Publicis Groupe’s shares crashed after it warned of a worse-than-expected slump for its traditional advertising business, hitting the stock prices of rivals such as WPP, Interpublic and Omnicom.
Shares of Publicis fell nearly 15%, from €55 to €46.84 after Arthur Sadoun, the global chief executive, admitted quarterly growth had slowed from 2.2% in the third quarter to 0.5% in the final quarter of 2018.
WPP’s share price fell more than 8% in Thursday trading on the London exchange. The stock prices of Interpublic and Omnicom both dropped by about 5% initially, although both ended Thursday New York trading with slight gains.
Publicis took the unusual step of releasing its results at 6 pm Paris time Wednesday after the French stock market closed, and hosted an earnings call Thursday morning.
Sadoun said Publicis had been "on track" during the fourth quarter until some large FMCG clients reduced spend by about €150 million more than the company had budgeted.
"The impact of attrition on traditional advertising has been stronger than expected," he said, explaining "a handful of US clients" were largely to blame.
Sadoun warned "we continue to see some attrition in Q1" since the start of January.
FMCG represents a quarter of the group's revenue and traditional advertising represents about 35% of the business, according to Sadoun.
"Clearly, we have the right model, which is outperforming the market," Sadoun insisted, pointing to strong growth in what he calls "game-changers" in data, dynamic creativity and digital transformation services. "We have a clear plan for 2019 and beyond."
Sadoun pointed to growth from financial services clients. While they have been cutting traditional agency services at the same rate as FMCGs, they have increased their overall spend by buying other digitial transformation services from Publicis, he said.
But he warned: "Client attrition obliges us to be more drastic with our cost base."
Steve King, the newly promoted chief operating officer of Publicis, said it was not losing market share to rivals, rather that clients were cutting spend.
King added that clients taking marketing services in-house was not a major cause for the loss of revenue.
Paul Richards, head of research at Dowgate Capital Stockbrokers in London, said: "For Publicis shares to be down 12%, the market is not concerned about one particular area [of the business] but the traditional agency model in general.
"With WPP, IPG and Omnicom down, investors are doing a ‘read-across’. It shows that it’s not just an issue for Publicis, but for all the traditional agency groups.
"The world is changing and the big global companies are struggling to adapt."