Ad conglomerate Publicis Groupe SA ended 2020 with revenue only slightly below its level in the previous year, as a degree of marketer spending returned to the U.S. later in the year and clients invested in data management services, the company said.
But the uncertainty of the continuing pandemic and the resulting lockdowns make it hard for the company to make projections about spending in the year ahead, according to the company.
“Although we’re very confident in our model, we stay cautious on the future, with the world being what it is right now,” said Arthur Sadoun, chief executive officer of Paris-based Publicis Groupe, which owns agencies such as Spark Foundry, Saatchi & Saatchi and Leo Burnett.
The company said it is nonetheless restoring salaries that it cut earlier in the pandemic and setting aside a higher bonus pool.
Publicis’ net revenue declined nearly 1% in 2020 to €9.71 billion, equivalent to $11.7 billion, compared with 2019. Revenue decreased 6.3% on an organic basis, a common measure that strips out currency effects, acquisitions and disposals. Analysts expected organic revenue to decrease 6.96% for the year, according to FactSet.
Organic revenue in the fourth quarter decreased 3.9% from the year-earlier quarter. Net income for 2020 declined 13% to €1 billion compared with 2019. And diluted earnings per share were €4.27, down 14.9% from the year earlier.
Organic revenue at Publicis fell 2.4% in North America for the year, but rose slightly in the fourth quarter. International regions were hit harder in the fourth quarter, with organic revenue declining 9.1% in Europe, 10.8% in Latin America and 12.1% in the Middle East and Africa.
Organic revenue gains in the U.S. were driven in part by data business Epsilon, which grew revenue 5.5% in the region, as well as an increase in digital-media spending and projects returning to its digital marketing and technology group Publicis Sapient, Mr. Sadoun said.
Publicis acquired Epsilon in 2019 for $4.4 billion.
Epsilon’s growth under Publicis comes as it also settles a fraud case with the Justice Department.
Epsilon recently agreed to pay $150 million to put to bed a years-old criminal case related to consumer information it sold that was used in fraud schemes, the Justice Department said.
Alliance Data Systems Corp. , the company that owned Epsilon at the time, agreed to indemnify Publicis against losses related to the case.
“It has nothing to do with us,” said Mr. Sadoun. “Everyone involved at the time is already gone.”
Privacy rules as an opportunity
Publicis is focused on helping clients navigate new privacy rules and data-management challenges, according to Mr. Sadoun.
Google plans to remove third-party cookies, tracking technology that help advertisers send targeted ads, from its Chrome browser. That means advertisers will need to use their first-party data such as email addresses, as well as new advertising technology, to continue to do targeted advertising.
Mr. Sadoun called the change a “marketing revolution” akin to the emergence of automated digital advertising.
“It’s definitely an opportunity for us,” Mr. Sadoun said.
Write to Alexandra Bruell at [email protected]
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