Publicis revenue slips in Q3

Canada fared better than some other markets, but it didn't make up for losses in traditional spending, media and business transformation.
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Publicis Groupe has released its Q3 2019 results, revealing the “bumpy ride” it expected as it transforms its business is taking longer than expected to get through.

Organic revenue growth for the holding company was 2.7% in Q3, well short of its own projections.

Publicis said late last year that it expected a “bumpy ride” for the beginning of 2019, which it expected to level out as the year went on. While Q2 results were flat and, at the time, made the company optimistic for the future, it has now adjusted its internal forecasts, expecting a 2.5% organic revenue decline for the full year.

Publicis attributed the losses to cuts in traditional advertising spend, primarily from U.S.-based clients, as well as “softer than expected” performance from its media agencies. It said it had a very strong comparable based from Q3 2018, and while business from FCA and GSK “continued to ramp up as anticipated,” they did not make up for losses it has experienced since then.

The third factor cited for the loss was moving Publicis Sapient from digital marketing to a more business transformation-based services. While the company is still investing in the move and has high hopes for future growth and new business as a result, it has not yet been enough to compensate for the move away from project-based and one-off assignments, leading to a negative impact on the short term results.

“We have clearly identified the challenges affecting our industry, and we haven’t lost a second in addressing them,” Arthur Sadoun, chairman and CEO of Publicis Groupe, said in a release accompanying the results. “We are disrupting our traditional operations with data and technology thanks to the acquisition of Sapient and Epsilon to deliver personalization at scale. We have streamlined and simplified our organization to seamlessly connect creativity, media, data and technology. Now we are focused on executing our strategy, and there are already concrete signs that make us confident for the future.”

Some of those signs include picking up accounts such as Novartis and Mondelez – which Sadoun said data and tech capabilities played a critical role in – as well as 21% year-to-date growth for “strategic game changer” assignments, which is how the company is referring to up-stream, data-driven work with clients.

In North America, Publicis’ largest market, organic revenue was down 3.6% in Q3, putting at a 3.3% decline for the year-to-date. The decline is mostly attributable to the U.S. and Mexico; though it didn’t break out exact figures, an investor presentation listed Canada among the markets that have had between 5% and 10% organic revenue growth for the year to date, while the U.S. and Mexico are listed among those where revenue has experience some level of decline.

There was a 3.3% drop in Europe (putting it at a flat 0% for the year) and 7.2% drop in Latin America (7.5% decline for the year). The company has been faring better in the Asia Pacific (where organic revenue grew 2.5% in Q3 and 2.2% for the year-to-date) and Middle East Africa regions (where organic revenue grew 9% in Q3 and 15.5% for the year-to-date).