Publicis chief Sadoun cites US growth and Sapient integration as business positives despite revenue target miss
Despite missing expected revenue targets, Publicis Groupe chief executive Arthur Sadoun has highlighted the strength of his business model with the continued integration of data and technology services and growth in the US as reasons to be confident of a healthy second half of the year.
Publicis CEO Arthur Sadoun
Having reported a first-half-year organic growth decline of 2.1% and net revenue down by 8.2% at €4,280, year-on-year, Sadoun believes the company will still meet its full-year objectives.
Speaking to The Drum, Sadoun pointed to the results of rival Omnicom earlier in the week, which posted a weaker than predicted 2% increase in reported revenue, as proof that “there is a lack of trust” from clients in the agency network business model.
He went on to highlight the strong new business results for Publicis this year, listing “pretty impressive” wins with McDonalds, Carrefour and this week Lenovo as evidence that clients were responding to the Power of One business model that his firm is instilling on its three-year transformation strategy.
“It’s all about our model,” he said while highlighting the disruption currently facing the agency network sector. “When it comes to growth we feel confident that we are on track.”
The continued growth of the business in the US was another area that he said made for positive reading, with net revenue sitting at +2.6% growth on 2017 at €5,179. “Its where our model is most advanced,” he explained of that significance.
The second quarter, described by Sadoun as “a bump”, was where the concern lay, with Publicis Health and Publicis Services responsible for the loss of around €30m. This was a part of the business he described as “extremely volatile with low margin” and is now under review.
The data side of Publicis, and the integration business-wide of Publicis Sapient, was another area he said was key, offering the ability to connect data and technology for clients. It's a model that is working well in the US, according to Sadoun, and was growing by 27%.
“Everything we have to do is to scale our relationship with our clients,” he stated, citing the hiring of Annette King as chief executive of Publicis Groupe in the UK as the latest stage of the new model being introduced. “The reason for putting in a CEO for that entire operation is to make sure that she can operate seamlessly with Sapient, with the creative brands and the media brands to put data at the core and providing this model at scale. It is about reinventing the process, which we have done.”
Sadoun went on to his share his views on the challenges the industry is facing. “We can see that the level of disruption in our industry has been increasing in the last six months, when you look at Cambridge Analytica, GDPR… the only way to retain the trust of the market is to make the demonstration that we are reinventing our model for the growth of our clients because when you do that you accelerate your own growth.” He went on to cite the data-side growth of 27% as evidence of a "strategy game changer".
Sadoun also denied that the consultancies such as Accenture and Deloitte entering the marketing services sector was making an impact “for the moment” on Sapient and claimed that “there is a conflict of interest” when it comes to the consultancies operating as both an auditor and service supplier. “In a world where you need transparency, I still don’t understand how you can do both," he said.
Asked if there would be any major acquisitions conducted during the second half of the year, Sadoun was not confident of any deals, stating that the focus was more on individuals and talent coming into the business instead.
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Publicis Groupe is a French multinational advertising and public relations company, and is the oldest and one of the largest marketing and communications companies in the world, by revenue, headquartered in Paris.Find out more