Publicis Groupe will snap up Sapient, a digital-centric agency and communications company known for experience design and digital-retail integrations, for $3.7 billion. The all-cash transaction comes directly on the heels of Publicis’s acquisition of programmatic platform RUN, and may bring some closure to the holding company’s disastrous courtship of Omnicom Group.
Sapient CEO Alan Herrick (AdExchanger Q&A) will become CEO of Publicis.Sapient, a new organization that will house all of Publicis’ digital and technology-focused assets — including Razorfish, Rosetta and DigitasLBI — and be”focused exclusively on digital transformation and the dynamics of an always-on world across marketing, omni-channel commerce, consulting and technology.”
That’s a significant structural reorg of Publicis’s digital assets, and the first time all of its pure -play digital agencies have been aligned within a dedicated unit.
The companies say they see an opportunity to build capabilities around consulting, and to help Publicis respond to rising competition from the likes of Accenture and Deloitte.
Speaking with journalists about the deal, Publicis CEO Maurice Levy said the holding company already encounters consulting firms in its competitive business pitches “on a regular basis.” For instance, DigitasLBI won the Renault digital account after a shootout that included both those business consulting firms, along with AKQA. “We have to accept that the competition is no longer in these siloes where everything is well organized,” Levy said. “The new world is much more complicated than the former world. I believe the addition of Sapient will help us move forward at a much higher speed than we do today.”
Sapient has an existing consulting practice through its Global Markets division, which serves industries such as banking, energy and finance. The goal is to extend that practice to other categories and provide advisory services around marketing technology and strategy.
Herrick added, “What we will do over time is expand the vertical consulting presence within Publicis.Sapient in order to cross-pollinate, in order to feed the other pieces of Publicis.Sapient and have deep expertise in vertical segments in which we operate to help clients construct solutions to take advantage of opportunities. You’ll see us both deepen as well as expand the types of consulting we do.”
The boards of both companies have already approved the deal, which takes a major independent agency player off the market. Sapient employs about 13,000, and its 2013 gross revenues were $1.3 billion. Net profits were about $77 million. As of 2013, about 70% of its business came from its digital agency, SapientNitro. Another 25% was sourced to Sapient Global Markets, serving the capital and commodity market needs of clients in the financial and energy industries. The remaining 5% is in government, where it has built experiences for the Library of Congress, National Cathedral and others.
The company is often most directly compared with Razorfish, which has made big investments in “commerce everywhere.” Razorfish has lately struggled with client losses however — losing part or all of Microsoft, Blackberry, State Farm and Samsung in the last six months. In the wake of the bad news, Razorfish CEO Pete Stein has been expected to step down. And Publicis recently announced plans to merge Razorfish with Rosetta and Nurun, and place Rosetta CEO Tom Adamski at the helm of the new organization. On a call with press, Levy affirmed the Razorfish Global structure will go forward, and insisted Tom
With the new acquisition, it would seem Razorfish is no longer the apple of Levy’s eye.
“Sapient is a ‘crown jewel,’ a one of a kind company born in the technology space with strengths in marketing, communications, consulting and omni-channel commerce, all of which are equally important to best help clients achieve their digital transformation,” Levy said in a statement this morning. “It will also give Publicis Groupe access to new markets and creating new revenue streams. This acquisition fulfills many of Publicis Groupe’s objectives: we will enhance our leadership position in digital, achieve our goal of deriving 50% of our revenues from digital and technology three years ahead of our 2018 plan, and leverage technology, consulting capabilities to expand in new verticals, and offering new and exciting opportunities to our talents.”
SapientNitro’s biggest clients have included Unilever, Vail Resorts, and Queensland Tourism.
Publicis is putting the pedal down on technology, having acquired programmatic platform company RUN for an undisclosed sum and taken a 20% position in performance marketing company Matomy Media.
More to come.
