Shares in the big advertising holding groups jumped after Publicis Groupe posted better than expected first half results.
The French company reported a 9.7% rise in net revenue to Euro 4.77 billion for the six months to June.
But the lockdowns from COVID-19 still had a significant impact. Organic revenue -- widely used as a measure of fiscal health for advertising companies -- was down 8% for the half and 13% in the second quarter.
However, this is significantly better than the 23% decline in global ad spend forecasts by Zenith.
The results sent Publicis shares up 8% to Euro 28.85, and the other big holding companies followed as investor sentiment in the sector lifted.
In London, WPP was up almost 3% to 626 pence. In the US, Omnicom was up almost 2.5% to USD 56.33 and IPG 2.5% to USD 18.46.
Publicis Groupe’s results were driven by a 23.9% rise in North America revenues.
“The results we are publishing today demonstrate that Publicis has strong fundamentals to weather the crisis,” says CEO Arthur Sadoun.
“With our transformation almost completed, tailwind in the US and continued new business momentum, we were off to a good 2020.”
However, the company, like the rest of the industry, has been hit by the first economic consequences of the coronavirus crisis.
“But thanks to our unique offer combining seamlessly creative, media, data and technology, to our unmatched backbone of shared services and our strong balance sheet, we have been able to reduce its impact,” he says.
US organic growth was down by 3.3% over the first half, rising to a 6.8% drop over the second quarter, when ad spend had been expected to fall by 18%.
In Europe, organic growth was down 23.5% in the second quarter. In Asia, organic growth fell 5.7% with China improving from the first quarter but remaining negative and volatile.
Sadoun pointed to significant wins in new business across the world, such as Sephora in North America, McDonald’s in China, and Française des Jeux in France.
“There is no doubt that we will all have to live with the virus and its economic and social consequences for a while, but Publicis is well armed to weather this crisis,” he says.
“As we head into the second half, we are focusing on limiting the impact of the downturn, accelerating our new offering for our clients, while continuing to adapt our cost structure.”
The company has cut costs by 6.4% or Euro 286 million.
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