Inside Story of Publicis CEO Arthur Sadoun's $11 Billion Bet on Marcel AI

May 17, 2024

Arthur Sadoun is betting the future of Publicis Groupe on an AI platform called "Marcel."
The ad agency network desperately needs to change: Its revenues — $11 billion a year — and stock price are in decline, because Google and Facebook are eating its business.
To create Marcel, Sadoun banned all his staff from attending the Cannes Lions festival — famous for its drunken parties on the beach — and used their booze and hotel money.
Sadoun believes that Cannes allows too much "scam" work to be entered for awards.
Staff inside the company rebelled. Sadoun spent a year persuading his 80,000 employees that Marcel is the future.
It's a huge gamble. No one knows if it will work.
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PARIS — Publicis Groupe's new CEO, Arthur Sadoun, is sitting on the floor in a dark corner of the cavernous Porte de Versailles conference venue in Paris, and he looks grateful to be off his feet.

It's a sunny day in Paris and the outside temperature is nearing 30 degrees Celsius (about 86F). The room is poorly ventilated. The stage lights are uncomfortably hot. Roughly 103,000 people are jammed into the conference centre, which is the size of two city blocks. The air conditioning is overwhelmed by their body heat.

Sadoun is surrounded by half-a-dozen of his top lieutenants in the Publicis empire. He is sitting on the floor because there aren't enough chairs for everybody. Everyone is talking at once. Everyone is trying not to sweat.

Sadoun has just unveiled the ad agency network's big, mysterious, and bold new move into artificial intelligence — a project named "Marcel."

Marcel is essentially a relaunch of his entire company, which his people sometimes now refer to as a "platform," as if it were an app or an operating system. This is the biggest moment of the year for Publicis.

Sadoun needs this to work. He has no choice. The company's revenues ($11 billion a year) are in decline. The stock has lost 24% of its value since 2015. Change must happen. It's a cliche, but it is true: The internet is destroying the ad agency business, and has been for years. So Sadoun is investing everything — money, talent, Publicis' reputation as a creative leader — in Marcel.

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They have no idea if Marcel is going to work. But Sadoun has bet the company on it.

Sadoun is 47 but looks younger. He is rail-thin. His hair bushes upward, defying gravity. He has the deep tan of a man who travels a lot. He speaks to the audience in fluent English even though he is in Paris, and is French. He knows that his real audience are clients with ad budgets in the hundreds of millions of dollars, who are mostly based in America and might watch this on YouTube. In other words, they don't speak Français.

Sadoun's keynote in the main arena is delivered to a restless, packed audience. When he leaves the stage, Sadoun looks tired but talks as if he is elated. On the palm of his hand, scrawled in ballpoint pen, are the speaking notes he used at a press event with Satya Nadella, the CEO of Microsoft, this morning. They include three barely legible words, in English:

"Talent"
"Idea"
"Tech"

Sadoun showed Business Insider the speaking notes he wrote on his hand before going on stage. Jim Edwards

"Those guys haven't been sleeping for 6 months"

Sadoun's senior executive team has been working on Marcel for a year — two meetings per day, seven days per week. "Those guys haven't been sleeping for six months," Sadoun says, gesturing to his colleagues.

Sitting with us are Carla Serrano, the CEO of Publicis New York and the chief strategy officer of the company as a whole; Chief Digital Officer Dawn Winchester, Nick Law, the longtime R/GA creative leader who joined Publicis as chief creative officer of the holding company in January; Emmanuel André, the chief talent officer, and Peggy Nahmany, the vice president of communications.

Sadoun is hoping that his big new machine can knit these three things — talent, ideas, technology — together across 80,000 employees at 1,400 agencies, and thousands more clients inside the Publicis network. Much is at stake.

Publicis is a €9.7 billion ($11.4 billion) per year business, comprising famous ad agencies like Saatchi & Saatchi and Leo Burnett. It handles the biggest clients on the planet, such as Campbell's Soup and Mercedes-Benz. Remember that ad for Walmart during the Oscars featuring Mary J. Blige as a space villain and a little girl who refuses to go to bed? That was Publicis.

It's a great ad, but TV audiences are in long-term decline. Revenues at Publicis declined by 8.2% in Q1 2018, although they were up 1.6% on a like-for-like basis. They were flat last year. Publicis is a business that is treading water at best.

If Publicis stands still, Facebook and Google will eventually kill it

Publicis Groupe

Looming over Sadoun's shoulder is the threat from … everyone: Management consultancies like McKinsey who have wormed their way closer to clients' ears. Adtech companies like AppNexus that funnel dollars and data out of the traditional agency business. Clever digital publishers like BuzzFeed (or Business Insider!) offering the innovative, exclusive content that agencies used to produce.

Most of all, the duopoly of Facebook and Google, whose combined growth in ad spend was greater than all other new ad spending last year, according to the Interactive Advertising Bureau. Facebook and Google are taking all the new ad dollars in addition to eating up many of the old ones.

If Publicis stands still, Facebook and Google and all the others will eventually kill it. Publicis must change, and Sadoun has vowed to force that change through, whatever it takes. Publicis needs to "break the industry," Sadoun says, before the industry breaks Publicis.

So Sadoun is betting on AI.

The Marcel software is difficult to describe but at its core it does something simple: It is an "enterprise knowledge graph" that will organise all of Publicis' internal data — employee records, creative pitches, contact info, campaign numbers, media budgets — and make it instantly available to any employee who wants to ask it a question, just like Siri or OK Google. Sadoun hopes it will blossom into an internal, omnipotent platform as useful and versatile as the starship computer on Star Trek, but be available as a mobile app on employees' phones.

Cancelling Cannes is like your parents cancelling Christmas

Publicis Groupe

The project is such a big deal that Sadoun's first act as CEO in 2017, infamously, was to cancel his company's appearances at this year's Cannes Lions ad festival in order to focus on Marcel.

Cannes is the annual booze-filled-party-slash-awards show on the French Riviera in June that can make or break an agency's reputation. The Cannes Lions are the most prestigious awards in advertising (mostly because they are the only awards people outside the business know by name).

Creatives love Cannes. It's the one time of the year, the one place on the planet, where copywriters and art directors are treated like rock stars. Everyone gets drunk. Everyone parties on the beach. There are illicit hookups. There are illicit job interviews. It's a lot of fun. If you meet the right people at Cannes, your career can explode.

Now, Publicis will have zero official entries at Cannes in June 2018.

For an ad agency, cancelling Cannes is like your parents cancelling Christmas. The move was greeted by Sadoun's employees with a mixture of revulsion and sceptical curiosity. One staffer wrote to Adweek:

"We work nights and weekends. We miss time with family and friends in pursuit of pleasing our clients in a rapidly-changing business that all too often is completely thankless. But when we get an award, it's validation. It's the notch on the belt that you use to catapult yourself to your next job and to life's next level. No more eating shitty Thai food because it's 'free' and you couldn't afford anything else. You can finally afford to take a break, a vacation, some fucking time off. Take away the awards, and you might as well let clients do the work. In some cases, they already are. Fuck Marcel."

It was polarising to the say the least

Microsoft CEO Satya Nadella and Publicis CEO Arthur Sadoun. YouTube

"People who were very focused on awards in Cannes were pissed off, for sure," Sadoun told Business Insider. "People were still singing and dancing on the beach and not realising what was coming."

People who were very focused on awards in Cannes were pissed off for sure. People were still singing and dancing on the beach and not realising what was coming.

Carla Serrano, the chief strategy officer for Publicis, said, "It was polarising, there were people who were certainly supportive but there were a lot of people that were incredibly sceptical, fearful, angry. Creatives, right?"

But agency managers are less keen on Cannes. Among top brass, Cannes and its competition fees have come to be regarded as a bit of a racket.

It can cost $1.1 million in entry fees for an agency of Publicis' size to enter the event. That doesn't include aeroplane tickets, meals, taxis, gallons of pink wine, and other expenses. A cup of tea at the Hotel Barrière Le Majestic costs €10 (about $12). That's the cheapest thing you can buy at the dominant venue on the sun-drenched Croisette. Neither does it cover the cost of preparing competition entries, which take months of production work, akin to that done for an actual ad campaign.

If you win a Cannes Lion, the bills keep coming. If an agency wants to give all its team members an individual replica trophy, they can cost €3,650 ($4,300) each. Publicis won 160 Lions last year.

"Normally when the creatives finish Cannes, they are already starting next year to do scams"

Arthur Sadoun and Maurice Levy. Publicis Groupe

The desire for Lions is so fierce among creatives at all agencies that as soon as Cannes is over, many start working on what Sadoun's team call "scam" work: The production of flashy, innovative, one-off ads that don't run as real campaigns but might be slipped into a specialist magazine or placed on a single billboard purely to qualify them for next year's award shows. Few people see them, except for award show judges. (Scam work for Cannes is rife throughout the entire ad industry, it's not a Publicis-specific problem.)

"Normally when the creatives finish Cannes, they are already starting [work for] next year to do scams. And this year we didn't do any scams because there was no Cannes, so they focused on the real work," Sadoun says.

Nick Law calls it a "parallel economy" inside the agency business. "It's all a shadowy economy of making ads ... the strategic importance of them, they don't seem like clients [approved them]. Like, what are they doing that for? In some cases, clients recently have been complicit too, because of the whole culture around Cannes. Most clients aren't like this but there are some clients that get a taste of that world and are complicit in some of those scams. I do think that's correcting now because people are very aware of it."

A spokesperson for the Cannes Lions told Business Insider that the festival "takes all accusations of scam work extremely seriously. We have a team of 20 specialist awards managers to help make sure entrants meet all the requirements. ... We also ask for sign off from a senior member of the entrant company before anything can be submitted."

"We can root out a scam where we see it, but it is the entrants who historically have submitted it in the first place and they need to take that responsibility seriously. The positive element is that it is far, far less of a problem now than it has ever been," the official said.

While some inside Publicis were dismayed by the Cannes cancellation, "what was more interesting was the outside reaction," Sadoun says. "If you look at the people who have been publicly against this you won't find one good creative who says this is wrong. Because we came at a moment where it was at the end of a model anyway. Cannes was not about creativity anymore.

"Once I started to look at the creatives who would come and join the group, I've been seeing everyone in the market who has a high profile, they all told me the same thing. They said all the prize [juries] came to us, to say bad things about what you are doing, and we didn't want to because at least you are trying something."

That message — that Publicis is trying something different — is at least as important as the internal success of Marcel itself.

The cost of Marcel is higher than the cost of going to Cannes

Publicis Groupe

Since 2017, all the money that Publicis previously devoted to Cannes — several million dollars — was funnelled instead into Marcel. It has not revealed the true cost of the project.

"The cost is higher than one year [at Cannes]," former CEO and current chairman Maurice Levy told Business Insider in a separate conversation, "but it's OK, it's part of the investment the company must make." That's an interesting statement because many of Publicis' competitors assumed that the Cannes boycott was about saving money and increasing margins at the holding company.

Publicis is so big that if any executive wants to find out which other employees on the planet have experience working for, say, Samsung, it can take days of emails, Slack messages, and phone calls to collate that list. Marcel delivers the same data in seconds.

Dawn Winchester, Publicis' chief digital officer, said the company once tried to figure out how many different files the entire company owned across "all the shoe boxes in all the agencies." The estimate came out at about 5 billion. "You can't load that into a spreadsheet and have one person understand all that. You need AI to be able to look across and find patterns and connections, start to figure out how to filter it and serve it in a variety of ways. That's not something you can do on a human scale."

Marcel, however, can do that.

Sadoun worries that his staff are suffering from 'change fatigue'

At the end of each year, Publicis creates a "best wishes" video for its staff that usually contains an elaborate joke. In 2017, Sadoun disguised himself so that it appeared the job of CEO had aged him prematurely, and Levy pretended that giving up the role had made him younger. Publicis Groupe / YouTube

Its potential power, Sadoun believes, is that anyone, at any of Publicis' agencies, can now instantly find the best people to work on any client project. Crucially, management will lose the power to stand in the way of the formation of these teams, he says. The agency world is riven with fiefdoms — competing brands in competing countries, with competing P&L lines, whose managers are accidentally incentivised to keep their best staff away from everyone else's best staff.

Levy calls them "fences." "Oh no, no, no, that team is very busy! It's quite complicated! They cannot do that!" Levy says, impersonating the stereotype of an agency manager who doesn't want to work with other parts of the company.

All that is coming to an end at Publicis, both men say.

Marcel will drive that change. Change is both the best and worst thing about life at Publicis now. Sadoun says he believes many under him are suffering from "change fatigue."

"We are bringing such a pace of change that sometimes when I was travelling and I was seeing people, they said, 'it's a lot at the same time.' And this worries me, because we have no other authority but to accelerate the change. And on the other hand we are in the people business, so we have to be very careful."

History weighs heavily at Publicis

Maurice Levy and Marcel Bluestein-Blanchet, in 1976. Publicis Groupe

Marcel was named after Publicis founder Marcel Bleustein-Blanchet, who died in 1996. Clients are sometimes treated to the spectacular views from his old office: The windows look directly onto the Champs-Élysées and the Arc de Triomphe at the next intersection.

Marcel Bleustein founded the company that became Publicis in 1926. As an early pioneer of French radio, he introduced Édith Piaf to the nation. The company was confiscated by the Nazis during World War 2 because it was a Jewish-owned enterprise. Bleustein fought with the Free French during the conflict under the code name "Blanchet." After the Liberation, he called all his old clients and started over again. He died in 1996, aged 89. Bleustein-Blanchet's daughter, the billionaire feminist philosopher Élisabeth Badinter, is still on Publicis' board, and still uses her father's office.

He was succeeded by Maurice Levy in 1987. Levy's father, a leftist, fled Spain after he was imprisoned under Franco during the Spanish Civil War. The family initially went to the South of France but then the Nazis invaded from the North. "The Nazis were coming down to France, and were coming closer and closer to Perpignan, and the only way to escape was to go to Morocco," Levy once told the Jewish Chronicle. Levy grew up in Oudja, Morocco, before returning to France. In 1971 Levy joined Publicis as a computer programmer. In 1972, a fire broke out in the office and Levy rushed back inside the burning building to save the firm's computer records.

For 30 years, Levy used the office next door to Bleustein-Blanchet's. History weighs heavily at Publicis. The CEO of Publicis is, by tradition, expected to hold the job for life.

With that context you can see the scale of Sadoun's challenge. He must rescue Publicis from the temptation of wallowing in its own vivid history, at the same time as respecting its enviable legacy. That is why he chose to set off two distinctive bombs at once: Blowing up Cannes, and blowing up internal expectations of how an agency is supposed to work.

"I think the most important decision I made and I imposed on Arthur was to change offices."

Maurice Levy during a video interview by the French newspaper Les Echos. Les Echos / YouTube screenshot

Today, only about 100 staff of the 80,000 staff are connected to Marcel. A beta phase will involve 1,000.

"It's going to be a difficult journey. By 2020, 80% will be connected. It is a journey that we started a year ago, a strong proof of our commitment to change," Sadoun says. "We know that Marcel will evolve, it will be a project that will never be finished."

"It's part of who we are now. There are some pitches that we won not because we delivered Marcel but because we are deciding to change the model of our new company. And because this was proof of our commitment to change, it convinced some clients if they have to choose a partner for the next 10 years it should be us," he says. "We're going to change for better."

When Levy, 76, tapped Sadoun to succeed him in 2017, he insisted that Sadoun take his office. Levy moved back into the office he occupied in 1975, before Bleustein-Blanchet died. He also began growing a voluminous beard, as if to signal with his physical appearance that this time his long-delayed, oft-postponed retirement as CEO was real.

"I think the most important decision I made and I imposed on Arthur was to change offices. I insisted that he take my office. He didn't want to do that because he was probably respectful of our relationship and myself. I said, 'I'm the CEO, I'm telling you what you have to do, you have to take my office, full stop.'

"Very often it's the little things that are more important than the big ones. Everyone is going to go to the office of Arthur which is the former office of the CEO for three decades. It's symbolic," Levy said. "I don't want people looking at me for decisions. I prefer they see Arthur as the only boss."

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