Can Publicis overcome its 90m triple loss?

Publicis, the UK’s fourth-biggest advertising agency, has suffered a triple blow in recent months with the losses of the Asda, Post Office and MFI accounts.

These three losses – with a combined spend of some £90m – wipe out nearly one-third of the agency’s £283m billings and threaten to catapult it from the list of top ten UK agencies. Last week’s win of the Airbus account does little to fill the gap.

Some observers see the account departures as symptomatic of a malaise at the agency’s Baker Street offices. One speaks of Publicis being “dead in the water”. That said, the losses are understood to have created a £5m hole in the agency’s annual revenues of £36m, which may be damaging but is hardly fatal.

Dependable but dull?
The French-owned agency’s UK chairman Tim Lindsay, who joined three years ago with a brief to shake off its “dependable but dull” reputation, admits the losses are a blow. But he is confident about the future. “We remain a strong agency, we have a fantastic roster of clients and an outstanding new business pipeline,” he says. “But most of all we have an exceptional bunch of people.” He is optimistic that Publicis’ integrated offer – with advertising, direct marketing, digital and contract publishing all run from the same building – will help it win new accounts. The agency is pitching for Vision Express and the suspended Prudential review.

Lindsay points to the agency’s strong record of increasing business from existing clients. Last year, it won Premier Foods’ £7m Quorn work and then took the £5m Oxo account.

The agency has developed a strong line in populist – some would say bland – advertising, like Renault’s Papa and Nicole and VaVaVoom campaigns. But critics argue that neither the creative nor strategic work is strong enough to ensure clients stick with the agency.

When new marketing directors land jobs with Publicis clients, say the critics, they may recoil from the insipid creative output and look for something more edgy. Some believe this happened at the Post Office, when marketing director Gary Hockey-Morley joined in September and put the £20m business up for pitch. But Lindsay defends the Post Office work, saying the Ants campaign was a clever way of tying together disparate strands of communication, from TV ads to leaflets.

The Asda effect
It is the loss of the £45m Asda account that raises the most serious questions about Publicis management. Rick Bendel, the agency’s worldwide chief operating officer and the man most closely associated with the Asda account, resigned late last year and joined the retailer as marketing director, where he sacked his old agency and hired Fallon in its place.

His motivations are unclear. Bendel said he left Publicis to spend more time with his family. Others thought he left after being sidelined in the Publicis Worldwide hierarchy and got his own back on his ex-employer by taking away the Asda account and ripping the heart out of the London shop. However, this theory is undermined by the fact that he put the work into Fallon, which is also owned by overall parent company Publicis Groupe.

One criticism of Publicis is that it is a “servile” agency which bows to client demands and fails to stand up for what it believes is the best strategy.

Lindsay admits: “We had become that at Asda. We were taking orders – that’s the way Rick ran the business – and while the creative work was effective it wasn’t as sparkling as it should have been. But our work for Cadbury and UBS, the Army and United Biscuits speaks for itself.” Publicis is under pressure to win new business, but it has a mountain to climb to replace the massive losses. Rival global networks such as JWT, McCann Erickson and TBWA are also struggling against competition from smaller, ‘more hip’ agencies. Like them, Publicis may not be drowning, but it is in need of some serious resuscitation.

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