Publicis CEO on returning to growth and the instrumental role of Epsilon

The Publicis Groupe chief executive speaks to Campaign after reporting organic revenue growth of 2.8% in the first three months of 2021.

Arthur Sadoun: chief executive of Publicis Groupe
Arthur Sadoun: chief executive of Publicis Groupe

Publicis Groupe chief executive Arthur Sadoun spoke to Campaign after the owner of Saatchi & Saatchi and Starcom reported net revenue of €2.4bn (£2.1bn) in the first three months of 2021, up 2.8% on an organic basis.

Campaign: There is a lot of talk about a strong economic rebound in 2021 but the anticipated recovery from Covid will differ by market – the US and UK are advanced in their vaccination programme but France and Germany are slower. What trends are you seeing in terms of client and consumer behaviour?

Sadoun: Many people were overly pessimistic about the economic consequences of the crisis last year, and some are perhaps falling into the trap of being too optimistic today. Of course, we will see a strong rebound starting in Q2 as the comparables for the year will be very low, but the crisis is far from being over. We need to continue to put the safety of our people and their mental health first, and remain cautious. 

The recovery is differing from one region to another. The US is rebounding with a massive stimulus package and an acceleration of its vaccination programme, and Asia is showing early signs of recovery after being the first region to be hit by the virus. Meanwhile, Europe continues to suffer because of ongoing lockdowns and new restrictions.  

You can see that in our numbers. Overall, we are returning to growth earlier than expected with a solid 2.8% organic growth. This is mainly due to the US and Asia, which are both posting mid-single digit growth, while Europe is showing sequential improvement but still negative. When it comes to France and Germany, yes, they are definitely late on vaccines, but the good news is they are both positive at 4.9% and 6.0% respectively. 

Why did Publicis Groupe perform better than rivals in North America last year, especially in Q4, and have you continued that in 2021?

Publicis outperformed all of our peers in the US last year and is growing for the second quarter in the row, with a strong 5.1% thanks to the effects of our transformation. 

Through the strength of our model, we have been capturing a disproportionate amount of the shift in client investment towards digital channels, ecommerce and DTC. The best expression of that is Publicis Sapient and our digital arm PMX, which are both growing double digits, while Epsilon is at 4.7%, posting mid-single-digit growth for the second quarter in a row. 

What was the most surprising part of the results you have published today?

Definitely the sharp increase in the demand from our clients in commerce, we were expecting it, but not at this level. Having Sapient growing for the second quarter in a row in the U.S. at +11.2% was a good surprise.

The reorganisation we have put in place there at the end of 2019 made us confident that we would have good traction this year, as the pipeline has been picking up since Q3 2020.

But this kind of exponential growth shows how much commerce is at the forefront of every client’s approach, and how well we are positioned to meet that with Sapient.   

When you last spoke to Campaign, you said new business pitch activity was “busy” in 2021. How much opportunity is there for Publicis Groupe? Is it still difficult to manage conflict between clients in the same sector or do you think attitudes are changing?

I never comment on ongoing pitches, but yes, 2021 is off to a busy start. We have already seen some important wins like L’Oréal in China, Samsung and Unilever in the US and Infiniti globally. At the moment, we have more offensive than defensive opportunities. But it is not the statistics that matter. It is our opportunity to win or lose in the room (actually on Teams for the moment…) 

We have strong brands. They are well-positioned with unique propositions. All of our big clients are run through single P&Ls, with the necessary firewalls in place to ensure the confidentiality of our clients’ business. So thanks to our scale and our brand portfolio, managing conflict is not a problem for us. 

It's two years since Publicis Groupe agreed to buy Epsilon. What has the Epsilon business brought to the group? 

Acquiring Epsilon was an audacious move. Actually, it was the biggest acquisition of our industry at a moment when it was being very challenged by the financial market. But today, it places us as an indisputable leader in personalisation at scale, and brings our clients a huge competitive advantage. There are many examples of that.

Epsilon has been instrumental in our new business performance, making the difference in a lot of our client strategies. The evidence of that is the overall growth we are experiencing at the moment, with a huge acceleration on the international front, which is growing by 25% in Q1.  

Publicis Groupe’s share price has more than doubled since the worst of lockdown a year ago and there has been a lot of M&A speculation about takeover approaches for your company...

These rumours are unfounded. We have denied them firmly and immediately. Let’s be clear, people can always speculate and spread rumours. But if there is one thing that is an essential part of Publicis’s DNA, it is our independence.  

Campaign’s UK agency School Reports show a gender pay gap at some Publicis Groupe agencies. What can you do about this disparity between men and women? What is Publicis Groupe doing to narrow the gap?

We’ve made big steps forward and while we are in a much stronger place, we have more to do. Across all of our UK agencies, we’ve reviewed the causes of the gender pay gap, and have programmes in place to close the gap. We now have a strong set of female leaders across the UK, led by Annette King. Her leadership team is made up of six female and six male leaders. At the next level, we have 22 females and 20 males, and nine of our 22 agency CEOs are female.

Can you explain the background to Publicis Groupe's performance in the UK in Q1 and whether that differed between the different parts of the business? 

Publicis in the UK has really been a story of two tales in Q1. On one side, our media and creative activities have been growing. On the other, Publicis Sapient has been impacted by scope reductions mainly due to capex [capital expenditure] cuts at some of our biggest clients. But we are confident that the UK will have a good year, as our transformation is well underway. 

Does the identity partnership between Publicis Groupe and The Trade Desk have long-term viability or scale given the changes that Google and Apple are making and the growing push for greater consumer privacy?

All of the reasons you cited are exactly what give this partnership relevance and longevity. 

The disappearance of 3P [third-party] cookies may be the biggest disruption that our market will experience in the coming years. Our clients will have to shift from cookies to real IDs if they want to continue to engage on an individual basis with their customers. Thanks to Epsilon’s first-party data expertise and technology we are the best positioned in our industry, as reported by Forrester, to help our clients take back control of those relationships. 

By combining The Trade Desk industry-leading DSP with the Power of Epsilon’s core ID we are creating the next generation of privacy-first, personalised media platforms, that will bring a decisive competitive advantage to Publicis and will enable our clients to grow while reducing their costs and enriching their customer knowledge.