NEW YORK Last week, as Publicis Groupe released its 2008 earnings, CEO Maurice Levy vowed to win market share this year, even as he voiced concerns about the unprecedented worldwide economic crisis. On Friday, Levy spoke to Adweek’s Noreen O’Leary about how Publicis intends to make those gains in the year ahead.
Adweek: You see the current economic downturn as an opportunity to gain market share in 2009. How will you do that?
Levy: Some very big trends in our industry led us to strengthen our positions in emerging markets and make massive investments in digital. We’re also reinventing our agencies and agency offerings: Leo Burnett posted growth in 2008; Saatchi & Saatchi delivered its best year ever; Publicis Worldwide posted very strong growth in key markets. We’ve reinvented our agencies and changed the way we’re working. In rough times, advertisers are in need of creative agencies with new, bold ideas and the imagination to connect and reach consumers. We have that lever and other levers like our VivaKi Nerve Center, which is integrating new technology across the board and working closely with Google, Yahoo, Microsoft, AOL. It gives us a higher profile in all these areas and we were No. 1 in new business in 2008. In August I said I expected a difficult end to the year and a more difficult 2009. We are thinking about how to reorganize and regroup and be more bold in our conquest of new businesses and how we manage our costs.
Publicis’ ability to hold margins last year beat the expectations of financial observers. Do you think you’ll be able to achieve that again this year?
We had a 16.7 percent margin for the second year in a row in 2008. If the market is down, we may face some margin erosion this year. We want to deliver the highest margin in the industry and I believe we can do it. But it very much depends on the situation in the marketplace.
Are you expecting additional layoffs?
We consider layoffs as the last recourse. We start with cutting expenses for travel, entertainment; we try to work faster and more efficiently. We protect our workforce as much as we can. But there will be some areas where we can’t do that because the marketplace won’t allow us to do so.
What about layoffs in 2008? Did you issue any mandates to trim workforce at the operating units?
We gave guidelines, telling them to be cautious with recruitment: “If you can avoid hiring, please avoid it.” Each agency is different. I am not a czar. I cannot command. I can’t tell them, “This is the rule and you must comply.” You have to give latitude. Publicis Conseil grew by more than 20 percent last year — I can’t tell them not to hire. If you look at [Publicis Groupe] headcount at December 2007, then add the acquisitions we made and look at headcount [for] December 2008, you get about the same number.
You’ve remained active in making acquisitions and with $3.6 billion in liquidity could remain so. What’s the strategy this year?
We’ll do a moderate level of acquisitions this year. I would like to acquire digital assets in all markets and we’re always looking for opportunities in emerging markets. But we’re only looking for good opportunities that meet our needs and carry a fair price. People think we’re on a buying spree, so we’re obviously turning down a lot. We are actually quite cautious and not in a frenzy.
Have you ruled out larger acquisitions?
If we see an acquisition of a decent size, we’ll look at it — I’m not saying we won’t — but we’re buying very cautiously. What we’re really focused on is the crisis in the economy, running our business and gaining market share.
What can you tell us about the $15.5 million settlement Leo Burnett made with the Army because of agency billings fraud?
I was shocked and horrified when I heard about it and I won’t comment further because the things I would say are not very positive about certain people.
Leo Burnett worldwide CEO Tom Bernardin is now is his fifth year of running the company. How’s he doing?
I’m very pleased with the evolution of Leo Burnett and its turnaround. It generated real growth in 2008. [Burnett’s] consolidated position, improved creativity and new HumanKind approach is all very good.
How about the alliance between Saatchi & Saatchi and Fallon, after its first year?
It’s working very, very well and I’m very pleased.
How well positioned are Publicis companies to weather the current downturn?
We have a situation where we have incredible agencies doing extremely well and fighting hard. Look at Kaplan Thaler, with its lively approach and optimism. There have been a lot of changes in our organization. We have had to carry the burden of our healthcare operations, which had a lot of issues in 2007 and going into 2008. It stabilized in the second half of 2008. We expect now to see growth in the numbers there.