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 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 advertisers such as Unilever PLC and the rise of consultants like Accenture PLC and Deloitte LLP taking digital work.
Investor concerns about the trends were fueled earlier this month when WPP PLC, the world’s largest advertising company, lowered its long-term outlook for sales and profits, triggering selloffs 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 percent by 2020 and would embark on a 450 million euros (US$555 million) cost-cutting plan to boost its profit margins.
That compares with the company’s rate last year of 0.8 percent for organic growth, which strips out effects from acquisitions and currency swings.
Publicis said it is going to invest 300 million euros through 2020, focusing on improving talent and some bolt-on acquisitions.
Yesterday’s investor day was aimed at seeking 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 percent over the past year, compared with a 30 percent decline for WPP.
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