What’s going wrong at Publicis Groupe?

If you read the coverage of Publicis Groupe’s recently-announced Q3 numbers – organic growth going into -2.7 per cent reverse, with particularly big hits in the key markets of the US and Europe – you’d be spoilt for choice as to the reasons.

For some it’s the “softening” performance of its media agencies now grouped under Publicis Media, for others its over-dependence on a relatively small number of once big-spending clients, for others it’s problems absorbing tech consultancy Sapient (this has been going on for years, with the latest spin being that Sapient is concentrating on big contracts not tiddly little stuff) – which doesn’t augur too well for latest giant acquisition $4.4bn Epsilon.

The upshot is that, following a steep share price fall, Publicis is valued at less than €9bn and carries about €5bn of debt. Which isn’t very healthy at all.

Chairman and CEO Arthur Sadoun (below) took over in summer 2017 and since then the Groupe’s fortunes have been more or less downhill.

Sadoun has consistently put a brave face on things, admitting last week that times were tough and maintaining, basically, that the darkest hour is just before dawn. But investors, and Publicis’ Supervisory Board, must be wondering when dawn will break.

Certainly there’s been no evidence that his much-trumpeted ‘Power of One,’ which seems to mean companies working together, has made a positive difference. Publicis still has scores of agency brands, testimony perhaps to the fear of the holding companies that if they rationalise these they’ll scare off conflict-fearing clients.

Over the past two decades Publicis under, first, Maurice Levy and now Sadoun has spent billions on acquiring digital businesses – which don’t seem to have made the overall business any bigger.

Yes, it’s a tough market for ad holding companies but US rivals Omnicon and Interpublic seem to doing OK. WPP, the last to report, is maybe the key to Sadoun’s fortunes. If it shows signs of turning the corner in Q3 then Publicis is well and truly on the naughty step.

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