With Fewer Big Holdcos, Arthur Sadoun Says Client Conflict Is No Longer a Dealbreaker

Publicis CEO Arthur Sadoun believes that as the holdco landscape continues to shrink, agencies can manage competing clients, provided there is transparency and strict firewalls in place. He told ADWEEK there's “a new race starting" between Publicis, Omnicom, and WPP, where clients understand their different strengths and are therefore clearer about who they want to work with. As a result, more are forgoing pitches for direct AOR appointments. “Clients perfectly understand how to manage conflict" because they're already doing so with other partners in the marketing ecosystem, he said. His comments come on the heels of Publicis' Q3 results, reporting 5% year-over-year growth to $4.4 billion (€3.8 billion). Publicis said it expects $465 million (€400 million) in revenue from new business it's won so far this year. Its most significant win was PepsiCo's global media business, which led the French holdco to withdraw from the ongoing pitch for Coca-Cola’s global media account and resign from its North America media business after a year on the account. Coke has put the business up for review, with it now reportedly being contested by Omnicom and Dentsu. Sadoun declined to comment on Coke or Pepsi directly, but sat down with ADWEEK to discuss managing client clashes, why the three-horse holdco race is good for his business, and how AI is changing conversations around agency billing. This interview has been edited for conciseness and clarity. ADWEEK: Does industry consolidation leave clients with fewer choices? ARTHUR SADOUN: [Clients] have three choices of large, global players. Beyond those, there are smaller ones, local and regional, that make the industry rich in terms of options. But moving to three large players is right for our industry and better for clients.How do you manage client conflict when there are fewer players competing for the same major pieces of business? AS: Clients fully understand that we can work with competitors when you're at the kind of scale the top three have. That's not a problem. You need to be absolutely transparent about who you're working with. [And] you need very strict firewall rules in place when it comes to people, capabilities, and geographies. All our clients are already doing this with all the other marketing service providers they're working with. Whether it's data platforms, walled gardens, cloud solutions, system integrators, consultants—they're all managing conflict without a problem. It's now part of the process. This is where the market is going. How do you choose between two competitors when a situation does arise in which a client is reviewing its business, and you're signed to its rival?AS: A new race is starting, and [the three major holdcos] are highly differentiated now.Clients know what and who they want for their business. And those clients increasingly prefer a straightforward deep dive into talent and capabilities instead of getting into a lengthy, expensive, and heavy pitch process. The big shift is that you have more clients who know exactly what they want. They consider it way more efficient to spend their time and their money digging deeper rather than organizing a beauty contest that lasts forever.Do clients care when agencies work with competing brands? AS: The race for press releases around new business wins is a kiss of death, because you're looking at the tree that's hiding the forest. It's good to win new business. It helps when you're doing well, but the reason [Publicis] is successful is because of the quality of our work, our high retention rate, and the growth we deliver for clients. Clients understand [that agencies can] manage conflict, because they're doing so with others. Agencies that put too much focus on new business versus their old business—yes, it can help PR momentum, or the financial market, but it's been shown time and again that a new business press release doesn't improve your bottom or top line. What's driving the rise in AI revenue per head at Publicis? AS: There are more tasks we can automate through AI every day, allowing us to increase revenue per head. Clients are asking us to replace some tasks with AI, but not to replace people with AI directly. That’s a change-management issue that will take more time. We’re growing between $600 million and $800 million a year. That means we can automate some tasks while continuing to hire great talent. Companies aren’t cutting people because of AI; it’s because of a lack of performance. As we perform, we'll be able to continue to be net positive when it comes to hiring people.As more tasks are automated by AI, how does that change conversations with clients around fees and billing? AS: It does change the conversation, but clients are also aware that what they can gain in people costs, they’ll have to add in tech and data costs. As our numbers show, while we’re growing revenue per person, we’re also adding tech and data costs to what we do for clients.

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With Fewer Big Holdcos, Arthur Sadoun Says Client Conflict Is No Longer a Dealbreaker

Publicis CEO declined to discuss PepsiCo and Coke, but said managing competitors is more common in a consolidated market

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