Riccardo Savi/Getty Images; WeWork; Ruobing Su/Business Insider
- Troubled coworking company WeWork is currently paying ad holding company Publicis approximately $500,000 per month in retainer fees, according to several people familiar with the business.
- WeWork chief marketing officer Maurice Levy was formerly CEO of Publicis and still serves as the ad agency's chairman. He holds significant shares in the company. Levy said in a recent interview about his role at WeWork that he is "working for free."
- The majority of the retainer covers crisis communications work handled by PR firm Kekst CNC, according to one of the people.
- Nonetheless, the contract is generous in an industry where many clients have migrated to paying their agencies on a per-project basis.
- Both WeWork and Publicis declined to comment.
- Click here for more BI Prime stories.
WeWork, the coworking company that nearly ran out of money before lead investor SoftBank provided a bailout in October, is paying ad holding company Publicis Groupe more than $500,000 a month in retainer fees, according to people briefed on the arrangement.
The contract includes public relations work, with Publicis-owned Kekst CNC brought in to handle some of the company's messaging efforts, along with creative advertising and any media buys not handled by WeWork's in-house team or its official media agency, PHD, some of the people said.
Publicis, for example, designed the print advertisements that ran in national newspapers earlier this month in an attempt to launch a turnaround narrative for the beleaguered company.
One source with direct knowledge of the business said the majority of the retainer concerns crisis communications work. Brands going through periods of crisis often pay premium rates for PR services.
WeWork declined to comment, as did a Publicis spokesperson who said the company does not discuss the terms of its contracts.
WeWork's new CMO has a history with Publicis
WeWork last month hired former Publicis CEO and current supervisory board chairman Maurice Levy as interim chief marketing officer. Levy previously worked with WeWork's chairman, Marcelo Claure, when Claure was the CEO of Sprint, which had been a major Publicis client for several years before Levy stepped down as CEO in 2017.
Several weeks before the November announcement, Claure contacted Levy for help valuing WeWork's brand and coming up with a strategy to improve its image, according to the Wall Street Journal.
When Publicis presented the plan, it was enough to persuade Claure to hire the company to work on crisis communications and digital marketing, Levy told the Journal in an interview. Claure asked that Levy come along.
In a recent interview with MediaPost, Levy said that he is "working for free."
Even so, the fact that WeWork's chief marketing officer simultaneously serves as chairman of its ad agency, where he remains a significant shareholder, has raised some eyebrows among ad industry insiders, who said it represented a conflict of interest.
Two sources said the size of the retainer - extrapolating to about $6 million in annual fees - is generous by the standards of an industry that has increasingly seen companies migrate to paying ad agencies on a per-project basis.
One person with direct knowledge of WeWork's marketing business said that if a consultant launched a review for an account of this size, every major agency would pitch. Earlier this month, Business Insider reported that WeWork did indeed call on several of the industry's top agencies to compete for its business in a review launched over the summer.
That review, which concerned a campaign that would have cost at least $5 million, came to an abrupt halt in August as WeWork's IPO fell through.
Levy has been with Publicis for more than 40 years and helped it become the world's third-largest ad agency holding company before stepping down as CEO. He only plans to stay at WeWork a few months, during which he will build a new marketing team, the Financial Times wrote after a separate interview.
