Publicis Groupe's first-quarter 2019 earnings were impacted by key clients like Procter & Gamble cutting back on traditional advertising and bringing more media capabilities in-house.
The Groupe's North America net revenue has been particularly affected by the attrition of major CPG clients, representing around 3% revenue impact on the region's performance.
Publicis must adapt to follow the lead of P&G as the world’s largest advertiser, spending $10 billion a year -- which is one reason the Groupe is acquiring Epsilon for $4.4 billion.
"Realized at compelling financial terms, the transaction will make us fully equipped with truly end-to-end suite solutions to address the increasingly complex needs of our clients in a fast-changing, data-driven marketing environment," stated Publicis Groupe CEO/Chairman Arthur Sadoun.
Publicis Groupe’s year-over-year net revenue in the first quarter was in line with expectations, totaling € 2.12 billion ($2.4 billion), up 1.7%.
The Groupe posted an organic revenue decline of 1.8% during the first quarter.
North America net revenue was essentially flat on a reported basis with an organic revenue decline of 4.3%.
In addition to advertiser spending cutbacks, the Groupe’s first-quarter numbers were impacted by a handful of media agency client losses from 2018.
Net revenue in Europe was up 3.1%, with Italy recording double-digit growth at 28.4%. It was the opposite for Germany, where the drop was at 10.1%.
Asia-Pacific net revenue was up 4% on a reported basis and 1.2% on an organic basis. Latin America recorded net revenue down 8.3% on a reported basis, and down 6.3% on an organic basis.
Clients seeking the full-stacked service combining data, dynamic creativity and business transformation recorded a 27% rise in the quarter.
Looking forward, the Groupe believes the pace of attrition will slow down in the second half of 2019. In addition, a number of major pitch wins in 2018 will start to ramp up in the second quarter, noted Sadoun.