Google, Microsoft and Yahoo have launched the digital ad acquisition game, but none of them have shown a real turn in advertising strategy yet. And while Google is still struggling to make the merger with Double Click final in other countries like Canada, Publicis is stealing first base with a global digital ad strategy. Publicis acquired Digitas $1.3 billion to remain a major advertising actor in the digital future.
David W. Kenny, the chairman and chief executive of Digitas, explains the strategy turn he is preparing for the Publicis group. Basically, betting on an all-digital not-so-far advertising future, the strategy focuses on two main points: 1. Create the ad content in cheaper labor countries, and 2. develop powerful algorithms to distribute the content based on consumers demographics. The French ad company, which turned into a global holding company, is now playing it like other giants, sending production in cheaper offshore destinations.
The strategy sounds very constructive as Publicis announced last Tuesday the acquisition of Communication Central Group, a Chinese digital ad founded in 1995, that the French holding has renamed Digitas Greater China. This move fits the strategy set: Cheaper labor, and a foot set in a 20% annual growth digital ad market.
This move allows the company to operate a swifter change from mass communications to personalized messaging. The savings made overseas will allow the creation of more content, therefore a higher ad impact and value.
China is reaching its goal too. It's been a while since Chinese officials have been talking about opening the ad market to foreign companies. Not that the online ad Chinese market is low (over $3 billion in 2005), but China is racing against India and the advertising market seems to be a strategic differentiator China is focusing on.
The problem Publicis might face in China is the bureaucratic resistance and the spread-into-small entities market that define the specificity of China. Acquiring CCG is a good first step, but it's going to take more to expand operations in China. As it's been underlined many times in many business magazines, the multiple-region country is led by multiple government officials, creating a country of scattered decision-makers. Will Publicis manage to make its new global policy depend on a region-based country?
