Publicis Groupe reported a 13 percent increase in first-quarter revenue, to $1.90 billion, thanks to strength in its digital activities and emerging markets. However, the Paris-based holding company warned that growth is expected to slow in the second quarter.
The downturn will occur as marketers shift dollars to the second half of the year when the industry enjoys a quadrennial boost from the London Olympics and the U.S. presidential election. Publicis expects its second-half results to be stronger than the first six months of the year.
Organic growth in the first quarter rose 4 percent and continues to be steady in certain mature markets of Europe where it grew 3.6 percent and in North America, which posted a 3.3 percent increase. Despite good performance in European countries like France, the U.K. and Germany, the Eurozone crisis continues to take a toll in Spain and Italy where Publicis' business is contracting. High-growth markets like Brazil, Russia, India and China (BRIC) grew at a 10 percent clip in the first quarter while organic growth in Mexico, Indonesia, Singapore, South Africa and Turkey (MISSAT) rose nearly 12 percent.
In the first quarter, Publicis Groupe’s digital operations became the company’s largest business segment, generating 33 percent of revenue versus the 31 percent rung up by the company’s more traditional advertising services. Digital posted a 15.6 percent increase in organic growth in the first quarter.
Combined revenue from Publicis’ digital operations and the emerging economies accounted for 54.1 percent of sales in the first quarter. The company has said its medium-term objective is to obtain 75 percent of its revenue from those fast-growing business sectors.
The current results do not include the loss of longtime client General Motors at Publicis’ Starcom media network, which will continue to work globally with the marketer through the end of June. When GM announced the end of the $3 billion relationship in January, Publicis said the business represents less than 0.5 percent of its annual revenue.
Earlier this week, Omnicom reported a 5 percent increase in first-quarter revenue of $3.3 billion as net income remained flat, climbing only 1 percent to $204.6 million. While emerging markets also boosted the U.S. holding company’s bottom line, Omnicom said Europe continues to be a weak performer.