Publicis to invest more in data and tech deals after strong 2021

Publicis Groupe turned in a strong 2021, including a 10% jump in organic revenue, and has plans to invest significantly more in data and tech acquisitions in 2022. The holding company is also thanking its employees with bonuses tied to the holding company's recent performance. As the first of the major agency holding companies to report its full-year 2021 results, Publicis appears to have rebounded strongly from the pandemic. Revenue rose 8% to 10,487 million euros last year. Organic revenue, which strips out the impact of acquisitions, divestitures and currency fluctuations, rose 10% from 2020 and was 3% ahead of 2019's pre-pandemic performance. Speaking to Ad Age, Arthur Sadoun, CEO and chairman of Publicis Groupe, described 2021 as a “record year” on every key performance indicator. Publicis Sapient and Epsilon have grown particularly strongly in the U.S., with both growing 15% over two years, he noted. Overall, Publicis Sapient and Epsilon grew by 13.8% and 12.8%, respectively, in 2021. “The shift to data and commerce is coming faster than ever and we have the capabilities to do it,” Sadoun said. Boosting M&A budget Publicis increased its mergers and acquisitions budget to between 400 million and 600 million euros, up from 300 million in 2021, in order to invest in more data and tech. "Our ability to invest in this kind of technology … creates a product that is absolutely central for our clients," said Sadoun. "We’re going to accelerate this in the months to come.” Publicis also announced plans to give bonuses to all employees who have been with the company for at least 24 months. And, for the first time in its history, it will give an additional week’s salary to 35,000 staff who do not have bonus plans in their contracts. This doubles its bonus pool from 2019 levels. Sadoun thanked his employees and announced the bonus scheme in an internal video. New business wins Plenty of new business boosted the results. Publicis Groupe topped new business league tables published by JP Morgan Research for the third time in four years, with wins during the year including media for Walmart, TD Bank and Stellantis, as well as the global media planning and buying for Facebook and Instagram parent Meta. While the company lost out to WPP on the majority of the Coca-Cola marketing business at the end of last year, it won McDonald’s media business in late December, and last month picked up the CVS creative account in the U.S. Speaking of clients, Sadoun said supply chain issues in some categories, such as automotive, were “more modest” than expected, adding that this had contributed to its better than expected performance in the fourth quarter. However, he predicted this issue may linger over the course of the first quarter. Inflation is another issue that will impact salary costs, but Sadoun anticipates that it will be able to mitigate this and is confident that it will be able to invest in talent. War for talent However, the war for talent remains an ongoing issue. Sadoun said he is confident that its virtual employee platform Marcel, as well as the company’s “Work Your World” initiative that allows staff to work anywhere in the world for up to six weeks, is helping to attract the right talent at present. The company made more than 9,000 hires over the past year. “The talent shortage problem for me is more about how do we make sure the next generation wants to work for Publicis?” Sadoun added. “We need people who start thinking about media very differently and we need people who understand commerce.” Publicis recently lost Neil Heymann, its chief creative officer at Le Truc, to Accenture Interactive, while another former employee, Nick Law, has also taken a job there. “I think it’s good to see that a leader in systems integration ... like Accenture is investing in creativity because it validates what we are doing which is making sure that there is convergence between creativity and technology," commented Sadoun on the moves, adding, “On a more personal level, it’s very fun to see that the Australian rugby team is taking over Accenture.” By the numbers Fourth-quarter organic revenue rose 9.3% from the prior year and 5% over 2019 levels, boosted by new business wins including Meta’s global media business, and ahead of analyst expectations for year-over-year growth of around 6% for the quarter. Regionally, North America experienced the strongest growth, with full-year organic revenue up 9.7% from 2020 and by 7% compared to 2019. The U.S. business grew at a faster clip than Canada. Europe’s organic revenue grew 9.6% over 2020 but was still down 4% from 2019. Asia-Pacific reported organic revenue growth of 10.3% versus 2020. The operating margin rate improved to 17.5%, up from 16.0% in 2020. For 2022, Publicis is forecasting 4-5% organic growth, which is ahead of analyst predictions of 3%. Sadoun also predicts that it will maintain its margin despite inflation, putting this down to the performance of Sapient and Epsilon, its new business wins and a “positive” environment for advertising and marketing in general. Publicis also noted its commitment to diversity and environmental issues with Thursday's report. On diversity, it reported that it is closing in on its objective of having 45% of key leadership positions held by women by 2024, with 41% reached by 2021. The company has also instituted an annual "pausing for action" day for diversity, and has plans to mark Juneteenth with events for its US employees this year. The company is certified by Science Based Targets Initiative, with a commitment to becoming carbon neutral by 2030, shifting to 100% renewable energy by direct source by 2030 and reducing its carbon emissions by 50%.

Publicis to invest more in data and tech deals after strong 2021

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