Publicis chief Arthur Sadoun: group set to recover 2020 losses a year early
French advertising empire Publicis Groupe announced today that it has recovered from the economic hit of Covid-19 in its half-year financial results. We speak to chief executive officer Arthur Sadoun about the group’s recovery, how it plans to return to the office and where the biggest opportunities for advertising now lie.
Publicis Groupe chief exec Arthur Sadoun unpacks the network’s H1 results
After an unexpectedly strong performance in the first half of 2021, Publicis Groupe is already on the way to a full recovery from the crisis of last year.
Speaking to The Drum following a strong Q1 and an even more robust Q2, chief executive Arthur Sadoun is quick to emphasize the freak nature of this quarter’s financial results. “You should not take Q2 as normal. It is an exceptional quarter for everyone.“
Still, while the recovery bounce will peter out at some point, he says the group will “fully recover“ within the year, 12 months ahead of its initial comeback plan. It’s a big turnaround for the French ad network, which suffered double-digit negative growth in the first half of 2020.
Publicis’s H1 results
Organic growth for the first half of the year was 9.7%, versus a 8% drop during the first six months of 2020. Q2 organic growth was at 17.1%, against a 13% decrease for the same period last year.
Net revenue in H1 2021 increased 3.3%, to €4.9bn; Q2 net revenue was €2.5bn, following a 10.7% year-on-year increase.
The company reached an all-time high for its operating margin rate, which was at 16.5%.
Publicis has upgraded its 2021 guidance to investors, and now expects a ”full recovery” within the year, rather than the end of 2022, as previously predicted.
Now most of its regions have bettered their 2020 performance. Europe, Middle East and Africa, and Latin America are barely lagging behind with H1 organic growth recovery ratios all above 90%.
Publicis has benefited especially from the rebound in the US, where it already had a well-developed data offering; overall growth reached 15.2% in the territory, while the group’s home market of France saw 30% growth.
There are further success stories hidden behind the headline figures. Sadoun highlights the contribution of Sapient, which enjoyed 27% organic growth following “years of decline“ owing to restructuring efforts in motion prior to the pandemic, and the enormous demand from clients for direct-to-consumer services. That demand has come primarily from the States, but he says “we are catching up fast in Europe ... Epsilon is almost doubling in size outside the US“.
According to Comscore data seen by The Drum, Publicis’s net new business value led its holding company rivals, and it’s brought on new clients such as AB InBev’s global data account and the worldwide creative brief for car maker Infiniti. Other wins include the creative accounts for Unilever, Procter & Gamble and Samsung.
“Digital media is booming at the moment,“ he says. “Everything to do with customer data management is growing very fast, because clients understand that they’ve been completely reliant on third-party cookies for so long.“
Unsurprisingly, Sadoun is keen to tout the group’s expertise in leading clients away from third-party data addiction. Demand for digital media, first-party data management and direct-to-consumer has driven much of Publicis’s growth, though the performance of its creative agencies has also picked up following a quiet first quarter.
“The decision [to sunset the third-party cookie] is going to be the most major disruption in the marketing landscape I’ve seen for years.“ He says a key strength of its model is now “to really be able to help our clients in shifting from cookies to first-party data“.
Beyond the numbers
Although revenue is back and beyond 2019 levels, the day-to-day business of Publicis is far from back to normal. Its flagship VivaTech event went ahead this year in a constrained format that still gathered 26,000 in-person attendees. Sadoun says the experience was not “economically viable“, but did prove hybrid event formats are workable.
“It was smaller, but it was outstanding. It’s time to come back to life. There is not a black or white answer ... at one point you have to take a stand and try stuff.“
Sadoun says the group isn’t in a rush to get staff back to the office: “We still need to put the security and the safety of our people first ... which means we won’t make any rash decisions. What we’re doing at the moment is pretty simple; we’re taking local rules that can be done in a way that they could be adapted with changes in the sanitary conditions.“
He’s also clear on the need to adapt the network’s agencies for a hybrid workforce. “We are trying to give them a good reason to come back. On the other hand, we are building global platforms around Marcel [Publicis’s AI HR platform] that enable us to better share the workspace.“
Crucial will be ensuring that staff – juniors in particular – can still develop if they’re away form the office. He acknowledges how “difficult“ it can be for younger staff to break through with “daring“ new ideas.
“Despite the fact that we are in a hybrid world, we need to make sure that people can progress within Publicis.“
Though its financials will likely please shareholders, Sadoun says his priority is its staff – and that even as competitors staff up amid the upturn, the focus is on retaining Publicis’s current crew.
“We are attracting many people at the moment, but our first priority is to retain the ones that we don’t want to lose. After 14 months at home, you lose the sense of community. It is absolutely critical to recreate that,“ he says.
“Beyond the numbers, there are people. It has been a tough time. Our priority has been to help serve our people and save as many jobs as we can, which we did.“