How the CEO of Publicis plans to conquer the ad world with connections and charm
On his office terrace overlooking the Arc de Triomphe, Maurice Lƒvy is a towering figure above Paris. Publicis’ address at the top of the most exclusive boulevard, the Champs Elysƒes, underscores the agency’s place–and its chief executive’s profile–in the city’s business hierarchy. Lƒvy not only presides over France’s largest ad agency, boasting some of the country’s most well-known brands, he is a discreet behind-the-scenes player outside the industry, offering counsel during mergers and acquisitions. His connections straddle business and government. In 1992, when Perrier was for sale, Publicis client Nestlƒ was pitted against Italy’s Agnelli family for the sparkling water. Lƒvy lobbied hard for Nestlƒ, using his government contacts to convince them that one of France’s crown brands shouldn’t go to a foreign country. Instead, it went to a Swiss company. The handling of Perrier’s image would remain with the French. Of course, the account went to Publicis.
Now the ultimate Paris insider is taking on the world.
In the four years since Publicis’ bitter relationship with True North was dissolved, Lƒvy has scrambled to make up for lost time. He’s made a impressive total of 36 acquisitions, adding to existing businesses in advertising, consulting, direct marketing, promotions and public relations. He’s entered new operational segments, such as ethnic marketing, and gone into new geographic regions–Publicis is now represented in 76 countries. When he launched his global expansion strategy in early 1996, less than 1 percent of the company’s revenue came from outside Europe. This year, 40 percent will be generated outside its borders. Lƒvy has doubled Publicis’ size, with the U.S. alone ringing up an estimated $400 million in revenue of the company’s worldwide total of $1.2 billion.
On the surface, it’s very impressive. Lƒvy’s ability to woo two of America’s most fiercely independent agency holdouts, Hal Riney and Pat Fallon–both of whom rebuffed the overtures of companies like Interpublic–has won him glowing praise in the media. But behind the headlines lie some uncomfortable questions. Is Lƒvy’s buying spree an emotional reaction to the frustrating delay brought on by the drawn-out battle with True North? Or is it the result of a considered strategy that will forge coherent Publicis brands?
To some observers, the only characteristic shared by many of Lƒvy’s recent U.S. acquisitions–DeWitt Media, Fallon McElligott, Frankel & Co., Burrell Communications and EvansGroup–is the relative age of the principals, who are nearing the end of their careers. None are said to be interested in running Publicis’ U.S. operations, and Lƒvy has had difficulty finding someone to take over for American boss Bob Bloom.
Publicis prides itself on its federal organizational structure, a system that promotes autonomy while instilling a sense of a unified culture. But as it attains critical mass, is that management style conducive to the integration of marketing services?
On a recent wet Paris morning, Lƒvy looks like he’s heard this before and seems nonplussed at an 8 a.m. breakfast meeting. He was in the office at 7, already settling into a typical workday that could end at 9 p.m.
“[Critics] don’t see what I see. If they looked at what we’ve been buying, they would see there is one common thing among the companies: quality of work. It’s not just about running a large network. That big network machinery can’t move fast enough to keep up with the challenges facing marketers now,” he argues. “We will never pretend to have the largest share of market. What we look for is the partner who best brings added value to clients.”
To his way of thinking, “La diffƒrence,” as Publicis’ newly adopted philosophy states, defines the company’s corporate brand.
“We have a genuine respect for the differences in culture within our organization. That’s probably due to the fact that we are born in Europe and among Europeans, we have shared values but also differences in things like language, the way we eat, in our educations, the way we work. We are in a business of individuals and you can get more out of them if you give them room and allow them to be who they are.”
No wonder it was the French who came up with the concepts of “laissez-faire” and “entrepreneur.”
“In this country, we tend to think in a linear, strategic manner. Maurice Levy is very European in the way he operates. He’s much more imaginative; he has a vision,” observes Bloom.
“Size? Quality of companies? Maurice believes that how you achieve that isn’t a matter of first you do this, then you do that–which is how we Americans proceed,” says Bloom. “He moves all over the board.”
With his new confederation of operating units, Lƒvy is already changing the way Publicis functions. The company, which has a senior management structure of predominately French men, appointed a young, energetic Englishwoman, Joanna Baldwin, as head of international business development.
“The mentality here is different from more system-driven networks,” says Baldwin. “We build cumulative success out of individual success. We’re proud of the degree of individualism within a cultural closeness.”
Baldwin points to clients like Hewlett-Packard and Whirlpool as an example of the potential in her job. The two first selected Publicis for work in Europe. The agency was able to extend those business relationships to the marketers’ home turf in the U.S. through additional assignments to Publicis & Hal Riney in San Francisco and Chicago.
Publicis recently overhauled its technology group, creating American-based Publicis.Net–which intends to go public–as the entity to house Internet development. In the U.S., Publicis is
also working to cut backroom costs. In New York, the company is moving its agency, public relations and media operations under one roof. The move, into 125,000 square feet, is intended to foster more integrated working relationships as well as elevate Publicis’ profile in this country’s most well-known advertising center.
In Manhattan recently to look at real estate, Lƒvy took an immediate liking to a light-filled Chelsea warehouse, the kind of trendy building that’s drawn Martha Stewart and cutting-edge dot.coms to the far reaches of the Hudson River. The preference underscores the image he wants to create in New York. The ultimate definition of that is the agency he hopes to acquire. He’s been looking for a New York flagship, with industry speculation focused on Deutsch and Cliff Freeman and Partners. Lƒvy acknowledges he’s met with the founders of both agencies, but says Publicis is not involved in negotiations. “I meet with people like this in order to get the feel of the U.S. market,” he says. “Every time I have a meeting, it’s not because I’m trying to buy someone’s business.”
Building connections with companies like HP and Whirlpool has also motivated Publicis to move worldwide account directors closer to the client, whether in Northern California or the Midwest. While that strategy may seem obvious, it underscores Publicis’ transition from a France-based network–working for some of the country’s most well-known marketers, such as Renault, L’Orƒal, Lanc™me, Laboratoires Garnier, Hermƒs, Vittel, Club Med and Galleries Lafayette–into more of an international network.
“Our true expansion began in 1987-88, when Maurice became head of our total group,” says Publicis chief financial officer Jean-Paul Morin. “Around that time, France accounted for 80 percent of our business. In 2000, it will represent less than 20 percent.”
Still, unlike French rival Havas, which has moved its advertising headquarters to the American market it covets, Lƒvy is protective of Publicis’ French roots. With his Gallic charm and wit, Lƒvy is a gracious host. He combines chic Continental manners–asking a guest if he may remove his suit jacket–with a blunt, direct informality. (Breakfast companions are told to not to worry about getting brioche crumbs on a lacquered black table surface in his office.) While he can be demanding in his expectations, he’s got a down-to-earth ease with people. Bloom remembers being in Paris in the middle of intense contract negotiations when Lƒvy excused himself. He asked the Texan to join him in lifting a glass with the building janitors who were having their Christmas party.
Even as Lƒvy apologizes for his English skills, his quick intelligence betrays the fact that there is no misunderstanding the conversation at hand. An engineer by training, he started at Publicis in data processing and within a year was offered the agency’s top job by founder Marcel Bleustein-Blanchet. (Lƒvy declined, opting to learn the business as an account man on Renault.) At age 39, he became chief executive of the French agency, comprising about 73 percent of the company’s business. By 45, he was running the Publicis group. His outside interests include a love for modern art, but his life continues to revolve around work. Publicis’ holding company consists of Lƒvy, only the second chief executive in its 73-year history, and Morin, his chief financial officer. Lƒvy’s workday is usually so long, he has two secretaries who work in shifts.
“You can reach Maurice anywhere in the world, 24 hours a day. He knows as much about the details of a new campaign and a client’s business as he does a potential acquisition,” says the head of Publicis’ French and Canadian agencies, Yves Gougoux, a Canadian whose sunny office, farmhouse desk and basket full of violets makes him seem more at home in Provence. “The point of contact here is Maurice. He is efficient and direct. If you write him a note–just one of hundreds he may receive that day–you’ll probably get it back by the end of the day with his thoughts. He goes 1,000 miles an hour. To keep up, you’d better be in good shape.”
Which raises the obvious question of just how long the 58-year-old wants to continue at this pace. With the exception of WPP CEO Martin Sorrell and Grey Advertising’s Ed Meyer, perhaps no other holding company is so closely aligned with a single individual. Lƒvy jokes that he might like to go off and help his youngest son, who is writing and directing a movie. But few who know him expect that to happen anytime soon.
“I think about succession, but I don’t know what our plan will be. I don’t know if it will be someone French or not. I don’t know if it will be one man or a team,” Lƒvy says. “Marcel Bleustein-Blanchet was a great figure in France, someone pre-eminent outside advertising. People said he was irreplaceable. But he used to say, ‘A great agency brand is bigger than one man.’ “
If Lƒvy has come to characterize French advertising and its leading agency, his early international ambitions belie a homegrown industry which long enjoyed market dominance against multinationals, thanks to informal protectionist practices within French business. With his prominent Spanish Jewish lineage, some liken Lƒvy’s restlessness to another establishment outsider–the other Maurice of Sephardic heritage who set out to conquer the ad world–and with whom, through M&C Saatchi, Publicis shares the British Airways account.
By 1988, Lƒvy made his first major international foray, striking the alliance with FCB through a share swap. It appeared to be a flawless match. Each company compensated for the other’s geographic weaknesses without any conflict headaches. The relationship began to unravel in 1994, after Publicis bought French ad agency FCA, which worked for shared clients L’Oreal and Nestlƒ. According to Lƒvy, FCB’s then-CEO Bruce Mason used that deal–which included U.S. shop FCA Bloom–as grounds to break the joint agreement. Mason contended the original agreement prohibited Publicis from buying U.S. holdings, Lƒvy says. FCB, True North, FCB’s subsequent holding company and Mason, now departed from the company, declined to comment on the ensuing rounds of litigation. Lƒvy eventually made a surprise bid for True North as a way to thwart TN’s then-acquisition of Bozell Jacobs Kenyon & Eckhardt.
Some critics, who think Lƒvy has since embarked on a wrongheaded acquisition strategy based more on urgency than long-term strategy, see that episode as a turning point.
“With FCB, Maurice had found the perfect solution for both companies,” says one source. “It’s sad to see that fall apart just because two CEOs couldn’t get along. But Maurice shot himself in the foot when he made a bid for True North. He offered minimal dollars and asked for only 51 percent. He could have had it, if he had wanted it. Now it looks like he’s taking whatever he can get.”
Lƒvy disagrees. He claims True North wasn’t an easy catch and defends his current course. Others point to the run on True North as evidence of Lƒvy’s willingness to fight for what he believes.
“Maurice is used to being successful and center stage,” says Baldwin. “For him to go into a situation where he knew he had a good chance of failing shows a lot of personal courage. It shows he’s not afraid to get his nose bloodied in public.”
Lƒvy remains philosophical about the experience, which ironically has left him as True North’s largest shareholder. “You never know what the future will bring,” Lƒvy says. “We may sell our shares. Maybe management will make an offer we’ll consider. For the time being, we have no plans.”
“I don’t understand how one single man can destroy a relationship. How can he muzzle a board with outside people?” Levy muses about Mason. “I’m sorry True North happened; I prefer not to have gone through it. But I learned a lot about how U.S. agencies work, how boards work, how clients work.”
Sitting in one of the Le Corbusier chairs in his office, Lƒvy’s gaze shifts from time to time to an antique Bible opened to the book of Genesis. It is one of the few things that remains from the 1972 fire that destroyed Publicis’ premises. Genesis, of course, contains the Sodom and Gomorrah parable about Lot–the only virtuous man in Sodom–who survived the fire and brimstone sent by God in retribution for the town’s sinners.
The ability to survive misfortune is an intrinsic part of Publicis’ history, dating back to founder Bleustein-Blanchet’s launch of the agency, losing it to the Germans during World War II and its subsequent rebirth. In addition to the fire and the True North legal feud, Publicis recently endured an acrimonious public dispute between the Bleustein-Blanchet heirs. In 1998, Publicis went through a restructuring that dissolved Somarel, the family holding company, and replaced it with a joint-stock concern.
The FCB experience has been valuable in Lƒvy’s more recent efforts to court U.S. companies like Fallon and Frankel. He’s also learned from the mistakes of the first U.S. acquisition wave by French companies, which led many prospects to view him as another crazy Frenchman waving a big checkbook.
Some holding-company peers contend that perception is merited.
“He’s just buying volume, and he’s paying too much for the pieces,” observes one executive. “He bought some assets from [French marketing services company] Havas, which are throwing off a lot of cash flow.”
Lƒvy, however, disputes claims he’s overpaid for recent properties.
“We always pay a fair price for our acquisitions. The price Havas just paid for Snyder was not just a high price, it was horrendous,” he contends. “I didn’t want to pay that kind of price because of our shareholders. Just as important, I didn’t want to do it to the people we had already partnered with who were paid fairly. What would that have said to them?”
Those partners are entrepreneurial organizations, the kind of businesses Lƒvy feels most comfortable in. In turn, they are enticed with his offer to help capitalize their expansion–no small concern to a generation of company founders looking for a way to institutionalize their brands beyond their retirement.
For Pat Fallon, Lƒvy’s willingness to help fund his $700 million agency’s growth while maintaining its cultural independence was a unique opportunity. Originally, Lƒvy wanted to fold Fallon McElligott into Publicis and install its management at the top of the company. The agency wasn’t interested in that plan so Lƒvy devised another, which will keep Fallon a separate second network. Publicis’ Morin, who works closely with Lƒvy on acquisition strategy, says Fallon will be positioned more as a resource suited to clients in the “new Internet economy,” while Publicis will concentrate on large clients with big consumer bases. Fallon will expand to 10-12 offices worldwide, opening at a rate of one or two per year.
“The things I lacked in other contacts [with potential acquirers over the years], I found in Maurice. There was an immediate chemistry,” says agency chairman Pat Fallon. “The others were more senders than receivers. He received what we were about, understood our dreams and made them his. With everyone else who had ever approached us, it was more about money on both ends. They wanted to buy our revenue and were just concerned with the price we wanted for them.”
Bud Frankel, at promotions shop Frankel, echoes that sentiment. “Everyone else who had ever approached us focused on price. By contrast, Maurice talked about growth, innovation, our culture. Sure, he spent time with our financials, but he spent 10 times more time with our people.” The Publicis association, he adds, will help provide capital to expand Frankel’s
proprietary technology and deliver an international network to the Chicago concern.
For partners like Burrell Communications, where Publicis acquired a 49 percent stake last June, the partnership has already resulted in new business from L’Orƒal. DeWitt will become the U.S. unit of Optimedia International, Publicis’ global media network, which will now have $1.25 billion in billings. By the end of the year, Optimedia will have $5 billion in worldwide billings, according to Lƒvy.
He also offers another draw to potential partners: the ability to be a bigger fish in a smaller corporate pond.
“One of the things that appealed to us was that Publicis was one of the less-developed holding companies here. As they move more aggressively into the U.S., I want to be a part of that,” says Burrell Communications’ chairman Tom Burrell. “I didn’t want to be just another pin dot on the map of the big multinationals.”
Not that Publicis isn’t emulating those strategies as it races to catch up around the world.
“Our next acquisition emphasis? Indonesia, Taiwan, some Central American countries where we need to invest. In New York, we’re not where we want to be; we need a bigger, higher profile agency,” says Morin. “Our second emphasis is our expansion into the marketing-services area.
Publicis’ big push into the U.S. has paid off in skyrocketing billings. Capitalized billings from Nestlƒ, General Motors, Motorola, Allied Distillers, Budget Rent A Car, Club Med, British Airways and Cosmair now exceed $915 million–a 300 percent increase since 1997.
Lƒvy also has aggressive organic growth goals. In Publicis’ U.S. network, he wants to see a 30 percent increase this year. For Optimedia, the expectation is to have 60 percent of business from non-Publicis clients. Currently, about 70-75 percent comes from marketers working with Publicis.
Less clear are Publicis’ plans about who will run the company’s U.S. operations. A top candidate, Publicis & Hal Riney president Scott Marshall, is not interested in the job, says Lƒvy. If Lƒvy closes a deal with a New York shop, the top manager would presumably be considered. That individual will play a key role in helping to turn Publicis’ recent acquisition spree into the kind of solid success the company enjoys on its home turf.
The French parent, which is adopting the phrase “Get it right” to define the company’s strategic planning expertise, may well find that the ultimate test of that philosophy will be measured in the
company’s performance for itself rather than its clients. K
Maurice Levy may now be taking Publicis to America, but it was agency founder Marcel Bleustein-Blanchet (above) who reveled in importing stateside traditions to Paris and giving them a French twist. Lƒvy’s predecessor harbored a love of America, introducing radio jingles, U.S. radio shows and Gallup opinion research to France. He even popularized the use of maternity dresses. One of his most famous cultural re-creations, Le Drugstore, has become a Champs Elysƒes landmark.
Bleustein-Blanchet, who died in 1996 at age 90, was a larger-than-life figure in France. He grew up in a working-class district in Montmarte, left school at 14 and started his agency at 21. He named it Publicis, with “publi” standing for publicitƒ and “cis” for the French sound of the
number six, since he started the business in 1926. He opened four movie theaters–one of which was named after Radio City Music Hall–and became a broker of cinema ads. He also brokered radio ad time– inventing the French radio ad business–and owned a station, Radio Citƒ. He was the impresario who introduced Edith Piaf to the French public.
By 23, Bleustein-Blanchet was a millionaire. Nine years later, he lost everything when the Germans invaded France. Radio Citƒ was the first to break the news of Hitler’s annexation of Austria. The Vichy government would later forbid Jews from having any association with broadcasting or cinema. In 1943, he escaped from France just as the Gestapo was preparing to arrest him. (Other members of his family weren’t so lucky. Two of his sisters and their husbands died at Auschwitz. ) Born Marcel Bleustein, he needed a new identity. Hiding in Aix-les-Bains, he picked Blanchet from an obelisk commemorating dead soldiers. After three months in a Spanish prison, he made his way to England and flew with the U.S. 8th Air Force. He returned to Paris on the day of its liberation, only to find that there was nothing left of his agency or his radio station.
At age 40, he started from scratch–and his agency flourished. David Ogilvy attributed Publicis’ success to Bleustein-Blanchet’s “imagination, sagacity and indomitable courage.”
As a 6-year-old, Bleustein would drive by the Champs Elysƒes–lined with rich private houses–and say, “One day, I’ll live there.” The reborn Publicis–symbolized by the lion representing his Leo birth sign–would move into the Astoria Hotel at 133 Champs Elysƒes. The location was a poignant reminder of the threats to his early ambitions. It had been the site of Gen. Eisenhower’s first Supreme Headquarters for the Allied Powers.
Bleustein-Blanchet remained a major figure in France for the rest of his life. He counseled Gen. Charles DeGaulle on image issues and was keenly interested in Publicis until his death. K
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