(This analysis written as part of Ad Age's Agency Report 2009.)
Publicis Groupe, the world's fourth-largest agency company, pulled in 2008 revenue of $6.900 billion, just $63 million behind No. 3 Interpublic Group ($6.963 billion).
Publicis employed 44,727 people at year-end 2008, up from 43,808 at year-end 2007. The company employed 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.)
Paris-based Publicis Groupe operates in more than 200 cities in 104 countries.
Publicis Groupe holdings include:
Advertising: Publicis Groupe provides traditional advertising services primarily through the Publicis Worldwide, Saatchi & Saatchi and Leo Burnett networks. The Publicis Groupe network also includes smaller units such as Fallon (which, with Saatchi & Saatchi, is part of an umbrella group dubbed SSF Group); Bartle Bogle Hegarty (a U.K.-based ad agency 49% owned by Publicis Groupe); Marcel; Kaplan Thaler Group; and Beacon (a Japanese ad agency 66% owned by Publicis Groupe).
Specialized agencies and marketing services (SAMS): Specialized communications services such as public relations, corporate and financial communications, healthcare communications, direct marketing, sales promotion, customer relationship management, interactive communications, events communications and design.
SAMS operates both through standalone, independent agencies within Publicis Groupe and through units that are part of Publicis Groupe's traditional advertising networks.
SAMS business units include:
• Direct marketing, customer relationship management, sales promotion, interactive communications: Digitas, Arc Worldwide, Publicis Modem, Saatchi & Saatchi X, Moxie and Prodigious Worldwide; and 2008 acquisitions: Performics, a Chicago-based search-marketing agency; Portfolio, a digital agency in South Korea; EmporioAsia, a digital agency in China; W&K, an ad agency in China; and Tribal, a digital agency in Brazil.
• Healthcare communications: Publicis Healthcare Communications Group (Saatchi & Saatchi Healthcare, Pharmagistics, Groupe Boz, Publicis Selling Solutions).
• Corporate and financial communications, public relations, human resources communications, design: Publicis Public Relations and Communications Group (Publicis Consultants, Manning Selvage & Lee, Freud Communications [56% owned] and Kekst & Co. [acquired in 2008]).
• Multicultural and ethnic communications: Bromley Communications (49% owned Hispanic agency), Burrell Communications (49% owned African-American agency), Conill (Hispanic), Vigilante (multicultural) and Lapiz (Hispanic).
• Events communications: Publicis Live, Publicis Events Worldwide and PBJS (Seattle-based venture acquired in 2008).
• Production, prepress: Mundocom, Wam, MarketForward.
Media services: Publicis offers media planning, media buying and consulting services through Publicis Groupe Media entities: Starcom MediaVest Group, ZenithOptimedia and new-media consultancy Denuo. The company also owns Medias & Regies Europe, a venture based in France that sells advertising space. (Medias & Regies Europe operates in the United States through a partnership with Simon Malls and OnSpot Digital, a TV channel and network of plasma screens located in shopping malls.)
Publicis Groupe in June 2008 launched VivaKi as an umbrella organization, or "strategic initiative," encompassing media agencies Starcom MediaVest Group and ZenithOptimedia; digital agency Digitas; new-media venture Denuo; and the VivaKi Nerve Center, which includes search-marketing agency Performics and mobile-marketing venture Phonevalley.
Publicis described VivaKi Nerve Center as "a center for researching and developing new marketing services, tools, partnerships and platforms for the VivaKi agencies to bring to their clients and prospects."
Publicis Groupe stock began trading June 9, 1970.
Publicis' primary stock listing is on NYSE Euronext's Euronext Paris. (NYSE Group bought Euronext in April 2007, forming NYSE Euronext.)
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 that 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 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 holding companies cited as a reason to limit disclosures about performance of agencies.
Publicis Groupe's major acquisitions include Saatchi & Saatchi in 2000; Bcom3 Group (Leo Burnett, Starcom MediaVest) in 2002; and Digitas in 2007.
Publicis Groupe had 2008 worldwide revenue of $6.9 billion, up 7.9% from 2007 based on dollars.
Stated revenue in euros rose 0.7% in 2008. Stated revenue in euros, factoring out currency changes, rose 6.0% (2008 revenue at the 2007 exchange rate).
Publicis pocketed net income of about $658 million in 2008 vs. about $620 million in 2007 based on dollars. In its home currency, Publicis' reported net income was 447 million euros in 2008 vs. 452 million euros in 2007.
The company's reported operating margin was 16.7% in 2008; 16.7% in 2007; and 16.3% in 2006.
Publicis reported 2008 organic growth of 3.8%, up from 3.1% in 2007.
Publicis said in its annual reference document (a French regulatory filing) for the year ended December 2008: "With the intensification of the problems in the financial sector during the last quarter of 2008, the economic crisis changed dimensions. The weak growth observed up until then was suddenly transformed into a worldwide recession.... In spite of this instability and a climate of recession, Publicis Groupe experienced good results on operations for 2008. Organic growth of 3.8% is a good performance and illustrates the teams' dynamism and talent as well as the merits of its strategy amidst a crisis context where the worldwide growth was at the most 2.5% in 2008."
More from the year-end 2008 reference document: "The growth in digital activities continued to contribute to the group's positive worldwide performance, in particular in the United States and in Western Europe. In 2008, digital activities represented 19% of total revenue in 2008 compared to 15% in 2007.
The year-end 2008 filing continued: "The revenues from countries with very strong growth in emerging economies, including countries with strong growth rates, represented 22.9% of the group's total revenue in 2008 compared to 21.3% for 2007, confirming the group's goal to have 25% of its revenues originating from these regions in 2010. Emerging markets refer mainly to Central Europe, Russia, Asia Pacific, Latin America, and Africa and the Middle East."
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. The agreement is set to expire July 12, 2012, unless Publicis and Dentsu agree to renew it for another 10 years.
Publicis as of December 2008 owned 1.02% of Interpublic Group, according to the Publicis reference document for year ended December 2008. That filing said: "This investment is not consolidated and the shares are classified as 'available-for-sale.'" The percentage is down from December 2007, when Publicis reported owning 1.13% of Interpublic.
In its final 20-F annual filing with the SEC in April 2007, Publicis also classified its Interpublic 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 (now Interpublic's DraftFCB).
Publicis Groupe in 2008 tied with Interpublic Group as the No. 4 holding company in new business as measured by net equivalent revenue (anticipated annualized revenue from new business), according to the tally of J.P. Morgan analyst Alexia Quadrani.
Publicis and Interpublic in 2008 each had a $31 million loss in net equivalent revenue from new business, Ms. Quadrani calculated.
By Ms. Quadrani's tally, Publicis' gross billings wins exceeded its gross billings losses in 2008. To arrive at net equivalent revenue, Ms. Quadrani weighted gains and losses based on whether the billings in question were creative or media. Based on that weighting, Publicis showed a loss in net equivalent revenue. J.P. Morgan aggregates account shifts noted in press reports, but it doesn't claim its new-business tally to be all-inclusive, particularly in marketing services and outside the U.S. and U.K.
Publicis Groupe said in its year-end-2008 reference document: "2008 was once again a good year for net new business wins which amounted to $5 billion. This figure is the result of estimated media marketing budgets based on annual business (net of losses) from new and existing clients, and does not come from financial reporting. This success was a result of the richness of Publicis Groupe's product offering and its holistic character; it also originated from the innovation provided by the development of digital services in all activity sectors and from the group's capability of meeting its customers' constraints and emerging needs."
The company in February 2008 said the total value (billings) of new accounts won in 2007 was $5 billion.
Publicis Groupe said its 20 largest clients accounted for about 43% of revenue in 2008. The company said in the year-end-2008 reference document: "On average, its retention rate of the 10 biggest clients is 45 years."
Chairman-CEO Maurice Levy in early April 2009 told Ad Age that Procter & Gamble Co. was Publicis Groupe's largest client, representing about 8% of worldwide revenue. (In previous U.S. regulatory filings, Publicis Groupe disclosed that its largest client, P&G, supplied about 10% of worldwide revenue in both 2006 and 2005.)
In the April 2009 interview, Mr. Levy said General Motors Corp. was the company's third-largest client, representing "slightly over 3%" of worldwide revenue for 2008 and 2009. He declined to disclose the No. 2 client.
"Slightly over 3%" means that Publicis in 2008 generated slightly more than $207 million from GM. Publicis assignments include media planning and buying; digital work; and Buick-Pontiac-GMC. The GM/Publicis lineage dates to 1934, when GM's now-discontinued Oldsmobile division hired D.P. Brother & Co., which Leo Burnett acquired in 1967. Mr. Levy stressed to Ad Age in April 2009: "We feel that we have an obligation to best serve a client who has been loyal to us for so many years. They are facing now some serious issues, and we believe that we owe them loyalty and we owe them to best serve them during this troubled period."
Mr. Levy's April 2009 comments continued: "Obviously at the same time we have to protect the legitimate interest of our group, our employees and our stockholders, and we are in conversations with GM [for] many months, and we have discussed all the values, options and possibilities. I believe that we owe them loyalty and commitment and maybe more in difficult times than in good times.... We are not only here when days are good but also when days are bad."
In the April 2009 interview, Mr. Levy said Publicis had agreed to reduce its GM fees. "It started last fall ," when Publicis cut its fees, "and we have done something more at the beginning of this year " to reduce fees, he said. He declined to go into specifics.
Standard & Poor's, the credit-rating firm, in late March 2009 reduced its Publicis outlook to negative from stable, citing the weak economy and ad market as well as Publicis' GM ties. S&P said: "Publicis is significantly exposed to General Motors Corp., particularly through its media-buying arm. If GM files for Chapter 11, Publicis could, in our view, face significant losses on its outstanding receivables from GM, and there are significant uncertainties about its exposure to related outstanding liabilities toward advertising networks for media buying it has done on GM's behalf."
Regarding S&P's GM assertions, Mr. Levy said in early April 2009: "I believe that the comment from Standard & Poor's is exaggerated."
Publicis Groupe identified its largest clients in 2008 as:
• Publicis: Citigroup, Coca-Cola, Deutsche Telekom/T-Mobile, Hewlett-Packard, LG Electronics, L'Oreal, Nestle, Orange, Pernod Ricard, Procter & Gamble, Qantas, Renault, Sanofi-Aventis, Siemens, Telefonica, Toyota, UBS, Whirlpool, Zurich Financial.
• Leo Burnett: Allstate, Coca-Cola, Diageo, Disney, Fiat, Dubai-Holding, General Motors, Kellogg's, McDonald's, Nintendo, Philip Morris, Procter & Gamble, RIM/Blackberry, SABMiller, Samsung, Visa, Whirlpool.
• Saatchi & Saatchi: Claro, Deutsche Telekom/T-Mobile, General Mills, InBev, J.C. Penney, Nestle, New Zealand Telecom, Novartis, Orange, Procter & Gamble, Sony, Toyota/Lexus, Visa Europe, Wal-Mart.
• Starcom MediaVest Group: Allstate, Bank of America, Coca-Cola, Disney, General Motors, Heineken, Kellogg's, Kraft, Mars, SAB Miller, Oracle, Procter & Gamble, RIM/Blackberry, Samsung, Wal-Mart.
• ZenithOptimedia: Abbott Laboratories, AstraZeneca, Comcast, 20th Century Fox, Deutsche Telekom/T-Mobile, General Mills, Hewlett-Packard, JPMorgan Chase, L'Oreal, LVMH, Mars, Nestle, PPR-Puma, Procter & Gamble, Richemont Group, Sanofi-Aventis, Schering-Plough, Telefonica, Toyota/Lexus, Verizon, Zurich Financial.
• Publicis Healthcare Communication Group: Sanofi-Aventis, AstraZeneca, Schering Plough, Sepracor, Bristol-Myers, Novartis, Takeda Pharmaceutical Co.
DISCIPLINES AND REGIONS
Publicis Groupe generated 38% of 2008 worldwide revenue from advertising, 26% from media and 36% from specialized agencies and marketing services.
Publicis said digital and interactive communication revenue accounted for 19% of the company's revenue in 2008, up from 15% in 2007. Publicis' stated goal is "to generate 25% of its revenues from digital, interactive and mobile communications by 2010."
Publicis in 2008 generated about 42.7% of revenue from North America; 38.4% from Europe; 11% from Asia Pacific; 5.1% from Latin America; and 2.9% from Africa and the Middle East. (Percentages are rounded.)
Publicis Groupe said its main 2008 acquisitions were:
• Kekst & Co.: Publicis bought the New York-based PR agency in July 2008.
• Performics: It bought the Chicago-based search-marketing agency from Google in September 2008.
Publicis Groupe said in its year-end-2008 reference document: "Taken as a whole, the acquisition cost (excluding cash and cash equivalents acquired) of fully consolidated entities acquired during the year totaled 177 million euros" -$260 million- "of which 127 million euros" -$187 million- "was paid during the year."
Publicis in 2008 also made earn-out and buyout payments of 45 million euros ($66 million) on previous deals.
Publicis Groupe deals since January 2008 included:
• Act Now: Sustainable development consultancy acquired in January 2008; rebranded as Saatchi & Saatchi S.
• La Vie est Belle: Paris communications agency bought in February 2008; merged with the agency Paname and became part of Publicis France.
• EmporioAsia: Digital agency in China, bought in May 2008; rebranded as EmporioAsia Leo Burnett. Founded in 1999; staff of 35 people at time of acquisition.
• Saatchi & Saatchi Energy Source Integrated Interactive Solutions: Joint venture in China in June 2008 between Saatchi & Saatchi and Energy Source, a Chinese interactive operation. The joint venture was to focus on integrated interactive solutions, customer relationship management and online PR.
• Kekst & Co.: PR agency bought in July 2008. Kekst was to operate autonomously under its name as a member of Publicis Groupe's SAMS segment. Kekst had about 70 employees at the time of acquisition. It opened in 1970.
• Portfolio: South Korean digital marketing agency, bought in July 2008; became part of Publicis Modem and was rebranded Publicis Modem Korea. Founded in 1998.
• PBJS: Digital marketing and strategic communications company; based in Seattle; bought in September 2008. Publicis Groupe said PBJS's largest client was Microsoft Corp. Founded in 2003; employed 26 professionals at time of acquisition.
• Performics: Search marketing agency bought in September 2008 from Google (which had acquired Performics when Google bought DoubleClick). At the time of acquisition, Publicis said Performics had nearly 130 clients and 200 search marketing experts operating from offices in Chicago, San Francisco, New York, London, Hamburg, Sydney, Singapore and Beijing.
• Tribal: Digital agency in Brazil, acquired in November 2008; Tribal kept its brand name, and the agency was aligned with the Digitas network. Tribal opened in 1998.
• W&K Communications: Full-service ad agency in China, acquired in December 2008 and immediately rebranded Leo Burnett W&K Beijing Advertising Co. as part of the Leo Burnett Greater China operations. Founded in 2004; employed nearly 100 communications at time of the acquisition.
• Nemos: Digital agency based in Zurich; bought in April 2009 and folded into Publicis Modem network. Founded in 2002; employed 10 professionals at the time of acquisition.
Publicis in March 2008 rebranded Solutions Integrated Marketing Services, an India- and Singapore-based marketing services unit, as Solutions Digitas. Its services included direct, digital, promotions and shopper marketing. Solutions Integrated Marketing Services was founded in 1995; Publicis bought a 60% stake in 2006.
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. Honeyshed shut down in February 2009.