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VivaKi at a Crossroads

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In the summer of 2008, Publicis Groupe formed VivaKi, a unit designed to be the model for how a hidebound ad holding company can rush headlong into digital media.

Now, two years later, VivaKi co-managing partner David Kenny is departing Publicis, a decision he pinned on his inability to relocate to Paris. (He leaves at the end of June.) This comes at a critical time for the organization, which is putting into action the strategy he laid out, while trying to avoid the pitfalls that typically come when a holding company centralizes operations at the risk of impeding on the prerogatives of agency brands.

Complicating things further, Kenny -- believed to have been a possible candidate to succeed holding company CEO Maurice Levy -- was a member of Publicis' 12-person management committee, which, when he leaves, will have no one with digital expertise.

Kenny's co-managing partner, Starcom MediaVest Group founder Jack Klues, will run the unit himself as CEO.

Kenny's mandate was to meld Publicis' digital and media assets in order for it to take advantage of its scale in driving partnerships with media and technology players; centralize research and development; and better manage digital talent. Under the executive, the company complemented its December 2006 $1.3 billion purchase of Digitas, where Kenny was then CEO, with a $530 million purchase of Razorfish in August 2009. It also scooped up search specialist Performics from Google in August 2008.

VivaKi has had its share of success. Publicis last week boasted it's well on its way to deriving 23 percent of its revenue through digital, compared to just 6 percent when it bought Digitas. But it has also run into roadblocks in trying to impose a new structure across a 45,000-person company run as a collection of fiefdoms.

"I think [Kenny] miscalculated his influence and digital's influence on the company," said a source who asked not to be named.

Kenny said he believes VivaKi's strategy is the right one. Its challenges, he noted, have less to do with a fight between digital and media people than with the difficulties associated with globally executing and expanding the strategy, how well internal politics will be navigated and "adequate investment from Paris."

For that reason, Curt Hecht, president of VivaKi Nerve Center, the centralized hub for developing company-wide tech platforms, will relocate from Chicago to Paris for a year. It's a move Hecht said would allow him to expand VivaKi initiatives like Audience on Demand to new markets and bring an American view of tech innovation to Publicis management there.

While Klues does not have a background in digital, and has told Levy he will retire in 2012, he will be assisted with input from a variety of veteran digital executives in addition to Hecht, Levy said in a recent interview. They include Razorfish CEO Bob Lord, Digitas CEO Laura Lang and VivaKi chief strategy and innovations officer Rishad Tobaccowala. (See also: "Why Levy's Staying On at Publicis.")

"In a few months, we'll see who becomes Mr. Digital," Levy had said. "Some people think [Kenny] is the father of digital, but we have had a well thought through strategy for a long time."

That strategy is premised on finding the right balance between VivaKi's capabilities and those of the agencies working with clients day in, day out.

There are areas where VivaKi, by all accounts, has played a critical role.

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