Publicis walked away from six price-driven pitches: Arthur Sadoun

"New Delhi: Publicis Groupe walked away from around six agency pitches during the first half of 2026 after concluding that the reviews would be decided largely on price. Arthur Sadoun, Chairman and CEO of Publicis Groupe, said financial pressure on some competing agency groups had led to aggressive pricing in parts of the market. Publicis chose not to participate where it believed price would outweigh the value of the agency"s capabilities. “We thought it would be only price-driven. But let"s be clear, this is not the norm,” Sadoun said during the company"s post-earnings webcast. He added that most advertisers continued to recognise that a sustainable agency relationship must create value for both sides, even when the commercial proposal remains highly competitive. Artificial intelligence begins to change not only the services clients seek from agencies, but also how they evaluate and appoint partners. Sadoun said advertisers increasingly understand that deploying AI in marketing requires a combination of technology, data and experienced talent rather than access to tools alone. “Therefore, the pitches are shorter,” he said. In some cases, Publicis is being appointed without going through a conventional multi-stage review. Sadoun said the group had won accounts “without the pitch”, with clients instead conducting a direct assessment of its capabilities. The shift suggests that some lengthy agency reviews are being replaced by faster capability checks, particularly when advertisers need partners that can implement AI across media, creative, commerce and customer data. “AI creates a more complex world. And it means that our clients, more than ever, need the right capabilities and the right people,” Sadoun said. Publicis linked this environment to its strong new-business performance in the first half. The group secured six major new clients that it expects to generate approximately 300 million euros in annual net revenue once the accounts have fully ramped up. The wins are expected to contribute around 200 basis points of growth on a full-year basis. Publicis expects about 50 basis points of that contribution during 2026, with the remaining 150 basis points flowing through in 2027 as the accounts scale. At the same time, Publicis said advertisers were taking different approaches to marketing expenditure and large technology-transformation investments. Clients have largely continued to protect marketing budgets because they recognise that reducing brand support can result in market-share losses that are difficult to reverse. “If they cut their marketing spend, they will lose market share. That actually will be very difficult to win back,” Sadoun said. This helped Publicis" AI-powered marketing services, including media, data, creative, commerce, CRM and production, record organic growth of 6.5% during the second quarter. These businesses account for 87% of the group"s net revenue. Connected Media grew in the high single digits during the quarter, while Intelligent Creativity recorded low-single-digit growth. Advertisers have been more cautious about large, capital-intensive technology programmes. Publicis said geopolitical uncertainty and reduced economic visibility had led clients to delay discretionary transformation expenditure. This affected Publicis Sapient, which accounts for approximately 13% of group net revenue and recorded a mid-single-digit organic decline during the quarter. Publicis maintained that the slowdown reflected delayed client decisions rather than the disappearance of the underlying need for technology and data transformation. However, it has not assumed a major improvement in Sapient"s operating environment during the second half of 2026. The spending pattern indicates that advertisers are prioritising marketing programmes that can protect current demand and market share, while postponing transformation projects that require larger upfront commitments and longer implementation cycles. Despite AI changing the pitch environment and expanding the range of services advertisers buy, Publicis said it had not yet led to a significant shift towards agencies being paid entirely on business outcomes. “The so-called full outcome-based model remains fairly limited and we have not seen any significant evolution recently,” management said during the webcast. Software-as-a-service revenue also remains marginal, accounting for less than 1% of Publicis" group net revenue and sitting primarily within Epsilon. Most client contracts continue to combine conventional fee structures with a limited performance-linked component. These arrangements may include bonuses or penalties tied to predetermined indicators, but the variable element generally accounts for only a small share of the overall agency fee. Publicis said KPI-linked variable payments represent roughly 10% of remuneration across its existing client contracts."