EuroBusinessMedia (EBM): Publicis Groupe, the world’s fourth largest advertising company, just reported third quarter revenue, Maurice Lévy welcome, you are the CEO of Publicis Groupe, what are your comments on third quarter and nine-month revenues of Publicis Groupe, in particular the level of organic growth in the third quarter compared to the first half?
Maurice Lévy (ML): As you know, we had a first half of the year which was not very good and absolutely not in line with what we are used to deliver. And the market is very much expecting our numbers for the third quarter. I’m pleased to report that they are totally in line we our internal objectives. We were planning to have a third quarter in the region of 4 to 5% - we are exactly at 4.6% organic growth and we expect to do a fourth quarter higher than the third quarter. Regarding total growth for the third quarter, we are at 10% and, if we exclude the difference of foreign exchange rates, we would be at something in the region of 15%. So we see a very good impact on acquisitions as well as internal growth. The also very good news is that all the regions are contributing and all the operations are contributing positively, with the exception of our healthcare practice, which unfortunately is facing the difficulty of the sector. I would like to add something which is very satisfactory for us, which is to see that we have our digital operation growing by double digits as well as our media operation growing also by double digits.
EBM: Earlier this year you hinted at the fact that you expect organic growth for the full year to come in at the bottom of the 4 to 5% range. With the 3rd quarter data now available, are you able to provide a more definitive estimate for your full year guidance?
ML: We are in the same ball park and we believe that we will be in the region of 4%, which is what I said at the last meeting.
EBM: Are you concerned by the possibility of a slowdown of the US economy? What are you observing in the US and how do you think Publicis Groupe could be affected in 2008?
ML: I have no crystal ball and it’s very difficult for me to forecast what will happen in the US. I see a lot of expectations and forecasts which are made by great economists and also by some people in the advertising field. What do we see correctly? – hard facts. The first thing is that we have not seen any major change in the behaviour of our clients. So from now till the end of the year we have not been faced with any huge cancellation or postponing of campaigns - we have some but nothing which is noticeable or nothing which is material enough to raise concern. Obviously, as every year, many corporations are adjusting their spending in December according to how they will close the year. So we may have an effect, positively or negatively, on what will happen in December. Regarding 2008, there is some good news, which is that we are in what we call the quadrennial year, where we have the Olympic Games as well as the US election. For the time being and based on what we know, we don’t see a slowdown, we see a deceleration of the growth, while at the same time we know that the Chinese Olympic Games are raising a lot of interest and we know there will be a lot of competition to be there. So all in all, we do not see – always for the time being - any reason for being too much concerned. There are also some areas for hope, besides the Olympic Games and the US election, there is also the huge raise in investments in the interactive field. I must say that, due to the acquisition of Digitas and everything that we are doing in this domain, we are very hopeful to benefit from the growth in this sector.
EBM: What is your progress report about each access of your three pronged strategy around digital, emerging markets and media and SAMS, SAMS being specialised agencies and marketing services?
ML: On digital, as you know, now only have we made the acquisition of Digitas, Business Interactif in France, CCG in China, but we have also a policy and a strategy which is to enhance our digital capabilities in every single operation. We have also recently launched HoneyShed in the US, which is a kind of direct sales web TV - to put it in a nutshell - it’s something which is much more sophisticated, but that is part of what we are doing. We are very confident, based on the numbers we have, that this segment not only will be growing very fast, but that we will gain market share due to the fact that we have some of the best capabilities in the world. We have definitely taken a position which puts us at the forefront of the industry and we have the technology, people and tools which really are helping us to attract clients and to retain them. So we are very confident on that aspect.
Regarding the emerging markets, we have seen, for example, in the third quarter, that our market share – sorry – the share of our business to be more accurate, which was 20+ last year, is 22%. So we are growing in this segment and we have a position which is growing very well. We have also made some acquisitions - India with Capital Advertising in New Delhi and CCG in China as well as Yong Yang - so we feel very good about our possibilities in those markets and we believe that we will reach the 25% share of our business that we wished to get from this market earlier than expected.
Finally on the SAMS and the media operation, we have first very good news – that is we have two of the very best media agencies in the world, with Starcom MediaVest on the one hand and ZenithOptimedia on the other. So our offering in this segment is one of the very best - if not the best - in the industry, with some incredible tools which are putting us far ahead of any of our competitors, and probably the best people in the industry. If you look at the numbers for 2007, we’ll probably close the year on this segment of our business by double digit growth and we have some very good expectations for 2008. So we feel confident on that segment.
EBM: And what about SAMS?
ML: On the SAMS we have the PR which are doing very well and we will expect this segment to grow faster, and we have the healthcare which is doing less well due to the problem of the sector. 2007 has not been a great year, 2008 will be better in terms of growth but probably not yet at the speed at which we can hope for in that sector. There are some reasons for hope in this sector and we see that a lot of Governments, due to the cost of healthcare for their social security, are trying to make sure that small illnesses can be cured by self medication. Who would have thought that we would see this happening in France - and it’s just happened! So there are some reasons for hope in that segment, which will, by the way, help not only the industry, but the state owned social security as well as the well-being of the people. And we have some other assets which are going well, in terms of production, if you look at events and all these operations, we have better prospects for 2008. So we believe that the strategy we have put in place will work very well, we have some of the very best assets of the industry and we feel very confident.
EBM: Maurice Lévy, CEO of Publicis Groupe, thank you very much
ML: Merci.
