Publicis Increases M&A Budget Following Record Results

Following a record year that led it to beat expectations, with 2021 full-year organic revenue growth at 10% reaching $11,862 billion (10,487 billion euros), Publicis Groupe intends to increase its merger and acquisition budget to between $450-680 million this year as it continues to strengthen its data and tech capabilities. The advertising holding company, which owns businesses such as Sapient, Epsilon, Leo Burnett, Saatchi & Saatchi and Zenith, has rebounded following the impact of Covid-19 in 2020 having reported revenue growth of 8.8% year-over-year to $13.28 billion (11.738 billion euros), 3% ahead of pre-pandemic results in 2019. The organic growth of Publicis Sapient (13.8%) and data business Epsilon (12.8%) were highlighted as major factors in the performance of the group which has led to it issuing a one-week additional salary as a bonus to staff. Alphabet Revenue Grows 41% in 2021, Buoyed Once Again by Search Ads The business’ chief executive Arthur Sadoun admitted that he has been “positively surprised” by the dynamics of the industry environment but added that he believes the results also prove that the Publicis model, alongside the “drastic shift” by clients looking for data, digital media and commerce support, has aided its success too. We're going to make sure that everyone that has been in this journey for the last two years will get a bonusArthur Sadoun, Publicis Groupe chief executive Winning the McDonald’s U.S. media account without pitch at the end of last year was one of many significant pieces of new business which included global creative briefs for Nissan Motors Infiniti, TikTok and Kärcher, and media with Stellantis, Vinted, Humana, Meta and Eli Lilly alongside hundreds of regional wins. By sector, the largest drivers of revenue were from automotive clients (16%) followed by financial (15%), technology, media and telecom (14%) and food and beverages, healthcare and non-food consumer products (12% each). North America produced the largest net revenue growth of 9.7% to $7.2 billion (6.4 billion Euros) followed by 11.2% growth in Europe of $2.9 billion (2.5 billion euros) and 11.4% in Asia Pacific, reaching $1.17 billion (1.04 billion euros). Increased acquisition ambition With an intention to increase its acquisition spend this year against its budget last year of $225-338 million (200-300 million euros) to continue strengthening data and tech capabilities, the company made buys such as Saas platform CitrusAd, digital content producer Boomerang and research and development marketing firm BBK Worldwide as part of Publicis Health. At the beginning of this year, it also revealed the acquisition of software engineering firm Tremend. Sadoun claimed that direct competitors such as the holding companies are not looking for the same types of acquisitions, saying that they lack the “data and tech backbone” that Publicis has with Epsilon and Sapient “to land this kind of business.”He continued: “It makes the competition harder because we are fighting against players that don’t have the same multiples as we do. Every acquisition we are making at the moment are in fields where our direct competitors are more in ad tech or system integration than on the advertising or marketing space.”Of the focus to “accelerate” on deals similar to that of CitrusAd and Tremend he says there will be three areas: first-party data management outside of the U.S., new digital media and commerce-related businesses. “We have a few potential acquisitions of this type,” he continues, adding that private equity firms are also providing competition to make deals happen, but not the “traditional competition." Resisting The Great Resignation Discussing the introduction of a staff bonus being given to those who have been present for the last two years, Sadoun told Adweek that the total spent by Publicis on staff retention bonuses will be around 4% of its revenue, a number he expects will be matched by WPP. This follows the decision of the company last year to pay back all salary cuts during 2020 when the pandemic’s impact was first felt. “This year, I'm expecting everyone to be more generous, but in our case, we're going to make sure that everyone that has been in this journey for the last two years will get a bonus,” he stated. Sadoun also admitted that while it was not currently part of the company's financials, it was likely that cryptocurrency would be something it would begin to accept in the future: "It is definitely something we look at but right now it doesn't have any impact on our business." At the end of last year, to further embrace the flexible working model that had been introduced by the company, "Work Your World” was introduced allowing all members of staff to apply to work within other Publicis offices around the world for a few weeks each year with “a few hundred” said to have had their application validated within the first two months since launch. The company expects to continue its organic growth this year at between 4% and 5%. 'Work Your World'—Publicis Helps Relocate Staff Internationally for Six Weeks a Year