“Shares in Cannes Lions’ owner fall as Publicis pulls out and WPP voices doubts.” PR Week, June 2017
Around this time last year, the media enjoyed an absolute field day reporting all the controversy surrounding the decision of Publicis to absent itself from the International Festival of Creativity to be held later this month. Sir Martin Sorrell (and others) added fuel to the flames in voicing various concerns over price, the growing presence of tech and consulting deemed insufficiently creative.
A year on from negative headlines like the one above, Sir Martin has left WPP and Publicis has already stated its intention to return to the event in 2019. As always, it will be fascinating to observe the highs and lows, the creative and the controversial one can always expect from the Cannes Lions show.
A little bit of history
The Festival of Creativity commenced as the International Advertising Film Festival in Venice in 1954. After trying a few different locations, the Festival settled into alternating between Venice and Cannes until 1984, after which Cannes became its regular location.
The current owner of the Festival, Ascential plc has successfully directed the tiller since acquiring the operating company in August 2004 for £52 million. Cannes Lions is the outstanding jewel in the Ascential crown and remains the company’s largest revenue-generating asset in the exhibitions and festival segment. Revenue from Cannes Lions has grown 17% CAGR since 2012 and in 2017 it generated £65.5 million; 17% of group revenue (up from just 12% in 2012) and 33% of the exhibitions and festivals segment (up from 30% in 2012).
Ascential’s commitment to Cannes Lions is clear, as is demonstrated by the announcement in May that it would sell seven minor exhibitor events to fellow UK-listed company ITE plc for £300 million.
Embracing change
Ascential has also evolved the format and catered to the changing universe of attendees for quite some time. In 2017, agencies comprised 64% of the customer base, with the rest made up of a mixture of brands, media and tech. Back in 2008, the split was closer to 80:20. In response to Publicis' decision to not attend Cannes this year and WPP's mulling of future attendance, Ascential stated it would seek “to expand its customer base across the full spectrum of the branded communications industry”.
Cannes Lions is changing but then, Cannes Lions has always been changing. The Festival managers have long recognised the need to change and are perhaps more receptive to change than some of the larger delegate names. Vociferous criticism about the cost of attending, partly contributed to a 10% fall in Ascential’s share price during the event in June 2017.
In response, the Festival’s management worked with agency holding companies and other regular attendees to address this accusation; working to hold hotel prices at 2017 levels, introducing fixed priced menus and taxi fares, putting on more free-to-view events at the Festival now shortened by two days, as well as numerous other cost-savings. At the same time, the company has rationalised the number and simplified the format of awards. The investor community has responded well to these actions. The share price today is 34% higher than the low point it hit in June 2017.
There will always be detractors, but really, they had better learn to embrace the change. In spite of the eye-catching negative headlines over the course of the year, many smaller agency visitors remain seemingly resolutely unperturbed at the expanding presence of their technology and consultancy neighbours. Tech isn’t new at Cannes. Microsoft was the biggest sponsor of Cannes Lions as far back as 2010 and the categories continue to evolve to reflect the substantial changes in motion across most markets. Lions Health was introduced as a minor category in 2014, to celebrate creative excellence in healthcare advertising. Lions Entertainment was introduced in 2016 and Night School in 2017. The list and types of awards have constantly evolved with the introduction of “music” and “digital craft” in recent years and even “creative data” added in 2015. Little wonder the interest from tech.
Looking forward
The Ascential team is taking a sensible assertive approach. During the 2017 Festival, Mark St Andrew associate editor at Lions Festivals, clearly pointed out the following; “Every year we ask people for constructive criticism about Cannes Lions, so we can try our best to improve the festival. When we do, I sometimes hear: 'Cannes Lions just isn’t as creative as it used to be.' All feedback is useful. But on this point, I’m afraid I disagree. I believe the festival is actually more creative than ever. It’s just that our industry’s definition of ‘creativity’ is evolving, as the world around us profoundly and rapidly changes.”
This is so true. Cannes Lions won’t be around forever but Ascential and the Festival management team, led by Festival Managing Director, Jose Papa, have done an admirable job in adapting the Festival to meet the rapidly changing universe of deeply creative businesses and perhaps those that are not so creative. With all the changes afoot, it will be interesting to view how the Festival performs this year, in terms of its own revenue and contribution to the Ascential group. Longer term, it will be fascinating to observe what format and location the Festival occupies, as well as the audience it attracts. It likely won’t be anything like what you might be able to enjoy later this month.
