Nice numbers from Publicis don’t excuse poor answers
Publicis is first out of the blocks with its results for 2011 and the figures look worth boasting about, although it would be premature to do so until the other global groups have declared their results too.
But no-one at Publicis seems to have heeded the request made here last week that the group should give a better account of its investment in digital. Instead the group continues to pump out a few impressive numbers, none of which give a clue about what genuine return it is earning on the massive investment it has made in digital businesses.
For example, Publicis claims that “digital” contributes 30.6% of total revenue last year. But how does Publicis calculate its digital revenue? Is it revenue from any activity that is incidentally delivered digitally rather than by any other means? Or is it revenue from the investment that the group has made in digital expertise per se? And if the revenue claim is limited to that derived from the group’s investment in digital businesses, presumably it would be equally easy to calculate the profit earned thereon?
It is not that Publicis is necessarily under delivering on that investment, it’s just that we don’t know. And any reasonable investor is entitled to ask the question and be told the answer.
In an incorrectly labelled table, Publicis tries to show how fast its digital revenues are growing organically. But even if the table was correctly labelled, it relies on understanding how it arrived at digital revenue in the first place. What can be deduced – and it’s not surprising – is that, in North America (the home of subsidiaries like Digitas and Razorfish, for example), digital accounts for the biggest proportion of total revenue and almost the slowest rate of organic revenue growth.
Maybe Publicis will use the time between announcing its results and publishing its full annual report to develop some simple answers to a simple question: what financial return are you achieving on the capital invested in digital?
Bob Willott is editor of “Marketing Services Financial Intelligence”.
