Sapient rides to the rescue of Publicis Groupe

Big deals can make or break even the biggest companies and Publicis Groupe boss Maurice Levy seems to have struck gold with his $3.7bn acquisition of Sapient earlier this year.

While the French-owned marcoms giant has just posted disappointing organic growth of just 1.2 per cent in the first half of 2015, it posted Q2 revenue up a startling 38.5 per cent to more than €2.4bn (euros), largely on the back of Sapient, with some help from currency movements. There seem to be two businesses in Publicis, stuttering advertising and media buying (its media agencies are on the defensive in many of the $30bn or so of global media reviews currently taking place) and go-go Sapient.

Sapient owns the SapientNitro digital agency, of course, but its main businesses are Sapient Global Markets, which provides what we used to call IT for companies in capital markets and commodities and Sapient Government Services, which does the same for public bodies. Most of its staff hail from the IT powerhouse of India.

So it isn’t really an advertising or media company at all, which may provide a poser or two for Levy and his colleagues if its growth continues to outstrip everything else Publicis does so spectacularly.

That may not bother Levy too much (he began his career at Publicis working in IT, in the days when computers were rather larger than they are now). And Levy, like his great rival WPP’s Sir Martin Sorrell, is an empire builder on a Napoleonic scale.

Anybody else would look at these marcoms conglomerates and say, do we really need all this stuff? Every time one bit of the business moves forward, another seems to hold it back. Most incoming CEOs would ponder splitting up the business, separating out or selling the low growth bits. It’s what Rupert Murdoch did (reluctantly) with his empire recently, in the wake of the phone hacking scandal. His shareholders, however, have seen huge gains in the go-go part of the business, the 21st Century Fox entertainment company.

8-alan-j-herrick-e1423481188353Levy says he’s stepping down in 2017. He may well be succeeded by Alan Herrick (left), CEO of Sapient and the guy who’s producing the money. What does Herrick think about low-growth marketing services companies? You also have to ask if Sapient can continue to boost Publicis revenues quite so dramatically in the medium and long terms.

For now, though, Levy can bask in the knowledge that his bold move for Sapient has pulled the fat from the fire.

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