Sadoun says WPP & Omnicom-IPG upheaval hurting advertising as Publicis pulls further ahead

The French firm’s optimistic outlook comes a week after rival WPP issued a profit warning, which it blamed on “continued macro uncertainty weighing on client spend and weaker net new business than originally anticipated.” By contrast, Publicis Groupe has been on a new business clip, enjoying 15 major account wins over the last 12 months, including taking Mars, Paramount and a significant chunk of Coca-Cola business out of WPP.

Sadoun, though, says competitors’ challenges are not all good for his business. “The noise around Omnicom’s takeover of IPG and the noise around WPP restructuring has been hurting the market. Clearly, when you have a constant news flow around cost-cutting, layoffs and succession planning, it is not what our clients want to hear.

“What worries me is that [this news] prevents our clients from hearing what they should about us, which is what we are bringing in terms of value. And if we don’t do our job as an industry, others will try to replace us.”

Chief among their number is Facebook and Instagram owner Meta, which recently announced plans to allow advertisers to fully create and target campaigns using its artificial intelligence tools by the end of next year. “When I’m hearing that a certain platform is saying that they can go end-to-end with clients, it is definitely an insult to the intelligence of our clients,” Sadoun says. “But it’s also a way for us to understand that if we don’t stand for something strong, it could get challenging.”

For now, Publicis Groupe’s momentum is showing little sign of being derailed by either the testing macroeconomic climate or the rise of new competitors. Today’s figures show 5.9% net revenue organic growth in Q2, with acceleration in creative, including winning the global Nespresso account, helping it beat expectations. With organic growth sitting at 5.4% for H1, it is now raising its organic growth guidance to close to 5% for the full year, up from its previous 4-5% range.

As Sadoun acknowledges, this does not mean Publicis is immune to the macroeconomic climate. Reductions in marketing spend in H2 have been factored into the group’s outlook for the full year.

“I am not anticipating a drastic change of H1 versus H2 and we haven’t seen any change [in marketing spend] from Q1 versus Q2,” Sadoun says. “Having said that, we are anticipating that all the uncertainty that companies and consumers have been experiencing for the last six months can have an impact on the business, particularly in Q4, which is an adjustment quarter.”

Nonetheless, he says he’s “never seen clients asking for more help from their [agency] partners” than they are right now.

“They all realize that the media ecosystem has become even more fragmented, that the data sources are very fragmented too, that you can produce a huge amount of content, but not knowing if it’s right or not for your business. And what they are expecting from us is to have a clear strategy connecting this ecosystem at the service of their growth and reducing their cost.”

Sadoun says this is all the more reason “to make sure we stop talking down this industry all the time.” Agency holding companies, whose future is increasingly being questioned by analysts and commentators, must “defend the category.”

“I think that when we move from four to three players, this will hopefully prevent a couple of desperate moves that we are seeing on a couple of pitches or clients at the moment and that everyone’s focus – at WPP with its new management or Omnicom with its new leadership position – will be on what is the right thing for our industry and for our clients and this will unlock a lot of value for our sector.”

With Cindy Rose not taking up the WPP CEO position until September 1 and Omnicom’s takeover of IPG still awaiting completion, the industry will remain in transition for some time yet. “I can’t wait for the takeover to happen,” Sadoun says. “And I can only wish luck to Cindy Rose because we all need a strong WPP. In both cases, if they are successful, it will help us all.”

Sadoun takes a moment when asked what advice, from CEO to CEO, he would offer to Rose, the Microsoft exec and WPP board member succeeding “tough competitor” Mark Read.

“I don’t have any advice to give her,” he says after a beat. “She knows WPP and I guess she knows what needs to be done. I mean, it’s a tough job to be CEO of a holding company, because you have to focus on your clients, put your people first, and don’t be scared to make dramatic changes in an industry where you’re judged by the quarter. But hopefully, as a team in Publicis, we have demonstrated that when you do those three things, you can create value for every supporter. And this is what I wish to see.”