• by Paul Gough , May 6, 2004

First-quarter revenues fell at Publicis Groupe SA, as the Paris-based advertising holding company contended with unfavorable exchange rates.

Revenues dropped from $1.1 billion in the first quarter of 2003 to $1.05 billion in the first three months of this year. Most of the decline was attributed to the U.S.-to-Euro exchange rate, which was responsible for $80.2 million of the $86.3 million difference in conversion. That masked what was a pretty good quarter for Publicis, where organic revenues rose 4.2 percent to $463.2 million in the United States, and 4.4 percent overall. Publicis owns Starcom MediaVest Group and ZenithOptimedia.

Chairman/Chief Executive Officer Maurice Levy said the pace of new business wins continued in the first quarter, with more than $1 billion in new business--of which 60 percent represented planning and buying. Wins include Mars/Masterfoods, Chuck E. Cheese and Caterpillar for Starcom MediaVest Group, and Ferrero for ZenithOptimedia.

Levy was bullish for the prospects for the rest of the year, particularly in media. He was cautiously optimistic regarding Starcom MediaVest Group's prospects in the recently announced media services review by Procter & Gamble. P&G wants to redesign media planning into communications planning, and it could end up changing the nature of media itself, since the huge marketer spends more than $2.5 billion in advertising annually. Starcom MediaVest Group and Grey Global Group's MediaCom have been invited, along with at least two other agencies.

"It's not only one reason that has driven the review," Levy told analysts and reporters during a conference call Wednesday afternoon from Paris. "The first and the most important reason is simply the fact that they are looking at media with a different angle." He said that while media was once considered a world apart, it's now a central focus. Levy also acknowledged that there was an element of cost-cutting involved in the review, which he said was understandable. Levy said P&G needed to make sure they have the best of what the market has to offer.

He stressed that Starcom MediaVest Group wasn't going into the review overconfident of the outcome.

"We are never very confident under review because you never know what can happen," Levy said. "But I think that we have a knowledge and a strength that few advertising groups have, and I believe that we should be in a competitive position," Levy said.

Publicis is also involved in two other reviews, for some European business in Kraft and worldwide media planning and buying for Nestle.

Publicis is one of the last advertising agency holding companies to provide a look into the first quarter. Interpublic Group of Cos., which owns MAGNA Global, Initiative Media, and Universal McCann, will report its quarterly results on Friday morning.