Publicis Reports Improved Organic Growth In Q3

For the second straight quarter, Publicis Groupe remained in positive territory from an organic growth standpoint. Q3 organic growth reached 1.2%, the firm said, reporting results for the quarter early today.

That was an improvement from the 0.8% organic growth the company reported in Q2. Recent previous quarters showed declines in the metric, which strips out the impact on revenue from acquisitions, asset sales and currency fluctuations.

In a call with analysts today to discuss Q3 results, the firm attributed the improvement to recent new account wins, including Walmart, USAA, Asda, Motorola and Lowe’s.

Publicis Groupe’s consolidated revenue in Q3 was 2,264 million euro ($2.67 billion), down 2.2% year over year, and Publicis Groupe’s year-to-date revenue stood at 7,107 million euro ($8.38 billion), up 0.6% compared to the prior year. Year-to-date organic growth stood at 0.3% at September 30.



Exchange rates adversely affected revenue by 17 million euro ($20 million) or the equivalent of 0.2% of revenue for the first nine months of 2016. Net acquisitions contributed 38 million euro ($44.82 million) during the same time frame.

North America's performance this year has been hindered by the on-going restructuring of Sapient Razorfish. The company took a $1.5 billion impairment charge last year mostly against that group, and it cited Razorfish as a particularly weak link.

Organic growth in North America for the first nine months of 2017 was a tepid 0.1%. Europe grew by 0.6%, driven by the UK (6.2%) and Italy (8.8%). Asia Pacific was down 1%, Middle East & Africa reported growth of 5.1%, and Latin America spiked 8.7% through September 30.

"Consumer behavior is changing, the media landscape is being disrupted, we are confronted with new competition and our clients have been facing challenges around growth, cost and brand trust challenges for years," Publicis Groupe CEO Arthur Sadoun said during today’s call. “We are judged on our results,” he added.

The Groupe’s efforts to improve include its “Power Of One” restructuring implemented over a year ago, as well as bulking up its technology and consulting capabilities. The firm is also taking steps to tweak its culture in ways designed to better attract and retain top talent.  

As a "business transformation agency," we aren't just pitching data and creativity briefs, but providing an end-to-end model for clients,” said Sadoun. “There is no gap between brand and experience," he added.

While competitors have cited enhanced contract scrutiny by clients as impacting their bottom line, the Groupe says this debate around trust and transparency has become a competitive advantage.

After last year's ANA report, 30 clients went through audits without any significant changes, said Steve King, CEO Publicis Media. Further, many of these clients have since increased the scope of their contracts, he said.

The Groupe is in the early stages of rolling out a refreshed business plan developed with the new management team that Sadoun has installed since taking the helm earlier this year, including Emmanuel André, the Groupe’s Chief Talent Officer, and Annette King, CEO of Publicis UK.

Country-specific CEOs are being added where leaders with the right “transformation” skills can be found. China will soon gain its own chief, noted Sadoun.

The Groupe is leveraging a new delivery platform in India and a learning program will retrain its 80,000 workers worldwide. New incentive programs are also being instituted, said Sadoun.

"We know we are only in the middle of our transformation journey, as it is a profound change, in a highly volatile market," the Publicis chief added. "That is why, even though we have some preliminary encouraging signs, we remain very cautious and determined to win."


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