Publicis Groupe Reports 13% Decline in Q2 Organic Growth

CEO Arthur Sadoun touts "strong fundamentals" to withstand the crisis

arthur sadoun
Publicis Groupe CEO Arthur Sadoun said avoiding layoffs has been a priority, so it would remain "recovery-ready." Getty Images

Publicis Groupe reported a steep organic growth decline for the second quarter of 2020, as anticipated, but CEO Arthur Sadoun retained a positive outlook.

“We have demonstrated this morning that we have strong fundamentals to weather the crisis,” Sadoun told Adweek, citing Publicis Groupe’s services, country model, the global rollout of connectivity platform Marcel and the holding company’s “solid financial backbone.”

Publicis Groupe reported a 13% decline in organic growth for Q2, which it attributed to the first quarter where the full business impact of the coronavirus was evident, while noting in a statement that the figure was a significantly upgrade from the 23% decline in global advertising expenditures predicted by Zenith. For the first half of the year, Publicis Groupe reported an organic growth decline of 8%.

The market appears to share Sadoun’s optimism, as Publicis Groupe’s stock rose over 8% today, as of reporting time.

In the U.S., Publicis Groupe’s organic growth declined 6.8% for Q2 and 3.3% for the first half of the year, aided by positive growth in Q1. Sadoun pointed out that organic growth was still positive on the year going into May, which he said showed the strong headwind the holding company had enjoyed heading into 2020 in the region.

Europe, which saw the largest impact from lockdowns over the course of Q2, reported an organic growth decline of 23.5% for Q2. Sadoun noted that the region’s sharpest decline came in May, followed by improvement in June but remaining “very negative.”

China, which was hit hardest by the coronavirus pandemic in Q1, remains volatile and reported a 5.7% decline in organic growth for Q2. Sadoun noted that while the region improved in May, it was worse in June.

During its Q1 earnings report, Sadoun outlined a series of cost-saving measures across Publicis Groupe, including furloughs and salary reductions. In May, Publicis Groupe agencies in the U.S. including Digitas and Publicis.Sapient announced a series of layoffs.

Sadoun explained that the need for any further cost-cutting measures would be determined at the agency level, noting that while some agencies were growing others may need to consider such measures. He added that Publicis Groupe’s country model, aided by Marcel, allowed it to reallocate resources across agencies to best suit clients’ needs and protect its staff. Publicis Groupe is also continuing to ask agencies to forgo hiring freelancers and instead rely on talent from within the network.

“Our first priority is to save as many jobs as possible,” Sadoun said. “If things start to take off, we need to make sure we can invest because we want to be recovery-ready.”

New business performance has helped Publicis Groupe during the crisis. In May, LVMH’s Sephora sent its North America media account to Publicis Groupe, and it picked up media planning for McDonald’s China that same month.

Looking ahead, Sadoun anticipated the second half of the year being considerably busier for new business, adding, “Clients have understood that if they want to pitch, they can’t wait for the virus to be done.”

“What our clients are asking for today is exactly same as what they were asking precrisis, but now there’s a sense of urgency,” Sadoun explained. “This crisis has accelerated everyone’s strategy. In our case, it has definitely accelerated our go-to market [strategy]. Everyone understands that they can no longer delay the need to own their data and transform their marketing with brilliant ideas.”

@ErikDOster Erik Oster is an agencies reporter for Adweek.