Publicis surpasses Omnicom as second-largest holding company by revenue

Publicis Groupe has surpassed Omnicom as the second-largest holding company by revenue, bringing in $14.9 billion in 2022 and $3.7 billion in Q1 2023, it said on an earnings call on Thursday. 

By comparison, Omnicom, which reported Q1 results on Tuesday, brought in $3.4 billion in revenue in the quarter and $14.3 billion in 2022.

According to Publicis’ results, the holding company now has the largest market cap in its competitive set at more than $21 billion, up from $16 billion in 2017. WPP’s market cap, by contrast, has shrunk from $26 billion to $12.9 billion over the same period, while Omnicom’s has stayed steady at $19 billion, according to Publicis’ figures.

It’s a coup for Publicis, which has held the No. 3 spot on the global market for “forever,” according to CEO Arthur Saduon. He said the company is starting to see its transformation bear fruit, adding that Publicis has grown by 45% since 2019. 

“It has been a tough journey … when we did the Epsilon acquisition, when we created the country model, when we put Marcel in place,” Sadoun told Campaign US in an exclusive interview. “But we are moving to No. 2 [holding company in terms of revenue]. So yes, it’s worth it.”

Publicis’ 10% net revenue increase and 7.1% organic growth increase in the quarter were driven by all of its operations, Sadoun said, with media and creative services growing in the high-single digits. Growth was driven primarily by Sapient and Epsilon, which grew by 11% and 10% year over year, respectively.

Epsilon and Sapient are answering what Sadoun described as “the two biggest shifts in our industry,” including managing the transition from third-party cookies to first-party data and helping clients on their digital transformation journeys. He added that after a restructuring, Epsilon is growing double-digits while it was “roughly flat” when Publicis bought it for $4.4 billion in 2019. 

“The reason why they are both growing so fast, despite the macroeconomic uncertainties, is due to the fact that the demand for transformation has never been so high,” Sadoun said. 

Sapient is having particular success in the UK, contributing significantly to nearly 24% year-over-year growth in the region. Growth in the UK was also driven by global new business won in the US that is being headquartered in London. 

“By the way, two years ago, Sapient was having a very tough journey in the UK,” Sadoun said.

He added that the departure of UK CEO and longtime Publicis exec Annette King and subsequent decision to not replace her role is not a departure from Publicis’ country model, adding the region will be run by an executive committee similar to how the US is structured.

Publicis grew 5.8% organically in the US and 5.7% in North America. Despite concerns of the US Federal Reserve hiking interest rates, Sadoun is confident that Publicis will reach the higher end of its 3% to 5% global growth forecast for the year. 

He added that while clients aren’t cutting budgets yet, some are delaying projects. 

“Even though we’re going to see, as everyone, some localized advertising cuts here and there, we don’t see anything material, and more importantly, we believe that our clients will continue to invest in their transformation,” Sadoun said. 

In Asia-Pacific, Publicis grew 0.8% organically while net revenue decreased by 4.2%. China grew organically 3.7%, which Sadoun sees as a big advantage over competition. “The fact that we are growing in China where the rest of the industry is declining shows we have great momentum,” he said.

Like Omnicom, Publicis is also leaning heavily into off-shoring talent in regions such as India, Eastern Europe and Latin America. The strategy isn’t about cost-cutting, but about having access to engineers and back-office talent to support its agencies and clients around the world, Sadoun said. The holding company currently has 25,000 engineers in India.

“Off-shoring does not mean cheaper. It means qualified people at scale on a flexible model. That’s very important,” he explained. “It’s about scaling our engineers and making sure we have a flexible model that can adapt.”

Sadoun also spoke about AI, which it began investing in with its talent management platform Marcel in 2017 and is now integral to “everything we do for clients.” He added that Publicis’ creative collective, Le Truc, has a partnership with OpenAI.

“We didn’t wait for ChatGPT to actually put AI at the core of our operating system and for our clients,” he said. “We don’t believe AI and the machine will take the job of our people at Publicis, but we believe that our people need to master the machine if they want to continue to add value.”