Publicis Groupe third quarter revenue drops while APAC organic growth declines
Publicis Groupe has reported a slide in global revenue for the third quarter despite a recent major spending cut on its awards and marketing budget.
The French-owned advertising and media giant said in its revenue statement, which didn’t break out costs, profit or EBITDA, that the company’s income had shrunk from US$2.7 billion to US$2.6 billion year-on-year in Q3 – a fall of 2.2 per cent.
However, organic sales at the end of September rose by 1.2 percent on an organic basis to US$2.67 billion following a 0.8 percent rise in the second quarter.
The agency cited the falling euro exchange rate as being the main factor in the revenue drop.
Meanwhile closer to home, Asia-Pacific experienced a 1 per cent slide in revenue and a 2 per cent dip in organic growth for the first nine months of 2017.
In the group’s report, Publicis said business in China only grew by 0.4 per cent due to “difficulties at one entity under strategic review”, although further details of which agency this referred to were not disclosed.
Elsewhere, business grew by 9.5 per cent in Singapore, while in India, Publicis said the situation was “consolidating”, with the third quarter seeing growth of 3.9 per cent.
Over the last 18 months, Publicis Groupe has famously gone through a major global restructure, dubbed by the-then CEO Maurice Levy as ‘The Power of One’. Aimed at streamlining its agencies, the reorganisation has been carried on by Levy’s successor, Arthur Sadoun.
However, the holding company has faced difficulty earlier after having to write down US$1.5 billion off its digital transformation business Publicis Sapient.
Then, during Cannes this year, Sadoun announced the company would take a one-year break from entering awards and attending trade shows in order to finance its new artificial intelligence-powered professional assistant platform named Marcel.
In a statement on the third quarter results, Sadoun said: “Over the course of the summer the financial markets were exposed to a negative news flow regarding our industry. But the truth is that there is nothing new there. We all know that our industry is facing many challenges. Consumer behaviour 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.
“At Publicis Groupe, we decided that to rest on our laurels was not an option and we committed to transform for the better in an ambitious and consistent way.”
Speaking about the digital transformation business, he added: “With the acquisition of Sapient, we have put technology at the core of the business transformation of our clients… For the last four months, we have been accelerating the execution of our plan by shifting our model from a communications business to a transformation partner by building our organisation as a platform and putting our people first.
“We are beginning to see the fruits of these efforts, but we know we are only in the middle of our transformation journey, as it is a profound change, in a highly volatile market. That is why, even though we have some preliminary encouraging signs, we remain very cautious and determined to win.”
Market needs consolidation. More mergers or acquisitions on the way to reduce the number of holding companies
ReplyI sure they are doing better in Singapore with their great strategy of handing an amateur wannabe the reins to not one, but three agencies.
Reply‘Business grew by 9.5% in singapore’.
ReplyRevenue? Or EBIT?
Hi ‘Bonuses for all’ (I’m sure many wish),
It seems Publicis Groupe only releases revenue-based results in the odd quarters, and then a full financial report every half a year. So to answer your question, it’s revenue, though I’ve added a clarification note in the second paragraph.
Cheers,
ReplyEleanor
Business grew by 9.5% in Singapore? If you are undercutting the marketing and doing dirt cheap ads at a loss, sure. Top line the numbers look good, but let’s see what nett figures are like. They got 3 CEOs for the price of a pretty lame 1. So while it looks good to shout about supposed wins, people in the industry know about the losses. You can’t fool people (just the ones in Paris).
ReplyThe strategy of the Singapore Triple-CEO is to cut costs…at any cost….just look at the moves so far. Appointing crony ex colleagues and their cronies to top positions despite their lack of relevant experience and skills. Appointing kids to ECD roles because they’re cheap and just STFU.
The entire network is running mostly on the fumes of globally aligned big accounts. Meanwhile they brag about winning local assignments like Orchard Road Light Up…lol. Just wonder how long this experiment will last. When the entire shithouse crumbles, this will be remembered as the most shortsighted move ever.
ReplyAnd look at how messed up the trio of agencies are now! No proper ECDs, promoting hardly deserving creatives with no leadership experience into CD roles, transferring people from Saatchi to LB to Pub, and they recently transferred people to Pub to work on the scoot account. And shortly after, She Who Can’t be Named decided to jolly well drop the scoot client. Chaos utter chaos. No wonder it’s industry knowledge that creatives from the agencies are sending out portfolios left right center.
Reply“She Who Can’t be Named decided to jolly well drop the scoot client.”
It is common knowledge that the Scoot client decide to drop her by calling a pitch. This was just an unprofessional response by someone who doesn’t know any other way of behaving.
ReplyWhether you’re looking on from the inside or the outside, chaos is the best way to describe the situation there. It is distressing to see how the general image of all agencies in being dragged even further down by the ridiculous behaviour of someone who has no idea what they’re doing.
Clients pick agencies based on their unique character, strengths and chemistry of their people. Moving creatives around from one agency to another like labourers completely erodes this dynamic. Erasing any possible differentiation between them.
I can imagine the distress of the staff there and their eagerness to move…it’s just that the general tendency is not to move at the end of the year and wait till bonuses are paid at CNY. I really hope these agencies face an exodus soon. It’s the only way to make the frenchman sit up and understand the enormity of the damage that is being done by one person who nobody likes at all.
ReplyHave your say