Shares in Publicis, the world’s third-largest advertising group by revenues, dropped 8 per cent on Friday after the group cut revenue guidance for 2019 following a disappointing second quarter in the US.
Publicis, which is suffering as large companies slash advertising budgets and the likes of Facebook and Google upend the intermediary agency model by dominating digital advertising, said on Thursday after the market close that it now expects a “broadly stable net revenue” in 2019, excluding the impact of acquisitions and foreign and exchange. Previously Publicis had forecast higher organic revenue growth than the 0.8 per cent it recorded in 2018, without giving a precise figure.
Overall Publicis said that like-for-like sales were up 0.1 per cent in the second quarter, pulled down by a 1.7 per cent drop in sales in the US, which is continuing to face attrition in its traditional advertising business.
Arthur Sadoun, chairman and chief executive of Publicis, said in the results statement that the group’s “progress has been slowed down by the ongoing fee reduction on traditional advertising that continued to impact our overall US operations by around 300 bps in the quarter.” He added: “We have taken a major organisational step by accelerating the implementation of our country-model which helps generating growth through cross-fertilisation.”
In April, Publicis announced a $4.4bn acquisition of digital marketing agency Epsilon, it’s largest-ever acquisition, to expand its footprint in the US and accelerate a push into digital marketing.