Publicis Groupe reports lackluster Q4 growth

The holding co is committed to its "Power of One" model and investing in Sapient as it prepares for a "bumpy ride."
sadoun

Publicis Groupe said it is “optimistic” in its 2018 Q4 and full-year results, despite the fact that revenue fell short of what many were expecting.

The holding company’s organic revenue fell 0.3% in Q4, though it reported growth of 0.5% when excluding results from Publicis Health Solutions, which it sold last month. In either case, that growth was well short of the 2.5% growth expected from analysts, sending Publicis stock tumbling after the results were released Wednesday afternoon. For the full year, net revenue was up 0.1%, while organic growth excluding Publicis Health Solutions was up 0.8%.

In Q4, organic growth was up 4.4% in Europe and 6.8% in the Middle East and Africa, but down 2.6% in North America, 2.8% in Asia Pacific and 1.9% in Latin America. For the full year, organic growth was up 1.4% in Europe, 4.5% in Latin America and 4.6% in the Middle East and Africa, but down 0.8% in North America and 1.8% in Asia Pacific.

In a statement accompanying the results, Arthur Sadoun, chairman and CEO of Publicis Groupe, cited a number of major holding-co wide business wins in 2018 – including Mercedes-Benz and Campbell’s – to show that the collaborative “Power of One” model the company has been reorganizing itself around is working for clients. “Power of One” has been effort to integrate all of Publicis Groupe’s capabilities under a single offering, regardless of agency brand or geography, in order to better and more holistically respond to client needs.

However, those new wins were not enough to make up for decreases in ad spending from clients, particularly in the consumer goods segment in North America. Sadoun pointed out that further attrition in that area will result in a “bumpy ride” for Publicis in the first quarter of 2019, though he also expects account wins at the end of 2018 to help improve organic growth by the second quarter.

Some of Publicis’ agencies in Canada managed to pick up local assignments in 2018, though it also saw others sent off to competing agencies.

Publicis is also looking at Sapient to help fend off declines in traditional advertising spend going forward.

The data- and tech-focused division, according to Publicis, gives it “the expertise to combine marketing transformation and digital business transformation,” something that it believes not only allows it to compete with other holding companies, but with major consultancies, as it allows the network to work with clients on bigger picture digital transformation challenges. To that end, Nigel Vaz, previously CEO of SapientRazorfish, has been promoted to CEO of Publicis.Sapient and has been tasked with further developing its business transformation capabilities across several categories.