Arthur Sadoun has set out his growth ambitions for Publicis Groupe, reiterating his belief that 2019's drive to hone its "business transformation" services and the company's record $4.4bn acquisition of data giant Epsilon will pay off this year.
The chief executive also pointed to Google's cookie cull as presenting a "massive opportunity" for the group's beefed-up data division.
Sadoun spoke to The Drum following the company’s full-year results, which showed a drop in annual organic sales of 2.3% and net revenue up 9.3% to €9.8bn. Despite being cited for the second successive year by Goldman Sachs as the leading network for new business, winning major media contracts with the likes of Disney and GSK, there was a 4.5% decline in organic sales in the fourth quarter on revenue of €2.9bn.
For the year, Europe reported a fall in organic growth of 2.0% to €2.63bn, North America dropped 3.5% to €5.52bn and Asia Pacific rose 0.8% to €1bn.
Now Sadoun is backing last year's major investment, the group's record $4.4bn acquisition of Epsilon, to help improve its fortunes in the US in particular, where there was a fall of 4.1% in organic growth over the year.
With the integration of the American data giant, very much the great white hope within the business, Sadoun is of the view that the region is now ready for growth. He also cites Publicis Sapient's change of focus from digital marketing to business transformation, under the auspices of Nigel Vaz, as another reason for optimism.
“If you look back at the year, then you will see that we made a profound change in 2019. First was that we put our country model in place in every country in the world – in the UK we did that with Annette King – and we have transformed the way we were operating and going to market.
"This has had an impact on our growth in the US and we know that this is working because internationally Sapient is doing very well."
Sadoun said Vaz was spending more than three-quarters of his time on the US business to bring growth and simplify the operation. He also revealed that the group had promoted more than 150 people and recruited another 100 'leaders' over the last 12 months.
"Hopefully he will start to get momentum soon. The major changes in the US are: introduce our country model, turning Sapient to business transformation in the US; the acquisition and integration of Epsilon for £4.4bn, which will help clients to activate first-party data which is now in place; and to make sure we bring on board a new generation of talent which we have invested in.
"That will start to transform the group in 2020 and be a driver for growth. This is why the new generation of leaders is so important. With our latest win of Bank of America, it’s being led by new leadership and a new team in place. Those factors will help us come back to growth in the US.”
Asked about early trends emerging within the marketing sector this year and client spend, Sadoun said it was too early to go into detail. He did however highlight his concern about the situation in China, with the coronavirus pandemic causing many to think twice about travelling to the country. One of the group's media clients, air carrier Cathay Pacific, has already seen revenue severely impacted as a result of the travel crisis.
“It will have an impact on our clients,” he acknowledged. “We must make sure that we are aligned but the only priority at the moment in China is the health of our people - but then once the situation has settled down we must see what the consequences are.”
Another thing on Sadoun's mind is Google’s announcement that it will phase out the use of third-party cookies within its Chrome browser, leading publishers especially to wonder how it will measure its audience data going forward.
“This will have massive impact mainly for the publishers, and for clients because at the end of the way it will be done it will affect buying and we still need to do that in an effective way which we are doing with Epsilon.
“This is a massive opportunity for us because we are able to deliver first-party data to our clients which will allow them to have direct contact with their customers... we have the data set to enrich and enlarge their knowledge of their customers with first-party data and then integrate a platform that can activate that. In fact, the walls of the walled gardens are becoming higher is actually an opportunity for us.”
Finally, asked about what lessons he has learned from the acquisition and integration of Epsilon over the last year, he said the earlier acquisition of Sapient had been a help in making the multi-billion-dollar investment.
“If you want this to work from day one, it can’t be only the decision of the CEO. It has to be the decision of the management team and the reason why is to ensure it is well integrated. It is not my acquisition, it is the acquisition of the management committee and the board.”