Digitas Fuels Publicis Growth, On Pace To Be 20% Digital

Publicis Groupe, the Paris-based parent of Digitas, Starcom MediaVest Group, Zenith Optimedia Group, and ad agencies such as Fallon, Leo Burnett and Saatchi & Saatchi, is on pace to be 20% digital by the end of this year, making it the most digitally-centric of the major agency holding companies, Chairman-CEO Maurice Levy said in an interview this morning following a release of the company's first quarter earnings results.

"We believe that we will reach the level of 25% by 2010 and we will be close to 20% at the end of this year," Levy said, citing strong contributions from all of Publicis' digital operations, but especially Digitas. Levy said that 18.4% of Publicis' revenues currently come from digital marketing services.

Total digital revenues rose 20% during the quarter, led by Digitas, which was up 23%. That compares with an overall growth rate of 8.2% for Publicis to $1.65 billion for the first quarter of 2008. Organic growth, after factoring the impact of acquisitions, and other factors, was up only 5.4%.

Levy said that overall media services was the fastest growing segment after pure play digital services, rising at "double digit growth." The only soft spot, he cited, was in healthcare, which continues to lag the rest of the marketing services sector.

Other than that, Levy was upbeat on the near term advertising outlook, including conditions in the U.S., which is technically in an economic recession and facing a credit market crisis.

"We have, for the time being, very few negative informations," Levy said. "We know that the situation is not very strong. We know that there are some issues regarding the credit crunch. We know also that inflation is coming back. And we know that the confidence of consumers is relatively low. This being said, the informations we have in hand from our clients are still good. How long it will last is very difficult to say, but for the time being we have no strong signals of a heavy cut in the budgets of our clients for the US."

Levy added that there was nothing new to update the market on with regards to Publicis partnership with Google, though he reemphasized that it is primarily a people and information exchange, rather than a formal business proposition.

"This agreement is made to exchange people, to better understand each other's business, to make sure that we understand technology better than our competitors, and that they do understand the consumer needs and the brands' needs better than any of their competitors."

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