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Episode Seven: Man And Machine
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Publicis Groupe today announced 2015 organic growth (excluding acquisitions and currency fluctuation) of 1.5% and overall revenues – boosted by the $3.7 billion Sapient acquisition and a favorable exchange rate–up 32.3% to $10.9 billion.
Business improved in the fourth quarter of 2015, with organic growth of 2.8% over the same period the previous year, and revenues of $3 billion.
Maurice Lévy, the French communications group's chairman-CEO, claimed that 2016 will be "a year of transition" and "modest growth" before Publicis Groupe is "firing on all cylinders" in 2017 – the year he retires.
Speaking at the results presentation, Mr. Lévy said, "Not to promise that it is paradise and everything will be rosy next year. We want to be cautious ... We cannot ask our teams to focus first on building our new organization and at the same time to grow faster. We will reap fruits of the group transformation in 2017."
However, an analyst note from Liberum suggested that timing may be ambitious. It said, "Having seen from smaller peers that re-organizations tend to take more than 12 months before the full benefits can be seen, we wonder how fast an organization of the size of Publicis would need to re-organize and benefit from it."
Mr. Lévy said, "We move fast. This is our signature. The day job of our CEOs is to manage the operation, the night job is to reorganize the operation."
Looking back to Publicis Groupe's last set of results from the third quarter of 2015, when organic growth was just 0.7%, Mr. Lévy admitted, "I was surprised, shocked and almost demoralized by what happened in Q3. Almost every call was about cutting, cutting."
Mr. Lévy is not expecting the same setbacks this year. On a call with Ad Age, he said, "We will be less exposed to the new round of 'mediapalooza'" [global media reviews]. Last year almost all our major clients reviewed – it would be hard to be more exposed – but this year there will be more opportunities to win than to lose."
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Details of the reorganization of the group's media arm – the last of the four divisions to be finalized – will be announced at the end of February by Steve King, CEO of Publicis Media, which includes Starcom MediaVest Group, ZenithOptimedia, and VivaKi.
"Don't expect a revolution," Mr. Lévy said. "We are changing the organization with the objective of giving benefit to clients." He confirmed that Publicis will continue to "invest heavily" in VivaKi, the group's data management and analytics arm, which changed its focus away from programmatic a year ago. "We are pushing to make [VivaKi] truly something," he said.
Also taking up time of senior managers – particularly Laura Desmond, the chief revenue officer -- is the nomination of chief client officers for the group. Mr. Lévy said that this will all be in place by the end of the second quarter, with the vast majority of appointees coming from within. A training program is being created to help the CCOs master all aspects of the role.
Mr. Lévy has so many plans in place that is it difficult to imagine him stepping away from it all, as promised, at the annual general meeting in May 2017.
But Mr. Lévy insists his mind is made up. "I will do my job until the last minute with the same enthusiasm, involvement and passion," he said. "I am a man of passion. I am passionate about what I am doing. I'm passionate about the succession and I'm working extremely seriously on it. There is nothing that will lead me to slow down – and nothing that will lead me to stay."
The Publicis reorganization put Arthur Sadoun, formerly CEO of Publicis Worldwide, in charge of the new Publicis Communications agency division and under the spotlight as perhaps the likeliest successor to Mr. Levy.
For the full year 2015, North America achieved organic growth of 2.4%, while Asia grew 4%, Europe by 0.4% and Middle East and Africa by 0.1%. Latin America was down 5.3%.