Advertising
Organic growth in the three months to September was just 0.7%, below the company's expectations set out in the previous quarter. The company says its full-year organic sales are now only likely to grow 1%, below its previous target of 2.5%. Overall, Publicis' revenue (taking account of acquisitions, disposals, and FX) grew 33% year-on-year to €2.3 billion ($2.6 billion.)
Publicis Groupe stock was down 9.8% to at the time of writing.
Speaking on the company's earnings call, CEO Maurice Levy described the results as "disappointing news."
"The month of September showed zero growth due to numerous campaigns being postponed, mainly in digital operations. The level of cuts are surprisingly high and coming from many different advertisers from packaged goods, automotive, and pharma."
Levy couldn't provide further details on specific clients that had cut their campaigns. For pharma clients in particular, regulatory issues had caused them to hold back on advertising spend. Meanwhile, with packaged goods, some products that were due to be launched this quarter had been postponed.
He also added that the majority of reduced spend had come from the US and that around 60% of the canceled campaigns were one-off projects, while around 40% were longer-term retainer pieces of work.
Levy said the company remained "cautious" about Q4 as this is the quarter when clients who are suffering financially will cut their marketing investments in order to make an adjustment on the P&L.
The results all are all the more disappointing as they come in the same week rival advertising agency holding groups Omnicom and Interpublic Group both beat expectations and posted strong organic growth. Omnicom posted organic growth of 6.1%, while Interpublic posted organic growth of 7.1%.
That would suggest campaign cancellations isn't an industry-wide, macroeconomic issue, but one specific to Publicis. Other rival agency groups - including Havas and WPP - report either later this week or next week.
Mediapalooza
Another issue putting pressure on Publicis in the quarter was the unprecedented number of media agency reviews taking place - an event so unusual it has been dubbed by the trade press as "Mediapalooza."
Media agency reviews let brand reassess their ad spending, often by offering those contracts out in a competitive bidding process. Reviews place agencies under huge pressure: Those fighting to retain their clients' accounts will likely be put under price pressure from rivals, and whether attacking or defending, the pitch process takes up a huge amount of employee time, which gives them fewer hours to focus on their other clients.
Despite the fact that Publicis had more accounts at risk than any other agency group, Levy said the outcome has been positive so far, with more wins than losses - which came against market expectations from both press and analysts.
To hammer home the point, Publicis presented this slide, showing the number of big clients it has either retained or picked up.
Publicis Groupe
As the chart shows, the industry is still waiting for some big reviews to be concluded, and Publicis is involved in three of those: P&G North America, Fox, and L'Oreal USA.
Levy said one of Publicis' strengths in such reviews has been the impact of the Sapient digital and technology business it acquired earlier this year.
However, the integration of Sapient also provided one of the company's challenges in the quarter. Alongside that, the company is still reeling from its failed $35 billion mega-merger with Omnicom last year, which Levy previously said had "distracted" the company's leadership.