Publicis Groupe's digital revenues were up 9% in the first nine
months of the year, and now account for 41.63% of the total, up
from 37.6% in 2013. However, Mr. Lévy made clear the extent
of the problems with digital network Razorfish, which led to last month's decision
to merge it with Rosetta to form Razorfish Global, under the
leadership of Rosetta CEO Tom Adamski.
"It was a perfect storm at Razorfish," Mr. Lévy said. He
cited the freezing of the Motorola account and Blackberry's move away from consumer
marketing, as well as the end of some important one-off contracts.
He said that Pete Stein, who was made Razorfish global CEO in
July 2013, was "an excellent guy but probably the casting was
not appropriate for those days." (Mr. Stein is leaving at the end of the year).
As an example of the impact of the failed merger, Mr.
Lévy said that the problems with Razorfish had been
identified at the start of the year, but that the company had
decided not to act because they had anticipated creating a bigger
digital entity after the Omnicom deal went through. He also said
that he had delayed the recent
management changes because of the pending merger.
Earlier this week, Omnicom reported third-quarter revenue growth
of 7.4%, while Interpublic Group of Cos. was up by 8.3%.
One window of optimism was the success of Publicis Groupe
agencies in the recent Samsung global
review, where its networks won or retained duties in the media,
digital, creative and network pitches.
For the first nine months of the year, organic growth at
Publicis Groupe was 1.5%. Mr. Lévy said, "We are not pleased
with the numbers but it is the reality and we have to face it."
Publicis blamed North America's meager 1.5% growth blamed on the
underperformance of Razorfish, while Europe's -0.5% growth was
attributed to weak economies of Southern Europe, as well as to
problems in the U.K., where revenues were down 2.6%, due to the
effects of a temporary leadership gap at Publicis Worldwide.
Emerging markets were also weak, with just 0.6% growth. Brazil
was down -0.6% and Greater China down -1.6%, but India was up
A note from analyst Liberum said, "Our concern is not so much
the short-term performance, more that [Publicis Groupe] may have
more deep-seated problems that are impacting its relative
performance against the other agency groups."
Mr. Lévy said, "The picture is bleak," and was unable to
offer reassurance about the fourth quarter due to "uncertainties"
in emerging markets and the "challenging environment" in
At the start of the year, Publicis Groupe forecast 4% growth for
2014, but this has now dropped to 1.5%, which Mr. Lévy
admitted was, "quite painful for me to live with. The only thing I
can tell you is that we are working extremely hard to deliver. 2014
will not be a landmark in history as one of our greatest years, to
put it mildly," he said. "We should put it behind us quickly and
move fast into 2015."
On Nov. 7, Publicis plans to hold an investor day to talk in
greater detail about its strategic plans for improving the