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Apr 28, 2008

NEWS: Publicis: We'll Be 20% Digital This Year

Publicis: We'll Be 20% Digital This Year

Paris-based Publicis Groupe, the world's fourth-largest advertising conglomerate, says 20% of its sales will come from digital advertising by the end of this year. That percentage will grow to 25% by 2010, chief executive Maurice Levy told Mediapost after releasing its Q1 results.

Publicis reported revenue of $1.65 billion, a 8.2% increase, and organic growth of 5.4%. This is more or less in-line with other global ad firms in Q1: WPP reported organic growth of 5% andOminicom Group 6.4%. North America revenue, Publicis' largest market, was up 5.3%, and Europe, a close second, was up a mere 3.2%.

The bright spot in the quarter was Boston-based Digitas, which saw sales increase 23%. Overall digital revenue was up 20%. Publicis acquired Digitas last year; it's also parent of Starcom MediaVest Group, Zenith Optimedia Group, Fallon, Leo Burnett and Saatchi & Saatchi.

Shares in Publicis have dropped more than 6% since the beginning of the year, when it missed organic growth targets for 2007 and warned the outlook for 2008 was "uncertain."

Publicis Digital Revenues Now 18 Percent of Business

Its acquisitions of Digitas and Business Interactif last year helped boost Publicis' digital revenues to 18 percent of the total pie in Q1 as the holding company continues to expand online and in emerging markets. The strongest growth rates were in its digital businesses, which soared over 20 percent, followed by media activities.

That said, the quarter just ended was a fairly quiet one for Publicis on the digital front, though it did trumpet a new relationship with Google and rebrand its India and Singapore-based marketing services unit as Solutions | Digitas. Publicis's Asia-Pacific, Africa and Middle East businesses grew at a much higher rate than did its North America and Europe operations, where it makes its big money.

Publicis' other units include media services powerhouses Starcom MediaVest and ZenithOptimedia. Big account wins for the quarter included Delta (Digitas), BT, Cadbury, Bank Of America (Starcom Mediavest), L’OrĂ©al (ZenithOptimedia), and Miller (Saatchi & Saatchi).

@ EconSM: Advertisers' Love/Hate Relationship With Social Media

Advertisers and media companies have a strange disconnect when it comes to social media. On one hand, they're heartily embrace the ability to directly engage with consumers. And on the other hand, they fear that engagement and are desperate to figure out how to control it and measure it. A mix of ad execs from the publishing side and the interactive agency side attempted to sort it all out during an afternoon panel at paidContent parent's EconSM conference.

-- All advertising is local: Joanne Bradford, EVP of National Marketing Services, Spot Runner: Bought a company called Weblistic, have a web shooter and can produce immediate videos. Discussing the political panel that kicked off EconSM on Monday night, Bradford said: "I just thought those people are doing a lot of work and not getting a lot of money." Larry Kramer, Senior Advisor, Polaris Venture Partners and ContentNext board member, opined that social media itself is the new local. "Everything we used to do in face to face groups, we've started experiencing as an online community."

-- Tapping into passions, not locations: Other panelists mildly disagreed with the geographical aspects that social media allows. Passion and interests have replaced the need to focus on a geography in terms of figuring out how to make the most of a brand's message, said Patrick Keane, EVP and CMO, CBS (NYSE: CBS) Interactive: Touted CBS's 200 percent year-over-year growth for March Madness, which got a tremendous boost from its association with Facebook. Everyone wants to beat up social media as un-monetizable. We were able to sell a lot of ads across mobile and online. Music is another area that's key. That's why we bought Last.fm. Over half the traffic the site has happens outside of Last.fm. Sports and music are prime points for generating engagement, added Gordon Paddison, EVP of New Media and Marketing, New Line Cinema, which recently released the teen comedy Harold & Kumar Escape From Guantanamo Bay. "We ask people to upload their videos and yes, sometimes you get someone putting a hat on a penis, but obviously, that's not the kind of engagement we want. Engagement levels are determined by how many social ads are generated, how many pages are created around a subject. Social nets are not in a position to give you adequate numbers to determine success."

-- Measuring discussion: Ad agencies are still figuring out what numbers to use in order to identify successful use of a social media-based ad campaign. At the moment, a good indicator is seeing how much word of mouth you can get through community sites and blogs. Peter Kang, Group Creative Director, OgilvyWest. "Three years ago, we'd get a call: go make a viral video. Now, it's make a widget. We try to get past the infatuation with the latest tool. Our clients ultimately care about sales at the end of the day, not what's the latest technology. Amount of discussion is the only metric we're linking to sales. There is often a direct correlation between the amount of discussion and sales."

-- Learning to listen: Kang also said that marketers are using social media in less specific ways, such as "learning to listen" to what users are saying about brands. Paddison was incredulous. "After all these years of advertising, marketers are only now learning to listen to their consumers, thanks to the advent of social media? Well, that's just pathetic."

-- A challenge to attendees: Playing the curmudgeon, Paddison praises mobile as a great content platform, but it's a lousy advertising platform. He happily offered to debate anyone after the conference who believes differently. He essentially argued that the display space is too small to make it worthwhile. He did say after that the iPhone and other phones that offer similar screens offer some hope. "I'm developing apps for the iPhone - but that's just me. I'd love it if an advertiser could develop a program for the iPhone. But we're not there yet."

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