Publicis Groupe boss Maurice Levy has dismissed reports that biggest client Procter & Gamble is slashing the group’s fees – leading to a round of redundancies – as “pure bullshit.”
Speaking at last week’s Davos chat-fest Levy had to acknowledge that all clients, P&G included were trying to reduce fees, but said that this was business as usual.
Levy may or may not be being ‘economical with the actualité’ (as the late Alan Clark put it) but there’s no doubt that P&G’s machinations have dented Publicis. P&G has cut the number of agencies it works with (which may help Publicis) and so far cut $300m from agency costs (which most certainly will not help the French-owned marcoms giant). Publicis lost the giant P&G North America media business last year, costing it between $50m and $100m in income.
The company is also suspected (by its rivals) of making unfeasibly low bids for a number of media accounts, like Dixons Carphone which stayed at Walker Media (now Blue 449, owned by Publicis) 18 months ago.
Levy is not afraid to wield the axe when required. BBH, also now wholly owned by Publicis, made about 20 per cent of its staff redundant shortly after the £100m deal was concluded.
With the global economy slowing rapidly, led by China, cost-cutting clients are going to a big problem for all the marcoms companies. Their expensive networks only work if they have the global clients to fuel them. Discounting to keep business is an accident waiting to happen.