"I think what has led us till now has not been the race for size, but the race for quality"

Maurice Levy, Chairman of the Management Board & CEO of the world's fourth biggest marketing services conglomerate, the $4.83-billion (Rs 21,252-crore) Paris-based Publicis Groupe, and his nemesis Martin Sorrell, Group CEO of the $6.76-billion (Rs 29,744 crore) London-based WPP, have at least one thing in common: both are non-typical advertising CEOs, one a computer professional, the other a bean counter, and both have never ever written a tagline or a punchline. The similarity ends there. The two differ on almost everything else: business philosophy, management style, outlook on life, even on their prognosis of future trends in their industry. During a visit to India recently, the 62-year-old Levy spoke to BT's Shailesh Dobhal on a host of issues concerning the advertising business and Publicis. Excerpts:

2004 has been a good year for advertising, hasn't it?

It is one of the few years where we have seen the market grow in almost every region of the world. The market has done very well in the United States, seen the beginning of a recovery in Europe, and strengthening in the Asian and the Latin American region. In the quarter ended September 2004, organic growth for us (Publicis Groupe) has been 4.8 per cent, which was unexpected. I don't know yet how we will finish the year, but it will be good.

You seem to be quite bullish on growth in 2005, in contrast to the not-so-upbeat picture painted by WPP's Sir Martin. What's the reason for your optimism?

I am an optimist by nature, and this is helping me see life with blue skies, even when there are some clouds. But more fundamentally, what I am saying is that the anxiety that people had regarding Iraq, and its consequence on the economy, is fading. The reality is probably slightly different from what we all feared. I don't believe that we will find long cycles in the economy where we have growth of 6 or 7 per cent, but I believe that for the next three-four years, a solid growth of 4 per cent (per annum) is possible.

Publicis Groupe remains much smaller than advertising's Big Three. You once said that you're happy playing the fourth musketeer. What's your view on your position now?

I am very happy with the position we have, because it shows we have huge potential. There is no reason why we should remain at the level we are. I think what has led us till now has not been the race for size, but the race for quality. And when we look at our operations today, we undoubtedly have some of the best agencies in the world-Leo Burnett, Saatchi & Saatchi, Publicis, Starcom MediaVest and ZenithOptimedia. And if we look at new business trends, the best news is that we are winning more than our competitors. And this will make us grow faster than all our competition.

But you lost the Samsung Global account pitch to WPP, HSBC to WPP, and Cordiant and Young & Rubicam (Y&R) bids to WPP. Will Havas be any different if and when it comes for sale?

Ok (takes a deep breath). Each of these are different stories. For Y&R, I refused to make the bid. Y&R had received an offer from WPP, they didn't like the offer and they came to us. We looked at their businesses and we refused to make an offer. It has been the same case with Grey, where we refused to make an offer.

But you withdrew from the Grey race (only) in July (2004). And you said that the pieces are more attractive than the whole?

Yes, and we still believe that they have some interesting pieces. The whole is not interesting for us. It can be a different story for WPP. We have an approach of quality, not quantity. With Cordiant, we were interested in very few assets. And when it came to the whole thing, we refused to enter into a bidding process. Because when you start a bidding process, you pay much more than what the operation is worth. Regarding Havas, to my knowledge, Havas is not yet for sale.

Of course, not yet. But didn't you say that if it is up for sale, it is your obligation to pick it up?

Well exactly. When Havas will be for sale, which will probably happen, I will look at it very carefully. If I see that it is not in the interest of Publicis, I will not make an offer. If WPP, Omnicom or IPG would like to buy it, they can buy it.

But wouldn't you say that (picking up) Havas would be critical for the top four, in terms of getting scale and size, as it is one of the last independents?

I have a very different viewpoint from my competitors regarding scale. I think we have today the right size. And from this base, we can grow much faster.

But you're still just two-thirds as big as your nearest competitor (Interpublic Group)?

Yes, I know that. And I don't need to be at their level. I know that people have a hard time understanding this, but a good strategy for us is a strategy of quality. And if Havas is for sale, as I said earlier, I will look at it seriously. I will look at their advantages, the problem that they may pose, and then if I feel that there is something positive for the Havas people, and for us, I will make an offer. And if I feel that it is not in our common interest, we will not make an offer.

"India is a huge WPP country. We are a small outsider, a challenger"

How would you describe losing two of the biggest globally-aligned accounts (Samsung and HSBC) that came up for pitch this year? Was it that Martin Sorrell was more aggressive, that he visited (South) Korea so many times? And you were the roster network for the HSBC account earlier.

We had (just) some media operations for HSBC. HSBC was the client of Lowe (IPG). For Samsung we're in the running. What I have understood from Samsung is that the race is not finished.

But $200 million (Rs 880 crore) have clearly gone to WPP?

Yes. But what I have understood is that it is a total account of $600 million (Rs 2,640 crore), and that $200 million has been assigned. There is still $400 million (Rs 1,760 crore) to be assigned. And for this remaining $400 million, the decision has not yet been made.

India is, in terms of the advertising business, largely a WPP country, with Publicis as poor number four (after IPG and Omnicom). Will you get more aggressive on India? And how?

I think there are two different aspects. The first one is obviously that India is a WPP country because it is here for the last 70 years, and it has a market share that is close to 40-50 per cent. It's a huge WPP country. We are a small outsider in this country, a challenger, and we came in very late. We started in this country only six years ago. We are very aggressive and we're growing very well. I was at the Advertising Agencies Association of India award show two days ago. I have seen how well Leo Burnett, Publicis and Saatchi & Saatchi have done. So I think we have an incredible force in this country in terms of talent and we are poised to grow in this country.

But are you also looking at acquisitions, because organic growth will only get you that far? Will it be in advertising or below-the-line businesses?

We're looking at both the strategies: To grow organically, which we believe we can, as well as through acquisitions. There are very few quality operations to buy in this country. We are looking for operations that will complete our roster (here), mostly in marketing services.

What are the trends you see in the advertising business? Will there be more consolidation?

Consolidation is almost finished. As you mentioned there is only one operation to be consolidated today, which is Havas. In my view, Havas can remain independent if it wishes, and be consolidated if it wants. But consolidation is coming to an end.

The big trend is much more about integration. What we are witnessing for a few years is that the services the agencies are rendering to their clients are growing, not just marketing services, but in all their (client) operations. I believe this trend will strengthen in the coming years. Some advertisers will decide to outsource a lot of services to their marketing partners. And advertising agencies should play a crucial role here.

We are witnessing an explosion of the new media and also an explosion of new means of communication. We (advertising agencies) have to give the brand all the legs it needs to address the consumer in a holistic manner. Holistic communication that looks not merely at the consumer's wallet, but his personality, psychographics, et al, will drive future growth for the industry.

"I am looking to invest in India"

What about the trend of clients going in for super-agencies at the holding structure level, such as HSBC and Samsung?

If you look at what happened closely, these kinds of deals are obviously reaching a very high level of visibility, because of a huge account, which is watched by the whole industry and the media. However, it represents only a small share of what is at stake every year. Two accounts last year. Two, not even three, accounts this year. We will have some of this in the future, but not a lot because there will be conflict issues. People are looking at the security of their information.

But aren't clients' security (needs) better served by giving the entire business to just one group?

I think they can do that through a single agency without going through the group level. The group has to be very careful in the way it is handling these kind of things because it may well lead to confusion on what the group's role is vis-à-vis the agency. And I think it is very important to keep each one at its own place.

Are you looking at synergies of scale for ZenithOptimedia and Starcom MediaVest (a la WPP's Group M)?

What we are looking at is to take maximum advantage of this combined size. In markets where it is permitted, we would like to bulk the media together. And obviously we will keep each brand separate.

How will you do it? Will you bring an umbrella holding structure on top of your two media brands?

Not necessarily. We can do that just by the combination of media (buying) negotiations. We don't need to put more structure. I am very much against this structure. I think that creating structure is bringing cost and what we (instead) need to do is to cope with the trends of our clients, and that is to reduce our costs if we want to be competitive.

For example, in Europe, we are thinking about combining the scale and power of negotiation that we have with Starcom MediaVest and ZenithOptimedia in some countries. By January (next year) we will see this (combined) operation coming to India, because here the two operations are small. The advantage in India is that when you have agencies that are huge, a talented small team can do much better for the client than a huge factory.

You mentioned that clients would increasingly outsource a lot of work to agencies. Will agencies in turn take to outsourcing themselves? Will it make sense for, say Publicis Groupe, to outsource some global work to India?

To do what you call a BPO (laughs)? We are seriously looking, first at taking maximum advantage of all our operations here for the region, to see if we can do a better job at saving costs and consolidating revenues. To move to a bigger scale requires that we think twice. Advertising agencies have a different process than a lot of (other) industries. We are a service company and we have to be close to our clients. So, before moving to a BPO process, we have to make sure that we can first do it for our operations in India, with shared service in India, and maybe in the region. What I do want to do in India is clearly to invest, and I am looking for some strong acquisition to make in this country to change the profile of Publicis Groupe.

How do you manage people, especially super egos that are the norm in the advertising business?

That is really the most difficult thing (laughs), because not only do you have to manage the egos for the talent that they represent, but you have to manage the egos for the talent they think they have! And that is sometimes a different measurement. And I think that our role, our business as managers, is a little bit of a psychologist, a little bit of managers of divas and impresarios, and sometimes we are (even) kind of a father or a brother to some creative people to help them (out).

We have to deal with individualities. We have one key value (at Publicis) that is difficult to express in English (language), which means that we believe in the human spirit. We believe in the people, and this is something genuine. We do not believe that people are just workers. We believe that they have their individual dreams, and individual ups and downs, and we should not treat them as machines.