Publicis: Rough Times Ahead for Ad Business

Publicis Groupe CEO Maurice Levy today predicted a “difficult finish” for the ad industry in 2008 and a “marked slowdown” next year, but said his company would focus on the digital sector and high-growth markets to compensate for the sagging economy.

Those comments came as the Paris-based holding company said its third-quarter revenue fell about 1.5 percent to $1.105 billion compared to the same period a year ago, based mainly on the weakness of the U.S. dollar and British pound.

In organic terms, however, factoring out the impact of currency fluctuations and the impact of acquisitions, revenue rose almost 4 percent, and in constant currency terms the gain was 5 percent. The numbers were generally in line with market expectations.

For the first nine months of the year, the company’s organic growth has been about 5 percent; the improvement is nearly 7 percent when measured in constant currencies.

Analysts seemed to take the results in stride, with UBS’ Alistair Reed writing in a note: “These results and comments should prove reassuring relative to some concerns in the market.”

Said Levy: “Our objectives for 2009 are to consolidate revenue by increasing our market share in classic creative agencies and to push ahead in fields where we have leadership positions: digital and high-growth markets.”

The profit-margin goal for ’08 remains 16.5 percent, Levy said.

Almost 19 percent of the group’s revenue so far this year has stemmed from digital operations, compared to about 13.5 percent during the first three quarters of ’07. The company has said that bodes well for long-term growth and stability, as the digital sector has remained relatively vibrant even as more traditional advertising areas have slowed. Publicis hopes to have digital account for 25 percent of its revenue by 2010.

Publicis in June reorganized its global digital operations under the VivaKi banner, led by David Kenny and Jack Klues.

Last week, Publicis’ rival Omnicom Group posted a Q3 revenue boost of 7 percent to $3.3 billion and said its revenue was up 10 percent so far in 2008 compared to the same period a year ago.