Publicis Groupe SA (PUB) will probably spend more on acquisitions this year than initially planned as the owner of the Leo Burnett and Saatchi & Saatchi advertising agencies is expanding in emerging and digital markets.
The company may spend about 700 million euros ($993 million), compared with a previous target of 400 million to 500 million euros, Chief Executive Officer Maurice Levy said in an interview in Cannes today. Paris-based Publicis could spend even more if a particularly compelling deal comes along, he said.
The increased spending won’t have an impact on the company’s forecast, Levy said.
Publicis, the world’s third-largest advertising company with clients including Microsoft Corp. and Walt Disney Co., has said it will outperform peers and improve operating margins in 2011. The company, which aims to double operations in China by 2013, plans to announce two to three acquisitions in that country this year, Levy said today. Advertising companies are pushing into China and other emerging economies to make up for slower growth in established markets.
The company this week agreed to buy China’s Genedigi Group to become the largest public relations network in the country. Genedigi has 400 employees and offices in Beijing, Shanghai and Guangzhou. Publicis has announced the acquisitions of more than a dozen companies so far this year, almost matching the number of 2010 deals, according to Bloomberg data.
The company’s current targets are significantly smaller than the 575-million euro acquisition of Rosetta Marketing Group which was announced in May, Levy said today.
Rosetta will join the French company’s digital-oriented brands such as Digitas and Razorfish, and be part of a strategy of expanding that segment to 35 percent of group revenue in 2013 from 28 percent last year, Publicis has said.
Digital operations and business in emerging markets accounted for 48.3 percent of sales in the first quarter, Publicis said in April. The company has a medium-term target of earning 65 percent of revenue from the two segments.
Levy said today that second-quarter sales may rise by 6.3 percent to 6.5 percent. For the full year, Publicis should report revenue growth of more than 5 percent, he said.
To contact the reporter on this story: Amy Thomson in Cannes, France via Athomson6@bloomberg.net