Publicis CFO: P&G Media Loss 'Not The End of The World'
The wound is still fresh for Publicis Groupe, which lost its multibillion-dollar media buying and planning business for longstanding client Procter & Gamble on Monday. But Publicis Groupe CFO Jean-Michel Etienne said the change, while disappointing, is "not the end of the world" because the account only represented 0.7% of the holding company's total revenue.
"It's something that happens in this type of business," Mr. Etienne said at the UBS Global Media and Communications Conference Tuesday. "Sometimes you lose, sometimes you win."
He pointed out that Omnicom, the P&G media review victor, lost its big Johnson & Johnson business a few months ago, and added that Publicis' loss of GM in early 2012 was "far bigger" than P&G.
According to an analyst report from Liberum Capital, the P&G loss will increase pressure on Publicis' media buying business, both "directly through reduction in business from P&G and indirectly through loss from the scale benefits associated with aggregated buying."
While the P&G North American buying review, the company's first in nearly 20 years, may have accounted for less than 1% of Publicis' revenue, Mr. Etienne said it was the largest of the "mediapalooza" series of reviews currently taking place. The reviews yet to come to a conclusion, two of which Publicis is involved in, include 21st Century Fox, Sony, Volkswagen, and L'Oreal US.
When asked during the session if Publicis has seen any significant price changes during media reviews this year, Mr. Etienne said: "Clients are not launching these kinds of review to increase prices, but we're used to that. People are trained for that because it's part of the new world."
Publicis saw organic growth of 0.7% in the third quarter, with no growth in September due to cuts in the CPG, automotive, and pharmaceutical sectors. Mr. Etienne called the quarter a challenge, and said the company plans on being cautious on its view for the fourth quarter. Full-year organic growth is expected to be around 1%, so he said it was "not a good year growth-wise."
"This is something that we understand," he said. "We have a problem and the company is focused entirely to exit from that situation."
Publicis' recently announced reorganization of its agency networks and leadership to create four new groups -- Publicis Communications, Publicis Media, Publicis.Sapient and Publicis Healthcare -- will go into effect at the start of the New Year. It's expected to be fully implemented within the first six months of 2016.
The goals behind the restructure are to break down silos and become more client-centric, said Mr. Etienne.
"The reorganization that's in place gives us new opportunities and I'm pretty sure we'll have a different picture soon," he added.