Publicis Posts 10.7% Revenue Jump in First Quarter

Holding Company Will Focus on Growing Digital and Emerging Markets, Especially China

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Publicis Groupe reported a 10.7% jump in first-quarter revenue to $1.758 billion, with organic growth of 6.5%, compared to the 5.2% growth posted by Omnicom Group last week. Publicis is reaping the benefits of strong emerging markets and investments in digital operations -- and is placing its bets for future growth on both areas, particularly China, where the group aims to double revenue within three years.

At a presentation in Paris this morning, Publicis Chairman-CEO Maurice Levy said the group's U.S. operation is a model for the rest of the world. "The U.S. has the strongest position of all the group in every area from innovation to volume and partnerships," he said. The U.S., where 42.1% of revenue comes from digital business, accounts for 49% of total Publicis Groupe revenue.

On digital's potential, Mr. Levy said, "We can go deeper and farther into aspects of digital that are not yet handled by agencies. There is a new frontier objective." Digital business accounted for 28.2% of group revenue, up from 27% in the first quarter of 2010, while advertising made up 32% of revenue, and media 19%.

Jean-Yves Naouri, Publicis' chief operating officer and Mr. Levy's heir apparent, said at the presentation, "China is not only the manufacturer of the world, it is now a huge center of consumption and presents a massive opportunity to increase mass consumption. There is a strong demand for durable goods -- the car market is expected to double by 2020." He said the group will focus on a "significant acceleration" of acquisitions in China this year.

Other areas driving growth include Europe -- particularly France -- and strong performances in some of the faster-growing economies.

North America posted 8.1% growth, including 8.4% in the U.S. In Latin America, growth was 8.7%, boosted by 24.8% in Argentina, 20.1% in Brazil and 15.7% in Venezuela, but dragged down by negative results in Colombia and Mexico.

Growth in Asia reached just 1.5%, because the 8.2% surge in revenue for China was offset by negative numbers in Japan, where Publicis is very small, Australia, Thailand and Korea.

In Europe, the 6.2% growth was uneven, with France, Germany, Russia and Central Europe performing well, but the U.K. posted only a 2.4% increase in revenue and negative growth in Spain. The turmoil throughout the first quarter in Northern Africa and the Middle East region kept revenue growth there down to 0.5%, except in the United Arab Emirates, up 7%.

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