Publicis Groupe has raised its revenue growth estimates for the year after beating analysts’ expectations in the third quarter.
Results from the French group, which owns agencies Saatchi & Saatchi and Leo Burnett, are the latest to demonstrate the rapid rebound in advertising spending, particularly in the US, India and China, and in digital media.
Publicis’ like-for-like revenues in the three months to September rose by 9.2 per cent to €1.32bn, with North America growing by 12 per cent. The group’s revenues in India increased by about 20 per cent, China by 25 per cent and Russia by 24 per cent.
Maurice Lévy, chief executive, said the growth rate was “above our own expectations”.
“We found some good confidence from advertisers to invest,” said Mr Lévy. “In this world of competition, if [clients] wanted to protect their brands, they had to invest more.”
The fourth quarter is expected to show some slowdown in global advertising spending growth compared with the rest of 2010, as comparisons with last year become tougher and it lacks the boost from the World Cup.
Publicis now expects full-year organic revenue growth of about 6 per cent, but did not raise its margin targets beyond the 15 per cent it set earlier this year.
“We want to have much better growth than anyone in the market and for that we need to invest in talent – and we are doing that,” Mr Lévy said, adding that bonuses and other personnel costs had been “somewhat underestimated” this year. The integration of Razorfish, the digital agency Publicis acquired from Microsoft last year, will also impact the margin.
“We will certainly have a small improvement of the margin compared to last year, but the real performance of the margin that people are expecting from us will come,” Mr Lévy added.
Publicis has recently made acquisitions in Brazil, including Talent. It is now undertaking a “strategic review” into its Chinese operations, a region Mr Lévy would like to see among its top three sales generators, from its fifth-largest today.
“It’s not insignificant but we have to focus on how we accelerate growth,” he said, highlighting healthcare and public relations as areas for potential acquisitions.
Publicis has set a target of generating 60 per cent of its revenues from digital marketing disciplines and emerging markets. “That would give us the opportunity of sustainably outperforming the market,” Mr Lévy said.
He added that he would consider acquiring more digital assets in the Europe, but had recently passed on one potential deal, which he declined to name.
Shares in Publicis rose by 3.5 per cent to €36.99 around midday trading in Paris.
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