Publicis CEO Mike Rebelo: Sapient's platforms and systems the new secret sauce; what next for Starcom, Zenith, Saatchi, Leo Burnett and Digitas?
When Publicis Media’s Australian CEO Matt James left for the UK early this year, it fast-tracked a restructure of the Paris-based marketing services giant’s Australian portfolio. Decades of supremacy by the group’s media, digital and creative agency brands was cut and flipped for a new approach.
“We are without a doubt at the hardest part yet of our journey and, as is the case with any major structural change, things always get worse before they get better.”
Decades of supremacy by the $13bn group’s media, digital and creative agency brands has been cut and flipped in Australia for a new approach that centres around clients first and repackaging the holding company’s collective talent and agency capabilities ahead of individual agency brands. That’s a material change, along with Publicis Sapient with its expertise in digital business transformation taking the growth lead and shine from its sister agencies in media, digital and creative.
Mike Rebelo, a 21-year veteran at Saatchi & Saatchi across numerous international markets, was the executive tasked to make Australian change happen for the French mothership, which is under pressure from investors.
“We’re a marketing and business transformation company. We can see the conversation between the CMO and CIO overlapping. We need to bridge that gap as a group.”
Publicis at “the hardest part”, will get worse
Last month Publicis Groupe faced a 14 per cent drop in its shareprice at one point after an earnings call which revised its third-quarter organic sales downward by 2.7 per cent.
New York-based Omnicom, meanwhile, maintains guidance of 2-3 per cent organic revenue growth this year. WPP too posted a surprise 0.7 per cent rise in organic sales in the September quarter - against analysts’ forecasts of a 0.6 per cent drop. It’s not all roses in Paris.
Publicis Groupe global CEO, Arthur Sadoun, was blunt on an earnings call in October about more difficulties to come: “We have taken the tough but necessary decisions needed to tackle the industry challenges we are facing head-on,” he said. “We are without a doubt at the hardest part yet of our journey and, as is the case with any major structural change, things always get worse before they get better.”
Rebelo, like his Australian rivals at WPP (UK), Dentsu (Japan) and IPG (US), is new this year to the top seat at a holding company in Australia and New Zealand.
And like his freshly-minted competitor CEOs in Jens Monsees at WPP and Henry Tajer at Dentsu, Rebelo says growth at Publicis will come from new capabilities in digital enterprise transformation, technology, systems and platforms. The one-time Publicis powerhouse brands in media, creative and digital communications are now playing second fiddle.
“Our year one, two, and three plan will see the greatest double digit growth come from Sapient."
“The volume and the value still sit in the communications and media space, as do very trusted relationships with clients,” Rebelo says. “But you’re not seeing the double-digit growth there like you’re seeing in the digital business consulting market, in martech, adtech and the services that run on top of that. So in the strategy we’ve implemented, the growth will come from Sapient. Communications and media will still grow but our year one, two and three plan is Publicis Sapient.”
Unlike Monsees at WPP, Rebelo has one bonus card: he doesn’t need to navigate a complex reporting structure in which his local agency network bosses also feed into global reporting lines which can override local edicts. Rebelo in Australia and New Zealand is all-powerful.
He says his primary agenda is rewiring a legacy holding company structure into a “connected platform”. Fair enough. What does that mean?
“Most holding companies are there to govern, to drive financial performance and be accountable to shareholders and the stock market,” he says. “That doesn’t change as a connected platform either. But to change and help clients be better, faster and more agile, we needed to have enterprise-scale agility across our businesses to bring together teams, or agency brands, on a piece of business to provide that whole expertise they’re looking for.
“In a classic holding company structure you have brand X, brand Y and brand Z operating into a global CEO who holds that P&L. We don’t have that anymore. All brands operate into an Australia and New Zealand P&L that sits with me. We’ve still got more work to do, don’t get me wrong. But that in itself has allowed us to stand up teams around clients like Campbell Arnott’s, around Toyota, around Westpac. When you’re talking to clients, it’s about solving more problems for them and it’s not just about long-term brand awareness. The good ones know how to operate all the way through the funnel. We’re living in a short-term market and you’ve got to do both.”
“We’ve moved from being a holding company to a connected platform – that’s really our point of differentiation.”
Joining the dots between agencies
Rebelo says agency brands remain “really important” because people and clients still want to work with them. “But the group,” he says “provides the connective tissue for a Saatchi, Leo's or Zenith to combine with Digitas and combine with Performics and develop that end-to-end marketing transformation capability that client X may be wanting you for now’.
“You can’t shift from here to there overnight but we can do it a lot quicker than anyone else – or we can bring talent to do that faster.”
Rebelo says the task is easier between the media and communications units because they have a lot of similarities.
“The Sapient talent is very different to an ad or media agency,” he says “They engage more with the CIO of an organisation. Their people are engineers and customer experience designers; they design agile organisational structures. They do more platforms and systems work. They solve a different set of client challenges and they’re competing against a very different competitive set.”
While Rebelo says Sapient is Publicis’ big growth engine, he isn’t bearish on the future of traditional agencies as they build “new kinds of operating systems for clients or teams that can really shape how we go through the classic marketing funnel.”
Rebelo frequently uses the term “graphic equaliser” to illustrate how Publicis is managing a more “modular” and flexible approach to its agencies and how their services are packaged up.
“The group provides the connective tissue for a Saatchi, Leo's or Zenith to combine with Digitas and Performics and develop that end-to-end marketing transformation capability that client X may be wanting you for.”
Hybrid talent incubator
Creative networks like Saatchi & Saatchi and Leo Burnett are typically strong in brand awareness and creative storytelling; Rebelo says they now have to link closer to other specialist units in the group to deliver and join up other parts of the marketing funnel in performance and retail-orientated tactics.
“You still need to drive acquisition and conversion and deliver sales,” says Rebelo. “So Saatchi can start to partner with a Performics or a Digitas - they do that very well. At the moment you’ve got some very deep functional expertise but I think there will be some definite crossover. As talent evolves and becomes more hybrid and builds broader expertise it will be fascinating.
“We have a Next Generation board we use as a parallel against the Publicis Groupe board for different views and ideas. They came back with this concept of being a ‘Publicis Lifer’. It’s interesting because this younger group tends to want to be rotated every three or four years out of the business. But they were saying they can stay 10 years or 15 years traversing the group and getting that experience they all want.”
Rebelo says the operating approach of linking all the specialist firms in Publicis through the marketing funnel – systems and platforms included – is shaking the fundamentals of agency and group culture.
“That’s where I think with some of the big shifts in our industry you have to recognise, ‘well yes, we actually do have to look at things very differently’.”