reorganise itself compared to some rivals. "Having first-mover advantage and power sounds good," he said. "Last-mover advantage may be better."

Publicis Groupe began planning a group-wide reorganisation in September after a summit in San Francisco and announced the creation of four divisions for media, creative, digital consulting and healthcare in December.

"There was an acute understanding that the way Publicis Groupe was divided into silos wasn’t the way to be transformational partners for our clients," King said, explaining the logic of Publicis Media and why it now made sense to axe SMG and ZenithOptimedia as mini-group brands.

King, a Briton, expects Publicis Media to be based in London, despite the fact that Publicis Groupe is headquartered in Paris and the US is its biggest market.

"One of the things we’ve got to decide is where is the global headquarters going to be. I think the business would be run out of the UK because geographically it’s a much easier place to run a global business, rather than America or Asia. It’s not going to be Paris."

The disbanding of SMG and ZenithOptimedia amounts to a U-turn as Publicis Groupe brought together Starcom and Mediavest in 2000 and Zenith and Optimedia in 2001, but King insisted the group brands had functioned well for 15 years.

He was a founding employee of Zenith in 1988 and became global chief executive of ZenithOptimedia in 2004.

He is under pressure to turn around Publicis Media after SMG’s recent loss of two major US clients, Procter & Gamble and Walmart, which were estimated to be worth over $3 billion (£2.1 billion) in billings.

King said: "I’m long enough in the tooth to know every agency goes through a period of losing clients. Sometimes it’s incumbency, sometimes it’s price-driven, sometimes it’s all three.

"I think what we’re doing here [with the reorganisation] and the management changes we’re making in the next few weeks will give us an opportunity to reinvigorate and strengthen those businesses."

He recalled that Mediavest was named Agency of the Year by some of the US advertising press only a year or two ago and said Publicis Media would be reorganising even without losing P&G and Walmart. "We’d have been doing this if we’d won all these clients."

He told some clients about the reorganisation earlier this week and said: "I don’t get anyone saying, ‘I don’t get what you’re doing.’"

King was bullish about Publicis Media and the wider media-buying business despite multiple challenges.

"Everyone says to me, ‘Oh my God, what a terrible job you’re taking on,’" he said, comparing Publicis Media to its sister divisions, Publicis Communications, Publicis Sapient and Publicis Healthcare. "But I think the media business is the easier one to run. Our business is very simple. It’s about the application of scale and leveraging it.

"The barriers to entry for creative agencies are virtually zero. But the media business is where you have to have scale. Where we are aggregating – in data, in analytics, in econometrics – the barriers to entry are high. We’ve got to leverage in these practices and scale them as much as possible."

He added that clients needed help because of technological disruption. "There is not a single client with a clear line of sight about their business in the next two to three years. We’re in a very nice position to help them with their business transformation.

"I bet the worst-performing media agency grew its revenue last year. I suspect all of the holding groups’ media divisions grew by revenue or headcount or client assignments."

Rivals such as consulting firms are trying to muscle into the media business but he said: "Unlike most people who want to enter this area, we’ve already got enormously powerful partnerships with Google and Facebook and others."


Campaign UK

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