Ad agency Publicis holds on to key Samsung contract: source

Reuters News
Posted: Oct 02, 2014 3:11 AM

PARIS (Reuters) - Ad agency Publicis has kept hold of a major contract with Samsung Electronics, a person familiar with the matter said, calming worries it would lose a client analysts estimated brought it some 70 million euros ($88 million) last year.

"Publicis is the big winner. It has kept the budgets it had earlier with Samsung and added additional business," said the person, who declined to be named because the contract was confidential.

South Korea's Samsung, which put its advertising accounts under review in May, spends heavily on marketing to keep consumers' attention riven to its smartphones and televisions that compete globally with products made by Apple and Google.

It spent more than $11 billion on advertising and marketing last year, according to its annual report.

Publicis shares were up 1.7 percent at 0727 GMT on Thursday, while stock in rival WPP, which was also in the running for parts of the Samsung business, was down 0.8 percent.

Publicis-owned Starcom will buy advertising space for Samsung, Leo Burnett will handle the creation of ads, digital agency Rosetta will handle on-line marketing, and DBH will handle additional functions.

Interpublic Group and MDC Holdings, which currently handle some parts of Samsung's U.S. advertising, will continue in their current roles, according to trade publication Ad Age.

Charles Bedouelle, an analyst at Exane BNP Paribas, said the Samsung contract was a "symbolic win" for Publicis after 15 tough months in which its much-vaunted merger with U.S. competitor Omnicom fell apart and its top-line growth has lagged rivals.

"Given the unusual high level of confidentiality around the contract, it is hard to gauge the impact," Bedouelle wrote in a note to clients.

"Whereas many were expecting a full or partial loss of (a contract) that is 1-1.5 percent of revenues, we would guess Publicis has added maybe 0.25 to 0.5 percent of revenues."

Publicis earned 6.95 billion euros in revenue in 2013.

(1 US dollar = 0.7922 euro)

(Reporting by Gwenaelle Barzic and Leila Abboud; Editing by Jean-Michel Belot and James Regan)