Last year was a good year, but Publicis Groupe is planning a cautious approach to 2012.
The Paris-based holding company, which operates the Publicis, Saatchi & Saatchi, Leo Burnett and Zenith Optimedia agencies in Canada, among others, announced a 7.3% increase in revenue to $7.7 billion for 2011, leading to a record profit of $795 million for the year. Organic growth, which doesn’t include acquisitions, was 5.7%.
Despite the gains, the company plans to be prudent this year. Publicis has frozen hiring and does not expect to do any big deals in 2012, although it is planning to strengthen its presence in China, particularly in the health-care and public-relations sectors.
In 2011, North America grew 5.9%, thanks mostly to digital business, which now accounts for 46.4% of revenues in the region, boosted by the $575 million purchase of New Jersey digital-marketing agency, Rosetta, in May last year. Digital accounts for 30.6% of revenues across the whole group.
Every region showed organic growth of 5% or more last year, with Russia growing fastest at 15.6%, bringing Europe up to 4.8% despite problems in the Euro zone. China grew at 8.5%, while the Asia Pacific region as a whole grew at 5.7%, with Japan still suffering from last year’s tsunami. Brazil, hit by problems at Leo Burnett, grew revenue by just 2.8%.
Ditching his traditional shirt and tie for a black polo neck, and complaining about the cold February weather, chairman-CEO Maurice Lévy was somewhat optimistic about 2012 when he spoke at the results presentation. He said, “January was very good, the beginning was reassuring.” He also said that the Olympics, the European football championships and the U.S. presidential election should have a positive impact on the industry this year.
But he didn’t touch at all on one of Publicis Groupe’s hottest issues for 2012 – the continuing search for a successor to Levy, who has stayed on past his planned retirement date until the company can find a worthy candidate to succeed him. Jean-Yves Naouri appears to be the front-runner, but Levy has made it clear before that the company is also looking at other contenders. Naouri is chief operating officer of Publicis Groupe and executive chairman of the Publicis Worldwide agency network.
Publicis Groupe claimed a record net new-business gain of $7.9 billion in 2011, including Nescafé worldwide, and Microsoft, Burger King, Sprint and Delta in the U.S. But at the start of 2012, its Starcom MediaVest arm lost the $3 billion General Motors media business to Aegis Group’s Carat in what is likely to be one of the biggest account moves of the year in the ad industry.
Lévy claimed the GM business made up only 0.5% of Publicis’s revenues in 2011, and said, “I don’t think for one moment that Starcom will remain for much longer without another big automotive account.” The contract ends in June 2012, so the full impact of the loss will not be felt until next year.
The group is keeping aside cash to buy back Japanese ad giant Dentsu’s remaining 11% stake in Publicis Groupe, if the Japanese giant decides to sell as anticipated in July. If this goes ahead, Lévy said he would cancel the Dentsu shares immediately after purchase.
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To read the original article in Advertising Age, click here.
