An 'Unfortunate Hiccup' - Publicis Groupe Q3 Organic Growth A Tepid 1%

Publicis Groupe has been unfocused -- and is now paying the price. The holding company reports that 3Q revenue was 1.748 billion Euros ($2.2 billion at today’s exchange rate), with organic revenue up a slight 1%.

By comparison, both Interpublic Group and Omnicom, reporting results earlier this week, posted Q3 organic growth of greater than 6%.

Year-to-date, Publicis Groupe revenue is 5.106 billion Euros ($6.5 billion), up 1.6% year-over-year. "As we conclude 3Q, it was an unfortunate hiccup, but we should not think this is otherwise anything other than a bump on our growth and we refocused on our growth path," says Maurice Levy, CEO, Publicis Groupe.

Levy blames the company's poor performance on a multitude of factors. "The issues were a sharp decline in analog, the end of one-off contracts, the end of the Motorola business and the slow recovering of emerging Europe," says Levy. "To be honest, we have been too focused on our [long-term strategy] project and we are paying the price for that. It is now the past."



"The speed of digital and technology innovation had not fully been taken into account and impacted our performance," says Levy. Indeed, analog business dropped dramatically across all countries, with Europe -- excluding Russia and Turkey -- dropping 6%; North America down 1.8%; Brazil, Russia, India, and China (BRIC) as well as Mexico, Indonesia, Singapore, South Africa, and Turkey (MISSAT) were down 6.2%.

Digital is clearly a priority. This specialty now accounts for 41.6% of its total revenue, up from 37.6% year-over-year. "This is where the market is going and generating growth," says Levy. This growth was spread globally with Europe, minus Turkey and Russia, reporting digital growth of 10.3%; North America was up 4.5%, and BRIC/MISSAT countries were up 35.8%.

"What has been a distraction is the merger and that's my fault. Period," Levy said.

Now, Publicis is at the end of its "bad cycle," and has made several changes to improve its future performance. In September, Publicis announced it was reorganizing its Razorfish agency into a global network led by sister agency Rosetta CEO Tom Adamski. Publicis has also implemented several key management changes including naming Kevin Roberts, the outgoing CEO of Saatchi & Saatchi “Head Coach” of Publicis Groupe, in which he tasked with “inspiring and motivating the Groupe’s top leaders.”

At the same time, Starcom MediaVest Group and ZenithOptimedia have both continued to generate strong returns and winning new business. And healthcare looks to be a strong area of opportunity. Looking forward, Publicis is unveiling its strategic update and outlook to 2018 via a webcast on November 7.

"I don't believe 2014 will be a landmark in our story and we should put it behind us and move fast into a better 2015," says Levy.

"Chart arrow down" photo from Shutterstock.

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