Publicis Groupe today reported worse than expected revenue for the third quarter of 2012, with organic growth of just 2% and revenue of $2.1 billion, due mainly to a very weak September.
In July, the group reported growth for the first half of the year of 2.8%, and at the time predicted an increase in growth rates. In the U.S., despite 6.1% growth in July and August, September numbers brought the overall growth figure for the third quarter down to 3.2%, with revenue of $3 billion. This was mostly attributed to the impact of the loss of General Motors' media business and a decline in revenue from Publicis Groupe 's healthcare agencies.
Europe moved into negative territory, shrinking by 3.6% and bringing in revenue of $1.7 billion. Maurice Levy, chairman and CEO of Publicis Groupe , said during a conference call that the issue in Europe was no longer the Eurozone crisis, but consumer confidence and a "wait and see" attitude from marketers, who are cancelling or postponing campaigns.
During the call, Mr. Levy also addressed other topics that have had industry tongues wagging. That includes the potential of a long-rumored deal between Publicis Groupe and the next biggest player, U.S.-based Interpublic group and whether a successor is in line for Mr. Levy.
Asked by an analyst about rumors surrounding Publicis Groupe 's potential acquisition of IPG, Mr. Levy noted that while there isn't a deal imminent, he has looked at the company from time to time. He said: "IPG is a good company. It has bags full of issues as everyone [has] -- we respect them even if we are competing against them. It's a good competitive relationship and nothing else. When we look at the possibility of acquiring IPG from time to time, there is always a banker coming with a book saying how compelling it is to make that acquisition."
Mr. Levy spelled out the arguments for and against an IPG deal. He said, "Some good reasons to do the deal -- we share a lot of clients, in many areas we are complementary, they have assets that could help change numbers and improve areas and margins." The main reason not to do the deal, he said, was because IPG was "expensive."
Speaking on the subject of his succession, Mr. Levy made it seem like he's not going anywhere anytime soon; he pointed out that other heads of holding companies are not young and succession management was an issue for everyone.
On the topic of financial performance, Mr. Levy insisted, "[The results] are not impacting our competitiveness or our ability to deliver full speed on our growth potential. ... We are increasing the size of the businesses that are going faster rather than the size of the businesses that are shrinking. The strategy has worked for us so far."
Publicis Groupe , the owner of networks including Saatchi & Saatchi, Leo Burnett, Bartle Bogle Hegarty, and ZenithOptimedia, claims one-third of revenue come from digital, with that figure as high as 48.9% in North America and 23.8% in Europe -- the latter a region in which the LBi acquisition is expected to boost the percentage to 30%. In BRIC (Brazil, Russia, India, China) and what Publicis calls the MISSAT countries (Mexico, Indonesia, Singapore, South Africa, Turkey), 10.2% of revenue comes from digital. In the rest of the world that figure is 13.8%.
Publicis Groupe 's net new business for the first nine months of the year stands at $2.4 billion. In the third quarter of 2012, the group took full ownership of Bartle Bogle Hegarty, including Neogama/BBH, acquiring the remaining 51% of shares it didn't already own.
Looking ahead to the fourth quarter of 2012, Mr. Levy said, "We have to be cautious. If the situation is difficult for some of our clients we can expect further decline."
Yesterday, WPP Group reported a revenue rise of just 1.9% in the third quarter. Its CEO, Martin Sorrell, blamed four factors for the cuts in client budgets: the unpredictability of the U.S. economy, the Eurozone crisis, turmoil in the Middle East and a slowdown in fast-growing economies such as China, Brazil and India.