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Publicis Groupe Q3: Organic growth at just 0.7%

Publicis Groupe’s consolidated revenue for the third quarter of 2015 stands at 2,325 million Euro, which is a 33 per cent increase from 1,748 million Euro in Q3 2014. With over 60 per cent of revenue exposed to the dollar and sterling, exchange rates had a 182 million euro positive effect, corresponding to 10.4 per cent of the Groupe’s revenue in Q3 2014. Acquisitions contributed a further 381 million euro, i.e. 21.8 per cent of revenue in Q3 2014.

Organic growth was +0.7% as a result of continued modest growth in Europe and North America, despite improved trends in the Asia-Pacific region. Publicis Groupe expects organic growth of around 1 per cent over the full year.

Asia-Pacific recorded revenue growth of 25 per cent and organic growth of 3.5 per cent due, notably, to good performance in India (12.5%) and improved growth in China in the third quarter (5.3 per cent), following on the return to growth recorded in Q2 and over the first half of 2015.

In a press statement, Maurice Lévy, Chairman and CEO of Publicis Groupe, explained, “Growth reported in September was nil due to an unusually large number of clients downsizing accounts and postponing or even cancelling campaigns, hence our quarterly organic growth of 0.7 per cent. However, we are still reporting a sharp rise in revenue of almost 35 per cent for the first nine months of the year. After excluding the impact of exchange rates, revenue growth still stands at 20 per cent.”

Sapient, which Publicis acquired at the beginning of 2015, returned to growth with a positive trend of 5 per cent in the third quarter. According to Mr Lévy, the integration phase is still moving forward satisfactorily in every respect, and the growth potential is proving more significant than initially planned.

“We are working actively on the Groupe’s new positioning and offering which includes Sapient, digital, and state-of-the-art technological tools at the core. The seminar we held in San Francisco in early October, attended by 350 executives, is an important stage in this process. Advertisers are increasingly demanding in terms of criteria on innovation, relevance of targets and integration, enabling them to utilise the Groupe’s entire array of assets to their best advantage. And this is what is at stakes in our strategy. In fact, this is the reason behind our recent investment in Lucid, the artificial intelligence (AI) platform that has been described as the most comprehensive and advanced in the world. Using data compiled on individual behavior over decades, it is now possible to avail more relevant and operational predictive models in the business than with traditional market research. This year we will record double-digit growth of our main indicators on a reported basis while generating free cash flow in excess of one billion euro,” Mr Lévy summed up.

When updating its forecasts in September 2015, media agency ZenithOptimedia again lowered its growth estimation for the global advertising market to 4 per cent, down from 4.2 per cent announced in June 2015 (after a 4.9 per cent forecast in December 2014). This downturn is due to a slight lowering of forecasts for all regions, but also to the slowdown of economic growth in China and the expected implications for the USA and Europe.

Noor Fathima Warsia

A veteran journalist in the Indian marketing, media and advertising fraternity, Noor Fathima Warsia took on the role of Group Editor -– APAC for Digital Market Asia in May 2013. Noor has focussed on tracking trends and developments in the Indian media industry.