SOLD! On Publicis Groupe Buying Razorfish

Harley-Manning_small  [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.

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Comments

re: SOLD! On Publicis Groupe Buying Razorfish

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.