April 23 (Bloomberg) -- Publicis Groupe SA Chief Executive Officer Maurice Levy said he will focus on takeovers in emerging markets rather than digital expansion as he forecast growth for the advertising company this year.
Revenue, stripping out effects from takeovers, acquisitions or mergers, could grow at least 3.4 percent, Levy said in an interview today. Last week, the Paris-based company forecast annual growth between 3.2 percent and 3.6 percent.
Levy presented a five-year plan at Publicis’s investor day targeting operating margins of 18 percent to 20 percent by 2018, from 16.1 percent in 2012. Improved margins will come from a “better digital margin, scale effect on operations and the development of tools to contain costs,” Levy said at the London event.
Publicis, the third-largest ad company, has between 400 million euros ($520 million) and 600 million euros to spend on acquisitions this year and is close to buying more agencies in India and China, according to Levy, though 2013 won’t be a “massive investment year.” The owner of Leo Burnett and Saatchi & Saatchi ad agencies posted first-quarter revenue growth of 1.3 percent on April 15, missing analyst estimates, in part on lagging European economies.
“Most advertisers are suffering from the Europe situation, which will lead to further unemployment and difficulties in Europe,” Levy said. The U.S. could make up more than the current 50 percent of revenue at Publicis this year, he said.
First-quarter revenue was 1.56 billion euros.
“It’s sad because Europe is not a preferred region of new investment,” he said. “Most clients are investing in new markets or re-investing in the U.S.”
Levy said he’s also “pushing” to step down from the CEO role at Publicis, though the supervisory board “doesn’t feel the same kind of urgency that I do.” Levy, who joined the company in 1971, said a succession committee has already been formed and an internal candidate will probably be selected.
Publicis’s Starcom MediaVest Group is working with Twitter Inc. to “find the way to monetize their audience,” Levy said in today an interview on Bloomberg Television with Francine Lacqua. “This could be pop-ups, this could be video, this could be new formats so we are working very hard with Twitter to find the right way to commercialize their space.”
The deal with San Francisco-based Twitter may involve spending $400 million to $600 million over a period of three to four years, he said.
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