Arthur Sadoun, CEO of Publicis Groupe.
Publicis Groupe is celebrating its new position as the second biggest legacy holding company after usurping rival Omnicom Group's spot.
During its 2023 first-quarter investor presentation, Publicis compared its 2022 results to those of Omnicom. Slides showed the French holding company posting $15 billion in 2022 revenue, surpassing Omnicom's $14.3 billion. WPP is the world's largest agency holding company, based on 2022 revenue of $17.8 billion.
“We have never been in the No. 2 position, so it's a big thing for us,” Publicis CEO Arthur Sadoun said in an interview.
For the first quarter of 2023, Publicis’ $3.7 billion in revenue also clocked in higher than Omnicom’s $3.4 billion.
New business activity for the quarter is “definitely higher” than it was last year, but lower than activity in 2021, Sadoun said. Some key wins for the holding company in the quarter include Walgreens media business and creative business for Dunkin' and Steak 'n Shake.
Sadoun credits the company’s growth to its revenue mix, noting that one-third of its business comes from data and technology. He is also bullish on the use of AI, which has been a point of emphasis for the holding company since its 2018 partnership with Microsoft to help build its AI platform Marcel.
“We have not waited for ChatGPT to put AI at the core of our operating system, but also at the service of our clients,” Sadoun said. “But it doesn't stop there. We have done that also in other entities for all of our clients. So when you look at Publicis Sapient, the core of what they're building, which is innovative customer experience that is based on products and solutions, it's AI-based and it's actually helping in project management. … The biggest strength driving Epsilon is our AI model that allows us to have real-time data that we can enrich and activate in the nanosecond.”
Sadoun also noted that the company's creative collective Le Truc is using OpenAI tools to create more personalized content rather than for the ideation of creative. “We're going to make sure that the machine doesn't replace the talent, that the talent gets better by mastering the machine and being more creative quicker and bolder in what we do,” he said.
Read more: How ad agency AI practices are working with clients
Sadoun said he is seeing workers in different regions come back to the office in different ways. He claims people are mostly back at the office in Asia and Europe, but less so in the U.S.
“If you talk about media and creative [staffers], they are back at least three days a week; if you talk about tech and data, it's less because we are talking about engineering where sometimes [staffers] have been hired in cities where they don't work,” he said. “And so everyone is coming back, but not at the same pace. And we are dealing with the situation, geography by geography, and expertise by expertise.”
When asked if it's a requirement for creative and media teams to come in three days a week, Sadoun said it's what he is “seeing and expecting” from the teams, excluding any employee exceptions.
Since 2018, the holding company has reduced its office footprint by 50%; its “Work from Anywhere” program is currently being utilized by 12,000 employees.
Sadoun compared the company's cost-conscious employee management to tech companies that have seen significant layoffs recently. “A big difference between us and, for example, the tech platforms that are laying off at the moment is that we have always been very cautious on costs,” Sadoun said. “We have made sure during the crisis to keep our people thanks to Marcel.”
Sadoun confirmed that on top of the two-week bonuses that were given out to most Publicis employees last year, salaries increased by 8% across the holding company.
Publicis posted 7.1% organic growth and 10% net revenue growth in the first quarter. Epsilon and Publicis Sapient were the key drivers of the holding company’s growth, according to Sadoun. Epsilon saw 10% organic growth while Publicis Sapient's organic net revenue rose 11%.
Organic growth strips out acquisitions, divestitures and the effects of exchange rates.
Regionally, Publicis saw organic growth of 5.8% in the U.S. and 12.3% in Europe. The Middle East and Africa region was up 16.6%, Latin America grew 7.8% and Asia Pacific saw positive growth of less than 1%, including 3.7% organic growth in China specifically.
Earlier this week, Omnicom reported a 5.2% increase in first-quarter organic revenue. It took a $119.2 million charge for real estate repositioning costs.
