Publicis Plays Catch-Up With Unilever Mag Acquisition; Operating Leverage is Key

(MoneyWatch)  Some clarity is beginning to emerge as to why exactly Publicis -- whose dominant client is Procter & Gamble -- bought Unilever's Pour Tous Vous Dire web site and magazine in France. It's all about the operating leverage provided by owning the media your clients are buying.

The P&G/Unilever conflict is proscribed in Publicis' contract with Unilever for the acquisition: P&G brands will now be allowed on PTVD if they are not direct competitors to Unilever brands; and Unilever's control over the site will lapse in five years. Nicolas Zunz, co-president of Publicis Dialog, via Adweek:

The contract with Unilever is very clear about this. We can have some brands from Procter & Gamble if they're not [direct] competitors with the brands of Unilever. So, it's a huge opportunity for Procter & Gamble in France. We have to just find the good brands that are not direct category competitors.

PTVD publishes a thrice yearly magazine with 2 million readers, a web site with 5 million subscribers, and only 15 staff run it -- which tells you instantly how easy it will be for Publicis to make a profit.

The Brand.Intelligence Co.'s blog notes the larger dynamic in play:

Publicis' move also underscores the agencies are potentially becoming competitors to the companies they work with.

Some examples are Nestle's Croquons la vie, and Danone's Danone et Vous. You could also mention Walmart's All You magazine (which currently seems to be moribund).

More significantly, Alloy Media + Marketing has carved a niche as one of the most profitable agency networks by owning as much as possible the media it recommends to its clients. When you look at Alloy's $1.57 per $1 invested operating leverage (compared to Publicis' $1.18), all of a sudden owning a content-based CRM operation makes a lot of sense.

But this is not "unusual," as Adweek said it was.

Go back less than a year and you'll find that WPP acquired Danone's CRM properties, doubtless for similar reasons. Given that history, Publicis' move with Unilever looks like it's merely playing catchup.

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