Publicis Divests Health Care Business To Drive Growth

“Account wins are a tangible demonstration of how our clients are responding positively to our model,” Sadoun said. “They make us confident about long-term trends and our ability to benefit from the major changes faced by our industry.”

While Publicis will continue divesting noncore assets, it will only do so for strategic purposes as opposed to beefing up its balance sheet.

“If we want to bring marketing and business transformation, we have to focus only on that,” Sadoun said.

Although the company will not make any major acquisitions soon, he said, it will continue to evaluate bolt-on acquisitions that bring either talent or technology that align with its strategy.

“We have seen buying growth at any price become an increasingly easy option for some competitors,” Sadoun said. “We have been extremely disciplined in making acquisitions, and we will be even more now that we have a clear plan. We won’t buy growth at unreasonable conditions that will hamper our relationship with clients in the long term.”

Creative pressure

Publicis bets that investments in data, technology and dynamic creative will mitigate some of the pressure that creative agencies face from reduced margins and scopes of work.

While clients are reducing spending on traditional creative, they’re not cutting budgets overall. Publicis is well positioned to capture that shift by emphasizing personalization at scale.

“The industry is facing structural headwinds on creative activities,” Sadoun said. “We are continuing to invest in data and technology to make our creative ideas even stronger and more effective.”

As Publicis incorporates data, technology and business transformation in more of its pitches, it’s also running into consulting firms. Consultants participated in the first round of the GSK pitch but were ultimately unsuccessful, said Steve King, CEO of Publicis Media.

“We are seeing competition occasionally, infrequently, from the consultancies,” he said. “I don’t know of a single instance where we’ve lost one of our major assignments, or any significant part, to any of the consultancies. The way we’re building our proposition will put us on an offensive footing.”

Consultants are, however, increasingly cropping up in business transformation pitches with Sapient, Sadoun added. “Although we are smaller, we have a proposal that is at least as competitive as we gain traction,” he said.

As for programmatic, Publicis has “huge momentum in that part of the business” despite a growing industry trend of clients taking pieces of the function in-house, King said.

“Compared to a year ago, we actually have a smaller proportion of clients in-housing,” he said. “One reason is because it’s really tough to do.”

And while media review activity is still heavy, the nature of pitches has changed from a cost perspective to a search for a strategic partner. Given that shift, clients will want to work with their agencies on a more long-term basis, King predicted.

“The solutions we’re building will give us more stickiness,” he said. “I think we will see an elongation of the pitch cycle.”

This post was syndicated from Ad Exchanger.