Publicis Sees Opportunity In Facebook SNAFUs And GDPR, Despite Unknowns

Despite consumer outrage aimed at Facebook, Publicis Groupe’s sentiment about the platform is status quo.

“The impact is not material on our business in the short or medium term,” said Steve King, CEO of Publicis Media, on the holding company’s Q1 2018 earnings call Thursday. “Facebook is a very important partner to us. They have incredible technology capabilities, fantastic engineering and great leadership.”

Publicis Groupe CEO Arthur Sadoun agreed and posited that Facebook’s mishaps are a boon for agencies, which have an even more important role now in policing content and helping clients leverage their first-party data.

“Facebook is a great company and very important partner to us,” he said. “It’s legitimizing our role as agent by making sure our clients own their own data by building individual profiles, which we all know is the future.”

But Facebook’s trust issue with consumers could hurt advertisers in the long term, King acknowledged.

“There is a big challenge for Facebook to reestablish that trust post-Cambridge Analytica,” he said. “I suspect the next few months will determine whether that trust is reestablished.”

GDPR you ready?

While executives assured investors that they’re up to speed on GDPR compliance and Publicis’ responsibilities as a controller and a processor, they weren’t as clear about the effects of GDPR on the advertising ecosystem.

When asked whether agencies will be able to get consent from consumers to tie together their personal data with unique identifiers for targeted marketing without having an explicit value prop to consumers, Sadoun simply reiterated the agency’s role in helping clients grow by delivering one-to-one messaging at scale.

“Our clients won’t survive if they don't own their data,” he said. “Our job is to make sure that through their first-party data, they can enrich profiles of consumers through second and third parties. We are here to sell and buy and make sure our clients grow.”

King provided a little more detail, adding that the data management needs under GDPR could provide an expanded service opportunity for Publicis Groupe thanks to its access to 35,000 engineers and data scientists from Sapient.

“We’re implementing robust data privacy and governance, which is paramount to our business and clients’ business,” he said. “We did not build Publicis People Cloud as a black box [in which we] own the data ourselves. We’re managing the interpretive layer for our clients.”

On how GDPR shakes out, however, “I don’t think there’s a very clear, definitive answer,” King said.

Publicis Groupe reported organic growth of 1.6% for the quarter with net revenues (revenue minus pass-through costs) at $2.56 billion. That’s a “much better start from last year,” Sadoun said, when revenues were -1.2% for Q1 2017. Headwinds were attributed to new client wins like Carrefour, Campbell’s and Marriott.

“We know that new business wins will have an impact on H2,” he said, but “there is no doubt that our industry is facing an attrition issue when it comes to contracts and pressure on costs. We have to balance the wins and the attrition that will have a negative impact.”

Despite a positive quarter, Publicis still has work to do to get back to the growth shareholders need, Sadoun said.

While that growth might come from bolt-on acquisitions in the areas of data, dynamic creative and business transformation, Publicis isn’t looking to acquire any assets that could potentially be sold from WPP as a result of CEO Martin Sorrell’s shocking departure.

“We’re only going to focus on those three things and in a disciplined way,” he said. “We have a plan, organization and pure road map and we’re going to focus on our game-changers.”

 

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