This story was written by David Kaplan.
Publicis Groupe’s $530 million acquisition of Razorfish from Microsoft (NSDQ: MSFT) was anticipated for over a month, but the interactive shop’s CEO Bob Lord tells paidContent it wasn’t a done deal until about two weeks ago. The Paris-based ad holding company bested a higher bid from Japan’s Dentsu as WPP Group decided quickly to back off. Lord talked about how his firm will collaborate with other Publicis shops, how Bing fits in, and acquisition strategy. (No shopping list for India.)
One thing Lord emphasized was Razorfish’s independence within Publicis—although collaboration is key. Lord is ready to start planning additional acquisitions for the agency, which was hardly a shy shopper during the economic meltdown. For example, last October, Razorfish purchased Spanish digital ad shop Wysiwyg.
David Kaplan: What are the particular benefits to Razorfish of being part of a traditional ad holding company structure, as opposed to operating within Microsoft?
Bob Lord: When you look at the different ad holding companies and Publicis, having a unit like VivaKi, which is made up of Digitas, Starcom MediaVest Group and ZenithOptimedia, is a unique. It gives a clear niche to fit into. That said, we will remain autonomous and I will remain CEO, reporting to David Kenny, VivaKis managing partner. So with this acquisition, there are two primary benefits: Weve been trying to build out our global network for the past few years through a number of acquisitions. Well now be able to provide the kind of global access to our clients with a system that would have taken years to acquire. Secondly, the ties with media agencies SMG and Zenith provide an expansive broadening of our service offering. And thats also an important and exciting thing for our employees, who will have a lot more services at their disposal.
What will the relationship with Digitas be like? Is there any room for collaboration? How do you complement what they have?
I think from a Digitas standpoint, well remain completely separate. There will be a strong wall there to avoid conflicts and we may sometimes compete for the same business. But for the most part, well be able to help Publicis get more business by being able to go for clients that would be in conflict with Digitas roster. Starcom and Zenith is where the collaboration will be centered.
Serious rumors about Microsofts plans to sell Razorfish had been circulating for at least a year. How big a distraction was that for the agency? How did clients react to the rumors?
I think it ended up being an industry buzz, not a client problem. Whether there was a period of uncertainty, that was mainly a press issue. So the only distraction was managing the industry press. I think clients have become numb to all the acquisition talk. At the end of the day, all that matter was the work we were doing for them and if we delivered on ROI. Whether we existed under Microsoft or someplace was not a big deal to our clients.
As an independent agency within Publicis, will you still be able to make acquisitions? Or does being acquired mean that you dont have to worry about those kinds decisions?
Were certainly going to continue to think about making those decisions. And yes, I think we will continue to do smart acqisitions and because of our position here, well be able to be more selective. For example, Publics has an operation in India. So were not going to acquire any more agencies there. Well be able to focus elsewhere as we work to service the existing offices in that country. As for setting the acquisition strategy, well be having conversations about that over the next 6- to 8 weeks.
The deal with Publicis calls for the establishment of a five-year Strategic Alliance Agreement with Microsoft that gives Publicis clients favorable options when it comes to buying display and search ads on Bing. How will this differ from the working relationship youve already had with Microsoft?
I think things will be exactly the same with Microsoft. Weve always operated at arms length from them. Weve never enlisted them on a pitch and have always won on our own. That was purposeful. We needed to be able convince clients we werent giving Microsoft preferential treatment, that we werent steering buys to them because they owned us. And Microsoft never handed us any business. And thats a good thing. If we were just an extension of Microsoft, we could have become sloppy. And that never happened because we always had to compete on the merits.
The word that Publicis was the lead contender first surfaced at the end of June. How serious were the talks then? Was it a done deal at that point?
Those early reports were way ahead of the curve in terms of us and Publicis. Those rumors always start just after Cannes. Honestly, there was nothing in earnest between us until the last two weeks. And contrary to a lot of reports, this was a hard decision for Microsoft, because we do create a great deal of value for them. But ultimately, it was decided by all that this would be the better fit.
By David Kaplan