Publicis Groupe Client Losses, Spending Declines Stunt NA Growth

Reduced client ad spending, as well as media client losses, contributed to a 3.1% organic revenue decline during the first half of the year for North America, Publicis Groupe's largest market, the company reported today in its quarterly financial update.

Investors sent the company’s stock down 5% in over-the-counter trading in the U.S. and nearly 1% down on the Paris exchange Thursday.

It was the second straight day that Wall Street sent a holding company's shares down after issuing second-quarter results. Yesterday, Omnicom shares fell after the firm reported a revenue dip. 

"Our progress has been slowed down by the ongoing fee reduction on traditional advertising that continued to impact our overall U.S. operations,” said Arthur Sadoun, Chairma-CEO, Publicis Groupe during a call with investors.

Our clients are suffering from well-known pressures, particularly in CPG, where we have a "disproportionate market share." 



“As a result, we have taken a major organizational step by accelerating the implementation of our country-model, which helps generate growth through cross-fertilization,” he says.  

Sadoun says the “Power of One” leadership reorganization is already paying off in implemented countries, such as France and the U.K. Europe's organic growth stood at +1.6% for the first half of 2019, while Asia-Pacific was up 2%, the Middle East and Africa region was up 19.1%. Latin America, however, fell by 7.6% due to high comparables and economic turmoil in several countries.

Publicis Groupe’s net revenue for the first half was 4.352 billion euros ($4.89 billion) — a 1.7% increase from the year-ago period.

The Groupe’s overall organic revenue declined 0.8%. Publicis Groupe’s net revenue in the second quarter was up 1.6%. 

Sadoun said he expects 2019 net revenue to be broadly stable on an organic basis.

Everyone is familiar with the disruption created by data and technology. The need for transformation has never been so strong in our industry. We have a model allowing us to address those challenges and invest both in the talent and expertise of the future, such as Sapient and Epsilon, while delivering strong financials,” he says.

"But as spending cuts are not gone away, we are taking a conservative approach for the full year, forecasting a broadly stable net revenue on an organic basis," Sadoun adds.

Publicis Media's Steve King says Publicis Groupe is optimistic about 2020 — particularly with the Epsilon acquisition, along with ad-spend hikes associated with the Olympics and U.S. elections.


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