Earnings: Publicis Groupe’s Q1 Revenue Drops Despite Digital Growth
Categories: PaidContent
Written By: Patrick Smith
How badly are the big advertising groups faring this year so far? Worse than they had hoped if the latest figures are anything to go by. French advertising giant Publicis Groupe, the world’s third-biggest by revenue, had revenues of €1.07 billion (£959 million) in the first quarter, a 1.3 percent year-on-year rise on paper, but a 4.4 percent decline compared to Q108 in underlying terms. CEO Maurice Levy (pictured) says that “growth in digital activities and emerging markets has helped to cushion the shock,” and that digital revenue in the US was particularly good.
In the first three months of the year Publicis made 20.5 percent of its revenue from digital, compared to 17.6 percent in Q108. Digital accounted for 19.6 of 2008’s full-year earnings. The company won $1.7 billion (£1.15 billion) of new business in the quarter and bought Swiss digital agency Nemos.
—Market deterioration: With his trademark bluntness, Levy said that “all available indicators seem to point in the same direction: market deterioration is much worse than expected“. Publicis’s rival WPP also misjudged the scale of the downturn in ad spend—CEO Sir Martin Sorrell admitted Tuesday that the rate of decline in Q1 took him by surprise. And like Sorrell, Levy predicts a recovery in the global ad market next year, specifically the summer. More after the jump…
—Western Europe suffers :Emerging markets in Latin America and EMEA helped keep the company’s revenue decline below that of some of its rivals. But it’s not been a great time for European marketers: Publicis’s revenues in the continent were down 11.6 percent year on year at €357,403 (£320,576) in Q1. The UK was down 4.9 percent year on year, France suffered a 7.4 percent drop and southern Europe saw a dramatic 20.5 percent decline compared to the same period last year. Germany managed a 0.9 rise while central Europe was up 14.8 percent. In the US, the decline was a mild 3.6 percent compared to Q108.
—Outlook: The last forecast from Publicis’s own ZenithOptimedia agency predicted a worldwide drop in ad spend of 6.9 percent this year—alongside some digital growth, including a 2.3 percent digital rise in the UK. There’s no change from that forecast, but Publicis does warn that at the end of last year analysts predicted a 2009 ad spend drop of just 0.2 percent—so things can change very quickly for the worse during this recession.
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