Publicis Groupe, which announced double digital revenue growth for the second year in a row, is confident about 2023 but its projections don’t look as strong as last year.
The global advertising company, despite a challenging economic environment, expects organic growth of 3% to 5%.
Publicis closed 2022 “firing on all cylinders” with net revenue up 19.9% to $12.57 billion euros and organic growth of 10.1%. Compared to 2019, this implies organic growth of 13%, accelerating in the second half at 15% after 11% in the first six months
This meant record bonuses -- nearly €500 million in 2023 compared to €200 million in 2019 -- and one week extra pay for those not on an incentive scheme.
The 2023 outlook of 3% to 5% organic growth is, according to Publicis, a high end target and depends on the size of possible marketing budget cuts ahead.
But the numbers are within range of forecasts for the Australian market.
MAGNA, in its 2023 forecasts updated in December, says the advertising marketing in Australia will dip in 2023 but still grow by 5% to $23.5 billion. Australia’s advertising market grew by 8% in 2022 to reach $A22.3 billion.
GroupM, in its December update, puts growth in the Australian market at 3.4% in 2023, down from 10.9% in 2022.
The world is facing challenges, including inflation, supply shortage and war in Europe. However, Publicisi argues that its clients understand that they have no other alternative than to continue to transform their marketing.
How other big global advertising groups see the year ahead will be revealed later this month with results from omnicom, IPG and Dentsu.
Publicis CFO Michel-Alain Proch, briefing market analysts: “We know that (3% to 5%) it is well above consensus but we feel that it is realistic.
“The question you're going to ask is how can we deliver the 5%. And we believe it will depend on two things, first, the level of potential budget cut in traditional marketing.
“Again, we don't see any big change in client behaviour but we see some cuts here and there in some countries.
“And the second is the new business dynamic, but honestly mostly with existing clients, because whatever we're going to win in the next six months big will have an impact for next year more than for this year.
“You are talking between 3% to 5%, about €250 million additional growth ... it is clearly ambitious and very sizable given the current macroeconomic but we feel that 3% is realistic, 5% is ambitious and we're going to do everything we can to fill the gap.”
A slide from the presentation to analysts:
CEO Arthur Sadoun briefed analysts: ““Looking at our performance over the last three years, we have emerged as a stronger group.
“Thanks to the profound transformation we've been through, today our business is firing on all cylinders. Our revenue mix, our go-to-market and our platform organisation set us apart from competition and also make us confident for the year to come. “
Sadoun says the group’s differentiated revenue mix increases resilience to business cycles.
That means data. Sadoun: “Thanks to the acquisition and the integration of Epsilon and Publicis Sapient, 1/3 of our revenue is composed of real-time third-party data and best-in-class technologies.
“This is precisely what our clients need in a tough macroeconomic context to continue to drive growth while optimising their spend.
“This starts with first-party data management. With Epsilon, we are in a unique position to provide our clients with true identity resolution to fuel their entire marketing activities with the most accurate real-time customer insights in a soon-to-be cookie-less world.
“What makes us truly unique is our ability to combine our best-in-class data with our scale in media to build new digital media offerings and optimise our client spend.
“We are actually leading in the two major revolutions in our industry: Connected TV and retail media.
“On Connected TV, we created PMX LIFT to accompany our clients is the shift from linear TV.
“On retail media, CitrusAd has doubled in size since we acquired it in 2021. We have fully integrated its technology with Epsilon to create a new generation of retail media platform that provides clients with unparalleled customer knowledge directly linked to sell activities.
“Thanks to our recently announced JV with Carrefour, we will actually expand these capabilities beyond the U.S. and the U.K. into Europe and LatAm by 2024.
“Last but not least, with Publicis Sapient, we have the technology and 20,000 engineers and developers to create the platform experiences that our clients need for direct customer relationships and true personalization at scale in their own ecosystems.
“Second reason why we are confident in 2023 is our go-to-market. It positions us as a key partner in our client transformation by seamlessly integrating data and technologies into all of our operations, we have been able to top the new business ranking again for the first time in 5 years and consequently boost not only our Media but also Creative agencies.”
A slide from the analyst presentation:
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