Sunday, August 9, 2009

Publicis Groupe's acquisition of Razorfish: the Asian angle

Following the news that Microsoft will sell digital agency Razorfish to Publicis Groupe for US$530 million, sources expect it to be "business as usual" for the agency under its new ownership, including in Japan, where Razorfish is engaged in a joint venture with Dentsu.

According to the global agreement, Razorfish will become part of Publicis’ VivaKi, joining Digitas, Starcom MediaVest Group and ZenithOptimedia in the region, and is expected to keep its current leadership worldwide.

In Asia-Pacific, Razorfish’s agencies are Hong Kong-based e-Crusade, which handles Nike among other clients, Amnesia Razorfish in Australia and a joint venture with Dentsu in Japan.

Publicis is slated to take full control of the agency, which was sold to Microsoft in 2007 as part of the $6 billion acquisition of online advertising group aQuantive, in the fourth quarter of this year.

According to Razorfish’s regional president Lee Sherman, the leadership in the agency’s regional office will stay the same, and “the agency is very excited about the agreement” because it will be able to expand its capabilities by using the VivaKi network, “as it makes sense for our clients”.

Amnesia Razorfish’s founder Iain McDonald added that the partnership is advantageous because it perpetuates a relationship with Microsoft – from which Publicis has agreed to buy search and display advertising – and “will help accelerate our plans for growth in the region”.

Meanwhile, a spokesman for Razorfish noted it will be “business as usual for Dentsu Razorfish”, and anticipates that Publicis will continues the joint venture’s management with rival holding company Dentsu, which had also bid to buy Razorfish from Microsoft.

The spokesman added that the specifics of the deal are still up in the air. “It’s too early to speculate on possible working arrangements for our various brands around the world with the deal just having been signed,” he said.

A regional representative for Publicis said he expects Publicis and Dentsu to work together on the venture, pointing out that Dentsu holds a minority stake in Publicis Groupe and the two holding companies work together globally on public relations and sports marketing initiatives. “We are used to working together,” he added.

However, agency sources within the region also say the deal gives Publicis little leverage in Asia-Pacific’s digital arena outside a few key markets.

According to Barney Loehnis, Asian network director of Aegis Group’s Isobar Global, outside of a bolstered presence in Australia, Hong Kong and Japan, “I don’t think this deal gives Publicis a firm dunk in Asia”. “My personal observation is that $530 million is not cheap and Publicis is paying the price of its lack of vision from a few years back,” Loehnis said of the deal. “More than anything, this deal is interesting from a media-strategy perspective as it will still be working with Microsoft. But, this absolutely does not increase Publicis’ ability to go to market with a strong digital case.”

Source: Brand Republic

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