Does today's strong Publicis result mean the industry's pulse is coming back?
Welcome to a Friday update from Unmade, at the end of a week when we announced the program for our AI event HumAIn. You’ve only got four days before the ticket price goes up.
Today: Publicis kicks off quarterly results season with a strong number - but is it the company’s transformation rather than the economy that’s driving it? And The Unmade Index slumps to a new low for the third day running.
If you’ve been thinking about upgrading to an Unmade membership, this is the perfect time. Your membership includes:
Member-only pricing for our HumAIn (May 28) and REmade (October 1) conferences;
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Swallows and tigers: Generative AI is giving us the edge on our competitors says Publicis boss Arthur Sadoun
Australia may be well into autumn, but the first swallow of spring turned up in Paris this morning. Publicis Group was the first of the global holding companies to share its opening 2024 quarterly numbers, and they were pretty good.
Publicis’s global revenue for the quarter was up 4.9% to €3.2bn (AUD$5.3bn).
While the update doesn’t break down individual markets, so we can’t see Australia’s contribution, Publicis grew by 6.4% in APAC, with much of that driven from its media and digital divisions.
After years of WPP dominance, Publicis has become the holdco to beat. As our members-only analysis last month showed, last year Publicis was the most profitable.
This morning, Australian time, Publicis CEO Arthur Sadoun was bullish (although he used the language “cautiously optimistic”).
Much of Publicis’s momentum comes from the fact that it has been the company to do the work needed to transform away from the traditional ad-agency-and-media-buying model.
Publicis is by some way the least traditional holdco. It bought data marketing business Epsilon in 2019 which helped with that transformation to Publicis’s strategic offering of what it describes as personalisation at scale, and its digital business Sapient has also outperformed the market.
Sadoun said on this morning’s investor call that the company employs 14,000 engineers. “We consider ourself a platform company,” he added.
When Publicis announced in 2017 that it was taking a year off from entering awards and spending the money on developing the AI platform Marcel, it was mostly derided as a stunt. But it was a genuine shift that left the company better placed than its competitors to lean into generative AI when that exploded in 2023.
The question for the wider market is whether the good numbers from Publicis suggest a bounceback for the global economy, and the sector, or are specific to its own strategies. We’ll have to wait a few more weeks to tell if there’s a rising tide to lift all boats.
The strong push into AI by Publicis is a key factor. Generative AI still threatens to be a neutron bomb for the communications industry, wiping out human jobs but leaving the buildings standing. But the businesses that are already leaning into AI are the ones giving clients what they want.
Describing “huge interest” in AI from clients, Sadoun said on this morning’s investor call: “We haven’t waited for everything to be ready to start experimenting.
“The truth is AI becomes interesting when it is at the service of unique data sets that go along the entire company and can irrigate everything you do - not only in media, but in software engineering, in insights, and this is where we have a big difference.
“We are not building the core AI to have an additional source of revenue, although it could be. We are doing this because it is truly transforming the entire company and bringing the client a level of service and product that they cannot find anywhere else and justify the gap we are creating for organic growth.”
That final point could sound like hyperbole, but does appear the best explanation for the group’s outperformance.
I have a hunch that its creative arm - including Saatchi & Saatchi and to a lesser extent Leo Burnett - will be better placed than most to survive the AI onslaught which is already wiping out much of ad agencies’ bread and butter work. Big ideas will be the last thing to go.
Which takes us back to the question of whether things are as rosy for the other holdcos.
One sign that should encourage the sector as a whole: what Sadoun described as “the tech rebound”. Much of the pain felt across the sector globally - most notably for Sir Martin Sorrell’s S4 Capital - was tech clients pulling back. If that’s now rebounding that is a positive indicator.
Perhaps the quadrennial effect - the Olympics and US presidential elections cycle - lives on.
Not that it’s all green flags. Sadoun also pointed to some clients “suffering and cutting advertising projects”, and question marks about China’s economy. And it’s simply too early to say whether even the holdcos that grab the AI tiger’s tail will be able to hang on.
Still, one swallow is better than none.
Unmade Index just can’t find the floor
The Unmade Index hit a record low for a third day in a row on Thursday. Yesterday saw our index of locally listed media and marketing companies lose another 1.13% to land on 552.6 points.
Much of the drag came from Nine, the biggest locally headquartered stock, which dropped 2.42% to a market capitalisation of $2.6bn. Nine’s $1.61 share price is now close to its 12 month low of $1.60.
News Corp, which is dual-listed in New York and Sydney, also had a rough day, losing 2.7% and dropping to a market cap of US$14.3bn.
Meanwhile Seven West Media had a better day, improving by 2.63% to a market cap of $292m. Ooh Media grew by 1.47%.
Time to leave you to your Friday. I’ll be back with Best of the Week tomorrow.
By the way, if, having read about the Publicis transformation, you’re finally persuaded that you should get to grips with AI, don’t forget to check out the program for HumAIn. In four days’ time the ticket price goes up.
Have a great day.
Toodlepip…
Tim Burrowes
Publisher - Unmade
tim@unmade.media