AdNews casts an eye over Publicis and Omnicom's first half 2017 results.
“Our ambition is to post higher growth than our competitors,” says global multinational advertising company Publicis.
The bold claims were stated in its half year 2017 results released yesterday (20 July) and compared with rival Omnicom's results for the same period, it is already delivering. For Q2 Publciis delivered a 2.2% increase in revenue while Omnicom's Q2 results for the comparable period, also published yesterday, saw a 2.4% slide in global revenue. More on Omnicom below.
Publicis says the early part of 2017 has shown encouraging signs; returning to positive growth in the second quarter and the operating margin has been improved “despite the backdrop of weak growth”.
It says the momentum of accounts won has been good such as P&G in the UK; eBay in France; Singtel in Singapore, and Marriott, KFC, Lowe's and Mattel in the US. Recent Australia wins include 20th Century Fox, Aldi, Ego, Danks Hardware and Southern Cross Travel Insurance.
“The Groupe’s top priority is to improve its organic growth and there are quite a number of projects still on-going,” Publicis said in a statement.
“Our ambition is to post higher growth than our competitors by becoming the leader in marketing and operational transformation. Four concrete measures have been taken for this purpose: make our model a reality for all of our clients, leverage our competitive advantage in technology and consulting, simplify our organisational structures for greater efficiency; design a culture that attracts and retains the best talents.”
Publicis also credited its second quarter results to improved performance in North America.
Publicis Groupe’s consolidated revenue for the second quarter of 2017 was €2,515 million, up 2.2% from €2,462 million euro in Q2 2016.
For the first half-year, Publicis Groupe’s consolidated revenue amounted to €4,843 million, up 1.9% from €4,753 million for the corresponding period in 2016.
On June 1 Maurice Lévy's replacement, the now Publicis CEO Arthur Sadoun, took to YouTube as he wanted his first words, in his "terrible French accent", to be straight to the world. He spoke about the “strong headwinds” the industry faces and how he plans to “bring back the kind of growth we deserve”, while future-proofing the business.
The CEO also discussed the The Power of One vision to transform the group from a holding company, "to become a platform", describing the future structure as "an agile, flat, modular-dynamic organisation" aimed at creating new value for clients and everyone within the organisation.
Launched 18 months ago, Sadoun, says The Power of One has been one of the boldest moves the Groupe has made.
“We have one objective: become the market leader of marketing and business transformation,” Sadoun said in the first half statement to shareholders.
“This means being recognised as the indispensable partner of our clients in their transformation. To achieve this ambition, we need to accelerate in execution and go deeper in integration.”
He said improving organic growth is its number one imperative as organic growth is “the key metric of the industry” as it demonstrates Publicis' attractiveness in the market.
“It is the demonstration that we are competitive and that our model is both built on our clients’ needs and sustainable,” he said.
“Organic growth is required to attract and retain the best talent on the market. And obviously it has to come with greater efficiency. This is vital, as we must remain competitive for our clients and invest in our talents.”
He went onto say it has the right strategy; the first half results are encouraging and that it's thanks to the good account win momentum over the last 12 months, resulting directly from The Power of One, that organic growth exceeded its own expectations in the second quarter.
“When it comes to the outlook for the year, we expect the sequential improvement in organic growth to continue in third quarter. And we should return to a growth rate comparable with peers in the second half of the year,” Sadoun said.
Earlier this month Publicis Communications bought The Herd Group, an Australian business which owns PR agencies N2N and Fuel.
Omnicom’s Q2 revenue falls, APAC delivers growth
Omnicom's worldwide revenue fell 2.4% to US$3.8 billion in quarter two. Despite the fall, Omnicom reported 7.1% organic growth in APAC, which far outstrips North America performance, which grew just 0.2%.
John Wren, Omnicom Group global CEO, told investors he expects performance to pick up by the fourth quarter.
The group says organic growth increased across all four of its core competencies, with advertising driving growth: advertising increased 5.2%, CRM increased 2.9%, public relations increased 0.7% and specialty communications increased 2.7%.
Operating profit during the quarter increased US$3.7 million (0.7%) to US$565.5 million. Operating margin increased slightly to 14.9% from 14.5% in the same period a year ago.
For the half year, worldwide revenue fell 0.1% to US$7.4 million, compared with the same period a year ago.
The fall was in part due to currency exchange rates and a fall in acquisition revenue.
For the half year, APAC delivered 8.1% organic growth.
Operating profit for the year to date sits at US$975.5 million, an increase of 2.3%, while operating margin increased slightly to 13.2% up from 12.9% last year.
Net income for the half year was US$570.4 million - an increase of 4.8%.
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