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Publicis Groupe hit by ad spend slump in Q3

Following on from WPP’s flat Q3 results, Publicis Groupe has posted worse-than-expected Q3 results as the effects of the economy “abruptly halted” client ad spend in Europe.

Publicis Groupe reported consolidated revenue of €1.63bn ($2.10bn), representing organic growth of just 2% when compared year-on-year and falling short of analyst expectations. Europe was hit hardest, while other regions across the world proved more resilient.

Fast-growing markets accounted for 24.8% of Publicis Groupe’s total revenue in the third quarter of 2012, up from 23.7% in 2011. Third quarter revenue from the BRIC and MISSAT (Mexico, Indonesia, Singapore, South Africa and Turkey) markets contributed €220m ($284m) to overall revenue.

North America saw organic growth of 3.2% with €805m ($1.04bn) of revenues coming from the region. Revenues from Europe, however, were down 3.6% to €429m ($553m).

Ad markets across Southern Europe saw negative growth of -8.7% over the quarter, and -1.3% in Northern Europe. France was impacted the most with negative growth of -2.2%, as well as the UK (-0.8%) and Germany (-1.8%).

Digital accounted for 33.3% of the group’s total Q3 revenue, compared to 30.2% at the end of September last year. Following the acquisition of LBi earlier this month, digital’s share is expected to rise to 35%.

Other acquisitions over the quarter include the 100% takeover of Bartle Bogle Hegarty (BBH) and Malaysian digital agency Arachnid.

“This was a summer of contrasts: the upward trend continued through July and August, then September brought a sudden downturn in the economies of Europe,” says Publicis Groupe chairman and chief executive Maurice Lévy. “Since the end of the summer, advertisers have increasingly adopted a wait and see attitude, cancelling or postponing campaigns.”

“The situation in the rest of the world is somewhat better,” adds Lévy.

New business for the first nine months of 2012 stood at $2.4bn, following a string of wins including Taco Bell in the US, Emerson in China and L’Oréal in Singapore.

For the first nine months of 2012, Publicis Groupe’s revenues totalled €4.71bn ($6.07bn), a 2.5% increase over the same period last year. The group’s investments in the digital sector and emerging markets are beginning to pay off with 7.5% growth in digital and 6.3% growth in emerging markets.

The results come just a day after Sir Martin Sorrell reduced WPP’s full-year outlook for 2012, warning a dramatic slowdown in the advertising industry.

Jenni Baker, London