News emerged yesterday that suggested the Publicis Groupe is in talks to acquire the Sapient corp, the French advertising giant looks to recuperate from its failed $35 billion merger with Omnicom and speed up its transformation into a digital-focused company. The Boston-based Sapient is a digital advertising specialist agency with a market capitalisation of around $2.5 billion, so this would be a significant investment on the part of Publicis, who also recently acquired the (admittedly much smaller) digital ad firm RUN. The deal has been annouced earlier this morning that Publicis will agree to pay $3.7bn for Sapient, in order to become a go-to digital powerhouse.
The Boston-based Sapient is a digital advertising specialist agency with a market capitalisation of around $2.5 billion
This Friday (November 7th) Publicis are also scheduled to present its investors with its plans concerning their strategic plans between now and 2018, and the future of digital advertising, which is steadily becoming dominated by technology and data. CEO Maurice Levy, who recently agreed to stay in the role for longer than expected given the collapse of the Omnicom merger, was one of the primary proponents of the focus shift for the company, which has seen a slowing in sales growth of late. The purchase of Sapient will mark the first major digital acquisition for Publicis since it bought LBi for half a million dollars back in 2012, but it does have a recent history when it comes to spending big on digital ad firms, to which their $1.3 billion 2007 buyout of Digitas (now DigitasLBi) and $575 million 2011 buyout of Rosetta Marketing will attest.
The purchase of Sapient will mark the first major digital acquisition for Publicis since it bought LBi for half a million dollars back in 2012
Sapient is one of the last remaining big independent companies, with a client base including Coca-Cola and Mondelez and a revenue last year of $1.26 billion. It began life as a technology consulting firm, but expanded its reach as it made its own acquisitions. It moved into the digital ad space in 2009 when it bought the New York-based Nitro Group, and bought the data analysis company mPhasize last year. Publicis is the third largest advertising agency in the world, counting agencies such as Saatchi & Saatchi and Leo Burnett amongst its ranks.
Publicis are also scheduled to present its investors with its plans concerning their strategic plans between now and 2018, and the future of digital advertising
At the time of the collapse of the merger, Levy blamed the distractions associated with such a monumental deal as the primary reasons for the group's recent weak financial results, with recent third quarter organic revenue growth of just 1% posted recently, way below the other major players in ad land. In hindsight, however, Levy has also blamed a “Sharp decline in analog, the end of one-off contracts, the end of the Motorola business and the slow recovering of emerging Europe.” He also (rather tellingly) added that “The speed of digital and technology innovation had not fully been taken into account,” which is something being rectified with great haste by the company, whose digital business now accounts for 41.6% of the company's total revenue. Referring to the digital wave his company are currently riding, Levy said he believed “That people have not even seen the tip of the iceberg,” and eventually wants to make Publicis resemble more of a “Internet company,” hinting that further deals may be on the horizon.
Benjamin Hiorns is a freelance writer and musician from Kidderminster in the UK.
