Publicis plans new Berlin-based agency after landing Mercedes-Benz

Dive Brief:

Mercedes-Benz has tapped Publicis Groupe as its global network and digital agency, and Publicis has announced that it will open a new agency in Berlin, called Publicis Emil, to handle the account across 40 markets, according to The Drum.
Publicis Emil is named after Emil Jellinek who created the Mercedes-Benz brand. The agency will be led by Justin Billingsley, COO of Publicis Communications; Maggie Lonergan, who will lead European operations; and Claire Molyneux, who will focus on other global regions, except for the U.S., China and Germany, where incumbent agency BBDO still holds the account.
The new agency will be staffed with talent drawn from Publicis's other hubs, including Publicis Communications, Publicis Media, Publicis.Sapient and Publicis One. The agency should be fully operational by July 1.

Dive Insight:

It's too soon to say traditional agencies are starting to rebound from a couple of tough years caused, in part, by their failure to embrace digital quickly enough, but Publicis's Mercedes-Benz win is a positive sign. The agency holding group's growth and transformation is what made the Daimler-owned Mercedes-Benz win possible, Publicis CEO Arthur Sadoun said, according to The Drum. The news joins a report from UBS that forecasts ad agencies will bounce back in 2018, driven by bigger budgets and large advertising increasing their work with creative agencies.

Winning the Mercedes-Benz business is an important milestone for Publicis, one of the top ad holding groups worldwide, that suggests its digital transformation is working. Over the past couple of years, Publicis has grown its digital offerings to stay competitive. Last October, the company launched Publicis Spine, a platform that lets its clients better target individual consumers, which will include PeopleCloud that combines clients' first-party data with data from Publicis and its vendors.

Publicis has found success with its "Power of One" model that focuses on integrated marketing at scale. Since it was announced two years ago, the group has used the idea for clients like Walmart and HP. Publicis had an estimated $10 billion in media billings under review for January, The Drum report said.

Traditional agencies have struggled to retain or win big accounts over the past few years because their digital capabilities have lagged the alternatives open to brands, such as consultancies and working directly with major digital platforms. Major brands such as P&G, are moving more of their marketing work in-house, which is often more cost effective and offers brands more control over marketing strategies. Recognizing the threat poised to traditional agencies by the evolving media landscape, all of the major holding groups are investing heavily in digital.

Mercedes-Benz is ranked the ninth most valuable brand worldwide by Interbrand and the third highest advertising spender among automakers, per The Drum. The car brand has previously outlined plans to create connected cars that resemble mobile living rooms and recently partnered with voice assistant Google Home to let people interact with their cars from home.