Publicis Group counts cost of disastrous merger mania

So what sort of shape is Publicis Groupe in following the collapse of its mooted merger with Omnicom?

Not very good it would appear from its half-year results, battered by a weak second quarter in which it showed organic growth of just 0.5 per cent – way below its target of four per cent.

Net profit in the first half fell 17 per cent to €260 million euros ($351.54m) on sales of €3.36bn which the company blamed on the rise of the euro against other currencies, chiefly the dollar. PG’s operating margin also fell to 13 per cent, from 13.7 per cent in the same period a year ago. PG blamed a change in accounting rules for some of this.

imagesPG CEO Maurice Levy (left) said it would be “extremely difficult” to meet the company’s target of four per cent or more organic revenue growth this year after first-half numbers were “unsatisfactory.” He also said the (ultimately fruitless) merger negotiations had “weighed on our performance.”

The figures are in stark contrast to those of US-based rival Interpublic which reported revenue up 5.4 per cent including a startling 33 per cent rise in the UK. IPG’s main creative agencies in the UK are McCann, Lowe and FCB/Inferno.

IPG, of course, was not distracted by merger negotiations although it’s possible, as my friend George Parker of Adscam fame regularly predicts, that it will be. Publicis Groupe has often been mooted as a possible buyer (it came close to a deal a couple of years ago) but, based on these latest results, the last thing the company’s owners, led by Elizabeth Badinter, need is more merger distractions.

Levy said a while ago that his strategy was to turn PG into an ‘internet company’ not an advertising one. The trouble with the internet, unless you happen to be Google with its near monopoly on search, is that it’s full of competitors busily driving down prices.

Levy would be more profitably occupied trying to bolster his big agency brands – Leo Burnett, Saatchi, BBH and Publicis itself – and his media agencies.


Omnicom, PG’s putative merger partner is doing OK too.

Time to leave the stage Maurice, I fear.

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