Publicis CEO rejects private equity sale rumors as 2020 revenues beat market

Earlier this month, the Saatchi & Saatchi owner was forced to deny reports its senior leadership team had held discussions in Paris with executives from the private equity firm as recently as December. As Publicis posted better-than-expected results for 2020 on Wednesday (3 February) Sadoun was firmer than ever in his conviction this was not a road down which the business was headed.

“It took us 20 minutes to deny that story,” he told The Drum. “Like every business, we receive lots of solicitation from private equity firms and bankers, but what is clear is that we have not entered into any negotiations with anyone.

“I do not want to leave any doubt, there was no conversation.”

His comments come as Publicis Groupe revealed that its revenues had not been hit as hard as expected against the backdrop of sustained cuts to ad spend in the final three months of 2020 and a global economic downturn.

A ‘resilient’ 2020

The French-founded agency network’s Q4 results show it to have ducked the worst of the Covid-19 headwinds, with Sadoun describing its performance as “resilient” amid a tough context. In total, organic revenues declined by 6.3% in 2020, outpacing market expectations.

As the pandemic worsened across the word in March last year, Publicis saw its quarterly organic growth decline by 13%. However, after a more buoyant Q3, the drop eased to 3.9% for the three months to December, contributing to a healthier year-end balance sheet.

Net revenue losses for the year were broadly flat, dipping by 0.9% between 2019 and 2020 to $9.7bn.

In October last year, Publicis was just behind IPG to take the crown for the best performing holding group of the 'big six'. Havas, WPP, Omnicom and Dentsu were lagging behind. However, which of the arch rivals has emerged on top over the last 12 months will only be clear as more financial updates trickle out in imminent weeks.

The US (which accounts for around 60% of Publicis' business) emerged as a bright spot in 2020, with revenues in the market growing 5.5% in Q4.

Sadoun credited this largely to the integration of data analytics firm Epsilon, which he said helped it garner insights on US consumers and capitalise on a growing shift from brands towards online advertising, e-commerce and direct-to-consumer (DTC) amid the Covid-19 outbreak.

“Our model is complete in the US, in terms of first-party data we are ahead of the competition,” he said.

The chief attributed the Groupe’s wider success to its ‘Power Of One’ model (which unites different disciplines such as creative, media, data and digital transformation) and country-level management structure.

“We demonstrated in 2020 that we’re confident in our model, we believe that the shift to digital personalisation at scale and e-commerce is an opportunity for us,” he explained.

“Clients understand that in a cookieless world they need identity resolution technology and that’s what we’ve been bringing with Epsilon. Our creative business has also been resilient in the crisis, because the truth is, clients need creativity more than ever.”

Although it recently lost out on a $600m pitch for Walgreens to WPP, Sadoun also said strong new business momentum – which seen Publicis pick up the likes of Kraft-Heinz, Pfizer and Visa in 2020 – contributed to a better bottom line.

In markets like the UK, Publicis was among those hit by coronavirus-related redundancies at the start of last year. As well as staff cuts, around 6000 senior executives seen volunteered to have their pay temporarily slashed as part of a €500m plan to cut costs.

Following its “sustainable” performance, in which it did not accept any state aid from the French government, it will repay every salary sacrifice in full and set aside a higher bonus pool to “fairly reward” its teams.

Taking 2021 at face value

With vaccines being rolled out at differing speed across markets and ad spend recovery set to stall until the latter half of the year, Sadoun is cautious about the remainder of 2021, which he acknowledges could be even “tougher” than last.

He hopes that investment in an integrated model and a focus on talent will help shield the business from the worst of the impact and protect clients too. One certain thing is that he is predicting a return to ‘normal’ any time soon.

“I like to think of Q1 for 2021 as being more like another quarter of 2020. [As an industry] we shouldn’t look at 2021 as a year in itself, we should group it with 2020 and think of this like 24 months that represents a particular moment. Until we know how this is all going to end – which we don’t – then taking care of our people, accelerating for clients and protecting our structure are the only things that matter.”

With rumours of a Publicis sale put to bed, for now, Sadoun says that more acquisitions may be on the horizon for the business but these will be targeted towards smaller companies rather than beasts like Epsilon or Razorfish.

He said: “Our transformation in terms of assets is completed, we have what we need to transform. We will be looking at small businesses in data and commerce that will help us accelerate the international development of Epsilon.”

“When you see [the growth Epsilon is driving the US] it’s proof that we are moving in the right direction.”