Publicis revenues exceed pre-pandemic levels after 17% growth in Q2

Publicis Groupe’s global revenues jumped 17.1% in Q2 and were up 9.7% across the first six months of 2021 and it is on course to recover all of 2020’s losses this year – one year ahead of previous expectations.

Revenues have already returned to pre-pandemic levels as they were 2% ahead of 2019 in the first half of 2021, the French agency group said.

Arthur Sadoun, chairman and chief executive of Publicis Groupe, admitted to Campaign that Q2 2021 was a “very strange quarter” because of the dramatic comparison with a year earlier as 17.1% growth this year followed a 13% slump in 2020.

Over the six-month period, revenues were 9.7% ahead, compared to an 8% decline last year.

He credited digital consulting arm Publicis.Sapient and data business Epsilon for driving growth in the most recent quarter, particularly in the United States, where both grew at over 25% in Q2.

The US operation was up 15.2%, Asia was up 13.6% and Europe up 23% in Q2.

Looking ahead, he predicted Publicis Groupe’s annual revenues will rise 7% globally in 2021 against a 6.3% decline in 2020.

That meant it should “recover all of last year’s losses in a single year” – “one year ahead of its initial expectations” – although the company cautioned that was “assuming no major deterioration in the health situation”.

“Capturing a disproportionate part of our clients’ investment in data and technology”

Sadoun said: “In the first half of the year, we had a very strong performance thanks to our model in an improving business environment. Not only did we fully recover the revenue lost in 2020, but all of our KPIs over the first half exceeded 2019 levels.”

The US and Asia were especially strong, as they were 7% ahead of 2019 levels.

“Creative activities were positive, showing sequential improvement after being flat in Q1, with notably a strong growth in production activities,” the company said. “Commerce is also growing strongly, benefitting from an increase in clients’ demand.”

Publicis Groupe had an operating margin of 16.5% – its “highest ever” – for the first six months of the year, as the owner of Leo Burnett, Saatchi & Saatchi, Starcom and Zenith benefitted from reduced costs.

The group also topped the agency new business rankings in the first half of the year, according to data from COMvergence, although Sadoun noted retentions such as Samsung in the US and Nestlé in the UK were also significant.

“For the remaining part of the year, our unique ability to capture a disproportionate part of our clients’ investment in data and technology means we are in a position to upgrade our 2021 guidance,” he said. “We now expect to fully recover to pre-pandemic levels, a year ahead of our initial expectations.”

Performance against rivals

Publicis Groupe was the second-best revenue performer, after Interpublic, among the big six traditional agency groups during the pandemic after lagging most of its peers in 2019.

Earlier this week, Interpublic reported 19.8% growth in Q2 and 10.6% across the first half.

The US group was was more bullish than Publicis Groupe about the full year, predicting revenue growth of 9% to 10% in 2021 after a decline of only 4.8% in 2020. 

Omnicom had 24.4% growth in Q2 and 10% in the first half but that followed a weak 2020 when its revenues fell 11%.

WPP, Dentsu and Havas owner Vivendi are yet to report results.

Publicis Groupe shares rose nearly 5% on the day before its Q2 results on the strength of Interpublic’s results.

Analysts at Citigroup welcomed Publicis’ results: “The primary focus for us is the organic growth performance, which is meaningfully better than expected and actually represents 2% growth on a two-year basis, i.e. vs. 2019 numbers.”

This suggests “the rebound in growth is not just ‘economic recovery’” and better “underlying trends” are now driving the agency sector, the investment bank said.