Publicis Groupe’s earnings released last week showed the holding company has returned to worldwide organic growth for the first time since the pandemic began. That puts pressure on rival holding companies preparing to report their own earnings this week and next.
“Publicis’ numbers suggest they have turned the corner,” says Greg Paull, principal at consultant R3, “and other groups should be posting similar outcomes from a very soft 2020.”
That’s the good news; the bad news is it might be tough to sustain it.
There are two major factors playing into this: Uneven rates of vaccination and recovery around the world could result in an earnings drag on sprawling multinational holding companies. And while certain businesses at the Big 5 agency holding companies have performed well across the board in the pandemic—namely health care, digital and e-commerce—they are still weighed down in major sectors like live events. In addition, many creative agencies remain burdened with client cutbacks in hard-hit categories like travel (though there are signs travel spending may be picking up again).
Even Publicis, which reported organic growth of 2.8% for the first quarter, tread carefully in offering guidance for the remainder of the year. “The crisis is not over,” said Publicis Chairman-CEO Arthur Sadoun in an interview last week. “The real question is how much will we recover everything that was lost last year?”