A tough economic climate for advertising, with the big digital clients holding back ad spend, is all about agencies fighting for market share.
Publicis Groupe, despite seeing budget cuts in traditional advertising, just posted better than expected revenue organic growth of 5.3% September quarter
And the France-based global group is so confident about its prospects that it has lifted full year guidance to 5.5% to 6% growth, up from 5% previously.
“It's a market share game at the moment,” CEO Arthur Sadoun told analysts during a briefing.
“Despite a quarter that has been increasingly difficult for the world now, we are very strong on our feet.
“We continue to deliver what we promise … winning market share, leveraging our revenue mix, making sure that, through our platform organisation, we can control the cost not only to deliver the margin, but to reward our people and make sure that we continue to invest.”
He puts Publcis’ gains down to a “unique” go to market in media, a balanced revenue mix and continued market share gains.
Media, which represents one third of revenue, reported strong new business momentum. with high single digit growth on top of double digit last year.
With data and technology, another third of Publics’ business, some clients took a more conservative approach and delayed some business transformation work.
He says that market is in a slowdown, mostly due to delayed capital spending projects.
"Clearly clients are in a wait and see attitude," he says. And all others consulting in this sector are reporting the same.
"Although our pipeline remains robust ... we are seeing the same kind of delays, particularly in the US when you talk about region, and particularly in financial services and retail for the vertical."
However, Publicis Sapient, the digital business transformation company, still achieved 1.2% organic growth despite a very strong comparable base at 18% in the same three months in 2022.
And Publicis's global marketing technology company Epsilon was up 10.5%.
“When it comes to the rest of the year we are confident in upgrading our 2023 guidance once again,” he says.
And a key factor is continuing to gain market share.
“By seamlessly integrating real time data and technology into media creative and production, we have built a go to market which sets us apart from competition.
“As a result, we have topped the new business rankings four times in the last five years, and won over $10 billion in new media billings.
“This is two and a half times the level reached by our closest competitor over the period. It has had a material impact on organic growth when compared to peers over the years.
“Our strong Q3 makes us confident that we will continue to outperform the market on growth.”
Publicis’ revenue mix also gives it resilience in a tough market.
“Despite macroeconomic conditions … the strength of our revenue mix materialises through the power of our data and media alpha, which represent 50% of our revenue on the back of market share gains and increased client spending on third party data.
These very strong dynamics help us outperform the market despite anticipated slower growth at Publicis Sapient, which represents roughly 16% of our revenue, and that is currently seeing some projects being delayed like all comparable consulting firms.
“However, there is no doubt that the demand from clients for digital business transformation will bounce back again, even more in the world through AI.”
A slide from Publicis' September quarter results presentation:
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