Publicis' 2020 Organic Growth Decline Beats Expectations

After a year like 2020, holding companies are celebrating losses. Publicis Groupe performed ahead of analyst expectations, reporting a -6.3% organic growth decline on the year today, ahead of an analyst consensus of -7.1%, which left CEO Arthur Sadoun striking a mostly optimistic tone regarding the results and the holding company’s outlook for the year ahead. “It is a solid performance but more importantly, a performance that demonstrates the strength of our model,” Sadoun told Adweek. “We are demonstrating that the combination of Epsilon, Sapient, our creative brands and our media brands is what clients are looking for." Publicis reported an organic growth decline of -3.9% for Q4, ahead of analyst consensus at -6.7%. Sadoun said today that based on the strength of its performance, Publicis was able to repay the 6,000 management employees who took voluntary salary reductions as a cost-saving measure during the height of the pandemic’s impact. He explained that this reimbursement included Publicis’ management board, with the exception of the senior-most management team at the company, a handful of individuals including supervisory board chairman Maurice Levy and Sadoun himself, who also took pay cuts. Sadoun also claimed that furloughed Publicis employees had returned to their roles. "Those who reduced their salary," Sadoun said, "did so for one single reason: to save jobs at the moment where we were all expecting for the worst." Despite these efforts, the holding company could not avoid impactful rounds of layoffs across some of its agencies. Publicis agencies including Digitas and Publicis Sapient went through a round of layoffs last spring, and BBH laid off around 20% of staff across its New York and Los Angeles offices. In the U.S., Publicis reported organic growth of 0.5%, something Sadoun credited in large part to Epsilon, which had 5.5% organic growth on the quarter, as well as its agency Publicis Sapient. The earnings report arrives in the wake of news that Epsilon agreed to a $150 million settlement with the Department of Justice resolving criminal charges related to the selling of data facilitating elder fraud from 2008 through 2017. The charges stem from before Publicis’ acquisition of the company in 2019. Sadoun suggested that only a select number of Epsilon employees were involved in these crimes and not representative of the company as a whole. He also stressed that the settlement was related to charges stemming back well before Publicis’ acquisition and claimed that data privacy was at the core of Epsilon’s operations. “We can see the shift from third-party cookies to identity, which is exactly the service Epsilon is offering,” he added. Sadoun also said that Publicis Media has been taking data privacy and data ethics issues very seriously, including sharing internal audits with clients to offer full transparency. "There is a lesson to [learn] out of every crisis,” Sadoun said, explaining that the health and economic crises of 2020 informed Publicis' approach to the future of work and its focus on addressing shifts to CRM, digital media channels and ecommerce. Additionally, he said the "social crisis" resulting from a reckoning with systemic racism in the wake of the police killing of George Floyd highlighted the need to make meaningful progress with diversity, equity and inclusion. Looking to the year ahead, Sadoun characterized Publicis Groupe as confident yet cautious, and said it is prioritizing employee well-being, growing alongside clients and advancing the company's DEI agenda. "This is a point where we draw a line in the sand and make a demonstration that our people go first, that we will bring value to clients, and start to make progress on our DEI agenda," he said. Last month, chief diversity officer Ronnie Dickerson Stewart left Publicis, with the company not seeking an immediate replacement for that title and Publicis chief inclusion experience officer Renetta McCann continuing to lead DEI efforts in the U.S. Sadoun claimed Publicis' creative, media and data capabilities at scale combined with a business transformation unit he views as a competitor to consultancies, like Accenture and Deloitte, give the holding company a differentiated offering from competitors.

Earnings Reports

Publicis Groupe's 2020 Organic Growth Decline of -6.3% Beats Expectations

The holding company said it is reimbursing 6,000 managers who took voluntary pay cuts

Erik Oster

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Erik Oster