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By Nick Kostov and Suzanne Vranica 

PARIS -- Publicis Groupe SA on Thursday tapped Arthur Sadoun, the advertising giant's 45-year-old creative chief, to replace longtime Chief Executive Maurice Lévy, part of a succession plan to steady a firm buffeted by massive changes in consumer behavior and technology.

The appointment aims to end years of uncertainty over who will take the reins from the 74-year-old Mr. Lévy, who built Publicis from a French-focused firm into the world's third-largest ad company by revenue.

Mr. Sadoun, who oversees Saatchi & Saatchi, Leo Burnett and other creative agencies in the Publicis stable, "has a clear vision of the business," said Mr. Lévy in an interview.

Filling Mr. Lévy's shoes will be tough. Mr. Lévy is only the second executive to lead Publicis, which was founded in 1926. He is seen by some in the industry as irreplaceable, much like his rival Martin Sorrell at WPP PLC. Mr. Lévy built the company through massive buying sprees that stretched around the globe and pushed the firms into new sectors such as digital marketing and consulting.

Under the succession plan, Mr. Lévy is due to become the company's chairman on June 1, leading some ad executives to question whether Mr. Lévy will remain the firm's main architect despite the elevation of Mr. Sadoun. "Is it a complete mock up or a real succession?," said one executive.

Mr. Lévy said he would "help the transition to make sure I am handing over the relationships, skills and knowledge."

Known as a hard-charging and charismatic executive, Mr. Sadoun has been working to overhaul Publicis's creative agencies, injecting them with more digital firepower. While those changes have ruffled some feathers internally, they have helped the ad giant win some business from companies such as General Motors Co. and Wal-Mart.Stores Inc.

Mr. Sadoun said he planned to focus on "accelerating our transformation and development."

Publicis also announced that Steve King, who was in the running to take over from Mr. Lévy, will join the network's management board. Mr. King is currently CEO of Publicis Media.

The change at the helm of Publicis comes at a volatile time in the overall ad business. Big firms have gone on acquisition sprees over the past decade in an attempt to adapt to major shifts in consumer behavior and the rise of digital. An industry that once relied on the wining and dining of clients is being challenged by stock-market like systems that are now used to buy and sell ads.

The appointment of Mr. Sadoun embodies that struggle. Although Mr. Sadoun has recently focused on giving the firm's creative agencies a digital makeover, he hails from the traditional side of the business, schooled in client relations and big ad campaigns for TV.

Mr. Lévy has tried to transform Publicis into a more technologically savvy company. He snapped up digital agencies, but those moves have also made Publicis somewhat unwieldy. Under pressure from marketers, ad companies are trying to refocus their activities, forcing disparate units to work more closely together.

In the interview, Mr. Lévy acknowledged that efforts to transform the ad giant stalled as he pushed for a $35 billion merger with Omnicom Group Inc. that was ultimately jettisoned in 2014. "Teams were out of focus," he said.

The company has lost business with fast-moving consumer companies like Procter & Gamble, General Mills and Coca-Cola Co. who switched some of their lucrative media-buying arrangements to competitors.

The cozy relationships ad giants have with marketers -- long the bedrock of the business -- have also come under scrutiny as trade groups representing big advertisers have accused ad firms of conducting business in a nontransparent way.

Last year, the Association of National Advertisers said its probe of the ad business found that rebates and other nontransparent practices were "pervasive" in the U.S., which raised alarms about how ad agencies conduct business throughout the industry. Publicis and other ad companies have denied any wrongdoing.

Separately, the U.S. Justice Department subpoenaed many of the large ad companies, including Publicis, last year, as part of an investigation into possible price fixing in video-advertising production

Mr. Lévy, a charismatic leader with a thick French accent, studied computer science at New Jersey City University and joined Publicis in 1971 as head of information technology. His loyalty to the founding Badinter family has been well-known ever since he risked his life by running into a burning building to rescue company records on computer tape from a fire the following year.

Publicis has a market capitalization of $14.7 billion. Its share price has risen 23.8% in the past 12 months.

Write to Nick Kostov at Nick.Kostov@wsj.com and Suzanne Vranica at suzanne.vranica@wsj.com

(END) Dow Jones Newswires

January 26, 2017 15:33 ET (20:33 GMT)

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