Gideon Spanier
Oct 13, 2023

Publicis continues hot streak as it upgrades Q3 forecast and ‘gains market share'

“Publicis will undoubtedly be the industry leader for organic growth”, analyst says

Publicis Groupe: creative agencies' growth has been hit by cuts to 'classic advertising'
Publicis Groupe: creative agencies' growth has been hit by cuts to 'classic advertising'

Publicis Groupe reported better than expected 5.3% organic growth in the third quarter and looked set to stretch further ahead of its rivals as it upgraded its annual forecast for both revenue and profit margin.

Media (up high single-digit) and data unit Epsilon (up 10.5%) were the best performers by discipline and the UK was the stand-out market (up 10%) in the three months to September.

The French agency group has been on a hot streak, with revenue growth ahead of the peer group so far this year, and Q3 is the second quarter in a row when it has upgraded its forecast.

That contrasts with many rivals, including Dentsu, IPG, S4 Capital and WPP, which cut their annual guidance at their Q2 results and blamed cuts by tech clients.

Publicis Groupe said it is “winning market share” and now expects organic revenue growth of 5.5% to 6% for the full year, up from its previous forecast of 5%, and profit margin at the top end at 18%.

Arthur Sadoun, the chief executive of Publicis Groupe, said: “Today we have a differentiated go-to-market [proposition for clients], that allows us to gain market share; a uniquely balanced revenue mix that makes us more resilient to business cycles; and a platform organisation that enables us to post industry high financial ratios [in terms of profit margin].”

Sadoun added he was focused on two priorities for the rest of the year: “bringing our teams back together in person”—with a new policy of mandatory Mondays in the office and no two consecutive days of remote working—and “accelerating the AI-ification of our operations, which we are uniquely able to do through [consulting arm] Publicis Sapient”.

The group employs close to 100,000 people and generates roughly one third of revenues from media, data and tech, and creative.

Media was strong in Q3 as it “grew high-single digit on top of double-digit last year”. Major media account wins have included Pfizer, LVMH and, most recently, Kimberly-Clark in the US.

Data and tech was “very solid” thanks to Epsilon, but Publicis Sapient slowed to 1.2% because of a “slowdown in digital business transformation” projects and against a tough comparative with a year earlier.

Creative remained “low-single digit”, partly because of cuts to what Publicis called “classic advertising”.

By region, the US grew 3.2%, Europe 10.7% and Asia Pacific was up 3.8%.

Publicis Groupe said it was confident of growing 5.5% for the full year, even though there were some potential risk factors including global “economic and social tensions”, further delays to digital business transformation work and some clients cutting budgets in Q4.

The results made no direct reference to violence in the Middle East, following Hamas’ attack on Israel, where the company employs close to 450 people, but Sadoun has told staff that the company will "unequivocally stand by you in these tragic and trying times”.

Publicis Groupe has reported Q3 results unusually early – only 12 days into the new quarter—on the strength of its performance at a time when the wider market has been jittery.

Brian Wieser, an industry analyst, who runs the Madison & Wall consultancy, said the Q3 performance means “Publicis will undoubtedly be the industry leader for organic growth”.

David Herro, the chief investment officer, international at US-based Harris Associates, told Campaign in an interview prior to the results: “What Publicis has done very well is integrate their agencies and put businesses on common platforms.”

Publicis shares rose about 4% in early trading following its improved forecast.

(This article first appeared on CampaignLive.co.uk)

Source:
Campaign India

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