It’s Poaching Clients Season at . . .

It’s Poaching Clients Season at . . .

Steve’s breakdown: We hate to see this sort of thing happen but the truth is, clients don’t like drama at their ad agencies. Right?

Well then, you might as well read the whole story with the headline: UNCERTAINTY OVER FUTURE DIRECTION OF PUBLICIS TRIGGERS EMPLOYEE UNREST—AND TALENT EXODUS

“Chairman-CEO Arthur Sadoun’s ‘Power of One’ provokes creative shops; executives cite lack of communication and questions over a possible restructuring for internal turmoil” YIKES!!
EVERYWHERE, USA: Publicis Groupe executives gathered a few months ago to debate which agency would service a new piece of business won by the holding company’s centralized Power of One team, which is composed of talent from various of its shops. According to a person at the meeting—a former creative from a Publicis agency—a suggestion was made for the assignment to be handled out of Saatchi & Saatchi New York. According to that creative, one of Publicis’ CEO-Chairman Arthur Sadoun’s “main people” responded: “Don’t put that there; [Saatchi] won’t be here next year.”

To his bewilderment, the person refused to explain what he meant.

That anecdote is telling of Publicis’ internal state, which two current and eight former executives who wished to remain anonymous describe as chaotic, unclear and concerning. These executives claim rumors are running rampant through the company about it gearing up for another significant restructuring that could see further consolidation of its creative agencies, a shift back to country leads and the folding of Publicis Media, one of its four “solution hubs.”

For its part, Publicis categorically denies a shakeup is underway. “We have absolutely no further plans to merge any of our brands or review our leadership structure, especially given the traction our model is having with our clients and in new business over the past 12 months,” the company said in a statement.

But that doesn’t seem to have been effectively communicated to many inside the company, who believe that Publicis leadership is mulling potential changes at a meeting in London this week. The uncertainty has contributed to a recent string of senior departures and mounting concern within the company over what exactly Sadoun—who took the reins in 2017 from Maurice Lévy as only the third leader in the company’s 94-year history—has planned for the group.

The executives interviewed for this story all describe company morale as having gone downhill, claiming that only a select number of leaders within Sadoun’s tight inner circle are “in the know.”

Analysts have cast doubt recently on Publicis’ efforts to achieve organic growth in 2020 and integrate data-marketing giant Epsilon (bought for $4.4 billion last year), given the challenges it’s faced in managing digital play Sapient (acquired in 2015 for $3.7 billion). Within the company, it seems confidence is not much stronger.

Change is ‘definitely’ coming

Despite Publicis’ denials, the executives interviewed for this story insist there have been recent discussions among Sadoun and other members of his leadership team about the possibility of closing Saatchi & Saatchi New York (all of Publicis’ New York entities have already been moved into one building) and folding Publicis Media into Publicis Communications, bringing brands like Zenith and Starcom under that umbrella. A former executive who worked directly under Sadoun says there’s also been discussion about consolidating legacy creative brands like Leo Burnett and Saatchi & Saatchi​​.

One former executive says Publicis has also weighed appointing a head of each country, with Tim Jones, currently the chief executive of Publicis Media Americas, likely to be named the U.S. lead under that scenario.

Those discussions—real or rumored—have nonetheless fueled some employees to fear for their jobs. “Creative agencies are no longer at the center of the holding company and what you’ve seen as a result is a massive outflow of talent,” says one former Leo Burnett executive.

Creatives “don’t want to work at a company called Publicis Communications West or East,” another former executive says, commenting on the possibility that storied brands like Saatchi & Saatchi will be folded into the larger Publicis company. “That doesn’t sound interesting.”

‘A new breed of leadership’

Jay Pattisall, Forrester principal analyst, says that while he hasn’t heard specifically about a Publicis restructuring, “I would not be surprised in the least by the folding of either the legacy media or creative agencies, or rolling them up into other brands or the Publicis Groupe.” Pattisall says the holding company is focusing “more on the group and Power of One and less on the agency brands.”

“These rumors are categorically untrue,” said Publicis in a statement. “2019 was a year of profound transformation for Publicis Groupe, when we put in place new leaders and new structures across all of our operations, particularly in the U.S. where we implemented a ComEx to make the Power of One a reality in our biggest market. ”

The Power of One model was first introduced by Sadoun’s predecessor, Lévy, in 2015 to create a fluid business across its various offerings. It saw the restructuring of its companies into four solution hubs: Publicis Communications (comprising its creative agencies); Publicis Sapient (its digital offering); Publicis Media (media) and Publicis Health (health and wellness).

Pattisall says the pressure to adapt to an ad industry in turmoil is not just a Publicis problem but reflective of the entire industry. “Being a holding company CEO in 2020 is an incredibly difficult position to occupy,” says Pattisall.

Like Sadoun, he says recently installed WPP CEO Mark Read, Dentsu Aegis Network CEO of Americas Jacki Kelley, and GroupM Global CEO Christian Juhl represent “a new breed of leadership” appointed to “make some very difficult decisions and play some big bets.”

The Power of One, says Pattisall, “seems to be working at least from a new business standpoint,” pointing to recent major Publicis wins that leaned on that strategy including The Walt Disney Co. and GSK. (Notably, the Disney review garnered criticism after chatter arose that there were discussions about Publicis Media and Omnicom Media Group “share shifting,” essentially increasing buys from their other clients across Disney’s vast array of properties.)Power of One

Successful or not, the strategy has caused controversy within the holding company. Several executives interviewed for this story say the Power of One places too much emphasis on pitching versus retaining business.

The former creative agency executive says the strategy is helping win new clients because clients are promised whatever top talent they want from any agency they desire. The person says the problem is that talent is likely already working on accounts, and that work then suffers when talent is taken off those accounts or are forced to juggle too many clients.

“You pitch with the Power of One,” the former agency exec says, offering a hypothetical situation, “and you take the creative director from Tide, make him pitch this [new account] and promise him to that [prospective client] but the creative director has already been promised to Tide. Either [that person] will work on both accounts or get backfilled.”

The former executive says he’s seen this scenario played out “a number of times” and fail, claiming that it’s led to clients taking work from Publicis. “They do lose business; they don’t talk about that,” the executive says.

He claims, for example, that Procter & Gamble has scaled down the scope of its business with Publicis. PG One, Publicis’ dedicated unit for the company, handles creative for several brands including Olay, Always, Bounty, Charmin, Puffs, Luvs and Tampax. (This month, Olay selected independent shop Badger & Winters to create its Super Bowl 2020 spot over Saatchi & Saatchi, which created last year’s Big Game #KillerSkin ad for the brand.)

For its part, Publicis denies that the company has lost business from P&G, the world’s biggest advertiser based on total ad spending. P&G did not return a request for comment.

The former executive claims Sadoun, who is involved in every major pitch, promises too much to prospective clients that the company can’t deliver on including “one P&L” when really there are “still dozens of P&L; it’s chaos.” (In 2016, Publicis Communications announced it would be beginning its shift to a single P&L in each country for all its creative agencies.)

“Growth is so important, obviously, but we have these other relationships,” the former executive says. “There is a lack of consideration for existing relationships.”

Brain drain 

While this could be viewed as sour grapes—agency executives who ran their own shows now being forced to collaborate—it’s still costing Publicis top-tier talent.

BBH New York Chief Creative Officer Gerard Caputo left this month to become a creative director at Wieden & Kennedy, which would seem like a step down in his career. That was just the latest in a string of departures that seemed to have started with Nick Law, Publicis Groupe’s former chief creative officer, who left for Apple last June. (According to one current executive, the meeting in London this week will partly be focused on how creative leadership should be structured without Law.)

More recently, Lisa Donohue announced her planned departure at the end of 2019. She had been with the holding company since 1987, holding roles at Starcom, Leo Burnett, Publicis Spine and most recently as chief integration officer of Publicis Groupe.

Fura Johannesdottir—the former chief design officer of Publicis Sapient Europe, the Middle East and Africa—exited at the end of December to join Interpublic Group of Cos.’ Huge. Publicis Chief Diversity Officer Sandra Sims-Williams departed for Nielsen this month. Leo Burnett Chicago President and Chief Strategy Officer Emma Montgomery resigned in December.

Four months before Montgomery’s exit, Leo Burnett U.S. Chief Creative Officer Britt Nolan left to become the chief creative of Omnicom Group’s DDB North America. In October, Saatchi & Saatchi New York Chief Creative Officer Taras Wayner announced he was leaving to become the North American chief creative officer of WPP’s Wunderman Thompson.

Wayner’s exit followed Publicis Sapient Chief Strategy Officer Neil Dawson joining Wunderman Thompson (as its global chief strategy officer) one month earlier. BBH Worldwide CCO Pelle Sjoenell left in September 2019 to take the same post at Activision Blizzard.

Fear of the unknown—for example whether Saatchi & Saatchi New York or Publicis Media will exist in a year—is also driving employees to question their roles within the company, say the executives interviewed for this story.

Publicis also denies that reasoning for the departures, but did not provide its own explanation.

A former executive who worked directly under Sadoun describes internal communications as “messy,” noting that “a lot of [Publicis] leaders are really uncomfortable with uncomfortable conversations.”

The executives interviewed for this story say staffers have a general idea of what is in store for Publicis—Sadoun’s emphasis on the Power of One seems to suggest there will be further consolidation—but the lack of communication about exactly what changes are to be expected is causing anxiety among staff.

“Employees see constant turmoil but no one puts it into perspective,” says a former Publicis Media executive.

Publicis, again, denies this claim.

Morale goes downhill

“It’s become about who’s in the inner circle and who is not,” says one former Publicis Groupe executive.

The executives interviewed for this story all maintain that Sadoun has made a habit of keeping company with people who don’t challenge his decisions—and those who did, have left. “Arthur surrounds himself with people who support his agenda,” the former Leo Burnett executive says.

Executives say this inner circle includes Sadoun’s appointees to lead Publicis Communications in the U.S., as well as Publicis Media CEO Steve King. In July 2019, the company restructured the group’s U.S. creative agencies into three zones: east, west and center. Andrew Bruce is CEO of Publicis Communications West, Andrew Swinand is CEO of Publicis Communications Center and Jem Ripley is CEO of Publicis Communications East. (See below for a breakdown of their responsibilities.)

Now that Epsilon—or as one former executive calls it the “shiny new toy”— has been thrown into every pitch, it’s causing further disconnect between employees sitting on the data side of the business versus the creative side, this person claims.

That said, one former Publicis Groupe executive says the integration of Epsilon is at least going better than Sapient so far.

‘He gives a shit’

Many of the executives interviewed for this story say they understand the need for change. The industry is in flux and agencies need to keep up, but they are skeptical of whether the vast amount of changes at Publicis are sustainable long-term.

“So much of the decision making is short-term,” says one of the former executives who worked under Sadoun. “You just take the win today and worry about what comes next tomorrow.”

Case in point: the company’s decision to bring back Razorfish this week after (possibly, too rashly) it decided to fold it a year earlier, as Adweek reported. The holding company will revive the brand it purchased for $544 million (according to Ad Age Datacenter estimates) in 2009 from Microsoft, which it then merged with SapientNitro (to create SapientRazorfish) and then folded into Publicis.Sapient, one of the company’s four solution hubs, in 2019, which resulted in 100 layoffs.

Still, even his detractors don’t deny that Sadoun is committed to the business. “He gives a shit,” says a third former Publicis executive who worked under him. “He works like a first-year lawyer. He is on planes, running himself ragged.”

Will it be enough?

Unlike his counterparts at other holding companies, Sadoun has an unusually large cohort of people to answer to. While executives say he has officially moved from the “honeymoon” period of transitioning into the CEO role to become the active leader of the company within the last 18 months, Lévy is still involved in many decisions. (Lévy remains the chair of the supervisory board at Publicis Groupe, although it’s unclear how his current role as interim chief marketing and communications officer for WeWork affects that.)

And then there is Elisabeth Badinter, the daughter of Publicis founder Marcel Bleustein-Blanchet, who remains the company’s largest shareholder and chairwoman of its supervisory board. Badinter (and Lévy) maintains a lot of control over Publicis, which has seen struggling financials despite a slew of wins in the last year including declining organic growth. (The holding company expects to release its 2019 full-year results on Feb. 6.)

“That family is totally in the game,” says one former Publicis executive, giving Sadoun not as much “leeway to make changes as a CEO for another company might have.”

It’s worth pointing out that being only the third CEO in the company’s history and leading Publicis, which is up against as many legacy issues as any other holding company, through one of the most disruptive decades in advertising, puts Sadoun in a position many don’t envy.

“Look, it’s going to be an interesting next year or two,” the former Leo Burnett executive says. “I look at Arthur and go, ‘That can’t be fun.’”

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