U.S. digital ads spur Publicis' return to growth

FILE PHOTO: The logo of Publicis group is seen at the high profile startups and high tech leaders gathering, Viva Tech,in Paris, France May 16, 2019. REUTERS/Charles Platiau/File Photo

(Reuters) - Publicis, the world's third-largest advertising group, on Thursday beat market expectations as it returned to organic growth for the first time since before the pandemic, fuelled by high demand for digital advertising in the United States.

In the face of growing domination by Facebook and Alphabet's Google, the Paris-based group is striving to move from traditional print and TV ads to targeted digital campaigns steered by data.

In a call with reporters, Chief Executive Officer Arthur Sadoun said the return to growth demonstrated that "the acceleration towards digital channels, data, and commerce in general is a tidal wave accelerated by the crisis."

Underlying sales in the United States, Publicis' biggest market where it generates more than half of its revenues, grew by 5.1% in the quarter, while Asia posted a growth of 5.7%.

The strong U.S. performance was driven by Publicis' digital business Sapient, which increased its revenues by 11%, while the data company Epsilon, acquired in 2019, bore fruit for a second consecutive quarter with nearly 5% growth.

On group level, underlying sales grew by 2.8% to 2.4 billion euros ($2.87 billion) in the first quarter, compared with the same period last year when the emerging COVID-19 crisis pummelled the sector and clients sliced advertising budgets to save cash.

Analysts had expected an organic decline of 2.0% for the quarter, according to a company-provided poll.

The key metric benefited from new business wins such as L'Oréal's media business in China, Toyota in Australia, and Samsung media in the United States, the company said.

Publicis, home to ad agencies such as Leo Burnett and Saatchi & Saatchi, did not provide an earnings outlook for the full year but said it expected to report organic growth between 8% and 10% in the second quarter.

($1 = 0.8351 euros)

(Reporting by Milla Nissi and Sarah Morland in Gdansk; Editing by Steve Orlofsky)

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