The Publicis Sapient deal is a harbinger of huge change for the PR industry

On Monday, Publicis Groupe announced the $3.7bn (£2.3bn) acquisition of Sapient, a move which took the industry by surprise, coming as it did several months after the failed attempt to merge with Omnicom - a deal which would have created a marketing services giant to overtake Sir Martin Sorrell's WPP.

Sapient and Publicis' PR operation, MSL, will be working together
Sapient and Publicis' PR operation, MSL, will be working together
While Sorrell has dismissed the acquisition of Sapient as the actions of a "jilted lover" following the failed merger, others see it as further evidence of a seismic shift in the role PR will play in the future.

Danny Whatmough, head of digital at Weber Shandwick, thinks we will see more deals of this kind over the coming year.

He says: "The agency-client model is currently going through a major shake-up. The traditional ad/creative agency lead role in is doubt, with other agencies – including digital and PR - now demonstrating their suitability for this role."

Publicis will create a digital platform called Publicis.Sapient via its acquisition, bringing together Sapient with its other recent digital acquisitions, which include DigitasLBi (in 2007), Razorfish (in 2009) and Rosetta (in 2011).

The move will make some in the industry nervous that they are not yet fully prepared for a digital revolution in PR, which is already in full swing.

Whatmough adds: "For the PR industry, it is yet another wake-up call that we need to continue to invest – and invest heavily – in digital talent. And we must look outside the traditional PR agency to find this talent. As clients increasingly expect truly integrated offerings we must ensure that we aren’t left behind in our ability to offer truly transformational digital solutions to our clients."

The stated aim of Publicis was to achieve 50 per cent of its revenues from its digital offering by 2018, from its current position of 41 per cent, but the acquisition of Sapient has brought this target forward by three years.

Maurice Levy, chief executive of Publicis, told PRWeek on Monday that this was a "beautiful" moment for the company and that, by 2018, Publicis would derive a "much higher percentage" of revenue from digital services and that he would set out the new target later this month.

Unsurprisingly, Levy himself is seeking to redefine the whole PR discipline in the context of the company’s acquisition.

He says: "People think PR is an old business which is based on relationships [but] the reality is different. PR has been profoundly changed by the emergence of new means of communications, such as social networks and bloggers. They give people the possibility of using their voice, even if it is just unnecessary noise and this dramatically affects the job of PR agencies."

Some financial analysts point to Publicis' offer of $25 per share for Sapient, a 44 percent premium on its closing price on Friday, as a hefty price to pay for the company, and wonder whether it will be worth it.

"It’s clearly a significant and potentially transformative deal for both businesses and it’s also a very big bet," says Hamish Thompson, managing director of Houston PR. "Some analysts are pointing to the price paid and saying ‘is this too much? Can they create additional value for shareholders?’  The key has to be in second-guessing the future of the relationship between consumers and promotional techniques.  The way we buy remains in huge flux.  We shop, share and search under the influence of others these days. Our decisions are tribal."

However Thompson downplays the wider impact of the deal on the PR industry, because, he argues, ideas will never be replaced by technology.

"Will this deal enable the combined businesses to get closer to the unpredictable comet of customer behaviour and, more importantly, will they be able to figure out what will motivate the consumer of the future - There’s your $3.7bn question," he says.

Other PR professionals pick up on the idea that PR will remain strong in the areas where technology does not make as much difference, such as crisis comms, reputation management and board-level advice.

But even they accept that the size of the deal announced on Monday dwarfs anything similar in terms of PR company acquisitions, leaving the PR world as something of a poor relation to the digital sphere.

"The global marketing services groups are obsessed with data," says Tony Langham, chief executive of Lansons. "In the context of data, PR is a cottage industry by comparison and you only have to look at the money invested to see that."

And, despite Levy redefining the role of PR for the future, Langham says management time at Publicis will be "spent on where it has invested its money".

Threepipe sees itself as being at the forefront of the integrated, and digital, approach to the new PR landscape and its co-founder says the Sapient deal is clear evidence of this new approach.

"I think it demonstrates the premium placed upon digital knowledge within the wider communications industry," says Jim Hawker. "Publicis has paid a premium because it needs to upskill quickly in an area in which budgets are growing and brands are looking for strategic advice."

Levy has outlined how he believes cross-selling to existing clients of Publicis and Sapient, as well as cross-fertilisation of ideas in his people-driven business, will bring benefits to everyone involved.

But Hawker paints a grim picture of the likelihood of Publicis’ PR agencies, such as MSL, directly benefiting from the brave new world Levy has created by purchasing Sapient and, instead, envisages a situation in which PR is fighting for its life. 

He says: "Hopefully it will create more opportunities for the valuable skills contained within these agencies but I very much doubt it. PR is losing the war in terms of being able to access these budgets because the necessary skillsets required to understand and implement digital budgets are generally lacking."

Hawker thinks the solution will be to begin merging individual companies within the group but, until that happens, they will fight like cats and dogs over the profits and losses.

"There is of course a massive opportunity to improve digital knowledge within the overall business but the reality is that this will be impossible to achieve," he says. "I imagine that there will be a lot of up-selling and cross-selling happening across the group’s clients but until all the agency profits and losses are merged into one then there will be resistance to internal change within the group."

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in