Publicis revenue continues to dip in Q1

The holding company expected a bumpy ride due to ongoing attrition, but believes business-transformation work will help right the ship.
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Despite some positive signs in its Q1 results, Publicis Groupe’s expected “bumpy ride” to begin 2019 has come to pass, according to a company press release about the results.

Organic revenue growth across the holding company, which owns a number of agencies including media shops Zenith, Performics and Spark Foundry (which it recently merged with Blue 449) was down 1.6% in Q1. In North America, the company’s largest market, organic revenue growth was down 4.3%, with the company citing “attrition that continued to impact traditional advertising,” the ongoing effects of media losses from Q3 2018 and a strong comparable base in Q1 2018 for the decline. In the broader network, Arthur Sadoun, chairman and CEO of Publicis Groupe, attributed declines to ongoing attrition in business from packaged goods clients, but says it has partially offset those losses by client retention in other sectors, as well as a 27% increase in business related to “data, dynamic creativity and business transformation.”

Publicis also saw a 6.3% decline in Latin America (now its smallest market by total revenue), but growth of 0.7% in Europe, 1.2% in Asia Pacific and 26.6% in the Middle East and Africa (now its second-smallest market).

Those organic growth numbers are excluding Publicis Health Services, which Publicis sold (effective at the end of January).

In its Q4 2018 results, Sadoun expected client attrition and client losses to result in “a bumpy ride” to begin 2019, and said in a statement accompanying the results that the company expected attrition to slow down in the second half of the year.

Publicis released its Q1 results early, alongside the announcement of its US$4.4 billion acquisition of data marketing company Epsilon. While the company repeatedly cited how Epsilon’s data and insights capabilities fit in with its strategy to be the “preferred partner to clients” in business transformation, its offering will also be brought to bear in its creativity and media solutions.

“Our clients are facing increasing pressure from the rise in consumer expectations, the mainstreaming of direct-to-consumer brands and new data regulations,” Sadoun said in a press release about the acquisition. “The only response is to deliver personalized experiences at scale. They have to transform to meet this new market imperative.”

This story originally appears in strategy.