Beau Jackson
Oct 18, 2024

'UK feels very strong overall': Arthur Sadoun on another forecast upgrade, 'black box media models' & more

Publicis chairman and CEO speaks to Campaign at Q3 results and says the group is "winning in China", highlighting the robust media and creative performance across Asia-Pacific in Q3 results.

Arthur Sadoun: says Publicis is 'pulling ahead again' following Q3 results
Arthur Sadoun: says Publicis is 'pulling ahead again' following Q3 results

Arthur Sadoun has set the record straight about the use of “black box” principal trading in the US following WPP chief executive Mark Read’s comments earlier this year in which he claimed the industry’s “use of proprietary media” involves “black box media models.”

The Publicis chairman and CEO said: “What I can tell you very clearly is that we don't operate black boxes, and I can safely say the same for our peers.”

He added: “Principal media, in the US, represents less than 1% of our revenue.” 

Sadoun was speaking at Publicis Groupe’s Q3 results which showed organic revenues grew 5.8% and the business upgraded its global forecast for 2024 for a second time, to 5.5% up from the 5% floor given in Q2

He said: “When we were in Q2, we said to the market, if the macroeconomic environment stays as difficult as it is, we will deliver 5%. The truth is that the macro went even tougher, and now we believe we can deliver 5.5%.”

Through growing market share over the past five years, Sadoun said Publicis has “moved from a distant third” behind rivals WPP and Omnicom “to pulling ahead again”, echoing comments from Q1, when he said Publicis had "extracted itself from the pack".

In his interview with Campaign, Sadoun also discussed UK performance, acquisition plans, data transparency, the challenge with growing creative versus media and why agency brands won't be disappearing.

Campaign: How was Q3 and do you see any changes in how the rest of the year is unfolding? 

We are confident in keeping the same dynamic until the end of the year, and this is why we're upgrading our guidance. We've been shopping during the summer, and we made two big acquisitions. And once again, we are beating expectations. We are at 5.8% – that represents 150 basis points [1.5%] ahead of our peers, and accelerating over four years, despite the difficulties that we have encountered in terms of macroeconomics.

The UK wasn't mentioned in the report under Europe – how did it perform in Q3? Is it still as stable as it was in Q2 when it had double-digit growth in media and creative? 

It has been broadly flat in Q3 for the very simple reason that creative and media still show strong but Sapient is negative. For the last 18 months, system integrators Accenture and Deloitte have been negative because there is a wait-and-see attitude from clients that have stopped spending capex in business transformation, and Sapient belongs to this world.

So the market anticipated that this industry is going to be negative. By the way, Sapient is doing better than the rest of the industry – but we are still waiting on our members, particularly in the UK. 

If you look at the overall performance in the UK on the year to date and for the year, we feel very, very strong, particularly on the media and creative side. 

If you take only Q3 now – for 2021, 2022 and 2023 the UK has been growing 43% – media plus creative, so you can see the dynamic and the wins we just had, of course, will make a difference in the coming quarter.

As you mentioned you have “been shopping” over the summer and invested $1 billion in acquiring Influential and Mars United Commerce. Are there more acquisitions to come?

No. Before the end of the year, we have just a small potential acquisition. Both acquisitions [earlier this year] went through a competitive process. We've been lucky enough to win both. We would have been happy with 50% – so we’re very happy with 100%. There is nothing in the pipe that is as material as these kinds of deals.

Transparency is a hot topic at the moment. It featured heavily in the investor presentation when speaking about Influential and Mars’ integration with Epsilon and in your discussion with Campaign UK editor-in-chief Gideon Spanier at Campaign Live in October. What did you make of Mark Read’s comments at WPP’s H1 2024 results about “black box media models” from competitors that won’t work in “a market that’s transparent like America”?

I don’t know exactly what WPP was trying to achieve when [Read] was talking about black boxes in the US. It was not clear. What I can tell you very clearly is that we don't operate black boxes, and I can safely say the same for our peers. 

On our media platform in the US – first, they are the opposite of a black box. They are on an opt-in basis, client by client, and sometimes double or triple opt-in, as it is in China. This is why we are winning in China. Second, we never ever use our client data for another client or for ourselves. And third, we have zero tolerance for garbage media.

The second thing that I guess he was implying – and it would be wrong to say – is that those platforms are the reason for our performance. Principal media, in the US, represents less than 1% of our revenue.

You expect to continue to outperform the industry in 2024 so what does this mean for the bonus pool at this stage in the year?

We are expecting to deliver to our team the same level of bonus pool, that is the highest in the industry, this year, again, thanks to our performance. We're going to reaffirm our 18% guidance in terms of margin, and we're going to make it clear that we will continue to have the strongest and highest valuable remuneration policy, as we are outperforming. 

New business has carried Publicis’ results throughout this year but it’s unlikely that the same scale of pitches will continue year on year. What happens if/when new business slows down?

What matters is not the number of pitches, it's the conversion rate. I mean, we did not participate in two of the biggest pitches of the year. So it's not that we have a high level of opportunities – we have a high level of conversion.

Some of the biggest wins this year have been in the media space. Is it harder to grow creative business than media, given the different tech solutions you can bring?

The media landscape has been evolving faster than the creative landscape. So when it comes to clients that want to transform, they are pitching media before creative.

That's the big difference – the significant investment we put in data and technology, which is roughly $10.83 billion (€10 billon) over the last decade. This has given us such an advantage in capabilities for clients that understand that they need to change, that it has created more pitch opportunities than in creative.

In creative, normally you change when you're dissatisfied with your agency, not so much because you want to change the model. And luckily enough, because I believe in long-term relationships, that you do great work when you build long-term relationships, regardless of which agency it is, we see less pitch opportunities in creative than we see in media.

Earlier this year, Publicis.Poke returned to its Publicis London brand – what is the future of the agency?

We have always had the same philosophy, which is, we want to kill the P&L silos and keep the brand strong. And if you look at how we have managed our portfolio in the UK, we have been very careful in investing in our brands and investing in talent that can run our brand. I will let the UK management give you more granularity on that, because I don't want to overstep.

I know there were some doubts a couple of years ago when we went to a country model, people said: "Are they going to move to a single brand? They will be only the Publicis brand. Everything will disappear…" At the end of the day, Saatchis, Leo Burnett and BBH have never been as strong. We believe in the power of the brands, we believe in the power of culture, and we want to make sure that we continue to do that. 

Source:
Campaign UK

Related Articles

Just Published

2 hours ago

Agency of the Year 2024 SEA winners: Indonesia, ...

Check out the complete winners list from Campaign's inaugural event in Jakarta, featuring several Southeast Asian regional awards, along with entrants across seven SEA markets.

6 hours ago

Big night for Leo Burnett across multiple Southeast ...

Publicis Groupe stole the spotlight at Campaign’s inaugural Southeast Asia Agency of the Year Awards gala in Jakarta, with Leo Burnett leading the charge across creative and digital in multiple markets.

6 hours ago

McCann, Famous Innovations lead the charge at South ...

Also imparting a memorable mark: FCB Kinnect, Havas Media India, OMD, and White Rivers Media with their impressive wins showcasing gold, glory, and game-changing creativity.

11 hours ago

Can retail media compensate for weaknesses in ...

Following reports on declines in performance media earnings, Campaign explores what strategies marketers can employ to navigate this changing landscape—including the promise of retail media.