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Advertisers have cut back on large capital expenditure projects since the start of the year, according to the boss of Publicis, who warned that the US tariff war would heighten caution among the French agency’s clients.
Fortunes of large advertising agencies are closely linked to those of companies in consumer-facing industries such as tech, retail, automotive and luxury goods, with cutbacks in marketing spending quickly hitting their own bottom lines.
So far, clients have kept investing in marketing, said Publicis chief executive Arthur Sadoun, but companies had cut back more on spending on capital-intensive projects in the first quarter due to a “wait and see” attitude.
He said Publicis “could see some budget reduction across some industries through the rest of the year because of the level of uncertainty”.
Sadoun said a strong first-quarter performance for the business would help it offset any weaknesses through the rest of the year, meaning it could deliver its financial guidance despite potential cuts to clients’ marketing budgets.
The group on Tuesday reported a 9.4 per cent increase in net revenue to €3.5bn, and organic growth of 4.9 per cent. It said a record run of new client wins had offset “deteriorating macroeconomic conditions”, and reaffirmed full-year 2025 guidance of organic growth of 4 to 5 per cent.
“This huge record in business in [the first quarter] will . . . offset any potential cuts that we could see from our clients due to this high level of uncertainty,” Sadoun added. “They are cautious, and you can definitely already see that in big transformation projects.”
He said that so far the impact had mostly been the stock prices of his clients. “No one knows exactly what the impact of tariff on their business, and so everyone is getting prepared for some instability and the lack of visibility,” he said.
“What is absolutely certain is that if we want to avoid a crisis, we will need greater certainty and clarity.”
Publicis has spent about €500mn buying companies in digital media, influencer marketing and data services over the quarter as part of a long-running investment into the faster growing tech-led sectors of the advertising industry.
The Paris-based group became the largest advertising agency in the world by revenues at the start of the year, but it could lose this position later this year given the proposed merger of US rivals IPG and Omnicom. Sadoun said this deal was also an opportunity for Publicis to poach clients and attract talented staff from the combined US group.
