Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Publicis seeks to boost growth by going deeper into consulting

Published 20/03/2018, 06:32
© Reuters.  Publicis seeks to boost growth by going deeper into consulting
MBGn
-
GOOGL
-
WPP
-
PUBP
-
ACN
-
OMC
-
MAR
-
META
-
GOOG
-

By Mathieu Rosemain and Gwénaëlle Barzic

PARIS (Reuters) - France's Publicis (PA:PUBP) is doubling down on its efforts to become a consulting partner for global advertisers online in the hope to reverse sluggish growth and beef up margins over the next three years.

The world's third-biggest advertising group said on Tuesday it is targeting underlying sales growth of 4 percent in 2020, up from 0.8 percent last year, by tapping its digital arm Publicis.Sapient and fostering greater collaboration between its myriad of agencies.

The target is part of a three-year strategic plan to be unveiled by chief executive Arthur Sadoun in London on Tuesday in a key test since he succeeded company veteran Maurice Levy, amid lower spending from big clients and the emergence of Alphabet Inc's (O:GOOGL) Google and Facebook (O:FB) as ad giants online.

The plan, dubbed "Sprint to the Future", confirms the group's shift toward using technology to offer both creative content and tools for firms looking to tap a greater number of consumers.

Publicis now regularly pitches against consultancy firm Accenture (N:ACN) for new accounts, Sadoun has said previously.

Shares of Publicis and bigger rivals WPP (L:WPP) and Omnicom (N:OMC) have underperformed benchmark stock indexes over the last year, as investors penalized disappointing results and weak forecasts, with WPP - the worst performer among the three - expecting flat growth this year in 2018.

Having dropped an earlier operating margin rate forecast of at least 17.3 percent this year, Publicis said it still saw room for improvement and is now targeting a margin of maximum 17 percent in 2020, up from 15.5 percent last year.

"The challenge is to justify how we can progress like this while maintaining the growth," said Sadoun in a late Monday call with reporters.

"The market is not expecting these numbers."

COST CUTS

On top of growing sales, the expected increase in margins will come from a 450 million-euro ($555 million) cost saving plan over the next three years, Publicis said, about two thirds of which will be redeployed to hire and train employees.

The group is hoping to boost profits from targeted acquisitions totalling between 300 and 500 million euros per year between 2018 and 2020, including companies in the fields of data and "business transformation."

For Publicis, the challenge remains to prove that Sapient, which weighed heavily in a 1.4 billion-euro writedown in 2016, is well integrated into the company and will improve results, analysts have said.

The recent signing of multi-year contract with Daimler’s (DE:DAIGn) Mercedes-Benz brand to become its global digital agency and the winning of a media account with hotels group Marriott (O:MAR) are proof that Publicis is on the right track, Sadoun said.

"There will be bumps in the road… It’s not going to be easy," he said.

"It is a very challenging market."

($1 = 0.8103 euros)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.