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paidContent - Publicis' David Kenny On Razorfish Buy: Digital Revs Now 25 Percent Of Total Revenues

This story was written by David Kaplan.

By acquiring interactive agency Razorfish from Microsoft (NSDQ: MSFT), Publicis Groupe has now attained a goal outlined by CEO Maurice Levy shortly after the Paris-based ad holding company bought Digitas nearly three years ago: 25 percent of its revenues will now be digital. The $530 million deal also satisfies several other objectives, said to David Kenny, managing partner of Publicis’ digital hub VivaKi, which will house Razorfish. In an interview with paidContent, Kenny pointed to Razorfish’s technology as well as its extensive global reach as key reasons behind the merger.

Revenue milestone: “The acquisition immediately gives us 25 percent of our revenues from digital and that’s a milestone among major ad firms,” Kenny said, alluding to the $350 million in revenues Razorfish claimed in the past year. The deal could be important for Publicis clients as well. The sale also comes with a five-year “Strategic Alliance Agreement, that also gives Publicis’ clients favorable options when it comes to buying display and search ads on Bing from Microsoft. “We’re not going to force these ad placements on our clients, it’s just something extra that we can offer if they’re interested,” Kenny said. “And given the terms, I expect many will find a reason to do so.”

Global addition: The Seattle-based Razorfish has about 2,000 staffers in its 19 offices across America, Europe and Asia. While Publicis employs roughly 45,000 staffers in 104 countries, Kenny said that Razorfish will bolster its global offerings. “Razorfish’s engineering capabilities broaden our technology and will help us evolve our culture, making us more innovative,” Kenny said. “But in general, we think Razorfish is a very valuable brand. They’ve had many of the same clients for over a decade and there’s no advantage in disrupting those existing arrangements.” He added that Publicis will keep Razorfish intact, though employees might be moved to other parts of VivaKi. Kenny, who was Digitas’ chairman and CEO before the acquisition by Publicis in December 2006, understands the cultural aspects that need to be managed as the company goes through the integration process with Razorfish. “I wouldn’t say that it will follow the exact model that was taken to merging Digitas’ culture into Publicis’ culture. But I expect there will be a lot of resemblance to it.”

Razorfish relieved: I spoke with several Razorfish staffers after the news of the acquisition was announced. All expressed relief that the ordeal of wondering about the agency’s fate since last year is over. For one thing, the rumors were a distraction, as clients sometimes expressed concern about whether the agency could make long-term plans. But it’s the creatives at Razorfish who are the most pleased, as those on the tech and engineering side are wondering about their place within a pure ad agency environment. While the creatives are looking forward to having the opportunity to work with companies like Droga5, which is allied with Publicis, the engineers are wondering if their role will be diminished.


By David Kaplan
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