Publicis claims market leader status with boost to growth target

LONDON: Publicis Groupe SA, the world’s third largest advertising company, is staking a claim to be the best placed to triumph over structural market changes that are stoking investor concerns about the industry.

“We believe that we are the only ones who have the right assets to succeed,” Publicis chairman and chief executive officer Arthur Sadoun said in an interview ahead of an investor day yesterday in London. “We have a positioning that we think is the right one: be the market leader in marketing and business transformation.”

The industry is facing headwinds such as cuts in marketing spending by major adver- tisers like Unilever Plc and the rise of consultants like Accenture Plc and Deloitte LLP taking digital work.

Investor concerns about the trends were fuelled earlier this month when WPP Plc, the world’s largest advertising company, lowered its long-term outlook for sales and profits, triggering sell-offs for peers including Publicis, Omnicom Group Inc and the Interpublic Group of Cos.

Paris-based Publicis, home to agencies such as Leo Burnett and Saatchi & Saatchi, is in a good position to respond to the threat of Accenture and help customers transform their businesses digitally because it has been investing in its own consultant offering,

Sapient, Sadoun said.

“The question is: who has been transforming fast enough to still be relevant today?” he said. “While some are losing revenue because of the difficulties of some clients or some transformation, we are actually increasing this.”

Revising its sales and margin goals for the first time since 2013, Publicis said it would aim to achieve an organic revenue growth rate of 4 % by 2020 and would embark on a 450 million-euro (US$555mil) cost-cutting plan to boost its profit margins.

That compares with the company’s 2017 rate of 0.8% for organic growth, which strips out effects from acquisitions and currency swings.

Publicis will invest 300 million euros through 2020, focusing on improving talent and some bolt-on acquisitions, the company said.

The investor day yesterday will seek to “regain the trust in the name of the industry,” Sadoun said. “It’s about showing the world there is a way for a group like Publicis to be an indispensable partner.”

Publicis shares have lost 5.9% over the last year, compared with a 30% decline for WPP.