AgTalk | Cautiously optimistic about India: Publicis Groupe's Jean Vyes Naouri

The world’s third largest communications group, the Publicis Groupe has announced the acquisition of two agencies in India – iStrat and MarketGate for an undisclosed amount. Listed on the Euronext, Paris, Publicis Groupe has presence in 104 countries, employs 56,000 professionals and offers full range of services & skills in the areas of  digital,  traditional advertising, public affairs, corporate communications & events, media buying & strategy and specialized communications.

The Publicis Groupe has been on an acquisition spree in the last few years having wrapped up buys in digital, healthcare and public relations in India. This year alone the communicatons behemoth lapped up three companies in digital space and one in the brand consultancy space in the country. On the advertising side, it acquired the Delhi-based Capital Advertising and restructured Saatchi & Saatchi India.

To know more about what is happening at the Publicis Groupe, Adgully spoke with Jean-Yves Naouri, Chief Operating Officer of Publicis Groupe and Executive Chairman of Publicis Worldwide post the acquisition announcement. Joining the Groupe in 1993, Naouri has overseen the growth in various domains across the globe and the eventual consolidation of the communications major. Following are the excerpts of the conversation.

Adgully: Can you tell us the intent behind acquisition of iStrat and MarketGate?

Jean-Yves Naouri: Sure. These acquisitions mark another step towards fulfilling the Publicis Groupe's ambitious goal of doubling its size in India between 2010 and 2015. It is a part of the Groupe's commitment to strongly boost revenue derived from digital and the fast-growing markets around the world.

We've recently made a number of smart, bold moves in India, and we're going to continue doing so. Building digital capabilities is a fundamental part of the Publicis strategy, and the acquisition of iStrat and the strengthening of our digital arm in this promising market is a key step towards realizing our growth goals. In addition, MarketGate is a fast-moving strategic outfit with strong skill-sets, an impressive range of clients and thorough knowledge of the Indian market and its consumers.

AG: What are the strengths that make you feel that the acquisition of both the companies, iStrat and MarketGate makes sense?

JYN: I would say that iStrat is one of the country’s foremost integrated digital agencies, so is the case with the Mumbai based strategic business and marketing consulting firm, MarketGate. iStrat  provides solutions across all forms of digital marketing. The agency services a broad range of prestigious clients, including Alpha G: Corp (real estate), the Confederation of Indian Industries, Dupont (luxury accessories), Hero Corp (motorcycles), Hindware (kitchen and sanitary appliances), Maruti Suzuki, the NASSCOM software trade association, and Nestlé. With a strong team of 50 employees, the agency provides full range of digital communications services including e-commerce store fronts, search engine optimization, social media, and rich media.

On the other hand, MarketGate delivers top-flight services in business growth planning, marketing strategy, brand positioning, portfolio strategy, brand architecture development, and marketing skills development. The agency’s seven consulting experts helps client companies to rejuvenate brands and power their growth by deploying marketing processes throughout
They have a healthy roaster of clients including Colgate, Dabur (foods/personal care), General Motors, GlaxoSmithKline, Godrej (personal care), HSBC, ICICI (financial services/banking), Madura Garments (fashion), Mahindra & Mahindra (automobile), MTR (foods), Radio Mirchi and Viacom 18.

Additionally by acquiring MarketGate we will also acquire MarketGate Dimensions, a subsidiary providing research-based solutions to business, marketing and brand issues, with offices in Mumbai, Delhi & Bangalore. Its client list includes Glenmark (personal care), Kellogg’s, Maruti Suzuki, The Walt Disney Company and Viacom 18.

AG: So both these acquisitions are a perfect strategic fit for the Publicis Groupe?

JYN: Absolutely. Building digital capabilities is at the heart of our agency and is fundamental to the Publicis strategy. iStrat is a perfect strategic fit for our vision – both from a perspective of their excellent capability and culture. We expect them to play a lead role in taking Publicis forward in India. The acquisition of MarketGate underpins both our commitment to this market and our clients’ needs. MarketGate will add a potent upstream capability that will benefit both Publicis and our clients immensely.

AG: What will be the changes that will happen post the acquisition at both – iStrat and MarketGate? Will the management change?

JYN: iStrat will be rebranded Publicis iStrat and will operate as a unit within Publicis Modem, Publicis Worldwide's global digital network. Its founders Navneet Singh Sahni (CEO) and Sonya Sahni (Head of Marketing) will continue to lead the agency. MarketGate will retain its name and will operate within Publicis Worldwide. It will also continue to be led by founders Shripad Nadkarni (CEO) and Sharda Agarwal (Executive Director). Both iStrat and MarketGate leadership will now report into Nakul Chopra, CEO South Asia for Publicis Worldwide.

AG: Coming to India, how do you view the country as an advertising market? How important is it in your scheme of things?

JYN: India is currently the world's 16th largest advertising market, and although the country's economic growth has slowed somewhat in 2012, it remains over 5%. As per Zenith Optimedia forecasts (December 2012) advertising expenditure is set to increase by 7.7% in India in 2013.
Publicis Groupe counts more than 2,500 permanent employees across India, through our global networks: BBH, Digitas, Leo Burnett, MSLGROUP, Publicis Healthcare Consulting Group, Publicis Worldwide, Saatchi & Saatchi, Starcom MediaVest Group, and Zenith Optimedia. The Groupe has been working to increase its profile in the country, including recent acquisitions of Resultrix (August 2012) and Indigo Consulting (April 2012). India is currently Publicis Groupe’s 13th largest market in terms of revenue.

AG: India and China are currently the two fastest growing economies in the world. Do you have a strategic growth plan as far as these two are concerned?

JYN: Pretty much. In fact I have set myself a stiff target. We aim to double the agency’s growth in two of the fastest-growing ad economies of the world. I feel we can grow faster in China and plan to double our size in China by 2013. And we are well on our way to doing that. In India, we will be able to double our size by 2015. Faced with a slowdown in the matured ad economies of the world, we need to be aggressive in the other markets. We are working towards two things. We are getting aggressive on digital. Our other focus is on the fast emerging markets. We have already trebled our size in Brazil.

Apart from investing in India, Publicis is also focused on the growth of digital within its operations. The vision is to become a ‘Human Digital Company’. We feel that digital and the fast growing markets like India, China and Brazil are the co-pillars of our future. And today if those two pillars are contributing 50 per cent of our revenues, our ambition is to take this up to 75 per cent.

AG: India has been a hotbed for global advertising majors and in recent times we have seen a lot many acquisitions in various domains. However many feel that valuations in India are on the higher side. Your Comments?

JYN: I don’t agree on valuations in India being on the higher side. Maybe many would feel that. We do not have exorbitant valuations. In fact the Publicis Groupe is known for being very conservative. Despite not being the highest bidder on several occasions, we have been able to consummate deals just because they wanted to join us. So I do not concur with the assessment.
The truth is that I am very positive about India. And I feel that when you look at the potential and look at the talent, one should be excited with all the opportunities that India is showing. I am bullish on India irrespective of its GDP growth rate. I would rather say, we are cautiously optimistic about India. When you look at the rest of the world, some countries would dream to have a five per cent growth. I am not saying that things are easy for everybody in India. But I would say it’s manageable.

AG: What is your strategy on working with Indian clients through your local arms?

JYN: Our strategy is to acquire local agencies and align them with our global agencies. This allows us to service the clients of local geographies more efficiently. What is interesting is that we are starting to see the potential to work not only with local Indian clients, but also with Indian companies that have a global ambition. We are extremely excited at this opportunity to work with such clients. We look forward to a time when Leo Burnett and Indigo or Publicis Worldwide and iStrat can partner with and deliver outstanding work for such Indian companies.

AG: Can you throw some light on some of your other initiatives and focus areas?

JYN: Definitely. We at Publicis are also bullish on e-commerce. We have recently entered into a partnership with IBM’s Smarter Commerce Initiative through its consulting-centered interactive agency Rosetta. The partnership combines Publicis Groupe’s deep experience in consumer insights, technology and building a broad eCommerce ecosystem around transactions with IBM’s technology, expertise and business process innovation to serve the needs of today’s Chief Marketing Officers (CMOs) and Chief Information Officers (CIOs) who want to align their organisations and purchase decisions around integrated content and commerce.