Maurice Levy: 'We Are Doing Much Better Than Our Competitors'

Five Questions for the Publicis Groupe CEO

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NEW YORK (AdAge.com) -- Publicis Groupe was the last among the Big Four holding companies to announce first-quarter earnings this week, and just like its larger competitors who went before it, the Paris-based holding company found itself in the red, thanks to recession-induced cutbacks in ad and consumer spending.

Maurice Levy
Maurice Levy Credit: Julio Piatti
Publicis had its ups and downs in the first three months of the year, winning the $1 billion global business for Carrefour and Comcast's $250 million regional media account but also losing a number of significant accounts, including HP's $1 billion global media account, the $100 million Miller Lite business and the Philips global PR account.

Even so, CEO Maurice Levy said his company is better off than the competition. "We are down, but if we look at all things being considered, we are doing much better than our competitors," he said. "That's fact."

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Ad Age: Why do you feel you're better off?

Mr. Levy: First, we are doing quite well in terms of new business, and we are generating new revenue -- more than anyone else. Second is our footprint in the emerging market. It has been slowing down, and the growth is not where we would like it to be because the situation is contrasted from one market to another, but the downturn is limited to 0.9% compared to a 4.4% drop for the full group. And last but not least, and more importantly, what's happening with the digital market, where our growth is 9.8% and it's becoming a big chunk of our business, above 20%. That puts us on route to reach the 25% we expect it to be at the end of 2010. So we feel pretty good about our strategy, which seems to be paying off quite nicely.

Ad Age: Which sectors performed well?

Mr. Levy: PR is down. The loss of Philips at MS&L is fairly recent and has yet to have any effect on our numbers, and it will have limited impact because the plan for PR by Philips had diminished quite substantially. [Marketers] are reducing their spending on PR. PR is definitely the one [segment] that was down, as was events. Both are very small at Publicis. Everything that is up in the segment has to do with crisis management, and in that area we have a very good operation, and the acquisition of Kekst is helping us a lot. And we have a very good [PR] operation in Europe, so things on that front are doing very well.

The event side is down, analog media is down, digital media is up and the performances from creative agencies are very good, but they are not yet on an upswing. Starcom, MediaVest and ZenithOptimedia are performing well, and VivaKi is starting to show some positive results. Direct and CRM are doing well and on a slight upswing.

Ad Age: What do you and the other holding companies need to do revitalize your business?

Mr. Levy: I don't know about the other companies. On our side we are working very hard to win market share, and that is starting to deliver some results. And we are pushing very hard to offer to our clients a full holistic approach in order to deepen our relationship with them. This approach is working well for the time being, and it's our area of focus. And obviously, if we can get some interesting opportunities in acquisitions in the areas of digital and emerging markets, we will certainly look at them.

Ad Age: What sectors will turn around quickest?

Mr. Levy: Digital will continue to grow, and I don't think it will turn negative. If you look, organically we have grown 9.8%, which is a very good number, and even if it is growing slightly it will continue to grow.

I believe the first to go on the up will be creative agencies, simply because there is a need for advertisers to work differently on building their brands and relationships with consumers. Times have changed, and [the marketplace] requires a different kind of approach, so I'm very confident things will start with the creative agencies.

Ad Age: Do you think your second-quarter numbers will be similar to these?

Mr. Levy: Like my peers, I think the second quarter will be tougher than the first. I believe we will have a tougher second quarter and things will be on the up from the summer moving on.

I believe we will touch the lowest point of our industry probably in June or latest in July and start to move to the up trend in August or September. We will then continue to grow, but it will not be sharp growth; it will be more progressive. Real growth will occur somewhere in the 2010 summer time frame.

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