Watching the biggest marketing story of the year unfold from atop a mountain in India was, to say the least, a little disconcerting. Yet, I imagine that agencies within both groups probably exhibited a similar level of disbelief, as they suddenly began to ponder how their future will play out in a dramatically reshaped environment.
While much of the coverage of the blockbuster Publicis Omnicom merger has focused squarely on the benefits to investors, pausing periodically to consider clients primarily from the perspective of conflict, the true test of success is likely to be its impact on the hundreds of thousands of staffers that work for the two holding groups’ constituent agency brands.
From a PR viewpoint, no business exemplifies this better than MSLGroup, which will become the second biggest firm among Publicis Omnicom’s $1.8bn PR agency stable, the largest holding of PR businesses in the world.
Much has been made of the cultural clash represented by the collision of Madison Avenue's Omnicom with the overtly Gallic Publicis Groupe. At this, MSLGroup executives might permit themselves a wry smile, given that they have spent the past four years navigating a similar situation, albeit on a smaller scale.
In 2009, Publicis Groupe made the bold decision to merge its two main PR firms. One was Manning Selvage & Lee, a New York-based powerhouse that appeared to have its glory days behind it. The other was French PR leader Publicis Consultants, based in Paris with considerable strength across Continental Europe.
It is difficult to think of two more contrasting agency cultures yet, somehow, under the leadership of new CEO Olivier Fleurot, the MSLGroup brand has rapidly taken shape. In our 2011 profile of Fleurot, the Frenchman noted that, despite an unhealthy “US-centric attitude” that has bedevilled the PR industry, MSLGroup’s progress has been underpinned by a collaborative zeal that does not begin and end in New York.
Notwithstanding the alarm that Fleurot may now feel upon learning that he will soon report to an American co-CEO in John Wren, that mindset has been bolstered by a substantial influx of entrepreneurial types into the agency ranks, thanks to the hectic pace of agency acquisition that MSLGroup has maintained since 2009.
As one senior MSLGroup source explains, the agency has effectively tried to swiftly build a global PR network after realising that its constituent parts were in no shape to battle the industry’s dominant players.
“The whole creation of MSLGroup was done out of a sense of expediency,” says the source. “Publicis Groupe needed a global PR network and fast.”
That strategy meant migrating to a single MSLGroup brand at the expense of individual PR agency identities, a plan that Fleurot and his leadership team often point to with some pride. Unlike other holding groups, they note, Publicis Groupe has one global PR network - ensuring that it receives the best resources in its efforts to build an international, multi-disciplinary footprint.
"In a way, back in 2009, we had to make a choice,” explains Fleurot. “Either we let our existing assets go on with limited impact because their individual footprint was relatively small or we decided to build a global player. We went for the latter. It required building a stronger brand identity to make all these people work together and better serve our clients. One management team, one brand, one purpose.”
Language and cultural background, then, are not the only things on which the two new bedfellows differ. While Publicis has followed a single-brand PR strategy, Omnicom has opted for the rather more conventional approach, housing a multitude of different PR firms within its holding structure.
For MSLGroup, the risk is that the single-brand approach may unravel once the agency is surrounded by other firms within Publicis Omnicom. “The logic,” notes the MSLGroup source, “is not that strong and becomes less so with other assets around.”
Not everyone within Publicis Groupe’s PR agencies would be displeased by this turn of events. The effort to combine agency resources has been met with varying degrees of resistance, what the MSLGroup source terms a “civil disobedience campaign”, particularly from corporate and financial agencies such as Kekst, CNC and JKL, who oppose the suggestion that “one size fits all.”
“You cannot force people in our business to do something they do not want to do,” says Fleurot. “I am very pragmatic about any agency that has been bought before and is doing a good job. I am not dogmatic about branding but I thought it was very important that we build an overarching brand identity and develop a more consistent approach worldwide. There are a few exceptions, as always.”
Those exceptions are understood to have floated the idea of a second PR agency brand, one that ostensibly focuses on more strategic, higher-margin corporate reputation activity.
Fleurot is probably too unflappable to admit to any measure of concern over this turn of events. "There is some value in having those corporate-focused consultancies work more closely together,” he admits. “Whether that requires a new and separate brand is a still question mark.”
“We have debates about branding and structure but nothing really different from what happens in other companies,” he adds. “We will do whatever is good for our clients and the business, but if it's mostly about smoke and mirrors, we don't need to spend too much time on it. And, by the way, people within our consulting firms have different views on the degree of integration and unified branding. It is a healthy debate.”
Much will depend on how Publicis Omnicom chooses to organize its new PR assets. So far, few answers to this puzzle are forthcoming, as explored in my colleague Aarti Shah’s excellent analysis of the deal. Most people contacted by the Holmes Report, however, believe the marriage of the two companies will either lead to more PR agency consolidation at Omnicom, or less at MSLGroup.
“There are brands within MSLGroup who don’t want to be involved at all, who don’t believe that one size fits all,” says the source. “This will give their civil disobedience some impetus.”
“I do think a lot of stuff could unravel unless we have a solid single brand network,” says another source, adding that the convergence of public relations, digital media and marketing communication should support the idea of one integrated offering, rather than a multi-brand approach.
Fleurot dismisses the notion that the MSLGroup approach is under threat. “I would tend to think that MSLGroup is no different from other global PR networks. At times they, also, have achieved their expansion through acquisitions and mergers. In the end, if the model works, you should let businesses adapt, develop and grow.”
Publicis Groupe’s PR acquisition spree has included 11 new agencies in numerous countries - including China, India, Taiwan, Poland, Russia and Brazil - as MSLGroup has looked to reshape its positioning as an emerging markets player with a broad range of expertise.
It is easy to forget amid its rise to the number four spot, but the MSLGroup experiment has involved a relatively remarkable feat — building a credible global network, with industry-leading strength in high-growth regions like Asia-Pacific and Latin America, in less than five years.
Yet the effort has also taken a toll. “There has been constant change for five years,” admits one senior MSLGroup source. “It does get weary after a while. Integration meetings, branding meetings.”
Other agency sources are more sanguine, spying a method to the apparent madness. The “constant state of flux”, as one describes it, has made it easier to integrate the newer purchases, by concentrating the organizational pain over a shorter period of time. For a firm already grappling with the merger of MS&L and Publicis Consultants, the addition of 11 smaller agencies probably doesn’t seem like a bridge too far, even if — as one source notes — many of the acquisitions are driven by Maurice Levy rather than MSLGroup itself.
Unsurprisingly, perhaps, the group’s newer recruits have demonstrated the highest tolerance to the torrid pace of change. Few, notably, have departed after being acquired. “As dysfunctional as MSLGroup sometimes appears and feels, there is a tidal wave of goodwill to make it work,” says one agency head within the group. “The RFPs we get into now - you can’t be in the running unless you are in umpteen markets. Expectations are sky-high.”
Fleurot, meanwhile, makes no apologies for the pace of change. Instead, he simply sees it as the price of doing business in a rapidly evolving sector. “What I've been trying to explain to everyone since the beginning - regardless of what we're acquiring or not - is that we live in a world that is changing faster than we think. People should not be afraid of change. Whether it is imposed on us by new digital platforms and new technologies, or whether it is the result our own strategy. There is no place in our industry for people who don't like change.”
In Fleurot’s 2011 Profile, he explained how he dealt with the dramatic exit of Freud Communications, which decided to buy itself out rather than be part of MSLGroup. “That was a complete cultural clash,” said Fleurot at the time. “I would never integrate a company if I think there would be a cultural clash.”
One wonders whether such counsel will be heeded by the powers that be at Publicis Omnicom. Because, if nothing else, MSLGroup has certainly racked up plenty of experience when it comes to uniting cultures, integrating models, and keeping clients happy – a bewildering array of challenges that often combine to scupper the most well-intentioned of agency mergers.
The firm has developed a scorecard that tracks how well new agencies integrate, which has since been adopted by Publicis Groupe. It is unclear whether this approach will be deployed to track the success of the new blockbuster deal, but it does suggest a certain sensitivity at MSLGroup to the risks posed by merger fatigue.
“With any business, at some point you have to just pause and integrate and consolidate,” says the agency head. If nothing else, the mega-merger may provide some of that breathing space, as the two groups work out how all of their assets will co-exist within the new company.
Even so, these deliberations are unlikely to prove especially relaxing for the group’s PR firms. One MSLGroup source notes a measure of “anxiety” at the firm, ahead of an eventual moment of reckoning, whatever form that might take. “At some point there will be a dog and pony show - where Olivier and everyone troops into a room and says this is what I’ve got.”
With that in mind, it is understood that MSLGroup, like other Publicis Omnicom PR firms no doubt, is trying to map its competitive strengths versus its new sibling agencies. There is a feeling that the group will eventually attempt to rationalise its PR assets. “Logic dictates three global PR networks,” says one source — which would clearly benefit the ‘big three’ of FleishmanHillard, Ketchum and MSLGroup, while renewing questions about Porter Novelli’s outlook.
Those calculations, though, are clearly speculative. Ultimately, the entire debate may yet prove moot. As former Publicis Worldwide COO Richard Pinder has presciently noted, once Levy’s 30-month stint as co-CEO is over, Omnicom senior executives, led by John Wren, will presumably be in the driving seat.
And, to put it mildly, the US group has rarely displayed a particular sense of urgency when it comes to proactively managing its various PR brands, even if that approach may start to charge following the recent hire of former J&J exec Steve Dnistrian, who, it is understood, is aiming to help Omnicom's PR brands become more cooperative.
Regardless, and notwithstanding the idea that Levy's (and even Fleurot's) influence should ever be taken lightly, Omnicom's record suggests that the status quo may remain in place for some time to come.
“The big challenge will be reconciling the highly integrated approach MSLGroup has with the highly decentralised approach Omnicom Group has,” says a senior source at an Omnicom PR firm. “It would be unprecedented for Omnicom to rationalise assets - their whole philosophy is based on letting the cream rise and the sediment settle.”