Publicis CEO takes long view in economic downturn

http://www.iht.com/articles/2008/12/14/business/ad15.php

As carmakers and other advertisers look for more efficient ways to get their messages across, Lévy said, the economic crisis will hasten the shift of advertising to the Internet and away from traditional media. By 2010, he said, 15 percent of global ad spending will be online.

Lévy has tried to prepare Publicis for this shift by beefing up its digital capabilities. Two years ago, the company acquired Digitas, a specialist in online marketing, for $1.3 billion. Publicis has also invested substantially in emerging markets, where ad spending has been growing more rapidly than in Western Europe, Japan or North America.

"This has recently become a higher risk strategy," the Morgan Stanley analysts wrote in a recent report on Publicis. Indeed, the notion that Internet ad spending will be less affected by the downturn, which has become something of a mantra in the industry, remains unproven. During the last downturn, Internet spending suffered the most. Emerging markets can also be volatile.

But Lévy said Publicis would stick with its approach. This month, the company acquired W&K Communications, an agency based in Beijing. In November, it announced the purchase of Tribal, a Brazilian agency specializing in digital advertising.

He said big, geographically diversified advertising companies like Publicis, alongside small, boutique agencies with a creative reputation, would fare better than midsize companies in the downturn.

"There will be casualties," he said, without naming names. "There will be consolidation. There will be companies that will not be in business when this crisis is over - advertisers, advertising agencies and media."