'The most promising growth prospect' – Inside Sapient, Maurice Levy's foundation for the future of Publicis Groupe (PUB)

In Publicis' quarterly earnings call, CEO Maurice Levy emphasized the importance of Publicis.Sapient for the future of the agency despite the acquisition being largely responsible for a $1.49 billion write-down of the group's digital business.
Publicis.Sapient EMEA and APAC CEO Nigel Vaz explained how the division helps the group become a key player in technology consulting.
Maurice Levy's successor is also an advocate of growing Publicis.Sapient's activity across the entire group.

Publicis Groupe's acquisition of US-based digital marketing group Sapient for $3.7 billion may have only happened a little over two years ago, but it is already being seen as the core of the of the French advertising group's future.

In his last ever quarterly earnings call for Publicis Groupe, outgoing CEO Maurice Levy explained that the increased need for the group to invest in digital business transformation — a popular advertising industry term for adapting to the changes brought about by the internet — is the "most promising growth prospect" for the business.

Bringing about digital transformation is Publicis.Sapient's main activity and Levy has high hopes for the new division. In the call he expected to see the division generating a sales growth of 6-7% in 2017 and 2018 and up to 9-10% by 2020.

At the same time Publicis Groupe announced a $1.49 writedown of its digital business, as the result of difficulties with the digital agency Razorfish, which was merged with another of its digital divisions Sapient.Nitro last year to form SapientRazorfish.

MarketWatch reported

Publicis.Sapient is the umbrella which houses the 2006 Publicis acquisition Digitas LBi, Razorfish, and the original Sapient business. The 2014 acquisition of the hybrid digital marketing, tech consulting and IT services firm Sapient was one of the biggest ever made by the French advertising group. At the time of the acquisition Levy said it would open up new revenue streams for the group.

The benefit of Publicis.Sapient is meant to be that it enables the advertising company to not just work on campaigns — budgets which often work in cycles and can easily be squeezed — but take on big projects akin to the way a consulting business operates: from advising on new products for consumer goods brands, or creating new digital experiences for people to apply for a mortgage from their banks, or helping travel brands transform the way they sell holidays.

Publicis now competes with companies like IBM and Accenture

Each of the big six advertising groups are increasingly beefing up their tech capabilities as the roles of marketing and IT consulting converge. This has attracted consulting companies — like Accenture and Deloitte — and tech companies — such as IBM or Salesforce — into the advertising space.

Nigel Vaz, Publicis.Sapient CEO for EMEA and APAC, told Business Insider: "On a daily basis we compete with consulting companies, both in terms of strategic innovation and direction, but also in terms of execution. We have a huge execution capability that competes with Accenture, IBM but also some of the more niche consulting firms."

Vaz explained the differentiator for Publicis from its new competitors is the "Power of One" reorganization, which the group launched in 2015. According to the website, any Publicis client has a full service from each of the hubs. Creative comes from Publicis.Communications, media buying from Publicis.Media, and digital transformation from Publicis.Sapient.

After focusing for years on marketing from an offline and online point of view, marketers are now having shift their view to giving consumers a consistent experience, from the moment one hears of a brand to an actual purchase.

"From my perspective the thing that is most critical now is recognizing the connection between the brand is the experience, and the experience is the brand, in order to facilitate a transformation of our clients' businesses," Vaz explained. "If you are trying to influence how I experience a brand you have to do more than just communicate."

The focus on developing the "Power of One" business is likely to remain a key point even after Arthur Sadoun takes over as the new CEO of Publicis Groupe in June. As the current head of Publicis Communications, Sadoun has become known as an advocate of strong integration and getting rid of silos.

"Arthur is probably somebody I spend more time with than many people at Publicis Groupe because we've spent a lot of time at clients making the 'Sapient Inside' promise work," Vaz said.

"He's deeply passionate about helping our clients truly transform. That's the bigger opportunity here. Of all the services that we as a group perform, we aspire to help our clients' businesses be more successful and be more relevant, which for me is nothing but another way of helping them transform."

"Sapient Inside" is part of Publicis Groupe's "Power of One" mission to integrate the company even further and places a digital consulting and technology expert inside Publicis' creative agencies.

Harnessing technology and adapting to the new digital environment is critical for brands to remain relevant today Vaz went on to explain.

"Technology is going to absolutely continue to dominate every sphere of our lives, not just marketing and communications," he said.