1. Particular sensitivity to the economic and geopolitical conditions
Description of the risk
The sectors of advertising, communications, and consulting are greatly impacted by any changes in our clients’ budget allocations. Clients’ activities can be influenced by periods of recession in specific countries or business industries, which may be a result of macroeconomic elements like inflation, rising interest rates, or a slowdown in household consumption. In addition, existing geopolitical tensions or uncertainties arising from election results in different regions of the world may also affect our clients and their operations. An unfavorable economic environment could lead to a reduction in advertising and/or digital transformation budgets and therefore have an adverse impact on the Groupe.
In addition, the Groupe’s cost structure largely consists of employees compensations. As a result, macroeconomic factors, such as high inflation over a long period of time, could have an adverse impact on margins.
Risk management
Clients view periods of slowdown as opportunities to increase their market share by implementing effective communication strategies or comprehensive reforms. In addition, the impact of inflation on personnel costs is controlled and margins maintained thanks to the implementation of efficiency measures via the platform organization.
2. Highly competitive industry
Description of the risk
The advertising, communications and consulting sectors are highly competitive and are expected to remain so. In addition, in a volatile economic environment, aggravated by an uncertain geopolitical context, clients are putting more pressure on costs, which increases competitive pressure during negotiations.
The Groupe’s competitors are of all types and sizes, and range from large multinational companies, including digital giants who are capturing an ever-increasing share of the advertising market, to smaller agencies that operate in niche or regional markets. Many players, including systems integrators, database design and management specialists, telemarketing and digital companies, now have access to technical solutions to meet marketing and communication needs of the Groupe’s clients and prospects.
The Groupe competes with these companies and agencies both to maintain existing client relationships and win new clients and budgets.
Furthermore, the Omnicom-Interpublic merger announced in December 2024 will result in, if completed, a change in the advertising landscape, making the new entity the global leader.
In conclusion, growing competition could have a negative impact on the Groupe’s revenue and earnings.
Risk management
The Groupe’s mix of Connected Media, Intelligent Creativity and Technology activities contributes to the uniqueness of its business model and strengthens our competitive advantage in winning new market share.
CoreAI is Publicis Groupe’s artificial intelligence platform, designed to unify and activate the Groupe’s proprietary data in order to transform artificial intelligence (AI) into marketing intelligence to serve the growth of its clients. CoreAI enables each of the Groupe’s business lines to maximize the use of AI by providing rigorous data analytics for communication strategies, optimized media buying plans to accelerate sales, personalized content at scale, software and digital products which can be deployed rapidly. The Groupe has always put innovation at the heart of its strategy and anticipates the needs of its clients through CoreAI which links proprietary data, a connected media ecosystem, the creative power and all of its 28,000 engineers, all brought together thanks to the Power of One.
Through its country model and platform organization, the Groupe offers tailor-made services to its clients. Furthermore, optimized shared services enables better cost management.
If the transaction is successful, the new Omnicom-Interpublic group will have to focus on the integration and production of the economies of scale promised to the market.