Publicis CEO: Europe 'sick child of world'
The London Summer Olympics may have been the most-watched event in television history but advertising revenue from the 2012 Games surprisingly disappointed French advertising group Publicis, as did revenue from last year's highly-watched European football championships.
But the lackluster revenues from such sporting events' ad purchases illustrate a disturbingly larger trend -- last year's revenue was worse than expected. And Publicis expects this year to be even harder.
In 2012, the European advertising network saw its "organic revenue" -- a key measure of growth and a barometer in the advertising industry -- grow less than 3%. Matching, let alone surpassing, that number in 2013 will be even tougher, said Maurice Levy, Publicis' CEO to CNN's Nina dos Santos. To push back, he says his company will shift toward "fast-growing markets" in digital and emerging economies while its home base of Europe recovers from its problems.
"I call Europe the sick child of the world nowadays because there are so many issues that have to be addressed -- starting with budget deficits (and) public spending -- that need to be addressed quite seriously," said Levy. "And this will probably lead to very little growth, if any."
Publicis' pivot to digital and emerging markets echoes a similar strategy that WPP's CEO Martin Sorrell outlined in 2011. He said his firm's focus would include new markets and new media for better revenues over the next decade.
"I think there are three things," said Sorrell. "Our strategy is new markets, which are the BRICs and next 11 (emerging economies); new media, which is running from PC, through mobile to video content, to social networking and then...consumer insight, which is about data analytics and application of technology."
But while the euro recently hit a 13-month high, which makes eurozone exports more expensive and less competitive when sold overseas, Publicis' Levy said the currency exchange issue is not as big a concern as the operating challenges that European companies face.
"When you look at the current situation, we are loaded with a lot of costs, charges, taxes, which are making the competitiveness of this company much more difficult. We have to take this down if we want to solve our problem for the long term."
"I don't see the European market growing in 2013," said Levy. "I believe that it will start to recover a little bit in 2014, and the good growth will come only in 2015."
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