Lévy predicts 7% decline in adspend

10 June 2009

PARIS: Maurice Lévy, ceo of Publicis Groupe, predicts that global adspend will decline by between 7% and 8% in 2009, with a slight improvement in the climate in the second half of the year compared with the first.

Speaking at the holding group's annual general meeting, Lévy said that this year "will not be a great year, a great vintage, but we have undisputable assets."

These strengths, he argued, included the company's presence in a number of emerging markets, its growing muscle in the digital sector, and a strong financial position.

He added that Q2 was likely to be the most difficult period of the year, with July looking particularly adverse, but that Publicis should perform better than the market as a whole.

"The second quarter will be the toughest quarter, with an improvement coming in the second half of the year," he added.

"At this stage we are confident we will do better than the sector's average and than the top tier, but we do not know by how much."

While Publicis will see margins fall from the record level of 16.7% recorded last year, Lévy stated that the marketing services conglomerate was still aiming to register the best comparative figure of any of the major holding companies.

"We will have an erosion of our margin. There is all likelihood that we will maintain the gap with rivals. I am confident we can deliver the best sector's margin," he said.

Among the initiatives in place to help it achieve this goal are stringently controlling overheads – including a reduction in its overall headcount – as it attempts to cut variable costs by 15%.

While Publicis had some €2.8bn ($3.9bn; £2.4bn) in free funds at the end of last year, it is not looking to invest further in emerging markets, although it may do so in "a smart manner" in Germany.

Lévy also revealed that, under the "worst-case scenario", Publicis' exposure to General Motors, the US auto giant which filed for bankruptcy protection in its home country, would reach €55m, but in reality this figure was likely to be much lower.

Data sourced from Reuters; additional content by WARC staff