Home Agencies Agency Reviews Cause Publicis Groupe To Feel The Pinch

Agency Reviews Cause Publicis Groupe To Feel The Pinch

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levyPublicis Groupe’s organic growth rate was stagnant in the third quarter (up only 0.2%, a decrease from 0.7% growth in the same period last year), due to economic uncertainties related to the US election, Brexit and the surge of media reviews in 2015.

Revenue for Q3 was 2.32 billion euros (or about $2.5 billion), down 4% from the corresponding period last year.

Although Q3 results were “in line with our expectations,” Publicis chairman and CEO Maurice Lévy said during the Thursday earnings call, “we obviously would have been much happier to deliver more growth.”

Publicis was hit by a large number of brand advertisers who put their agency accounts up for review during the period known as “Pitchapalooza” last year.

Among Publicis’ media account casualties was Walmart, though the holding company recouped some of the loss when it nabbed the retail giant’s in-store creative.

“Clearly, the situation is a contrast,” Lévy said, noting Publicis also won several big accounts– like P&G home car brand GSK, Coty and USAA – and that its pipeline is strong. 

But new account wins are slow to ramp up. “It’ll be between three and six months before we reap the fruit,” Lévy said “It’s also taken some time to see the impact of our [account losses], which [weighed] heavily on Q3 into Q4.”

Another headwind is the issue of media transparency, underpinned by the Association of National Advertisers’ probe.

ZenithOptimedia was among several Publicis agencies audited by brand clients – in Zenith’s case, it was JPMorgan.

“What I can tell you today is all audits have so far been satisfactory,” said Lévy, who noted that about 20 had been conducted so far, and that JPMorgan, specifically, plans to release a statement soon in reference to the audit’s conclusion.

Lévy claims clients are so far favorable to Publicis’ big reorg in the first half of 2016 – dubbed “The Power of One,” which organized Publicis agencies around four central hubs, including communications, media, Sapient and health care.

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More clients are asking for a full range of solutions, which span Sapient’s marketing technology chops, digital creative and media, he said.

“Clearly there will be a few more adjustments before the end of the year, but Sapient has already been integrated with Razorfish in order to have one single operation,” he added. “We faced the end of some contracts for Razorfish, but thanks to the support from Sapient and ‘The Power of One,’ it was Razorfish’s best quarter ever for new business.”

 

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