Q&A: Publicis Groupe CEO Arthur Sadoun Discusses Strong Q1 Earnings

Today, Publicis Groupe stock jumped over 7 percent in Paris after the holding company reported a strong first quarter with net revenue up 1.6 percent organically, compared year over year to a 1.2 percent decline. In the critical North American market, Publicis saw organic growth of 2.8 percent in the quarter; a feat after competitor Omnicom reported weakness in the market for its first quarter earlier this week. In Europe, Publicis reported a net revenue rise of 0.3 percent organically. The company attributed the strong quarter in part to key global wins including Mercedes Benz, Campbell’s and Marriott. A major media account win for Publicis in the U.S. was Red Bull. The report comes on the heels of Publicis announcing its 2020: Sprint to the Future last month which placed an emphasis on bringing one-to-one consumer engagement at scale. Adweek chatted with Publicis CEO and chairman Arthur Sadoun this morning about the first quarter, the industry and what we can expect from the company going forward. Adweek: You had a good quarter with organic growth up even in North America. We haven't seen that from your competitors; Omnicom reported weakness in the market earlier this week. How did you accomplish that? Sadoun: Yes, thank you for that. It has been a great quarter, but it has also been a very busy quarter. We actually have three objectives. In the fourth quarter results, we said clearly we would have a positive first quarter which is quite unusual for us. It's a good performance. The reason why the U.S. is up is two-fold. First, [it's because of] our new business track record. But it's also because it's in the U.S. where our model is the most advanced and our ability to connect data, creativity and technology is really transforming the relationship with our clients. At the 4A's Accelerate, P&G unveiled a new dedicated agency model for its North America Fabric Care business that pulls in talent from multiple holding companies including Publicis. This is certainly not a model we've seen before so can you tell me what your initial thoughts were to it and if you think this will be a trend that will continue with other clients? To be clear I am not commenting on a specific client relationship. Having said that, what I can tell you more generally, is that what we are experiencing with P&G, we are experiencing with a lot of our clients. And we're actually pushing for it for a simple reason—most of our clients today have difficulty finding growth, have a huge need to reduce their costs and need to branch out. The only way to do that is to transform. What really matters is putting together the agency of the future to work with the client of the future so they can transform, which most of them are starting to do. No doubt our clients have a need to transform, which is why we are on a 'Sprint to the Future,' to bring them really what they want which is, in the end, one-to-one consumer engagement at scale. Speaking of the Sprint to the Future plan, in it, there was a focus on consulting. Can you tell me about that focus and how clients have been reacting to the plan in general? I was surprised that I saw a few articles about this push to consulting. We never said that. We [created the plan] for three reasons. First it was extremely important to give direction to our people. The second reason why we did that was for our clients; so we can be more direct and explain our positioning. We didn't talk about a push into consulting; what we said was being a partner of communications would be at the core of the transformation of our clients. To do that we believe we have three game-changers: data, dynamic creativity and digital business transformation. When you connect those three and bring one-to-one consumer engagement at scale, you make your client win and [we] win new business which is a very important point to me. We had an unprecedented track record in terms of winning new business in the first quarter. I think some people will translate that as pushing into consulting. It's true we are clearly saying, yes, creativity will always be [the most important] but we want to make sure it's properly fueled by data and technology to really transform our clients' businesses. How have you been navigating the use of data around recent scandals like Facebook/Cambridge Analytica? I think it is important to [remember] Facebook is a fantastic company with incredible success and people tend to forget that. And Facebook is a great partner for us and a very powerful platform for the marketing world. It is true at least for us [the scandal] had two consequences. The first is consumers are realizing Facebook is not free and what they pay is their personal data. That's a big shift in perception. The second thing, which is very important for us, is we believe it is reinforcing the role of the agency because it is transforming our role as a creator of content. We are the ones who know what the content is, where it goes, where it should be sent. Our role as an agency is to make sure our clients own their data. The future of our clients rely on their ability to own their data. There's a lot of speculation right now around the abrupt departure of WPP CEO Martin Sorrell. There's talk that certain WPP assets may now be unloaded. Would Publicis be interested in any of those assets should they be sold? I have been reading a lot of things and I think it is really inappropriate to speculate on the future of WPP at this stage. Looking to the second quarter, with the launch of Marcel coming up, can you tell us how that might impact Publicis in the second quarter? We will explain everything on May 24. The potential of the project and where we stand is extremely encouraging, but we have to wait until the 24th to really comment on it.