Ad holding shares recover (a bit) after Publicis panic attack

The Publicis Groupe share price was rising unsteadily this morning – and WPP with it, in sympathy perhaps – after the collective panic attack that hit markets yesterday after Publicis CEO Arthur Sadoun (below) reported growth falling by 0.3 per cent in Q4 of 2018 (up 0.8 per cent over the piece.)

Sadoun forecast a bumpy first quarter of 2019 and the markets took him at his word. Publicis fell nearly 15 per cent yesterday and WPP nearly eight per cent although there’ve been no official noises from the British-based behemoth yet. Despite the minor recovery Publicis shares are down about a third over the year, WPP’s more so.

Some would argue that coverage of ad holding companies focuses too much on growth whereas what analysts should be looking for is better management of the considerable amounts of cash they still harvest. Publicis said its operating margins in 2018 had increased to 16.7 per cent. But growth is the key term of adland; ad holding companies still boast about their new business hauls, rather overlooking the fact that clients these days (in North America particularly) pay them less.

One network agency boss told me recently he blamed the travails of creative agencies squarely on big advertisers Procter & Gamble and Unilever, not on the depredations of Facebook and Google. P&G and Unilever have been cutting the amount they pay agencies by seemingly impressive amounts but cheaper, my source said, isn’t necessarily better for anyone. Others may disagree of course.

P&G and Unilever also led the charge into digital media, although that wouldn’t be clear from the recent pronouncements of marketing bosses Marc Pritchard and Keith Weed.

In recent years Omnicom and Interpublic have proved more resilient than Publicis or WPP, despite making far less of the importance of technology in their businesses. Both report next week.

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