Home / Ad Tech / Publicis Q1 numbers keep the wolf from the door but questions remain over Levy’s “transformation”

Publicis Q1 numbers keep the wolf from the door but questions remain over Levy’s “transformation”

Is Publicis Groupe clinging on to its position as the third biggest marcoms company behind WPP and Omnicom – supported mainly by the extra revenue from its $3.7bn acquisition of digital consultancy Sapient – or ahead of expectations in its recovery from account losses in 2015 and ongoing root and branch reorganisation into four ‘hubs?’

Publicis shares have fallen 15 per cent over the past year, lagging its rivals, but they recovered today after CEO Maurice Levy (below) announced better than expected first quarter numbers. Sales grew 8.9 per cent to €2.3bn (£1.81bn), organic sales (stripping out acquisitions, disposals and currency movements) grew 2.9 per cent – hardly brilliant (at least by Publicis’ historic standards) but not disastrous either.
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But Levy warned that the next two quarters would be tougher as the impact of losing Coca-Cola, Procter & Gamble and Walmart media in the US would begin to hit. On business as a whole Levy says: “We have made a promising start to 2016, both in terms of performance and our own transformation.”

Levy says that, post-Sapient, digital now accounts for about 55 per cent of group revenue, which is in line with his strategy of making Publicis the favoured agent of clients seeking “digital transformation.” The problem for Publicis is what does it do with the rest of its sprawling empire?

If you look at 2015’s performance with account losses (although it recently won Asda’s creative and media in the UK) and pay freezes across the board, there’s a sense that the company was being run “too hot.” This was the accusation levelled at Tesco in the Phil Clarke era. It wanted to do everything even when its basic business was under severe pressure. New CEO Dave Lewis put an end to that by selling retail operations abroad and distracting diversifications in the UK.

Such a policy is difficult for the big marcoms companies to adopt as their pitch to clients is that they do everything so, logically, they need everything. In any other industry a company like Publicis would consider divesting itself of some of its lower growth parts. One or more of its creative agency networks (BBH, Leo Burnett, Saatchi & Saatchi – it could hardly sell Publicis Worldwide) might find a better home in private equity or one of the big consultants currently invading adland. They’re all part of Arthur Sadoun’s Publicis Communications now anyway so are all these brands needed?

It’s hard to see Levy doing that but he’s supposed to be retiring in 2017. Sadoun, or whoever takes over, may take a different view.

In the meantime the jury’s still out on Levy’s Publicis. Sapient, though, looks an inspired buy.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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