Maurice Lévy, the CEO of Publicis Groupe, says 2015 will be the year the French advertising agency holding group will be “back on growth” following its $US3.7 billion acquisition of US-based digital marketing company Sapient which it believes will give it strength versus rivals in the fast-growing digital advertising space.
After a torrid first nine months of the year, in which Publicis Groupe CEO and chairman Maurice Levy has previously admitted he was distracted by the failed $US35 billion merger with US agency holding group Omnicom, Publicis pulled it back in the fourth quarter to report a 4.3% lift in revenue for the full year to €7.23 billion.
Organic growth was up 3.2% in the fourth quarter and 2% in the full year. Meanwhile, headline profit rose 4.7% to €829 million and EPS increased 2.8% to €3.64.
That return to organic growth in the quarter was largely due to a strong performance in emerging markets, particularly in Greater China, Russia, Brazil, India, and Turkey. The USA posted 2.8% growth, but both France and the UK reported negative growth of -1.2%.
Publicis – which owns agencies including Saatchi & Saatchi, Starcom MediaVest, and Leo Burnett – completed its acquisition of Sapient last week. In an interview with EuroBusiness Media, Lévy described the strength the addition now offers Publicis versus rivals:
“Why Sapient is so important? Maybe let’s start with something which is extremely important, which is “Where are we today?” and “Where are the businesses going to?” There are two giant forces which are converging and transforming everything. One is the fact that that we are in an era of convergence: convergence of business models, convergence of digital, convergence of tools, everything is changing quite radically the way we are doing business. At the same time, we are in this empowerment age of consumers. And if our clients are not taking into account these two giant forces, they are at the risk of being ubered! This is what I call uberization coming from Uber.”
As a result of the Sapient buy, and market moves generally, Lévy believes 2015 will be the year in which digital represents more than 50% of Publicis’ business. By 2018 he estimates that will to 80%. Digital currently generates 42% of Publicis’ revenue.
Despite having confidence for the full-year 2015,Lévy warned that Q1 will be a tough quarter, followed by a “steady” Q2 and Q3, and then “full steam” in Q4. Growth will be led by digital, emerging markets and a better performance from Publicis’ creative agencies, Lévy forecast. In his interview with EuroBusiness Media he said:
“So, all in all, I think that the people who have been watching us for many years will feel reassured by the kind of growth that we will be delivering in 2015 which, as I said, will be starting from a low base and going up progressively, like a kind of snake, or a wave if you prefer. And, at the end of the year, we will be in a great, great position for 2016 because — but that’s another story, as Kipling was saying — we will have also the Sapient acquisition.”
Media researchers ZenithOptimedia forecast the global advertising market to grow by 4.9% in 2015, with agency revenue growth expected to be between 3% and 3.5%.
The big task for Publicis in the year ahead will be the integration of Sapient: A company with more than 13,000 staff, more than half of which are based in India.
The acquisition will result in the creation of a platform to be named Publicis.Sapient, which the companies say in statement will create the “largest and most advanced” platform focused exclusively on digital transformation and “the dynamics of an always-on world across marketing, omni-channel commerce, consulting and technology.” Publicis.Sapient will also house other Publicis digital agencies including DigitasLBI, Razorfish Global and Rosetta.
Publicis.Sapient will be led by Sapient CEO Alan Herrick. He first joined the Sapient in 1995 and became the company’s chief and a member of the board of directors in 2006. He was named co-chairman of the board in June 2012. 30 other senior Sapient executives will also enter into long-term employment agreements with Publicis.
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