2019 Annual financial report

Chapter 1. Presentation of the group

By making Epsilon the data expertiseof the Group, Publicis draws on this wealth of resources for all our business activities turning it into a key, differentiating advantage:

  • our iconic creative brands will draw on Epsilon’s deep customer knowledge to boost concept design and create even more compelling campaigns, while in turn fueling the Dynamic Creative Engine to ensure we remain agile in adapting to changing consumer needs in real time;
  • connecting the Media networks’ billions of contact points to Epsilon’s data will improve our ability to create individualized profiles and further optimize clients’ media spend;
  • Publicis Sapientwill have relevant proprietary information on consumers to inform and optimize the solutions offered to our clients to shape their business model.

Now more than ever, our activities are resolutely positionedto the future with more than 30% of our net revenue generated by data and digital business transformation

But that’s not all: Publicis is also reshaping its organization over time to meet the needs of clients for streamlined and efficient access to the range of expertise on offer in the Groupe. We have also realigned our operations, organizing them by country to leverage synergies between areas of expertise and to discover novel solutions. The Power of One strategy, initiated in 2016 as an integrated working model providing even more benefits to clients, is now fully up and running. Through the Groupe Client Leader, clients are offered a tailored service and direct access to the Group’s entire range of expertise. We help our clients to constantly innovate and grow their sales, while controlling costs.

2019 saw Publicis round off its transformation in terms of both assets and structure, placing it in a unique position to serve clients across the entire value chain. The only g roup to have large-scale creative, media, data and technology assets, Publicis has a clear competitive edge—demonstrated by the new account wins in 2018 and 2019. For the second year in a row, the Group topped the league tables for winning new accounts and secured contracts in the biggest global tenders for existing or new clients (Disney, Beiersdorf, Axa and Novartis).

The Group also has extremely sound financials. Operating margin and diluted headline earnings per share were up +11.6%(2) and +8.2%(3), respectively, in 2019. With close to euro 1.3 billion in free cash flow, the Group confirms its target of deleveraging within the space of four years after the Epsilon acquisition. The Group continues its policy of investing in talent, with an additional euro 100 million invested in 2019.

All of these elements demonstrateboth the exceptional engagement of our staff and the value of our strategy

1.3.3 Main activities and Group organization

Publicis Groupe is positioned as the go-to partner for our clients’ transformation as they seek to create personalization at scale . It is organized around four main services: Communication, Media, Data and Technology, spanning 10 areas of expertise: Creative, Strategic communications and influence, Production, Media buying and strategy, Commerce, Performance, Data, Digital marketing, digital business transformation , and Healthcare.

Communication

Creative

Although brands are increasingly global, “think global, act local” is the watchword for many, in a world geared to personalized content tailored to each individual.

Naturally, advertising agencies contribute to the creative content that consumers discover every day on billboards, TV, radio or in the press, and through all other digital channels. They also play an essential role in helping and assisting clients to develop their brands globally.

The primary mission of advertising agencies and networks is to find ideas that are universal enough to bridge borders and resonate locally. Content is increasingly personalized and tailored with the growth of the Internet. Consumers must be able to easily and efficiently appropriate this content and recognize themselves in the message. Creativity is increasingly defined as dynamic

The Group’s creative businesses are structured around big iconic brands, like Publicis Worldwide, Saatchi & Saatchi, and Leo Burnett, as well as Marcel, Fallon and BBH.

Production

In addition to its creative agencies, Publicis Groupe also includes expertise in conception and supply of brand content for all channels (television, print media, radio, cinema, billboards (Out-of-Home), and digital: display, social networks, online video, etc.). Publicis Groupe’s production business, Prodigious, provides production capacities to its agencies and clients with state-of-the-art campaign management tools and archive libraries.

(2) Excluding transaction costs for the Epsilon acquisition for euro 40 million

(3) Excluding transaction costs for the Epsilon acquisition for euro 40 million and at constant currency.