Arthur Sadoun on why Publicis is ‘winning’ and how ‘struggling’ rivals have dragged down agency valuations

The global agency sector is robust, despite “struggling” rivals dragging down share prices, and “clients need marketing partners more than ever”, the chief executive of Publicis Groupe has told Campaign.

Arthur Sadoun was speaking after reporting 5.7% organic growth in Q3, thanks to a strong new-business run and the increasing use of artificial intelligence, and he upgraded his annual growth forecast, for a second time this year, to between 5% and 5.5%—well ahead of rivals.

He claimed almost three-quarters of Publicis’ revenues are already “enabled” in some way by artificial intelligence, including 80% at its biggest division, Connected Media, which includes Publicis Media and data unit Epsilon.

Sadoun has seen “zero” slowdown in client spending, but admitted investor worries about the macro-economic environment have weighed on Publicis’ share price, which has dropped about 20% to around €83 since the start of the year.

However, he mainly blamed agency rivals for undermining agency valuations. “The reason why the stock of every holding company is being affected at the moment is because, actually, the entire industry is affected by the performance of some of its struggling players,” Sadoun said, without identifying any competitors. WPP has seen its share price slump almost 60% since January after losing business and seeing “caution” from some of its clients.

The Publicis CEO used his investor presentation to make the case that big agency groups continue to play a vital role for clients in an “increasingly complex and fragmented” marketing landscape. None of Publicis’ top 100 clients spend more than 4% with a single media platform, which should “stop all this noise about the platforms could replace us”, according to Sadoun.

He said Publicis acts as a “connective tissue” for clients by linking media and data and connecting it to creative and production. “This gives us a crucial role — which investors need to understand — to play as a trusted, transformation partner for those clients, and that is why we are winning at the moment.”

Sadoun also discussed how Omnicom’s impending acquisition of IPG has “already” changed the new-business market, the fight for top talent and why Publicis is not interested in acquiring Dentsu’s international division. Publicis is currently the world’s biggest agency group by revenue and headcount, which has risen to 110,000, but faces losing the crown to Omnicom when its takeover completes later this year.

He spoke to Campaign exclusively on various aspects of the business:

How would you describe Q3 and what were the main factors driving your performance?

We had a very strong Q3 that was ahead of expectations. First, I think the news that people are not expecting is that we haven’t seen any slowdown in client spending — none, zero. Second, we are raising our guidance as we are seeing booming demand for AI products and services. Third, the new business momentum in H1 is actually continuing in Q3 [with wins such as Paramount and Paypal in media and Haleon in creative] and we are now starting to be confident that we are going to be able to out-perform for the seventh year in a row in 2026.

How is the new-business market because Omnicom is now close to completing its takeover of IPG?

I was not anticipating that the competitive landscape would redraw so dramatically and so fast, thanks to the Omnicom takeover of IPG, which is helping a lot. The merger has not happened yet, and clients are already anticipating that it is only three players [Publicis, WPP and Omnicom for the biggest global pitches]. They will take IPG or Omnicom, but they won’t take both, basically [in a pitch]. So it is a three-horse race [instead of four] when we go to new business already — it has already happened, even before the takeover is done.

Publicis’ share price has fallen around 20% since the start of the year, despite your stronger performance than rivals, and a UK investment bank, Panmure Gordon, recently published an analyst note in which it said: “While Publicis is the highest rated major peer, its rating is depressed due to macro risk.” So you’re telling us today that clients aren’t cutting spend, but it seems like the market, at least up until these results, isn’t as confident about your growth prospects.

There is definitely a macro [economic] sentiment that is negative and weighing on our industry, but I don’t think this is the biggest thing. The reason why the stock of every holding company is being affected at the moment is because actually the entire industry is affected by the performance of some of its struggling players.

Those players are priced by investors today as if they might disappear at some point — with big voices, like David Jones [the CEO of Brandtech Group and former CEO of Havas], talking about the “Kodak moment” [when a company or sector risks going out of business because it becomes obsolete]. I think this is totally wrong [to write off agency groups]. I believe that clients need marketing partners more than ever and hopefully we will demonstrate that again in our numbers this time.

By the way, everyone has had their ups and downs [over the years], starting with Publicis. But if you look at the facts, we are a growing industry. We are not going to disappear. We are just going to have to transform once again.

When you say “we are just going to have to transform once again”, what do you mean?

As an industry [we need to transform]. I think Publicis is a demonstration that when you heavily invest — real money — in new technology, data and AI, when you break down silos, when you put people first, when you obsess about putting clients at the centre, you can deliver growth. We have been delivering revenue growth of above 5% for the last four or five years now, with a growing margin, which definitely shows we are not buying market share.

We were expecting your profit margin to improve — above 18% — but you must also be driving efficiencies in some way to achieve the increase in margin.

A couple of things: First, the number one reason our margin is improving is because we are growing. The more you grow, the more you can create efficiencies. The more you grow, the more some of the costs are being shared with more revenue. We were €8bn [a year in net revenue about a decade ago]. We are €15 billion [approximately now]. So we have been growing pretty significantly.

Number two, definitely, having a Power of One model, with a single country P&L and shared services, has allowed us to be way more effective. If you look at our margin, we are doing way better than the competition because we have a way more flexible, de-siloed model.

Is there a new war for talent? I don’t think Publicis ever commented but Campaign reported that you hired Laurent Ezekiel from WPP (where he was running Coca-Cola’s agency) in July but then he decided not to join (and stayed to become global CEO of Ogilvy in Cindy Rose’s first week as WPP CEO in September).

On WPP, Cindy Rose is moving fast. I actually think she took the right decision by appointing a second in command, Devika [Bulchandani], who knows the business really well [she stepped up from CEO of Ogilvy to become chief operating officer of WPP]. I think this is an important move.

More broadly, in the age of AI, has top talent become even more valuable? It looks that way when Meta is handing out $100 million pay offers. In the agency services space, has the fight for top talent become more important?

Top talent has always been the most important thing in an organisation and it’s not changing in the age of AI. The kind of profile that is defined as top talent could change.

This is what is very interesting when you look at our revenue mix — we have 15% in engineering and technology with Sapient, 60% in Connected Media which is driven by AI, and our [creative] production platform [is also using AI]. The kind of talent and profile of talent have changed pretty dramatically.

Do you mean they need to be tech-savvy?

They need to be fluid. Meaning they need to be real practitioners in their own domain of expertise but understand how technology is impacting their business.

It’s very interesting to see that this has been the case for a while in media [in terms of the best talent] because it has been more than 10 or 15 years that media has been using machine learning and now AI. It has definitely been the case for Sapient, which is based on a foundation of technology and AI [in terms of recruiting the right talent]. And it is the case with [creative] production… we have talent that truly understands technology and production.

Can you explain what you mean when you claim in your investor presentation that 80% of Connected Media is now “enabled” by AI?

When I say AI-enabled, it means 80% of what we do for our clients on media is possible thanks to AI. I want to give you a very simple example: The way we connect our identity [data] graph to paid, owned and shared media is thanks to AI. The way we arbitrate between how much we’re going to spend in a publisher and in CRM is done through AI. When it comes to content, the way we produce content cheaper, faster and better is thanks to AI. But I would say every one of our competitors can do that now — everyone can do it in a garage, to be honest. Where we can make a difference with AI is connecting this content to our media ecosystem and to our data to make sure that it is truly intelligent.

And that is why we are growing double-digit on production and mid-single digit on creativity versus our competition — because our AI will allow us to do that differently.

Some analysts, including Forrester, have speculated that Dentsu’s international business could be a good fit with Publicis (as the Japanese group has been looking at a sale among a number of strategic options). We know you ruled that idea out at an investor conference in September, but anything more to say on that?

We have a very different view than Omnicom when it comes to the future. We believe consolidation of more of the same, for the sake of efficiencies, is yesterday’s logic and that, of course, includes what you [a holding company] could do with Dentsu.

So we don’t believe in consolidation. We do believe in connections. We believe in how we connect new capabilities, thanks to AI, to drive new sources of growth. This is why we spent €1 billion on new acquisitions [in areas such as data and influencer marketing] this year.

It’s interesting what you say about the market already moving to three players for the biggest global pitches, even before the takeover of IPG completes. You seem to be suggesting that going down to three players is good. But both of the others, Omnicom and WPP, seem distracted. Aren’t clients going to want more choice? Is it going to create space where someone else—like an Accenture or another entrant—is going to come in?

I think there will be space in this new world for marketing partners that have materially invested in data, tech and AI, with capabilities at scale, an end-to-end model that allows you to truly transform for clients, and, to come back to your earlier point, the right talent bench, as it will still be a service business.

And the reason we are winning today is we are a service business, with the best data, technology and AI capabilities—I mean product and platform—which is exactly what our clients need.

And the market is going to be redefined by that, to answer your question.

Finally, Publicis Groupe has its 100th birthday coming up at the turn of the year. What are your plans?

I’m going to keep the surprise for later in the year, but you’re going to like it.