After Sapient Acquisition, Publicis’ Digital Growth Will Exceed Even Maurice Lévy’s Goals

Should be 50% of revenue

Publicis Groupe is ahead of its 2018 goal to derive 50 percent of revenue from its digital business, Maurice Lévy told analysts in Paris today. The French holding company chief said that benchmark will be reached after the acquisition of digital company Sapient closes in the first quarter of next year.

In releasing its third-quarter results in October, Publicis said it rings up 42 percent of revenue from its digital operations.

Lévy, accompanied by Publicis Groupe chief strategist Rishad Tobaccowala and CFO Jean-Michel Etienne, spent two hours selling investors on the company’s digital transformation, which began eight years ago with the $1.3 billion acquisition of Digitas. Much of the presentation dealt with the rationale behind the Sapient acquisition, which adds 13,000 digital employees and new capabilities in business consulting, e-commerce and global production in addition to boosting the company’s share of digital revenue. (One thing Levy did not address was Sapient’s 15 percent drop in third-quarter revenue reported last month. In response to an investor question, Levy said he couldn’t answer because he didn’t have the authority to do so since the acquisition is still in the works.)

Levy was also asked about Publicis Groupe’s fourth-quarter financial outlook. He said October results were in line with expectations and are “good.” But he cautioned about the cyclical nature of the fourth quarter, when marketers’ budgets are often cut to achieve bottom-line objectives.

Tobaccowala said the Sapient acquisition is helping to make Publicis a player in a trillion-dollar industry, consisting of the content and storytelling sectors, worth $400 billion to $500 billion in marketer spending, coupled with $135 billion in consulting and $900 billion in technology services. With the Sapient acquisition, Publicis said it can offer marketers access to 22,000 digital technology specialists.

“It’s important to leapfrog the competition and provide what the client needs,” Levy said, echoing his digital guru, and he emphasized a number of times that Publicis’s digital business mix will be unique among holding company and consultant competitors.

Tobaccowala arrived in Paris for the analyst session on an overnight flight from China. Nonetheless he was characteristically eloquent as he talked about the next decade of digital disruption that will be shaped by the era of convergence and consumer empowerment. Among the points he made: Industries are converging, giving rise to new competitors. As an example he cited the iPhone which not only hurt the business of handset makers like Nokia but also game players like Nintendo, GPS manufacturers like Garmin and camera companies like Nikon.

Tobaccowala also said competitive boundaries are blurring with companies like Google, which are finding their main search competitors are not Yahoo or Bing but Facebook and Amazon. The exec also argued that consumer behavior has now become more channel, media, place and time agnostic, with screens mattering more to people than channels. All of which, he said, is presenting more challenges than ever to marketers.

“Clients have never been as uncertain, confused and worried about their brands, their organization and their future business models,” he said.