—Publicis CEO talks to Campaign after Q3 results beat forecasts—
By Gideon Spanier
The best agencies recognize that it makes sense for staff to spend time working in the office, which is why two of London’s “most successful agencies,” Bartle Bogle Hegarty London and Adam & Eve/DDB, are already back to in-office work four days a week.
That’s according to Arthur Sadoun, the chief executive of Publicis Groupe, who was explaining why he thinks his new policy of mandatory Mondays in the office and no two consecutive days of remote working will improve innovation and creativity. In practical terms, that means a minimum of three days in the office beginning January 2024.
It is understood that Publicis-owned BBH moved to four days a week in the office earlier this year, and its Omnicom rival, Adam & Eve/DDB, pushed that policy, which it called “Four and Flex” last year. The benefits of being in-person are “not lost” on them, Sadoun said.
“While productivity can be maintained, innovation suffers” when staff work remotely, he claimed, citing industry research and pointing to brands such as Disney and Google, which operate outside the agency sector and expect employees to spend a majority of their time in the office.
He spoke to Campaign at Q3 results, when the French agency group reported better-than-expected 5.3% organic revenue growth and looked set to stretch further ahead of its rivals as it upgraded its annual forecast.
Some rivals have cut their forecasts and blamed tech clients for cutting spend, but he said: “We are not seeing anything that would make us single out the tech sector in particular.”
Here is a transcript of the interview:
Publicis had a better Q2 than all of its main rivals, and you upgraded your full-year forecast. Now you are the first to report Q3. How did you perform in terms of discipline and geography?
We actually had a very strong Q2, outperforming average industry growth by 500 basis points [about 7% for Publicis versus 1.4% for its other three main peers] and upgraded our guidance despite global economic difficulties. For Q3, although those macroeconomic challenges intensified, we delivered strong organic growth of 5.3%, ahead of expectations and on top of double-digit growth last year.
All of our disciplines grew, with a remarkable performance from [data unit] Epsilon at double-digits, due to client need for first-party data management in a soon-to-be cookie-less world; and Publicis Media, growing at high single digits as they continued to win market share and new business. All of our regions posted solid organic growth, with Europe and the UK in particular at standout double-digit growth.
What is the financial outlook for Q4 because there’s nervousness in the wider market? Are you still on track to hit your forecast? And can you give any indication about 2024?
I can understand the apprehension in the broader market, as we are definitely in a context of rising global socio-economic tensions. But our go-to market [proposition], our unique revenue mix and our platform organization position us not only to hit, but to exceed our forecast and actually raise our guidance once again. We are now expecting to grow by 5.5% to 6% organic growth for the full year, with operating margin at 18%.
In this uncertain world, I suggest we wait for 2024 to talk about 2024, but what I can tell you is our objective next year is to continue to outperform the market for the fifth year in a row.
What’s the new business pipeline like? For example, some of your rivals have talked about a slowdown in demand from clients for digital transformation projects.
After a very busy H1, the second half of the year is a bit quieter on this front, which is good news for us as we are mainly focused on integrating our recent client wins. Having said that, clients are clearly taking a more conservative approach to [capital expenditure] and choosing to pause some projects in digital business transformation.
Every tech consultancy, including the industry leader [consulting giant Accenture], is experiencing this. However, there is no doubt the demand for digital business transformation will bounce back again as the client need for transformation will only increase, even more so in a world driven by AI.
Some of your competitors said they suffered a slowdown because of a reduction in tech and telco client spend in Q2. Have you experienced a similar slowdown? And why does it seem to have affected Publicis differently?
Like everyone, we are seeing clients being increasingly cautious. That said, we are not seeing anything that would make us single out the tech sector in particular.
You have introduced “Mandatory Mondays” in the office and no two consecutive remote days from the start of 2024. What problem is this trying to solve? And how severe is the penalty for employees who do not follow the policy—for example, will it lead to termination?
There are a lot of studies that have analyzed the new way of hybrid and remote working. And while the exact percentages vary across industries, the overall consensus is that while productivity can be maintained, innovation suffers. As you know, our clients rely on us for new ideas, fresh thinking, and creative solutions across all disciplines.
That’s why we have created in-office principles to guarantee opportunities for co-creation, spontaneous collisions, and knowledge transfer. We like to call it “CI”—the collaboration imperative. Think of it as a human complement to our industry’s fascination with AI.
You ask about “penalties,” but the idea isn’t for this to be punitive—we will make sure we move forward with empathy and intelligence. But ultimately, we have to be together—to innovate together.
How many days are you personally spending in Publicis’ offices each week? Do you dislike working from home? Or is it important for you to spend time at home at any point during the working week or month?
I’m an old guy, I have spent my days—and too often my nights when I was younger—working in agencies. I like everything about it. The confrontation of ideas, the energy of being together in person. It’s how I grew professionally, how I learnt the ins and outs of our industry, how I met some of the boldest, brightest and most creative people. So everywhere I am, I try to sit with the teams, except in Paris where I’m at the corporate level, which is pretty boring.
Having said that, I’m not trying to make the whole company replicate what I have experienced in the past. I believe in a hybrid world and enjoy the advantages of remote working, be it for more time with family or for broadening horizons and new opportunities through experiences like Work Your World. But, again, I think it’s time for all of us to come back to spending the majority of our working time together.
Environmental campaigners continue to raise questions about why some agency groups, including Publicis, work with fossil-fuel clients. Are you still happy to pitch for such clients, and is your policy changing at all?
We’re in the middle of a climate crisis on the one hand and an energy security crisis on the other. The energy clients we work with know that they are vital in responding to both. Our role is to accompany them, not just as a communications agency, but also, thanks to Publicis Sapient, as a transformation partner as they accelerate on their transition journey while continuing to meet the needs of their customers around the world.
Of course, beyond helping companies transform their businesses, we assess the strategies of potential clients to make sure they align with our values, and we continue to respect our long-standing commitment, since 2009, of rejecting greenwashing assignments.
Publicis Groupe’s supervisory board recently held a board meeting in London and the top management team, the Directoire+, also recently came to the UK, which is your biggest market in Europe. Was there any significance about your decision to meet in London? To what extent, if at all, has Brexit changed your approach to the UK?
The UK is our second-biggest market globally, after the US and ahead of France. Recently, it has experienced fantastic momentum, with 10% organic growth this quarter, and some outstanding new business wins, particularly in creative with John Lewis or Skoda. So, of course, the board were interested in seeing the current dynamic and meeting all of our managers there. As for Brexit, it hasn’t changed our business approach but it does mean we’re queuing for a lot longer when we come to visit.
This article originally appeared at Campaign UK.