SOLD! On Publicis Groupe Buying Razorfish

  [Posted by Harley Manning]

 

Last week Vidya Drego and I spoke with Bob Lord, CEO of Razorfish. Naturally we spent most of our time talking about Publicis Groupe buying Razorfish and why it’s a good fit.

Frankly, I did not need a lot of convincing that this is a good move. Microsoft picked up Razorfish by accident when it bought aQuantive in 2007 for the assets it really wanted: the digital advertising tools and services of Atlas and DRIVEpm. When we spoke with a Microsoft representative right after the aQuantive acquisition was announced he talked almost exclusively about those parts of the business. And when I probed about plans for the Razorfish part of the business he said that the answer to “How we integrate and drive more value – will come later.” In other words, Microsoft started trying to figure out what to do with Razorfish after they realized they’d bought them.

If you’re interested you can see what I had to say at the time here: http://www.forrester.com/Research/Document/0,7211,42503,00.htm

So here’s the conclusion that I drew from that conversation at the time: Razorfish did not fit neatly into Microsoft’s overall strategy. I still believe that. Not that Razorfish has done badly under its current owners. It’s probably the second largest digital agency around, right after Digitas. (I say “probably” because many interactive agencies are owned by larger companies, which means that Sarbanes-Oxley makes it impossible to know for sure how big one of them really is. Or how they’re really doing financially.)

Anyway, Razorfish has done well under Microsoft, which is not surprising. Both companies are too competent to let the business fall apart, and they’ve found some clever ways to create synergy. But the elephant has remained in the living room: Razorfish is not a strategic fit at Microsoft.

In sharp contrast, Razorfish is a strong strategic fit as part of the Publicis Groupe portfolio of agencies. As Forrester’s Sean Corcoran pointed out in his recent Wave of interactive agencies’ strategy and execution, interactive is growing at the expense of traditional marketing, and interactive agencies are expanding their role into “above the line” media.

But some might wonder why Publicis Groupe would buy Razorfish when it already has Digitas, which is “probably” the largest interactive agency (SOX strikes again!). As it turns out, Razorfish and Digitas are very different firms. Digitas’ greatest strength, in my mind, has always been its ability to put together a professional quality multi-channel marketing campaign – a capability that stems from its origin as an above the line marketing agency. However, in past years Digitas has not fared well in our Wave of interactive agency DESIGN capabilities. This year the firm declined to participate in our Wave.

What about Razorfish? The firm has much stronger design capabilities, both for user experience and what we call “brand image”. Plus – and this is just my opinion because we did not evaluate them on this – it has stronger technology capabilities as well.

The latter is important because there are some agencies out there with very strong tech chops, including IBM Interactive and Sapient. And it will become even more important as interactive moves to high function multi-touch mobile devices, or even stationary multi-touch devices like the way cool Coke vending machine Sapient displayed at Forrester’s recent Customer Experience Forum. Because ultimately, a great design has to actually work in order to deliver a great customer experience. 

So here’s a big thumbs up to Razorfish + Publicis Groupe. Vidya’s writing a short doc that will explore some of the implications for customer experience professionals in a little more depth. In the meantime, thanks for reading and I’d love to hear your comments.

Comments

[John Kottcamp]

While I fully agree with Harley that Razorfish was always an afterthought at Microsoft and never made sense as a strategic fit, I'm not sure I buy the idea that selling to Publicis is either good for Razorfish or good for its customers.

I don't believe the fact that Digitas and Razorfish are different types of digital agencies matters nearly as much as that Publicis and Digital agencies in general, have continued to be almost like oil and water. The problem is not simply possessing enough creative juices, Publicis certainly has plenty, and it’s not just having the technical skills that Digitas brings to the table.

The problem is that the cultures and ultimately the business models of traditional advertising agencies and digital agencies continue to be fundamentally different. And as long as that difference exists, mergers of mega agencies will falter.

Now, if Digitas and Razorfish were to be combined and then spun off, there would be an incredible powerhouse. But in fact, there are already some agencies, including Sapient, and my own agency, Ascentium, that have been building up this balance between great creative and deep technology expertise for several years. So in that context, a merger between Digitas and Razorfish wouldn’t produce a new kind of agency, simply the biggest one of its kind.

But it doesn’t sound like it’s a merger between Digitas and Razorfish, it sounds like another attempt on the part of Publicis to integrate a digital agency into a traditional advertising world. And I predict the outcome will be no better than what we’ve already seen with Digitas. As a marketer, it’s a waste of great talent. As a competitor, it’s great news. Big isn’t always better.