Publicis Groupe: 2007 Year in Review

By Published on .

Publicis Groupe, the world's fourth-largest agency company, pulled in 2007 revenue of $6.38 billion, nipping at the heels of No. 3 Interpublic Group ($6.55 billion). Publicis generated 39% of 2007 revenue from advertising, 25% from media and 36% from "marketing services and digital." Publicis Groupe said digital revenue overall accounted for 15% of the company's revenue, which gives Publicis the highest digital concentration among the Big 4 agency firms.

Publicis employed 43,808 at year-end 2007. That was up from 39,939 people at year-end 2006, not including the 2,050 staffers who joined Publicis in January 2007 in the acquisition of Digitas. (Publicis plus Digitas had 41,989 staffers at year-end 2006.)


Publicis delisted its U.S. stock listing (for shares in the form of American Depositary Receipts) from NYSE Euronext's New York Stock Exchange effective Sept. 27, 2007, and stopped filing financial reports with the Securities and Exchange Commission.

At the time, Publicis noted that ADR trading volume had accounted for only about 1% of its total trading volume over the previous year. It expected the move to save money by eliminating the need to do public filings in the U.S. Publicis had traded in the U.S. since 2000.

Publicis' primary listing remains on NYSE Euronext's Euronext Paris. (NYSE Group bought Euronext in April 2007, forming NYSE Euronext.)

Publicis began U.S. trading Sept. 12, 2000, at $37 a share, coinciding with the acquisition of Saatchi & Saatchi. The stock's low ($14.75) came Oct. 2, 2001, shortly after 9/11. Its high point as a U.S.-listed stock came March 21, 2007 ($49.40). The ADRs closed trading Sept. 27, 2007, at $40.70.

French rival Havas withdrew its U.S. stock listing in 2006.

Publicis and Havas no longer are subject to the Sarbanes-Oxley Act, a 2002 law that prompted holding companies to limit disclosures about performance of agencies.

Publicis in November 2007 trumpeted "a new, highly flexible agency model at Leo Burnett, to be rolled out starting in the U.S. in the first quarter of 2008." The company said Burnett "is shifting to a collaborative, open architecture organization delivering right-size, right-time solutions to clients." (Clients presumably prefer that to wrong-size, wrong-time solutions.)

The new model draws resources from three networks --Burnett, Starcom MediaVest Group, Digitas-- "to the mutual benefit of each network," the company said. "This entirely new model will permit fluid collaboration across these agencies based on client needs and opportunities. Leo Burnett, SMG and Digitas all remain independent; on shared clients, some solutions could be led by Leo Burnett, others by SMG, others by Digitas," according to the company.

The new scheme includes a central services operation that Publicis dubbed "The Insight Factory," drawing on tools and staff from Burnett and marketing-services arm Arc Worldwide (creative, research, market segmentation, and planning, production and database management), Starcom MediaVest (media, some digital production) and Digitas (creative, brand navigation, digital insights, dashboard management, digital production, technology development).

Publicis in August 2007 shifted the org chart for slumping Minneapolis-based Fallon Worldwide, aligning the ad agency with the Saatchi & Saatchi agency under an umbrella unit called SSF Group. The agencies continue to operate as separate brands, but they are led by Saatchi Worldwide CEO Kevin Roberts. Fallon Worldwide Chairman Pat Fallon moved to chairman emeritus at Fallon Worldwide.

Publicis holdings consist of:
• Advertising: Publicis, Saatchi & Saatchi and Leo Burnett networks. Other ad agencies including Fallon, Kaplan Thaler Group and French agency Marcel. Publicis also owns 49% of Bartle Bogle Hegarty, a U.K.-based agency.

• Specialized agencies and marketing services (SAMS): public relations (including Manning Selvage & Lee, Publicis Consultants Worldwide, Freud Communications and JKL); healthcare (Publicis Healthcare Communications Group); direct marketing, customer relationship management, promotion, digital (including Digitas, Burnett network's Arc Worldwide, Publicis Worldwide network's Publicis Modem & Dialog, Saatchi network's Saatchi & Saatchi X); multicultural (Hispanic shops Lapiz Hispanic Marketing and 49%-owned Bromley Communications, urban shop Vigilante, 49%-owned African-American agency Burrell Communications); events marketing (Publicis Events Worldwide, PublicisLive); and design.

• Media services: Publicis Groupe Media, consisting of Starcom MediaVest Group (including SMG Search), ZenithOptimedia and new-media venture Denuo. Publicis also operates, mainly in France, a media sales unit, Medias & Regies Europe, for advertising in print, movie theaters and outdoor and on radio.


Publicis posted 2007 revenue of $6.38 billion, up 8.7% from $5.87 billion in 2006. The 2006 figure, calculated by Ad Age, is a pro forma figure that includes $390 million in 2006 revenue generated by Digitas Inc., which Publicis bought in January 2007. The pro forma calculation makes it easier to see how combined Publicis/Digitas revenue compared in 2007 vs. 2006.

Ad Age converted Publicis revenue and net income figures from euros using average exchange rates for each year.

Publicis said its 2007 acquisitions, Digitas by far being the largest, contributed 2007 revenue of $432 million, or about 6.8% of the company's total 2007 revenue.

Publicis' reported revenue in euros rose 6.5%. Factoring out currency changes, Publicis said revenue rose 11.1%.

Publicis earned 2007 net income of $618 million, vs. $554 million in 2006. Publicis' reported net income in euros rose 2%.
The company's reported operating margin in 2007 was 16.7%, up from 16.3% in 2006.

Publicis reported 2007 organic growth of 3.1%, below expectations. Publicis blamed that mainly on "difficulties of the pharmaceutical industry," hurting performance of its Publicis Selling Solutions healthcare operation. Excluding healthcare, Publicis Groupe said, the company had 2007 organic growth of 4.3%.

In its February 2008 discussion of full-year results, Publicis said Saatchi & Saatchi had a record 2007, benefiting from new accounts (J.C. Penney, Wendy's, SABMiller). The company said its Publicis Worldwide network had "a marked improvement" in second-half 2007. "Only Leo Burnett, despite its excellent growth outside the United States, continued to suffer from the loss of important accounts in 2006 (U.S. Army and Cadillac)," Publicis said.

The company said Publicis Groupe Media "achieved exceptional growth in the three key regions of the United States, Europe and Asia."

Japanese ad firm Dentsu owns about 15% of Publicis under a strategic relationship forged when Publicis bought Dentsu-backed Bcom3 Group (the then-parent of Leo Burnett and Starcom MediaVest) in 2002.

Publicis as of April 2008 said it owned 1.13% of Interpublic. In its April 2007 20-F, Publicis classified those shares as "available-for-sale assets." Publicis received the shares in 2001 when Interpublic bought True North Communications, in which Publicis owned a 9% stake as the result of a one-time, and long-aborted, alliance with Foote Cone & Belding.


Publicis in 2007 was the No. 3 holding company in new business as measured by net equivalent revenue (anticipated annualized revenue from new business), according to the tally of Bear, Stearns & Co. analyst Alexia Quadrani.

Publicis in 2007 had $166 million in net equivalent revenue from new business, just behind WPP Group ($170 million), Ms. Quadrani reported. Ms. Quadrani's tally adjusts billings of creative wins and media wins to arrive at an estimated net equivalent revenue associated with that business.

Bear Stearns aggregates account shifts reported in media, but it doesn't claim its new-business tally is all-inclusive, particularly in marketing services and outside the U.S. and U.K.

Publicis scored a major win, and Interpublic Group suffered a big loss, in June 2007 when General Motors disclosed it was consolidating the Buick-Pontiac-GMC account at Publicis' Leo Burnett effective Oct. 1, 2007, without a review. Burnett already handled Pontiac.

Interpublic's McCann had handled Buick since 1958; sibling Lowe got the GMC account from McCann in the late '90s. Burnett's Buick and GMC wins came a year after GM in 2006 moved Cadillac from Burnett's Detroit-area office to independent Modernista.

The company in February 2008 said the total value (billings) of new accounts won in 2007 was $5 billion.


Publicis' top five and ten clients accounted for about 25% and 35% of 2006 revenue, respectively. Its largest client, Procter & Gamble Co., supplied about 10% of revenue in both 2006 and 2005. The holding company in February 2007 said its clients included 38 of the Fortune Global 500's top 100.

As of early 2007, Publicis said its largest clients by network were, alphabetically:

• Publicis Worldwide: Cadbury-Schweppes; Coca-Cola Co.; Hewlett-Packard; L'Oreal; Nestle; Pernod Ricard; P&G; Renault; Sanofi-Aventis; Siemens; Telefonica; UBS; Whirlpool Corp.; Zurich Financial.
• Leo Burnett Worldwide: Coca-Cola; Diageo;Walt Disney Co.; Fiat; General Motors; H.J. Heinz Co.; Kellogg Co.; McDonald's Corp.; Philip Morris; P&G; Samsung; Samsung; Wm.Wrigley Jr. Co.
• Saatchi & Saatchi: Ameriprise; Avaya; Bel; Bristol-Myers Squibb/Mead Johnson; Carlsberg; Deutsche Telekom/T-Mobile; Diageo/Guinness; Emirates Airline; General Mills; JC Penney; Novartis; P&G; Sony Ericsson; Toyota/Lexus; Visa Europe; Wal- Mart.
• Starcom MediaVest Group: Coca-Cola; Disney; GM; Kellogg; Kraft; Masterfoods; Miller Brewing Co.; Philip Morris; P&G; Sara Lee.
• ZenithOptimedia: 20th Century Fox; British Airways; Hewlett-Packard; JP Morgan Chase; Lloyds TSB; L'Oreal; LVMH; Nestle; Puma; Richemont Group; Sanofi-Aventis; Toyota/Lexus; Verizon; Whirlpool; Zurich Financial.

As of early 2007, Publicis said clients of newly acquired Digitas Inc. included: American Express Co., AstraZeneca, AARP, Bristol-Myers Squibb, Cingular (now AT&T), Delta Air Lines, GM, Heineken, Hewlett- Packard, Home Depot, IBM Corp., InterContinental Hotels Group, Kraft Foods, Lloyds TSB, P&G, Pfizer, Sanofi-Aventis, Time Warner, Whirlpool, Wyeth and Wells Fargo.


Publicis in 2007 generated 43% of revenue from North America; 39% from Europe; and 18% from other regions.

Stated organic growth in 2007 by region: North America, 1.7%; Europe, 1.7%; Asia-Pacific, 8.6%; Latin America, 8.9%; Middle East/Africa, 11.1%.

The company said 21.3% of 2007 revenue came from emerging markets: 10.7% from Asia-Pacific, 5.1% from Latin America, 3% from Central Europe including Russia; and 2.5% from Middle East/Africa.

Publicis said revenue growth in India and Russia exceeded 20% in 2007; growth in China reached 15%.

Regarding operations in China, Publicis said it employed 3,300 people at 39 agencies as of Sept. 30, 2007.

Publicis, as noted, said digital accounted for 15% of 2007 worldwide revenue. Emerging markets plus digital totaled 35%; Publicis in February 2008 said its 2010 target is to generate 50% of revenue from digital and emerging markets.


Publicis in December 2006 struck a deal, completed Jan. 31, 2007, to buy marketing services company Digitas Inc. for $1.3 billion.

Digitas reported the deal would give it greater media-buying scale with giant online-media sellers including Google and Yahoo. Even Publicis rivals had positive comments on the Digitas acquisition.

WPP Group Chief Executive Martin Sorrell in February 2007 told analysts: "For what it's worth, I think Publicis' acquisition of Digitas was smart, but it was expensive." (Mr. Sorrell went on to do an expensive deal of his own, buying 24/7 Real Media.)

Interpublic's CFO, Frank Mergenthaler, told analysts in March 2007: "I think that the Digitas acquisition for Publicis was a good move for a variety of reasons." Digitas generated 2006 revenue of $390 million, according to a February 2007 Publicis disclosure.

As noted, Publicis said its 2007 acquisitions, Digitas by far being the largest, contributed 2007 revenue of $432 million, or about 6.8% of the company's total revenue.

Publicis said in January 2007 that it was seeking other internet-related acquisitions in China, India and Europe that would make Publicis a global leader in digital marketing. Toward that end, the company moved quickly to expand Digitas as a global digital network.

Digitas in May 2007 absorbed most of the U.K. operations of sibling Modem, giving Digitas a London office. Digitas in June 2007 named Alan Rutherford as CEO of Digitas Global, a division formed to grow the agency's worldwide business. Rutherford, who officially came aboard in September 2007, joined Digitas from Unilever, where he was VP-global media. Rutherford, based in London, reports to Digitas Chairman-CEO David Kenny.

Publicis in June 2007 struck a deal to buy 49.3% of what it called France's leading interactive marketing agency, Business Interactif. Publicis bought the rest of that agency later in 2007. The shop became Digitas' French operation. Business Interactif reported actual 2006 revenue of $36.1 million, so it will be a significant revenue contributor to Digitas going forward; Publicis in calendar 2007, though, only could report a small share of Business Interactif's full-year revenue as Publicis did not gain majority control until late in the year.

In July 2007, Publicis bought Communication Central Group, which it described as the largest independent interactive marketing agency in China. Price wasn't disclosed. The agency employed 200 people in Shanghai, Hong Kong, Beijing and Shenzhen. Publicis rebranded the agency as Digitas Greater China, expanding the Digitas brand into Asia. The agency's clients included Philips, Unilever, Bank of China (Hong Kong) and Intel. The shop's founder and CEO, Neil Runcieman, became president-managing director of Digitas Greater China.

Publicis in March 2008 rebranded Solutions Integrated Marketing Services, an India and Singapore-based marketing services unit, as Solutions Digitas. Its services include direct, digital, promotions and shopper marketing. Solutions Integrated Marketing Services was founded in 1995; Publicis bought a 60% stake in 2006.

The Digitas network's Medical Broadcasting Co. agency in April 2007 was rebranded Digitas Health.

Publicis aligned Digitas Inc.'s Modem Media unit as the digital arm of the Publicis Worldwide network. The company then combined Publicis Modem with marketing-services venture Publicis Dialog, creating Publicis Worldwide's Publicis Modem & Dialog.

Publicis unwound other ventures: Publicis and Dentsu, both 45% owners of iSe Hospitality AG, formed to manage and organize hospitality logistics for the 2006 FIFA World Cup, began dismantling the operation in January 2007 for lack of future contracts.


Other Publicis 2007 acquisitions:
• Pharmagistics: Bought the Somerset, N.J.-based healthcare direct-marketing agency in March 2007. The unit was placed in the Publicis Healthcare Communications Group as part of Publicis Selling Solutions Group.
• Yong Yang: In April 2007, bought 51% stake in Chinese marketing-services firm specializing in field force logistics and retail and promotional marketing with 29 offices across the country. Yong Yang now is part of Arc, Burnett's marketing-services operation.
• McGinn Group: In April 2007, bought U.S. corporate communications outfit, which took the new name McGinn MS&L, making it part of the Manning Selvage & Lee network.
• Hanmer & Partners: In October 2007, bought majority stake in PR agency in India with about 350 employees; renamed Hanmer MS&L, also making it part of the Manning Selvage & Lee network.
• Muraglia, Calzolari & Associati: In July 2007, bought social media agency in Italy; now operates as M,C&A MediaVest.
• Capital Advertising: In September 2007, bought majority stake in ad agency in India; now aligned with Publicis Worldwide network.
• SAS: In September 2007, bought London-based corporate, design and visual communications agency; it became part of Publicis Consultants' U.K. network.
• Wcube: In September 2007, bought internet communications agency in France; now rebranded as Publicis Modem France.
• Phonevalley: In September 2007, bought mobile-marketing venture based in Paris with operations in France, the U.K., Spain, Germany and Italy; founded in 2000.
• Healthware SpA: In December 2007, bought digital health communications venture in Italy. Healthware specializes in the healthcare business with a focus on e-health and information technology. Founded in Italy in 1996, Healthware has an R&D and production center in Salerno, Italy, as well as offices in Milan, Naples and Rome. Clients include Astra-Zeneca, Novartis, Sanofi-Aventis and Wyeth; now part of Publicis Healthcare Communications Group.
• Multimedia Healthcare Communications: In December 2007, bought healthcare PR agency in Italy; now part of Publicis Healthcare Communications Group.

Acquired in 2008:
• Act Now: Bought environmental marketing consultancy in January 2008. Act Now was founded in 1998. The consultancy assists companies and their employees to practice sustainability while achieving performance goals. Effective with the acquisition, Publicis rebranded Act Now as part of the new Saatchi & Saatchi S, an agency positioned to help marketers on issues involving environmental and economic sustainability. The unit reports to promotion agency Saatchi & Saatchi X.
• La Vie est Belle: In February 2008, Publicis bought the Paris-based communications agency. The shop merged with the agency Paname and became part of Publicis France.

Publicis in April 2007 formed a joint venture with Richard Attias for a global events business, PublicisLive. Mr. Attias took a "significant minority interest" in the Geneva-based venture and moved from his previous job managing the company's Publicis Events Worldwide unit. A year later, in April 2008, Publicis said Mr. Attias stepped down "to pursue entrepreneurial opportunities outside the Groupe." John Rossant succeeded him, moving to executive chairman of PublicisLive from Publicis Groupe's VP-communications and public affairs.

Publicis in June 2007 and French software firm Dassault Systemes signed a memorandum of understanding to create 3dswym , a global joint venture focused on web-based 3D. The Paris-based joint venture company is 51% owned by Publicis Groupe and 49% by Dassault. It is developing a web-based platform allowing marketers to connect directly with consumers to jointly create and adapt consumer goods and retail environments using advanced web and 3D tools. SWYM is the acronym for "see what you mean."

A partnership of Publicis Groupe, Droga5 (founded by former Publicis Worldwide Creative Director David Droga) and Los Angeles production company Smuggler in 2007 launched HoneyShed, an online entertainment and shopping channel.
Most Popular
In this article: