Richard Pinder stepped up to take sole leadership of Publicis Worldwide in May 2009. The company, with 9000 employees in over 80 markets, is the largest Publicis Groupe agency network. He is a member of the Publicis Groupe’s P12 Management Board. Pinder, the network’s chief operating officer, spoke to Mint on the sidelines of Goafest 2010.
You’ve spoken earlier about the global recession marking a rupture with the past and a need for a change in advertising business models. What kind of a change are you referring to?
There’s been a change in the business in the last 15-18 months and it’s more profound than in the previous 15-18 years. There’s been an absolute crash in advertising revenues last year. No one’s seen anything like it before; and a substantial growth in digital all at the same time. In terms of the way our business has dramatically altered, two to three years back we had minimal revenues in digital advertising. Today 20% of our global revenues come from digital—that is a fair amount of money. It’s nearly 30-35% in some countries. In countries such as the US, it’s as much as 30% and in Canada, its 35%. That is a very big change. A complete rupture because you’ve had to hire people for that world, and it’s a growing business at the same time when (traditional) advertising business declined for the whole industry—about 11% last year.
Publicis has seen a fall in revenues as have most other advertising groups. Your forecast for 2010?
Revenues you cannot make up so easily. What’s gone is gone. The only positive part is that while we were down by 6.4% as a holding company; our competitors were down much more. WPP dropped by 8.5%, and Omnicom and IPG by around 11%. We declined the least. Being down is not good, but being down less than the others means that we gained more market share. Our profit margins were the highest; we spent less time firing people.
Our group company Zenith Optimedia predicts that the market will grow minimally by 1%. While we outperformed the market last year, it is our intent to outperform the market this year. But what we are seeing in the first quarter of this year is a flattening out of the decline felt last year, and not a substantial growth so far. It will be interesting to see what holding companies report for the first quarter.
There is speculation globally that Publicis looking to acquire stake in IPG.
If there were something like this; the first time I would know about it is when I read about it. That’s how Maurice Levy (chief executive of Publicis) works; he’s quiet about these things. That’s how he bought BCOM 3 and Saatchi. He handles it privately and surprises the market. Right now, I am wondering why we would. We have just become third largest holding company. We are in fact beating Interpublic and winning business against them everyday, especially McCann. We have just pitched against McCann with Nestle three times and won all of them.
Your view on some of the problems Google’s been facing in China?
I know Eric Schmidt (Google CEO) a little; I have attended a few dinners with him. Schmidt is running a big global business and is not hurt too much by the issues in China. There’s a saying in China—‘The mountains are high and the emperor is far away’. It’s a country where people are nervous of dissent. It’s not indicative of Google’s issues anywhere else in the world; it’s a particular market and they are looking at ways to navigate around it.
Rupert Murdoch did a great deal to woo the Chinese—he married a Chinese lady and invested in a great deal in Star TV in China. I am not sure he got the reward for it either. It’s an interesting question. Everyone’s trying to find ways of working around Chinese society.
Your comment on WPP’s TNS acquisition?
Martin Sorrell is clearly taking the company WPP away from advertising and into research. Good luck to him, but it’s not a business we think we are into. As it’s a whole other business model. So if they have overpaid, shame on them. If they’ve underpaid, good for them. I remember a speech Sorrell made where he said he wanted his stock rated along with Thomson Reuters. Thomson Reuters is an information company, not an advertising company. I also question what it must be like in that company if the holding company is driving the focus away from creativity and people and into knowledge and research which is obviously a whole different business.
Publicis has said that it’s looking at digital acquisitions in emerging markets. What is your India growth story?
Yes, we have been fairly open about looking at digital acquisitions in emerging markets. In China particularly, we are looking for acquisitions in local ad agencies there. In India, we are the number two advertising communications group and will build volumes in this market. It is definitely substantial double-digit growth this year. We are very happy with our India operations. Will we do more in specialized communications etc in India? Yes, because we want the Publicis brand name to be more clearly identified. The Publicis brand name is a little new to this market. We will always look at acquisitions here. But acquisitions (digital and others) are not the only thing we are investing in. We are investing in the management as well. And in our business it’s tough to invest in management ahead of our revenue growth.