Publicis-Microsoft Agreement Could Cut Two Ways

  |  August 11, 2009   |  Comments

Publicis plans to buy display and search advertising over five years from Microsoft, but hasn't disclosed the agreement's value.

San Francisco -- A plan by Publicis to purchase a minimum amount of display and search advertising from Microsoft over five years could cut two ways.

Publicis, in addition to acquiring Microsoft's Razorfish for $530 million, said Sunday it is entering into a strategic agreement with Microsoft to purchase display and search advertising over five years. Publicis said it will buy a "certain minimum" of advertising on "favorable terms," but it didn't disclose the advertising's value or the terms.

Rivals of Razorfish and Publicis are closely watching the deal as it plays out.

Among them: Tom Bedecarré, chief executive of San Francisco-based AKQA. In response to questions from ClickZ News, Bedecarre said Monday the agreement could be viewed two ways:

  • On the negative side, Publicis clients might question whether a higher portion of search ad campaign dollars will end up going to Microsoft Bing than they typically would have if the agreement had not been in place.

  • On the positive side, Publicis could say it obtained a discount from Microsoft similar to the way that agencies get better rates when negotiating for television ad buys during the upfronts.

Citing unconfirmed reports, Bedecarré said Publicis could be committing to spend as more than $2 billion worth of advertising with Microsoft over five years. Publicis did not respond to a query about that amount.

However, Publicis CEO Maurice Levy, in an interview with FT.com, denied that the agreement could cause a conflict of interest with Microsoft.

"We are not using the money of the clients," Levy said. "We are using the scale of Publicis to get the best deal for our clients."

When one advertising agency acquires another one, firms like AKQA use the opportunity to scout out talent and clients -- and this deal is no different.

Under that scenario, AKQA and other agencies will identify clients of Razorfish that may be competitors to clients of Vivaki, the digital arm of Publicis. Take for example, automobile advertisers. Razorfish counts Ford as its client. Under a hypothetical example, if another automaker is a Vivaki client -- then either Ford or the other automaker might see a potential conflict by having one agency work for two automakers.

What's more, Bedecarré will be looking to identify talent that may be interested in making a move. He pointed out that Razorfish's digital marketing team was allowed to operate independently under Microsoft. While Publicis said Razorfish will continue to operate independently, business books are filled with examples of mergers and acquisitions that did not work out as intended.

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ABOUT THE AUTHOR

Anna Maria Virzi

Anna Maria Virzi, ClickZ's executive editor from 2007 until 2012, covered Internet business and technology since 1996. She was on the launch team for Ziff Davis Media's Baseline and also worked at Forbes.com, Web Week, Internet World, and the Connecticut Post.

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