At the time of acquisition, Lévy referred to the digital consulting agency as the holding company’s “crown jewel” which would enhance its leadership position in digital, achieve its goal of deriving 50% of revenues from digital by 2018 and leverage technology and consulting capabilities to expand in new verticals.
Publicis also continues to be stung by major account losses during the pitchapalooza of 2015 and early 2016, including Procter & Gamble and Walmart.
“We have been hurt big-time in Q4, more than we expected,” Lévy told investors. “We not only had the impact of account losses in 2015 and early 2016, but on top we had very little one-offs and many urgent cuts.”
And an ongoing reorganization of its agency assets under three distinct umbrellas continues to cause confusion throughout the group.
“2016 was a very busy year,” Lévy said. “We have decided to dramatically change our organization. It was a little bit like changing the tire of a car while driving.”
Despite these setbacks, Lévy, who will depart Publicis in June, says his legacy will remain strong. The group has bounced back this year with a couple of account wins, including MillerCoors and Mattel.
And without the negative impacts of Razorfish, growth would have remained flat in 2016, providing “a different picture on the underlying health of the overall business,” wrote Pivotal analyst Brian Wieser in a note to investors.
“An eventual turnaround at that unit should help support margin improvements, as should the company’s ongoing efforts to rationalize operations in smaller markets via the company’s Publicis One model,” he wrote. “The combination of Publicis’ media agencies into a single division should also help. Paired with the appointment of the company’s new CEO, the company looks set up to produce momentum as the year progresses.”