“If You Think Our Clients Are Ready to Give Their Credit Card to One Platform, You’re Wrong,” says Publicis CEO Sadoun
Publicis Groupe CEO Arthur Sadoun, as much as he claims not to like talking about his competitors too much, hasn’t been able to resist throwing a few jabs at his major rivals in recent earnings calls. And indeed on today’s conference call, WPP, Omnicom, and Interpublic Group got a fair few mentions, both directly and indirectly, as he highlighted his own company’s superior performance following another strong quarter for the French group.
Sadoun ended his introductory remarks, however, by talking up not just Publicis’s prospects, but those of the agency holding groups as a whole. There’s been plenty of speculation about whether the big agency groups will remain as big and important in the ad industry as the tech giants use AI to compete for an even greater slice of total ad spend. But Sadoun said he sees “real reasons to be optimistic, not only for Publicis, but for all of us”.
A scathing Meta analysis
It’s been a rocky few years for ad agencies overall, and Publicis can rightly claim to have significantly outperformed its competitors in that time, at least in terms of growing revenues (and its share price). The company delivered 5.9 percent net revenue organic growth in Q2 and upgraded its full year guidance to “close to five percent” growth, just one week after its major rival WPP downgraded its 2025 forecast.
Some industry observers believe that with AI threatening to disrupt the agency model, with tech platforms offering AI-powered creative and media services which could replace some of the work traditionally done by agencies, market conditions are only going to get harder for the groups which are struggling. Sadoun, however, believes that all of the holding groups can thrive in an AI-powered future.
“Spending the vast majority of my time with clients, one thing is clear,” said Sadoun. “With the acceleration of AI, they need their trusted partners more than ever. If they want to thrive in a complex, AI-driven world, clients need to own their data and to not be prisoners of the walled gardens; connect the entire media ecosystem and not depend on any single platform; protect and grow their brand value and differentiation, as AI threatens to commoditise brands; measure their investment transparently with real business outcomes; and build their own ecosystem to be AI-ready and AI-powered responsibly. Only our industry is capable of connecting and delivering on these imperatives.”
The Publicis CEO was asked directly about Meta CEO Mark Zuckerberg’s vision for his own company’s AI-powered ad offering, in which brands will hand Meta their bank card and their business objectives, and Meta will take care of the rest. Will Meta steal business from the holding groups? Sadoun is confident that won’t be the case.
“It’s eight years today that I’ve been presenting results, and I have been hearing that the platforms will eat us for breakfast since the start,” he said. “And since then, we have actually doubled our revenue, and more than doubled our market cap. As we say in French, “le chien aboie, la caravane passe [translation: the dog barks, and the caravan passes]. […] Sorry for my French, but I think we need to stop the BS and fear that the platforms will make us disappear.”
Talking about Meta’s AI threat specifically, he reiterated his earlier comments: clients want to use AI, but they want independent partners to help them work across different platforms, and protect and leverage their own data.
On the creative front, he argued that AI used without the specialist knowledge of an ad agency will be ineffective. “AI has no taste, AI is incapable of knowing what will bring value to consumers,” he said. “That doesn’t mean that AI won’t help our creative forces tomorrow, or today, to get results […] but no one other than a partner like us, or any of the holdcos by the way, can do it.”
And Sadoun emphasised the importance for clients of getting independent measurement. “If you think that our clients are ready to give up and, as Meta says, give their credit card to one platform, you’re wrong,” he said.
Sticking to home ground
Sadoun’s comments in defence of his competitors likely have an element of self-interest. Analyst uncertainty around agencies’ future prospects seem to be weighing down Publicis’s own share price, despite its consistent strong performance over the past five years.
The French group certainly seems to be seen in a different light to the other holding companies by some. As the Wall Street Journal reported a few weeks back, Publicis was spared as Barclays downgraded the stocks of WPP, Omnicom, and Interpublic Group. But as Bank of America analyst Adrien de Saint Hilaire referenced on the call, there’s a disconnect between Publicis’s performance and its valuation.
It’s also worth noting that Sadoun’s bullishness is centred on a particular AI strategy — and not one that his competitors are necessarily following.
While AI is undoubtedly core to Publicis’s plans, Sadoun was once again clear that Publicis is not, nor is it trying to become, an AI company. Competing with the tech giants on that front will be extremely difficult, as highlighted, if nothing else, by the fees which Meta and others are paying for top AI talent. Sticking to the traditional strengths of agencies, and doubling down on the areas where they have decades of experience, will be key to success in Sadoun’s eyes.
If Sadoun is correct, agencies will need to be careful that in their rush to create unique AI capabilities, they make sure they’re still competing on their own home ground, rather than that of the tech giants.
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