The Publicis and Walker Media deal: What you need to know
The Publicis and Walker Media deal: What you need to know
Ok, let’s deal with some of this week’s big news first. It seems that the rumours that have been circulating for days were true: yesterday (21 November) Publicis Groupe confirmed it was “in discussions” with M&C Saatchi with a view to taking over Walker Media.

What direction the discussions are going to take, we don’t of course (at the time of writing) know. Publicis may take a 100 per cent stake, or (more probably) at least a majority. Will it be folded into ZenithOptimedia or nurtured in its own right?

I can see why this deal might be happening or (if the buyout doesn’t actually happen – Publicis has been keen to point out that nothing has been agreed as of yet) why discussions are taking place.
First off, Walker Media is an interesting business. It was co-founded by Christine Walker, a former chief executive of Zenith, and Phil Georgiadis in 1998 as a 50/50 joint venture with M&C. Christine worked at one of the very first media agencies, Ray Morgan & Partners, which was launched as a breakaway from the UK creative shop Benton & Bowles in 1985. Although she left the agency that bears her name in 2007, Georgiadis – renowned for his calm demeanour, restless mind and gift for strategic thinking – remains as chairman, maintaining the kind of continuity that clients love.

The agency, which is now 100 per cent owned by M&C Saatchi, has some great blue-chip clients in the UK: Marks & Spencer, Boots, Currys/PC World and Halfords. But its international client list is smaller: increasingly, these large brands are looking to consolidate their media buying and planning with international networks, which presents a barrier to the agency’s growth prospects. Settling in alongside ZenithOptimedia would considerably increase the appeal with these global brands.
For M&C Saatchi, which is listed on AIM, a sale would give it a strong cash position with which to fund its expansion plans, maybe return value to the shareholders or perhaps buy-back some equity from some of the senior management who still hold more than 20 per cent between them.

M&C Saatchi is not short of ambition and has been acquiring businesses that reduce its reliance on mainstream advertising – earlier this year it bought a 60 per cent stake in the international talent agency Merlin Elite (now known as M&C Saatchi Merlin, and part of the firm’s growing sports and entertainment marketing business). Since 2010, it has also moved into growth spaces such as mobile, social media, and PR.

As for Publicis, as well as satisfying Maurice Levy’s seemingly insatiable appetite for a deal, it would strengthen the group's media offer, adding both scale (particularly here in the UK) as well as a talented management team – in addition to Georgiadis, they’d get CEO Simon Davies, broadcast head Jon Horrocks and press supremo David Casson; and not forgetting the other end of the experience ladder, a graduate scheme that attracts some of the best and brightest talent around.

Perhaps another factor is the fact that ZenithOptimedia’s chief executive, Tim Hipperson, stepped down from the agency earlier this month. He was replaced by a new UK and worldwide management board, which you would think senior executives from Walker Media would more than likely join.
Zenith also had a big loss last month when L’Oréal moved its £135m UK and Ireland business from ZenithOptimedia to Maxus, an account that will need to be replaced at some point.
Investors responded positively to the news: M&C Saatchi shares rose 5.7 per cent to 342p when the story broke, while Publicis’ rose 1 per cent.

This is one story we’ll be keeping our eyes on – personally, I think there are too many benefits for all concerned for the deal not to go through, but we’ll see.

Staying with media – albeit of a different kind – and independent networks, there was also Engine Group (consisting of, among others, ad agency WCRS, PR shop Mischief and DM agency PAA) buying FlipScript China, a fast growing Shanghai-based digital and social agency for an undisclosed sum.
FlipScript provides digital and social media solutions for many global brands (Crocs, Starbucks, Bally and New Balance among them) operating in China. Its services are focused on digital strategy and creative development, social marketing and mobile solutions. It employs 52 staff, mostly Chinese nationals and has won many awards for its client campaigns. Alpha Xu and Wong Kian Fong, co-founders of FlipScript, will continue to lead the business.

It seems a very good deal for Engine. The acquisition will enhance Engine’s presence in China and allow it to create a social/digital micro-network with FlipScript, Deep Focus (Engine’s New York based digital and social media agency) and Jam (Engine’s London based digital and social media agency) working closely together.

FlipScript will be renamed Deep Focus / FlipScript and the deal creates a combined 270-people-strong operation with offices in London, New York, St. Louis and Shanghai, enabling Engine to develop a new digital and social offering to its existing and new international clients.

Engine derives over 60 per cent of global revenue from digital; it signalled its commitment to further developing its international digital business earlier this year when it appointed Alex Balfour, the former head of New Media for London 2012 Olympic Games, in the new role of chief digital officer.
As well as the all-important Chinese bridgehead, FlipScript also provides Engine with a highly-regarded team of digital experts, while the FlipScript founders get the chance to play on a global stage.
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