Publicis Groupe has implemented an approximately US$540 million cost-reduction plan in 2020, to adapt and be recovery ready amid the COVID-19 situation. In addition, the network will also be cutting dividends by 50% and delaying payment until the end of September. At the same time, the Groupe’s management team will have its fixed remuneration reduced. There will be a 30% reduction in fixed compensation for both supervisory board chairman and Groupe CEO, while a 20% cut for the management board members.
Arthur Sadoun, chairman and CEO of Publicis Groupe addressed this changes in a media statement, and explained that it is however, still too early to predict the full impact it will have on its clients and its business hence the agency will not be providing any guidance.
According to Sadoun, all of the countries the network has a presence in and all of its activities will be impacted to varying degrees. “Our response to this situation needs to be structured, multi-faceted and rigorously executed. Our experience in managing cost and cash in times of crisis, our country model and our strong balance sheet will help us to stand firm in this storm and prepare ourselves for recovery,” he said.
This comes on the back of an organic growth at -2.9% recorded at the start of the year. At the end of February before the pandemic started to spread, Publicis Groupe recorded almost flat growth, despite double-digit decline in China, mostly driven by 5% organic growth in the US on its creative and media business. According to the network, Epsilon 2.0 was also growing at +5% growth at the end of February.
However, the month of March saw a continuous decline in China and the abrupt deterioration in Europe also negatively attributed the company’s financials. Publicis Groupe said that the strong negative impact was largely compensated by North America returning to growth, including Publicis Sapient which is slightly positive in the US.
But as the network, along with multiple companies, is facing a crisis that will be unparalleled in terms of magnitude, complexity, and probably length, Publicis Groupe will be focusing on protecting its people first.
According to Sadoun, the agency has put in place the necessary infrastructure to enable all of its employees to work safely from home and also took a series of measures for their health and well-being. Publicis has also collectively advanced the launch of its global AI platform Marcel to keep the teams across the world connected and fight the effects of isolation.
In addition, the agency has also reviewed its current and future commercial and corporate messages and realigned its media plans to be much more dynamic, deliver short-term ROI and proposed some outcome-based products for this new market context.
“Let me take a moment to say that our thoughts are with all of those currently suffering with the virus. I would also like to thank our clients for their partnership. And finally, I would like to express my gratitude to our people, who have demonstrated in the last weeks that we have an incredibly diverse and united team, to come out of this crisis even stronger,” Sadoun added.
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