Levy says advertising model is outdated in digital age

LONDON - Maurice Levy, Publicis Groupe chief executive, has said the business model for the advertising industry is outdated and needs to change as it faces growing competition from internet giants such as Google, Yahoo! and Microsoft.

Levy said, while speaking at an advertising industry conference sponsored by the International Advertising Association, that the basis of the ad industry needed to be looked at.

He said: "The very model of our industry is being called into question. The model today is no longer valid, no longer relevant.

"Our role will remain strong, firm, indispensable. All we must do is adapt."

However, despite speaking of huge challenges ahead for the industry he made clear that he was not running scared of the digital giants that are increasing competing with the advertising industry.

He said that he had "huge respect" for these internet companies, but was unconcerned about them taking over from traditional advertising agencies.

These comments come after Levy revealed in January that Publicis Groupe planned to swap staff with Google and pool their respective creative and technical know-how to benefit clients.

Levy and Google chief executive Eric Schmidt held a joint press conference at the time and revealed that the companies had been co-operating for the past year.

However, long time rival Sir Martin Sorrell, the WPP Group chief executive, who describes Google as a "short-term friend and a long-term enemy", hit out at Levy during the World Economic Forum in the same month and suggested that Publicis' Google partnership lacked substance.

At the time, he said: "Next time I meet with [Google CEO] Eric Schmidt, I think we'll send out a press release. This morning I met with Maurice Levy, does this mean we're putting together a joint venture?

"What Publicis is doing represents a little bit of a concern that they didn't get the technology right. I think Maurice is acknowledging a bit of an Achilles heel when it comes to technology."

Levy alluded to this yesterday, saying that advertising agencies needed to develop a deeper understanding of technology, as audiences spend more time with video games, cell phones and other new media.