This first appeared in the September issue of AdNews Magazine.
As the business world moves at an increasingly rapid pace, noises decrying the death of the current agency model are deafening. But if you look at the major holding groups - WPP with its horizontality, Havas and its Village, Dentsu's bespoke teams for major clients, and Publicis' Power of One - the agency model isn’t dying, it's returning to its first form where media and creative worked in harmony.
It’s been 18 months since Michael Rebelo was made Publicis Communications CEO for Australia and New Zealand amidst a raft of changes within the group to facilitate its shift towards the ‘Power of One’ model and stabilise the holding company in a rocky advertising climate.
Following six years leading Saatchi & Saatchi Australia after spending the majority of his career within the Saatchi network, Rebelo was promoted alongside Melinda Geertz who was made national CEO of Leo Burnett. Andrew Baxter took on the role of Publicis Worldwide CEO and Publicis Communications chairman before his recent departure for KPMG. His duties were absorbed by Rebelo’s role.
The shake–up coincided with a global changing of the guard, with Arthur Sadoun taking over from global Publicis CEO Maurice Levy and subsequently putting a 12-month pause on awards. He also unveiled Marcel, the new AI platform, outlined a pivot towards consulting work, and signalled future acquisitions.
In 2015, Publicis split its portfolio into three hubs: Publicis Communications; Publicis. Sapient; and Publicis Media; yet the model only seemed to kick into gear this year and is now gaining traction.
Underpinning the model is the country P&L for the three hubs. Each Solutions Hub CEO is accountable for their P&L across all agencies. This structure allows each CEO to architect and build teams across agency brands, customer journeys and channels, without the challenges of agencies trying to protect their share of the client’s marketing budget.
Rebelo explained the capabilities have been reorganised around two core pillars, digital business transformation and marketing transformation, to better focus Publicis' investment.
It’s the Power of One model that sets the firm apart from the other holding companies, according to Rebelo, and sees it survive in the new world order of agencies.
“Not all things are created equal and this is equally true for ad agencies," he said. "It’s a tough and lonely world out there for some ad agencies that aren’t one of the creative premier league, aren’t part of something bigger, or that can’t connect into a diverse complement of capabilities with scale.
“Scale and specialism are being demanded more and sometimes these are at odds with each other. Therein lies the challenge for a lot of advertising and specialist agencies.”
Michael Rebelo
As a result of the greater collaboration across the portfolio, Rebelo, who oversees 14 agencies including Leo Burnett, Marcel, Digitas, and Saatchi & Saatchi, works closely with Publicis Media CEO Matt James.
James, who has been in the role for over two years, said the changes Publicis has undergone sees it advance from a holding group company to a “platform company”.
“We now operate as one group leadership team with aligned KPIs anchored to a single P&L," he explained. "This is a very powerful platform for all the normal barriers, that can make inter–holding company businesses suffer, to be smashed. This means that we can create the most transformative group solutions for our clients, without constraint."
Publicis’ approach gives the company a big advantage over competitors, James said, who are “battling with legacy issues between businesses and unaligned agendas".
“Our clients can move faster, with assurance they are making the right strategic decisions with credible return on investments as there is one throat to choke when it comes to results,” he said.
The acquisition of customer experience agency, MercerBell, two years ago has enabled Publicis to create teams that can advise across the entire customer experience, not just advertising, which is its model for Toyota in Melbourne.
Publicis leverages other agencies in its portfolio, like data and digital CRM agency, Digitas, which partnered with Saatchi & Saatchi to win gambling company, Betfair, last year.
By combining the strengths of agencies across its portfolio, Rebelo said, the holding company can better achieve the 'holy grail' of data–driven creativity.
Rebelo described Sapient, Publicis’ digital consulting arm, as the “weapon to take on the consultants,” dubbing it a “gamechanger” for the group. With all the hype around consultancies eating agency lunches, he’ll tell you Publicis Groupe was ahead of the curve with the acquisition of Sapient in 2015.
“While Publicis Communications and Media operate in the marketing transformation space, Sapient gives us the ability to bring in consultants to advise clients undertaking digital transformation," Rebelo explained. "This is the area I’m genuinely excited about as our agencies have the ability to help clients in areas where they couldn’t before.
“It elevates the conversations we’re having and none of the other holding groups have a Sapient in the mix.”
He revealed that Publicis Groupe has made deliberate moves over the years to not just participate in, but lead, changes in the industry. Rebelo cited acquisitions like Razorfish and Digitas that bolstered its digital offering, as well as the later buy–up of Sapient to bring digital business transformation advice to the agency's clients.
Another area of focus for Publicis Communications is its production and content business, Prodigious.
“As clients have started to move certain services in–house, agencies have looked at similar ways of internalising areas they would usually contract to third parties; production being one area,” Rebelo explained.
“I can’t see this trend changing. We’re all being disrupted, which is why Prodigious is a strategically important play for us in Australia and we’ve invested significantly in this business."
As for what’s next on his agenda, Rebelo said Publicis Communications is focused on "winning the war for talent,” which he considers one of the industry’s biggest challenges.
He is also focusing on acquisitions in the data, CRM and digital space in New Zealand.
“Making sure our agencies can attract the best share of the best talent is the biggest challenge we all face," he said. "We are acutely aware of the myriad choices people face so we are looking at ways we can leverage our scale to compete and offer reasons to join or stay.”
One way in which Publicis is retaining staff and remaining competitive is through the recent launch of a new parental leave policy, which Rebelo believes is progressive for the industry. It’s increased maternity leave up to 16 weeks and has doubled paternity leave.
“We’ve only just scratched the surface here in Australia and New Zealand, so that genuinely makes this role exciting."
Matt James
Is Power of One working?
Over the last 12 months in particular, Publicis has experienced “accelerated interest” in in its integrated model from Australian brands, James said. Clients have come to the realisation that multiple agencies create too much complexity and duplicity.
So far, this restructure and philosophy, which is better known as the Power of One model, has been validated by winning the global creative for Mercedes–Benz and Campbell Arnott’s.
“Locally winning the Campbell Arnott’s business was proof to us that major advertisers right here in Sydney can see our value to their business over other holding companies," Rebelo said. "It was a rewarding win for Publicis Group Australia."
Both pitches entered specific briefs from Australia, so had to be won on the ground as well as globally. For Campbell Arnott’s, the APAC business is led from Publicis Australia.
“We are able to provide genuine access to a diverse range of creative, shopper, data, digital and media talent under one client P&L and one person - a chief client officer - accountable for delivering success for that client,” Rebelo revealed.
While the Mercedes–Benz win stemmed more from a global win, it’s also a significant milestone for Publicis in this market, with the group setting up a new agency in Melbourne to service the client.
On a local level, Saatchi & Saatchi won ride-sharing app, Didi, partnering with Zenith, and Football Federation Australia, partnering with Starcom. James said the wins prove Publicis has momentum.
Rebelo revealed that clients are demanding a tighter union between brand, media and creative strategy.
“There’s always been a legacy of collaboration between the creative and media agencies in our Groupe. The Power of One philosophy has helped us focus on this and we’re certainly seeing a transformative level of working together like never before on new and existing clients,” he said.
“It’s not just creative and media where clients see the benefit. It’s also being seamlessly connected across brand, creative, data and customer journey marketing.”
What is Publicis Communications?
CEO: Michael Rebelo
How many people: 780 people
Agencies: Leo Burnett, Saatchi & Saatchi, Marcel, Publicis WW, Prodigious, Publicis Emil, Publicis Loyalty, Arc, Publicis Engine, MercerBell, Digitas, HerdMSL, Frontside, Saatchi & Saatchi NZ, Saatchi & Saatchi Wellness
Biggest clients: Toyota, Westpac Group, Qantas, Diageo, Samsung, Mercedes–Benz, Campbell Arnott’s
What is Publicis Media?
CEO: Matt James
How many people: 650
Agencies: Starcom, Zenith, Spark Foundry, Blue 449, Performics
Biggest clients: Samsung, Suncorp, Toyota
What is Publicis.Sapient?
Leadership: Phil Phelan, VP, Country Leader and Blair McQuade CFO
How many people: 80
Agencies: Sapient Razorfish, Sapient Consulting
Biggest clients: P&G, Samsung, Suncorp, Reckitt Benckiser, Aldi
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