Editorial: Publicis/Freuds deal makes market sense

Publicis' decision to take a majority stake in Freud Communications took many by surprise. Freuds, like most successful independents, gets many approaches each year, but few expected the iconic agency to tie the knot with the French advertising group.

Freuds made the early approaches around 18 months ago. Matthew Freud and his vice-chairman, Kris Thykier, were under pressure from clients, such as Nestle and Sony, to deliver global network campaigns, and the London-based group was finding this difficult to achieve organically.

At the same time it was frustrated at having to refer advertising leads to separate groups due to a lack of sister agencies.

The more cynical point to a predatory deal maker. After all, Freud originally sold his agency to AMV BBDO in the 1990s, later to buy it back for a snip.

But while Freud is shrewd - and no doubt will find a use for the £10m he could make out of the Publicis deal - the entrepreneur and son-in-law of Rupert Murdoch is unlikely to have been primarily influenced by filthy lucre.

And what's in it for Publicis? This is a group already employing 1,300 PR staff, including strong brands such as Manning, Selvage & Lee. One answer must lie in consumer brand PR. Few agencies are so adept as Freuds in gaining quick and high-profile coverage in consumer media, whether in The Sun or the New York Post, something many brands now demand to better leverage their ad campaigns. Also, in the recently published WPP Annual Report, Martin Sorrell stressed the declining share of advertising and media buying in favour of 'so-called less developed areas... such as PR and public affairs'. Publicis - like other marketing services groups - has been advised to invest in below-the-line agencies, which are also often valued at lower multiples than their own listings.

With heavy consolidation in the ad industry over recent years, the healthy clutch of private British consumer PR shops suddenly look ripe for the picking for marketing groups seeking growth.

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