Oct 16, 2013
Executives
Maurice Levy – CEO Jean-Michel Etienne – CFO
Analysts
Filippo Lo Franco – JPMorgan Will Smith – Goldman Sachs Charles Bedouelle – Exane BNP Paribas Ian Whittaker – Liberum Capital Conor O'Shea – Kepler Cheuvreux Julien Roch – Barclays Capital Lee Dunlop – Cazenove William Meyers – Nomura Claudio Aspesi – Bernstein Thomas Singlehurst – Citigroup Patrick Kirby – Deutsche Bank
Maurice Levy
Thank you, thank you. Bonjour to everyone.
Thank you for joining us. I am sorry for some of the people who are joining us from the other side of the Atlantic because it must be a little bit either early in the morning or very late at night.
I am with Jean-Michel Etienne and our two IRs, Martine and Stephanie that you know very well. I will go through a very quick presentation because as you know for the third quarter we present only the gross numbers as we don’t go into the details of margins.
And then with Jean-Michel we will answer all the questions that you may have. Beside the Q3 numbers, I plan to cover also an update on the announced merger of equals with Omnicom.
But let me tell you immediately and upfront that we feel good about our numbers and that we remain on track to deliver growth and margin as planned internally in our objectives. The first slide, which is in fact the second on our website, you have access to the presentation on the website.
So please don’t hesitate to go through. So the second is the disclaimer that I invite you to read carefully.
This is a legal obligation that we have and I have been asked to remind everyone to read it carefully. Regarding the following slide, it’s the Q3 numbers.
Revenue for the third quarter is at €1,675 million, an increase of 3% compared to last year and if we exclude the foreign exchange variation, the growth would have been up 9.3%. Organic growth is at 3.5%.
So we are perfectly on track. If we look at year-to-date, we have a revenue of €5,026 million, the variation is at 6.7% and if we exclude Forex Variation we are 10.1% up compared to last year.
Organic growth show a slight improvement compared to what we had at end of June at 3.3%. So as I said already, we are on track based on our internal objectives.
Following slide which is number four, the context. I think that everyone is fully aware of the current situation and there are uncertainties in Europe.
In the Q3 we had to face a tougher situation in the Latin countries, southern countries of Europe where slowdown has continued. Economic slowdown in Brazil and China, this is something which is well-known and the Syria conflict risk which we believe has not yet had any economical consequence, but may be a risk for the future.
When we look at the situation for the Publicis Groupe, the uncertainties in Europe has been, I would say mitigated because, we were expecting a better number for Europe. But what is interesting is that we moved from negative to positive as we have a positive trend.
Even though if it is a small growth of 0.4%, which is not a big number, but when we look at the history of the recent trends, I think it’s a good sign and something that we should be pleased about. BRIC MISSAT contrasted numbers, contrasted figures, I will come back to this in a minute when I will be speaking about the performance in the various countries.
Healthcare, we mentioned those we are expecting to see healthcare improving in the second half. We have a slow pick up.
So it’s a good indication, obviously we are waiting for the fourth quarter and for the time being the trend seems to be modestly good. Digital, very, very good numbers with double-digit growth and improving month after month, consolidating a very good number that we already have.
The next one you see a number and only a number because we don’t put all the details which is the net new business with USD3.4 billion, a number we are extremely pleased and which show a very strong improvement compared to the second half. So it shows that the attraction and the quality of the work of our teams are very well received by our clients and by potential clients.
So we are growing with our clients. We are growing with new clients and this is continuing as we have a series of new business which have been already confirmed in the first half of the month of October and we had a solid pipeline.
On the following slide, Page 6, we have the breakdown by geography. So Europe, excluding Russia and Turkey, shows a number of €469 million, which is up by 9.3% compared to last year and organic growth is 0.4%.
As I said already, it’s a positive sign, as Europe has been negative and will be negative for the year-to-date, but it’s the first time since a while that we see Europe with a very good growth - a good trend and a positive number. North America is at €825 million, organic growth is at 4.5% and variations compared to last year are up by 2.5%; 4.5% is very good.
We had a better number in Q2 and this is because we had some very specific orders that we have been able to invoice in the second quarter which should normally have been invoiced in the third one. BRIC and MISSAT, the number is not great, to be honest.
€217 million, up by only 1.5% and this is what is missing in the third quarter and the variation compared to last year is negative 1.4%. The reality regarding BRIC and MISSAT is clearly the issue of India where they are struggling in some economic aspects.
This is something which is well-known to everyone and there has been also a small slowdown in Brazil, since there have been some well publicized riots and some uncertainties. China is not picking up as fast as we were expecting it to be.
So these are issues which we believe are momentary and we don’t think that this will have an impact on the full year. Rest of the world, excellent number, plus 10% organic growth, variation for the full quarter is 3% and as I said already, plus 9.3% if we exclude the currency exchange variation and organic growth is at 3.5%.
If we move to the next slide, which is Slide Number 7, we see that the breakdown by geography year-to-date, Europe is at €1,439 million, still negative for the year-to-date, negative by 2.4% and the variation is up by 10%. North America, €2,455 million with organic growth at 5.5% and variation 6.2%.
BRIC and MISSAT, this is something which is impacted by third quarter and we have a number which is not bad but which is not good and not as good it should be at organic growth at 4.1%, variation at 7.6%. Rest of the world, the number is good at €481 million, up by 7.6% organic growth and minus 1 due to exchange ratio.
Without exchange ratio we should have been at plus 10.1% for year-to-date. One slide that I would like to comment pretty quickly on Slide Number 8 which is revenues by region in U.S.
dollars. So if we had to declare our numbers in U.S.
dollars, we should declare a €6.6 billion revenue year-to-date, up by 14.4%. So I think, I don’t need to enter into all the comments, but Europe would have been up by 13.1%, U.S.
by or North America 9%, BRIC and MISSAT 26%, rest of the world 7.3%. We will make a small pause on Slide 9, which is organic growth rate by country.
We are not going to comment all the countries but, I think it’s interesting to look at some numbers. On Q3, the negative countries remain a bit numerous with France and Germany and if the numbers are not very negative, they are still below zero.
So in a freezing zone. Spain and Italy and unfortunately, as well as Greece with double-digit negative numbers.
Singapore, Arab Emirates, Israel, negative, but not very significant. 0% to 5%, we have USA, Brazil, Colombia, Greater China and Japan, from 5% to 10%, UK which is back with a good number.
Switzerland, Canada, Mexico, New Zealand, Korea at above 10%. We have a group of countries with The Netherlands, Austria, Portugal, Poland, Turkey, Argentina, Venezuela, Chile, Australia, Thailand, South Africa, Saudi Arabia, so good numbers here and you have the year-to-date and I would like to insist on the 5% to 10% which are USA, Australia, Greater China and this is quite positive.
On Digital, which is the next slide, which as you know is one of our strategic pillars. This is where we have the very good news.
The Q3 numbers are interesting to watch and I invite you to have a serious look at. We reached a level of 39% of our revenue derived from digital.
That is close to 40%, everyone know that, 39% to 40%. There was only one point difference.
It does reflect €652 million. You can imagine, if we had just this flows separately from the rest of the Group and we have 12.3% organic growth, which an improvement is coming from the first half numbers.
So, as I said, Digital is not only something which is important to us, because we have invested massively, but it is important to all the consumers of the world, because when you look at them as of today, you will hardly somebody without a mobile phone, without a tablet, a computer, and without communicating, getting news or searching, or dialing or doing a lot of things through internet or any of these digital devices. For our clients, this is a paramount, because this is what is helping them to connect with the consumers.
So the decision that we took a few years ago to build this digital pillar is something which is paying and paying well as we can see and strengthening which is extremely good and a good testimony to the decision we made a few years ago. On Slide 11, we see the Digital breakdown by geography.
It’s not a big change from what you have seen already. I would just like to insist on one line which happens to be the second one, North America.
We passed the 50%. We have more than 50% of our revenues which is derived from Digital, 51.8%.
This is a clear majority and we see that this trend is going in the same direction for the future. So we have something which is a very, very strong asset moving in the right direction.
On the fast-growing market and despite the comment array that they were making, we are roughly at the same level as last year and those exactly are in line. We had 24.8% of our revenue which we have derived from the fast-growing markets.
Today it’s 24.1%, partially because of the acquisition of LDI which is increasing our share not only digital but also in the western countries and we have also the fact that the growth in Q3 has not been exactly what we were expecting which is at 5.2%, which is better than the average of the Group and bringing the year-to-date by 5.3%. So it’s not the bad number.
But we could have expected something closer to 6%, which is what we were expecting in fact. Organic growth by region and by activity is also something which is quite interesting.
I think we can elaborate a lot of analysis based on this but just confirm something that we all know which is that digital is growing much faster than analog. It shows that within the Group, analog is down by 0.8% and digital is up by 11.5% and the average of the Group is combining all the assets is up by 3.3% organically.
So, I would not go into the details but I think it’s interesting to see that in – stats digital is up by 26% and the rest of the world by 25%, North America 11%, Europe at 6.6%, all these shows clearly that the fact that we have such a big digital arm is has been for the future. So much for the growth numbers and moving now to some informational highlights.
Normally, this is a part that would have been made by Jean-Michel Etienne. Jean-Michel and I, we played with cards and I lost.
So I will have to give you the numbers which are good, by the way. So it’s not so bad.
Page 15, our net debt has increased from 524 to 550 and this includes the fact that we had the very large acquisition of LBI at the beginning of the year as well as the latest buyout of the shares of Denshu. When we look at average net debt the picture is much better.
Last year we had 764 million, this year it’s 584 million and if you want an information on the ratio, what I can tell you is that we have a ratio net debt to equity which is at 0.11. Now, on the following page you have the debt by maturity.
So our total debt is – gross debt 1, 366 million. From October 2013 to September 2014, 844, following the year 363 and then 68, 8 and 82 very little.
All this is something which is not creating any major problem, particularly with also the fact that we have a generation of cash which is quite robust. If we look at the liquidity at September 30, 2013, page 17, we have a total available of 2,560 million.
I don’t think that we will use this money as we have no much acquisition to be made in the next few months. Now, I am moving to the Publicis Omnicom merger update.
Let me just cover before we move to the update on some of the information regarding this merger. There have been a lot of things which have been said recently, particularly by our competitors who love nothing more than speaking about this merger, maybe because they have no much to say about their own operations.
So what I would like to comment on this is, first a reminder. This is a merger of the two best-in-class operation of our industry.
The two operations have the strongest track record of financial performances in the industry. Omnicom and Publicis have always delivered the best growth, the best margin, the best financial results.
The two back solid balance sheets. Ability to invest and make acquisitions, strong cash flow generation for building Publicis Groupe and for the shareholders for both the Publicis Groupe shareholders and Omnicom shareholders.
So, as we can see, what has been achieved there is something which is quite unique. You have the two best-in-class operations which are merging to create not the biggest, it happened that it would be the biggest, but the greatest company in our field.
There are few advantages which are an advantage of scale or a few advantages of scale if you prefer, because we will have the full spectrum of discipline not only in every discipline, but in every discipline and most of the geographies and in all geographies all these at scale. This is enormously, frozen not only because this will help us to better manage our operations, but better serve our clients.
We should never forget that we are doing these operations for our clients and for our people first. It happens that it will be good also for our shareholders, but we should never forget that what is first and foremost for our clients.
And if we don’t think about our clients first, we will fail in delivering to our shareholders what they deserve. So, starting with the full spectrum of discipline, which will help also cross-selling, it will also give us an incredible level of position in digital platforms and capabilities.
And we will be able to leverage what we already have in the Publicis Groupe and what Omnicom has built over time in a different strategy because they have been building on their own or acquiring and embedded most of them within their advertising or media operations. So we had a more different system or strategy and we have with the combination something which is quite unique.
As you know, Publicis has started to develop partnership with technology companies. We did that at a time where people were speaking about – about Google and we did it at the time where everyone thought that we were accretive to do it.
This has been the first followed by many of the first and with Omnicom, we will be capable of enlarging and extending our strong relationship across a larger group of technology companies and a larger group of agencies and obviously, one of the very important reason for this operation is building a scale big data. And taking advantage of the strength of the new group in order to offer to our clients’ new approaches on big data which will be extremely important for the future.
And this is something for which we feel extremely good and confident. On the following page, you will see that in fact, we, at Publicis we have always believed in creativity and we have also always believed in science and math.
But there is something that we should never forget that the big ideas and creativity will never be replaced by algorithms. As I can make a confession to you today, when I started in this business and I was a techy as most of the people know that I was writing some algorithm and some programs and they remember the time where I delivered the very first program of optimization of audiences and investments in the French market.
This was in the second half of the 60s and they tried to be honest with you, to see if we could with the computers has our creative people and they learned that we could do very little when it comes to big ideas, when it goes to attrition to emotion, computers are very good with numbers, but they have their limitations. So, when we look at what clients need, they are looking for the great ideas and with brilliant execution that we will be working not only across all the mediums, all the channels, all the contacts, paid owned and media but they are looking above all for an idea that will move their business, idea that will change and transform their businesses.
That will help them gaining market share that will help them winning against their competition and this is what we have been able to do on both sides, Publicis as well as Omnicom. And if we have such a fantastic portfolio of clients, it is because we have the creativity and expertise with the new technologies that is the ones were winning formula for our clients.
There is – as we are speaking about formula, formula that they like very much which is almost in mathematical formula which is IQ plus CQ plus EQ and this is something that I have always, always believed in, because IQ is nothing else that – than strategically intelligence. How we can better understand the issue of our clients their problems and how we can better serve them with great strategies great planners, great ideas.
CQ is how to better use science and technology, particularly nowadays when we know that this is a connected world and we have all our consumers around the world are connected. And EQ is what we are better at and I am speaking about our industry, not only about Publicis.
Our industry is all about emotions. We are there to create emotions, to create ideas that will connect consumers with the brand which will create loyalty beyond regions, which will create the areas connection which is much stronger than any rational and that is why IQ plus TQ plus EQ is so expansible in our business and I believe that the better doing it is the Publicis Groupe.
And we will share obviously this with our friends and our future siblings and I think that this merger also will give Omnicom and Publicis employees higher opportunities. Johnny needs comments that says how you are feeling.
I think that this is something extremely important and I believe that we are really committed on both sides to give Publicis employees the benefit of what Omnicom’s talent development programs are and to create more opportunities. Thanks to the new size of the company and brings to Omnicom what Publicis has created this issue, better I recognize that Omnicom has programs and universities which is far better than what Publicis has created so far.
So it’s very important that you see that in some cases there are some strengths that we don’t have and in some other cases, strength that Omnicom has not. This is also one of the reason why this merger is a winning solution.
It is the combination of the two best managed companies in the industry and we have been John on each sides, myself on mine, talking to our employees, to our clients that the reaction has so far has been very positive. One last comment on this, which is something that most of our competitors are pointing out which is that the fact cross border merger with network and the fact that we are two close will address.
On cross border merger the list is long of all the cross border merger which has worked beautifully, so we’ll not insist on that this pro-augment and regarding the fact that John and Mike has – may not work well together, I invite and they got you will see that with your very own eye, but I would love that you are part of one of our conversations, we easily come to agreement together, we communicate all the time. We have positive and constructive and different point of views and very positive conversations.
So that is not only extremely good and something which is very important. For a large company like this one, we are two.
So when one is in the U.S., the other one can be in Europe or can be in Asia or in Latin America. So we can travel, we can see a lot of clients and we can cover much more landscape than any of our competitors, so we feel extremely good and I think that you will see that this is going to work and that you have my personal commitment and I must say that they have developed with John that they respect enormously a great friendship and very good relationship.
Regarding now the current trend of operation, where are we to-date? This is Page 21.
We are on track anti-trust filings are made in most of the jurisdictions. U.S.
has been filed at the beginning of October. FTC is reviewing the proceedings, Europe draft notification is currently discussed with the Commission and we started that conversation in mid-September.
China draft filing has been provided to MOFCOM according to local procedures. Clearance has already been obtained.
In South Korea and South Africa and a lot of other filing have been made and we are waiting for the decision. We are handling – we having a management meeting of executives from both companies in mid-October.
We are 15 of October – 16, so it’s starting tomorrow, okay, funny, yes, it’s me too. And we will have also the first meeting of the integration committee which will be meeting during that same management meeting which will last for four days.
There is very little time for doing anything else and working including Saturday and Sunday, it’s all about trying to know each other. It’s about understanding each other.
The culture, the process, the way we work, the assets and starting to build the process for the integration and obviously everyone know that during that period we remain competitors and we cannot cover some specific issues. One good, or very good news and very good sign is on Page 22.
The ORANE Holders Meeting has taken place in October 10 and they have unanimously approved the merger with Omnicom. They have also unanimously agreed to early redemption of ORANE in exchange of Publicis shares at completion of the merger and approved the calculation of the accrued coupon.
So it is a great news. I must say that they ask that we check and not because like in Florida there has been a double counting of the votes, because it was a tie, but I wanted to be sure that it was really 100% because this was so unexpected to have such a positive outcome that I wanted to be sure that we were with the right numbers.
It shows at least that it is a positive step towards the merger as well as a balance sheet simplification which is something that we are looking for since a while. Regarding the outlook, I know that they are the least interested in this part.
I would like to share with you a few information. Let’s start with Page 24, which is the Ad Spend forecast, which is at 3.5%.
It is the first time since long time that they have not been revised on votes. This is the ZenithOptimedia had forecast at December 2012, the forecast for 2013 was at 4.1%.
It has been revised in April and since June, July, it is the same which is an interesting indication. As you know, we try to give you some indication between what is the difference between the ad spend forecast as calculated by the ZenithOptimedia and what is an estimation of the growth of ad agencies revenue.
Roughly, you have to count a discount of 30% to 40%, because this is gross, this is indication which is not taking into account the interesting and competitive discussion on conditions with the procurement with our clients and we arrive roughly at the growth of 2.3%. These are numbers you should have in mind.
So it maybe 2.1% or maybe 2.5% I don’t know. I had no other metrics than the one I can control to tell you what is the real number of this estimate.
But roughly with 2.3% you are not extremely far from the reality and this is a relatively good indication of what the market of the advertising and marketing service agencies is all about. If we look now at the growth trends for 2013, on Page 25 and particularly for the Q4, I would like to say that based on our numbers, we see a slight growth in Q4 for Europe.
We see that despite the current situation in the shutdown, we see solid and sustainable growth in the U.S. Regarding the shutdown honestly, I felt to believe that they will not come to an agreement.
There is such a response for the future that I cannot imagine for one second that democrats and republicans will not come to an agreement. There is so much at stake, not only regarding the country itself, its reputation, the image that it is giving to the world, but also the global consequences that I believe that wisdom will prevail and that they will come soon to an agreement.
On, rest of the world, BRIC, MISSAT, we are expecting good growth, but in single-digits for China and Brazil which would not be so bad, because I spent a few days in Brazil and currently what they are expecting is a 1% growth for their market and we expect to have a higher number. On Digital, we expect the fourth quarter to be with double-digit growth and obviously, I have to remind you that as always when it comes to the end of the year, we may face possible investment adjustment in November and December according to corporation’s results, our clients’ results, which can go either upwards or downwards.
When that profit is solid, their number will replenish, they are looking at spending more to consolidate their margins, their market share – sorry. And by this, investing for next year, and when their numbers are not met, they are cutting.
This is something which is happening in the last – starting last week of October and can be done every week. We have no indication so far of what will happen.
The only indication that I have today is a very strong and very good new business pipeline. All this is leading me to confirm on Page 26 that the indication that we have given to you regarding our organic growth, internal objective which was in a bracket of 3.2% to 3.6% and that we mentioned recently that it will be 3.5% and 3.6%.
We confirm that it will be there. Obviously, there are some uncertainties, as I mentioned and for those uncertainties, I cannot say anything else that’s what I have said already.
Regarding operating margin, we have improved our margin last year. We told you that we will have an improvement next year and that improvement which is 2013 is something that we also plan to deliver at the end of the year.
So we are confirming every single indication that we have given to you, regarding both growth and margin. And I am opening up now for questions and please do me a favor.
Start with a question directed to Jean-Michel, so I can have a cup of coffee. Operator, if you can open for the Q&A session.
Thank you.
Operator
(Operator Instructions) We are going to take our first question from Filippo Lo Franco from JPMorgan. Please go ahead.
Filippo Lo Franco - JPMorgan
Hello, good morning, everyone. So, I don't know if the question is for Jean-Michel, but I would try to direct it to him.
The two questions are more regarding the comment that you made about the slowdown in China that you consider temporary. And I want to know why you considered a temporary, because recently in the markets there has been some nervousness about overall slowdown of activities in China, particularly from consumer goods companies.
Also the remark and this is the second question that you made about the healthcare in the United States that is still unsettled. So when do you think that it should normalize?
And finally, a more general question about the CMO/CIO opportunities and the possibility that you win a new contract in partnership with a company like IBM, Accenture? And I want to know if you have any example of a recent contract that you have won in this field or for instance in the [electronic commerce] [ph] even without giving us the name of the client, if you can give us some example, because when I talk with people that this is still not clear, the opportunity that you have there.
And, well, these are my three questions, thank you.
Maurice Levy
Jean-Michel?
Jean-Michel Etienne
Regarding the first question, regarding the slowdown in China, especially, it is due to the structure of client portfolio that we have. We have many clients in the luxury goods, which is as you know has been reduced, the sales have been reduced and we had the direct effect on our revenues which has been in the mark during the Q3 gross numbers.
Maurice Levy
I can add one thing on China is that, there is a macro situation where we know that the government has changed its plans and has moved from infrastructure to consumption and investment on infrastructure is slowing down seriously. Why they are working on delivering better revenue to the people, increasing their revenue and we have seen that already and with the idea that they should spend more which would be very good.
Changing shifting this way is something which is a major shift which takes time, it’s like, if you are shifting one of this huge cruise boat and it takes time before they are reaping the fruits. So that is my comment.
Second question.
Jean-Michel Etienne
Okay, on the healthcare, we have some progress, to be fair but not at the level which you or we could have expected, but we have progressed. In Q3, this has been mentioned already.
The work on the budget for 2014 is not – is in currently in progress. So it is premature to tell you about 2014 situation for healthcare.
But the indication that we have from the business that people are continuing to invest and this is okay, after all the years of difficulty, we should see in the next year or two – next two years, we should see a situation which should normalize. That this cannot stand anymore the way it has been, because we are coming from a very difficult situation as you know.
Maurice Levy
Yes, and what’s happening also in healthcare that we are moving, enlarging our offering and we are helping some pharma companies in the communication towards some of the aspects as well-being and we are also using the capabilities and the strength and the knowledge that we have in the healthcare – in our healthcare division to help some advertisers in the food industry to better communicate on some health issues. So it’s something that we are working pretty well together.
Regarding CMO/CIO, there are a lot of things which are happening, and it’s not only one or two. We are currently pitching some extremely interesting operations against by the way some people that you have mentioned and some others.
And, currently, it looks like that we are well positioned. We have won some other operations which are still in negotiation.
So we cannot disclose and we had recently a review with IBM for a few operations and this has been done just last week. So we are progressing.
It’s not – and we don’t plan to be a competitor to Accenture. This is not our goal.
Our goal is just to increase the place in which we are servicing our clients. We need to help them solving some communication problems and some transactional problems and for that we need to offer them some broader services.
It’s not that we are competing with Accenture or with anyone else. It’s just that we are trying to increase our share of business and for the time being, due to the fact that this is a rational approach it is helping our clients.
We have many of our clients who are responding positively.
Filippo Lo Franco - JPMorgan
Okay. Thank you, guys.
Bye-bye.
Maurice Levy
Thank you, next.
Operator
We are going to take our next question from Popee Hope [ph] from Goldman Sachs.
Will Smith - Goldman Sachs
Yes, thanks. It’s actually Will Smith.
Just one question on the net new business. You guys have done USD3.4 billion as you pointed out.
That's - for the quarter, that's almost as much as you did in the first half. Are there any particular markets or sectors that are driving this?
And as we are looking into next year, should we be looking at an acceleration in organic growth on the back of strong new business?
Maurice Levy
I am sorry, but you must be in an area where there is either some other noise, but it has been extremely difficult to get your question. If you can repeat it?
Will Smith - Goldman Sachs
Yes, is this any better?
Maurice Levy
Yes.
Will Smith - Goldman Sachs
So, two questions from me, one on the net new business, you guys, you showed strong net new business of USD3.4 billion in the quarter, which is almost as much as you did in the first half. Are there any particular markets or sectors that are driving this?
And should we see an acceleration in organic growth next year on the back of that? And then secondly, looking at the first two quarters of the year, they were quite lumpy in terms of developed markets.
Are you expecting a similar trend in emerging markets towards the end of the year given the volatility we have seen in Q3?
Maurice Levy
Okay, clear. On new business, this is a year-to-date and not a third quarter number.
So it does include what we already had in the first half. So we have a number which is below what we had realized on average.
This being said which is extremely complicated for us to give a good number at a good indication, extremely complicated because fourth and about digital and on digital what we have is not billings, which is revenues and we don’t know how to calculate this to make it a comparable basis with some other. For example, we have just won a very large piece of business this week.
I cannot mention, but this week, this week. It’s a very large piece of business.
We know what will be the revenues and it’s in the eighth number figure. But I don’t know what is the billing I should report in order to make it comparable with the world we are in when it comes to mid-year or when it comes to advertising agencies.
So you should look at these numbers and I am really questioning myself every time, if I should or I should not publish this number in the future, because they are less and less relevant and they are more and more just an indication. It shows that we are doing well, that we are attracting new clients, that we are working very well and despite the merger et cetera, we have not been distracted, we have not lost our people.
All the things which have been said by the competitors is not happening. So this is something which we feel is difficult to apprehend and to give you more than an indication.
On the last quarter, we are accounting on a number which is for the emerging market which is about in the same direction of what we had in the third quarter. Sorry, on average of the year, third quarter has been relatively poor.
So we expect a better number and it is hard to give you at this point in time more specifics without entering into too many details which we can’t.
Will Smith - Goldman Sachs
Great, thank you.
Maurice Levy
Next.
Operator
We are going to take our next question from Charles Bedouelle from Exane BNP Paribas. Please go ahead.
Charles Bedouelle - Exane BNP Paribas
Good morning, everyone. Mr.
Levy, I don't know if you had your coffee, but I would try to give you the time now and ask a few questions for Jean-Michel and then I will come back to you, if I may. One thing I just wanted to check is that, you didn't give us specific figures for some of the Southeast Asia and, and in fact your Indian market but on my calculation they must be not only down, but down pretty severely.
Can you confirm that? That's my first question.
The second question I had is - I'm just - I know you are not going to give us marginal figures and I'm not expecting any margin figures, but I would like to try to understand the dynamics. We've had disappointing EM.
Europe is coming back a little bit, EM has very high margin now and Europe has low margin. So how should we think about this the averaging trend and does that change at all your plan for the margin this year, basically?
So that's – I would say that's my second question. And my third question is a marginal one.
When you look at the digital trends and the non-digital trends, and when you look at what's happening for example in Europe or even the US, does that push you, or does that motivate you to - I wouldn't say restructure. But maybe re-adapt even more rapidly your tools basically, and the people working in analog and the different things you can do in the non-digital part of the business to try to offset that and adapt to this change?
Thank you.
Jean-Michel Etienne
So, Charles, I will try to answer your three questions. First of all, yes, in Asia, there is very contracted situation.
You mentioned already China. You mentioned – sorry, we mentioned also India, but there are also Malaysia for instance for which the growth rate is not so high as you probably know.
So the situation is very contracted. There are countries where things are going pretty well and this is something that we should be very careful now when we are talking about APAC, especially, there is no one path for the growth in APAC.
They are very different situations now. So that countries where things are going well and those that we mentioned for which we could have few issues.
So, regarding now your second question on fast-growing markets and versus Europe and so on, no, no, we will not change our strategy of course to – we continue to increase our footprint in fast-growing markets, because this is the reality, this is the future and there is some specific situation that we have highlighted this morning. But we still continue to consider that they are extremely good positions to get there and we will continue to invest as we have done during the last years.
So to your third question regarding digital trend and the situation the you highlight in Europe, we have a plan, we have a plan to – and of course the way we are highlighting the growth in digital is driving some behavior some managerial behaviors. And of course, we are taking care of this and of course this has some effect on actions which are currently ongoing that for which you should see the effect maybe more in 2014 than maybe in 2013, the year 2013 has been characterized by some actions, specifically in Europe where the growth rate has not been so good and of course taking into consideration the difference of growth pattern in the two strategic pillars.
Charles Bedouelle - Exane BNP Paribas
Thank you very much and maybe one further question and maybe for Mr. Levy.
Is - I've looked at your announcement on the global production platforms and the Prodigious brand. Is it something we should expect to see more global practices and operations being considered for the benefits of your clients maybe with more efficiency than maybe also a better margin or better profitability for you or was this just more like a, I would say, a one-off or something very specific to this part of the business?
Thank you.
Jean-Michel Etienne
This is not a one-off, absolutely not a one-off. Prodigious is an extremely important project and announcement as we made and this is to set up the Group digital platform.
You’ll remember our presentation at the time of the Investor Day in London the 23rd of April where we had a long presentation on that and a long discussion on this. We have invested, we bought a company dedicated to that business located in Costa Rica in Colombia and we will use that platform and we will use also other operations that we have in other parts of the world to develop this digital production platform.
This is extremely important.
Maurice Levy
Yes, on that front, there is in fact, two very important elements. The first one, is that we see more and more unbundling.
So in some cases, we see some clients and this is a trend which growing asking that production is created by one single production company. This is happening for movies, commercials that we are doing.
And, we have created one already a few years ago. It is happening in graphic and we have – since many years and we have created also production platforms in Mauritius some years ago.
So all this is something is which is now moving in a direction where we can have separate agreements for production, for us and for our clients. The second part is the fact that with the competition, we need to have an organization which is remarkably well trained to produce with a high level of productivity, critical mass is extremely important.
And that’s what we are doing in some regions and this is helping us bringing down our cost and generating both more business, because we are more competitive than the competition and better margins. So this is not as Jean-Michel said it is not a one-off, it is not something trendy that we are doing.
It is a strong operation which worked normally with everything, or the pieces that we have put together has helped us growing this part more than the rest of the group and also when you think about the merger, it is something which will be a very strong base for developing this kind of relationship. Last, and not least, this is not something that we have invented last night or a few weeks ago.
This is something which exists in the Publicis Groupe since many years which was not well organized, not been one single brand, we had many brands as we did various acquisitions that we have made down the road, we have multiplied the brand which is not a good approach, if we want to take maximum advantage of what we are doing in this field.
Charles Bedouelle - Exane BNP Paribas
Very, very clear. Thank you very much.
Maurice Levy
Thank you. Next.
Operator
We are going to take our next question from Ian Whittaker from Liberum. Please go ahead.
Ian Whittaker - Liberum Capital
Thank you, very much. Just a few questions.
First of all just interested in one of your comments in the statement talk about underperformance in Russia. Can you just talk about why that was the case?
Second of all, just wanted to clarify just on your sort of commentary about China getting hit by your overexposure to luxury goods. Are you therefore saying that this is very much of a Publicis-specific issue rather than necessarily across the agencies, because if you look at your future partners and their results yesterday, they were suggesting that for them i.e.
Greater China was actually one of their better regions? And the third question is just really some clarification.
You said that sort of in terms of BRIC and MISSAT that you expect a good Q4 and that that should be in the region of single-digits. But can you just clarify for us what exactly you mean by good?
Do you mean 5% organic revenue growth would counts as good; something like 3% to 4%? Little bit of clarification would be helpful.
Thanks.
Maurice Levy
For the last question, the idea is very simple. We expect to be in line with what we have achieved so far.
So we don’t expect to grow faster, but we don’t expect to have a number that we have shown for the third quarter. Regarding the situation in China, it is – as always, when it comes to China and due to the size of the market and the complexity of the operation, it’s not the one simple answer and we should not stick to one simple answer.
We are forced to simplify when we are answering your question on such a call, but there are situations which are contracted, we have some of our clients who are suffering, we had some of our clients who are doing extremely well. We see some positive trends and somewhere trend is less positive.
So it’s a very complex situation. It is clear that we have a breakdown of business where our share of luxury goods is certainly based on what we know it is certainly much bigger than the share of disproportionate share that the one of our competitors.
The other aspect also which is important is actually we have less business with local clients at some of our competitors. We have a very strict approach when it comes to some field marketing operation or working with some local clients.
So we are maybe fast to rigorous in this field and we have approaches which are probably leading to a situation which are less favorable than some of our competitors.
Ian Whittaker - Liberum Capital
Just, just…
Maurice Levy
Yes, go ahead.
Ian Whittaker - Liberum Capital
Sorry, then just on that question, because you would expect as the importance of local competitors increases that that puts you with an increasing disadvantage if you stick to those clients here. Can we, therefore, expect a loosening of those criteria, so that you focus more on local clients in China?
Maurice Levy
We kind of loosened the criteria of compliance.
Ian Whittaker - Liberum Capital
Okay. So you're --
Maurice Levy
We will never have a loose approach to compliance.
Ian Whittaker - Liberum Capital
Okay, but you recognize that could put you at somewhat of a competitive disadvantage?
Maurice Levy
If you are speaking about local competition, maybe, if you are speaking about global competition, certainly not and if you are speaking about local clients, you will have two categories of clients. You have the one who are still with entrepreneurs and we are still dealing with let’s say criteria which are not ours.
And the more they grow, the more they change and they are moving toward an approach which is much more in line with the ones that we are experiencing in the western markets. So, I don’t think that this is putting us in disadvantage when you look at the things with a focus which shouldn’t be the right one, which is, okay, what is the growth that you can expect and are you growing in line with the markets and it’s that not only we will be growing in line with the market.
But normally we should have also a disproportionate share of growth simply because we have some assets which are taking shape and which are going to grow faster simply because we have some acquisitions recently and we are adapting them to us and to the way we work and this is always a process which is leading to changing a little bit the base of clients. So we stopped working with some and we developed some new clients and this is how we work on a regular basis and I think this is a normal process.
I don’t expect that any of our global competitors will be acting differently. I think that everyone or all of our competitors are taking the right tracks and making the right decisions.
Ian Whittaker - Liberum Capital
Okay and on Russia?
Maurice Levy
On Russia, we have, one issue which is the timing issue for some clients we know exactly what is the situation, two very important, very large consumer goods company has moved their investments from the third quarter to the fourth one. So this should be something which will not create any major problem and we have also won a very large account which is called the - for the people who are interested in Russia, they should know what this account is all about and – is starting to invest with us in November.
So this is something which will show an increase and there is also some changes in scope of what we are doing for PMI as there are really some new regulation regarding tobacco in Russia. So, all in all, all this is something which is giving us a good level of confidence for the end of the year.
Ian Whittaker - Liberum Capital
Thank you very much.
Maurice Levy
Next. We’ll move to next one.
Operator
We are going to take our next question from Conor O'Shea from Kepler Cheuvreux. Please go ahead.
Conor O'Shea – Kepler Cheuvreux
Yes, good morning and thanks for taking my questions. First question is for Jean-Michel.
Sorry to come back on the BRIC organic growth, but just looking at what you have in the appendix where you have the old split and you have organic growth in the third quarter of Latin America plus 9%, Asia Pacific, plus 3.4%, just wondering how to reconcile that with the 1.5% in BRIC and MISSAT. Is there anything beyond what you’ve already said about Russia and India?
And also if you could just give us a sense of what the currency impact – the negative currency impact might be in the fourth quarter, if currency rates remain unchanged. And then, just a couple of questions on Digital.
Again, in the BRIC and MISSAT, I think the digital growth in the third quarter, at least year-to-date, 26% was one of the highest regions. Is there a sense that maybe you are missing some exposure in terms of the weight of digital in those markets, and how can you prioritize that post-merger?
And then the third question, also on Digital. I think we've seen some top management departures at some of the digital agencies in the third quarter in the U.S.
notably Razorfish. Does – is there a sense that it's more difficult than you thought to keep talent and does that change how you think about the digital strategy, buy versus build on a go-forward basis?
Maurice Levy
I will take the last one. There has been a communication of the departure of three people.
So let’s start with Clark who was the Chairman of Razorfish. Clark was not working since, I don’t know, since ever – he had the title, he was not picked, he was not working.
He has the title, he was – being with us, because he has been one of the Founder of Razorfish and we loved that he was the Chairman that he was not involved with any client and with and I think he has new projects and we wish him well. This is something which is absolutely simple, normal and as I said he has zero responsibility since while he was chairing the board.
And the board has less to do with what it could when they were a separate entity because we are making all the decisions in management meetings, because it’s a wholly-owned company. Regarding, Bob - turning 50 he wants a new challenge, there was an offering which was extremely interesting from – he was a good friend and we are very good partners.
We discussed this with the Tim and personally Tim Armstrong the CEO of – and personally I consider that, if Bob wanted a new adventure, a new future, this was great for him and I will never stop or never try to stop someone to fulfill his dreams. Particularly, in an organization where I will have such depth of talents and one of the reason why we have then easily replaced Bob, it’s simply because we have depths of talents.
We picked there was three talents which are – we were on the same line, - Pete Stein, Christian and Shannon Denton. We discuss with the three of them.
We have chosen to give this global CEO role to Pete who is doing a great, great job. We gave the North America role to Shannon who is also great.
We could have done it to Christian, because he is excellent. Obviously, Christian was appointed.
We had some offer to make to him but he wanted to stay in the Silicon Valley and he wanted to stay in his field and that was a role enlarged and the role enlarged is one that Shannon has got. So, this has been very sad, but it has helped us to give a better role to people beneath Christian and I wish him well in his new venture whoever is the way is with former people from CTS, which whom he started in this world in the mid-90s.
So, the only thing that this shows is that Publicis has a great depth of talent. We have not been forced to hire anyone elsewhere and we have been able to fulfill all the positions without any issue.
So, all this is something which I consider as positive as far as we are concerned. And now I am moving to Jean-Michel who has the questions ready to be answered.
Jean-Michel Etienne
So, your first question was on the BRIC organic growth and so, we report BRIC and MISSAT. To give you more color on the Q3 numbers, the growth of BRIC per se is lower than the growth of the MISSAT.
So the MISSAT which is Mexico, Singapore, South Africa and Turkey is let’s say in line with what we have posted on a year-to-date basis for the fast-growing markets. Okay?
So but to be clear also, it was the reverse situation at the end of H1. So, all in all, okay, we have a situation…
Maurice Levy
There is great volatility.
Jean-Michel Etienne
Yes, if you see in the quarter, you know they are, in some cases postponement as we mentioned that already from one quarter to another and there is not changing the trends which is so deep as we can imagine in some cases. So the second question was on the digital growth that we have in BRIC and MISSAT.
You mentioned and we even report this 26% growth rate which is impressive of course but unfortunately the basis is still low and we are working on that but also we cannot grow faster than the market. It’s very dangerous to grow faster than the market.
There are countries where Digital is not huge in some countries such as Brazil for instance. Brazil we are digital we are growing in line with the market, but on a very low basis.
China is different, it’s growing maybe faster, and we made some acquisition that you probably noticed. We bought Netalk and few others.
So recently, which are – with the aim to change a little bit to benefit from this high growth and we are continuing to develop our digital business in the BRIC and MISSAT operations.
Conor O'Shea – Kepler Cheuvreux
And on the currency, I know it’s €95 million negative impact in the third quarter, do you have a sense at this stage whether Q4 will be substantially different from that at this stage.
Maurice Levy
Okay, I don’t have a crystal ball with us.
Conor O'Shea – Kepler Cheuvreux
But if currency rates remain unchanged?
Jean-Michel Etienne
Still it is also in the €95 million in an year and of course this is 43 yen as you see in fact this is report on U.S. dollar and the 43 or so millions which explain as €95 million is coming partly, significantly from the Brazilian real and Japanese yen also.
Conor O'Shea – Kepler Cheuvreux
Okay, okay, great. That’s very helpful.
Okay, thank you.
Operator
We are going to take our next question from Julien Roch from Barclays. Please go ahead.
Julien Roch - Barclays Capital
[Foreign Language] My questions are first on the synergies with Omnicom. In the Omnicom con call yesterday, they said that $500m was conservative.
I was wondering whether you could give us more color on how conservative that is. Also in terms of timing, when will we get 100% of the synergies and the last one is what are the implementation costs of the synergies?
The second question is coming back on the question on new business where you said digital is not billing, so difficult to make it comparable. In the Q2 new business numbers, have you already put in some digital grossed-up revenue?
And if yes, what kind of is the formula you are using? And, these are my questions, thank you.
Maurice Levy
Jean-Michel?
Jean-Michel Etienne
Okay, we are giving the synergies, so, I can confirm that we are on the low range of with $500 million which have been disclosed. We are still continuing to work on this to understand how this can be delivered.
We have few ideas of – this has been already – there are obvious things which have been mentioned yesterday by our friends. We did that together.
So, they are many concerns at, and regarding the timing, the timing the sooner the better of course, but, I will be disappointed personally if these synergies will not be delivered in year four – for three years, this has been that we should be able – I guess we should be able to deliver the synergies fully in year four, which mean three years after the merger. And implementation goes, okay, we have a number that you know $400 million.
We will spend this amount for the first year, it will be difficult to do everything and during the first year this is clear. But we will also facing, I think that we could expect this is something which has to be rationalized more of course, but the facing should be maybe an amount – a smaller amount in the first year, a bigger amount the year two and a smaller amount in year three which is something that you can see every time we have this kind of a problem.
This is a kind of low that we have seen in the past. I don’t see any reason to not comply with this “low” that I am giving you.
Maurice Levy
I have a slight different point of view on that, but that’s normal. I think that we can go through the stairs or take the lift and I would like that take the lift.
But this is something that requires a lot of work in advance and all these will depend on how much we can do ahead of the merger, because the more we can do ahead of the merger, the better case, when we have been merged and this depends on how we are getting the authorization, what we can do, what we can’t and all this is something which is not planned. Regarding the second question, I must say that, yes, we have and the numbers that we have are numbers which are just the revenues that we included, because we have not included anything else and we had in the first half a lot of media accounts which have been warned and they are media account as you know are relatively big and when they are big, they make a big number and some in terms of revenue what we get from the digital operations are bigger.
So, we will have to find a solution to do that and we will have to either find a professional rule or we should have an educator as a – to put a gross number. I am not very happy with this and since many years and the more our business model is changing, the more I consider that this number is less and less relevant.
Julien Roch - Barclays Capital
And can I add a last question, on the closing you confirm it'll be end of Q1. There is some market noises in the UK that the closing for the UK could be delayed to end of Q2, beginning of Q3 next year.
Could you comment on the UK specifically?
Maurice Levy
No, I think it should be at the present – we always separating that kind of rumor. It’s coming from the UK, so you know where it’s coming from.
We don’t – honestly, we have a target. We hope that we will be closing in Q1.
We believe that we can do it and all this is depending on the authorization that we will be receiving. There is nothing specific in the UK because, UK is part of the EU as far as I know and it’s – the authorization regarding competition in Europe is given by the EU and no specific request from the UK.
But if the source is having another opinion you should ask directly the source.
Julien Roch - Barclays Capital
[Foreign Language]
Maurice Levy
Next please.
Operator
We are going to take our next question from Lee Dunlop from Cazenove. Please go ahead.
Lee Dunlop – Cazenove
Good morning gentlemen. When do you plan to hold your Shareholders Meeting for the merger?
Will you wait for the regulatory clearances or will you hold it as soon as the shareholder circulars are ready? And just in regards to the noted progress of the regulatory approvals, any there which you expect which could take a little bit longer than the others and define the closing of the merger?
Maurice Levy
Regarding the AGM or EGM, Extraordinary Meeting, we have to wait for some authorization as long as we have not got them it will be difficult. So, legally, we have to wait for.
Regarding now the process, there are some countries which should be fast that we had seen too already and we have indication of a few of those which will come in very fast and there are some others who are a bit slow. When they are slow, this doesn’t mean that there is a difficulty of any kind, it is simply that their process take longer.
For example, if you look at EU as well as China, there is a discussion before the final filing. So we have a form which has been filed in those both cases which is a kind of pro forma filing.
On that pro forma filing we are discussing with the staff. They are putting questions, we are giving some answers back and forth as what they feel and we feel both of us that we have sourced out most of the questions that they are posing then we have the final filing.
And from there start a new delay that delay can be pretty short as long as one month or pretty long two to three months. So it’s difficult to know precisely.
As we believe that we have no major hurdle and that we should pass the test without any major problem and that is the opinion of our lawyers and the opinion of the economists who have worked on the market share. We think that it should be done by the end of Q1 latest, but you know, if a country is taking more time for any given reason, we are penalized without having any kind of derived response – the decision.
Lee Dunlop – Cazenove
Okay, thank you. Would it be the larger regulatory authority such as EU, FTC in China that you would want to get - that you would legally need approval before having the Shareholder Meeting?
Maurice Levy
We need the approval including for some small countries. Legally, we can’t go and call and EGM if we have not the required approval.
Lee Dunlop – Cazenove
Can you say which countries they are?
Maurice Levy
I have not the whole list, but it’s – you know we are in 15 or 16 jurisdictions. So there are two already approved.
There are three which are under intense discussions. There is also Mexico, there is also Brazil and there are a few others which are I think more a formality because the decision should normally come like in South Africa or in Korea pretty quickly.
The big ones are those and there is two countries where we had to file after.
Lee Dunlop – Cazenove
Okay. Just want to - for the sake of clarity, when we talk about the Shareholder Meeting, we are not talking about necessarily completion.
I wanted to clarify.
Maurice Levy
Here we are talking about Shareholder Meeting, we will vote in favor of.
Lee Dunlop – Cazenove
Okay. That’s fine.
Maurice Levy
And we cannot ask the Shareholder Meeting to vote in favor otherwise we would have done it with a provision saying – based on approval, et cetera. In the good old days these are things we could be doing and many companies have done it in the past.
Since few years, regulation has changed and this is something we can’t do it anymore. We need to have the approval before we ask the Shareholder Meeting to make a decision.
Lee Dunlop – Cazenove
Okay. That's only on, that's on the approvals side pertaining to French laws.
Maurice Levy
It’s just sent from Omnicom.
Lee Dunlop – Cazenove
Okay alright.
Maurice Levy
As I said, and we don’t anticipate any major problem. We don’t anticipate any major issue.
It is just a process and we have to follow the process regularly, cautiously and to deal with the requests that can be put to us. The final decision is in the hands of the relevant authorities.
So we have to do what we have to do and this is something that we are doing jointly with Omnicom. It’s not two different processes.
It is the same process that is led by the two companies jointly and with the two legal advices and which is a common task for the economists and all the people who are supporting us to bring all this information. It’s enormous, enormous stats, it’s really huge work to be done.
It has been done mostly. So the work is behind us.
Now we are in the normal process of discussion.
Lee Dunlop – Cazenove
Thank you very much.
Maurice Levy
My pleasure.
Operator
We are going to take our next question from William Meyers from Nomura. Please go ahead.
William Meyers - Nomura
Hi there, yes, it's Will Meyers from Nomura here. Just one question, please.
Going back on to an old topic of privacy, perhaps a new twist given that there have been articles recently saying that Google are looking to launch their own alternative to cookies and we are seeing greater news from the U.S. about trying to tighten up regulation around cookies and privacy.
And I'm just wondering what type of impact something like that and changes around that area of gathering information might have on some of your digital media buying business, particularly in terms of the trading desks, which rely quite heavily on the cookies at the moment. So just to get your views on how worried you are about potential changes and the impact on some of the businesses would be it would be great please?
Thanks.
Maurice Levy
With pleasure. We are already using cookies which do not belong to us.
On the trading desk we are using platforms and cookies which belong to other, - let’s call them media and obviously, we are building our own. As we will be building also our own big data.
So, we don’t anticipate that the fact that there will be some specific cookies or that unless it will be a regulation, I think it will be safe regulation in the U.S. it will lead to a transformation of the work.
I think it is good that we are caring about privacy I think it would be foolish to do not manage privacy correctly because it will kill the future of the business. So it’s extremely important that we care about private information and I think that this would not have any negative impact on our business.
William Meyers - Nomura
Okay, thanks.
Maurice Levy
Thank you.
Operator
We are going to take our next question from Claudio Aspesi from Bernstein. Please go ahead.
Claudio Aspesi – Bernstein
Good morning. One question please.
You have pointed out that investors should be cautious about taking the projections for the market in the growth of advertising into consideration when they then project growth for the agencies because there is a deflationary pressure on your activities. On the other hand in the past we have heard from both you and your peers that in the digital world, you actually get more of the spend in a campaign because you do more activity fundamentally and you also get into more software sales et cetera, et cetera.
So obviously, your estimate of somewhere – of a 70%, let's say, ratio between the growth of the market and your growth is a combination of these two. Can you please give us a flavor for what has been the deflation on similar activities recognizing that no two campaigns are ever the same?
But can you give us a flavor for your estimate of deflation in the past four or five years and whether the deflationary trends are stable from year-to-year or whether it's becoming more of an issue or less of an issue?
Maurice Levy
You are – I think in our addressing process and how we are defining the objectives for the following years. So it’s a very clever question, very, very good question.
This is the kitchen of Jean-Michel, where he is managing all the number and trying to find the right balance in order to give to our CEOs the good objective for the following year. Jean-Michel will maybe answer that question.
Jean-Michel Etienne
So the way – in fact, this is true that the correlation between the ad spend growth and market ad spend growth and what is the pattern to be taken for the change in revenue of the agencies has increased along the years and this is due – you mentioned that to several factors. Digital is only one on the sector and the fact that we move from many years ago from commission to fees and there are plenty of other factors.
So, by simplification, one we are taking to some for the revenue change of what the estimates which are prepared by the forecast – the market forecast for billings and we have – this is something that we are investing on that. We don’t have a magic formula, we don’t have that.
But we are using to set up the objective, we are of course using as Maurice said, different tools, we have a model, where we are speaking the analysis of revenues of each agencies between analog and digital and of course the pattern which is followed for digital has nothing to do for analog. The first thing that we are doing is that then we are looking also the geographical mix of course of the brand which is located more in fast-growing markets.
Of course, we’ll have a pattern that’s slightly different. This the way we are setting up the objectives and your question is absolutely key in the way we are setting up the objective for our businesses.
Maurice Levy
And as far as the last part of your question is, which is have seen a deterioration as we seen in the last few years or something which is changing, what we can tell you is that since 2005 or 2006 that we have started to look at how the things we are working between forecast and actuals. We have always kept approximately the 10% base.
It was 30%, it is 33% in eight years of time. So it’s not a big deal and that risk is not really there because what we have lost from one side, we have won from the other side and so we are – we would say approximately the same discount if I may.
Claudio Aspesi – Bernstein
Okay, thank you.
Maurice Levy
Thank you. Next, I think Louis, we are almost with the last one or the last two ones.
Operator
Last two questions. Next one is from Tom Singlehurst from Citi.
Please go ahead.
Thomas Singlehurst - Citigroup
Hi, guys, I am Tom here from Citigroup. Can you hear me?
Maurice Levy
Yes, we do.
Thomas Singlehurst - Citigroup
Perfect, perfect. So, a few moments ago Maurice, you mentioned the good old days.
I'm not sure my colleagues themselves I would agree with it. But I always think that it used to be quite easy being an advertising agency analyst, because if you wanted to forecast growth you either looked at the quarter immediately prior to the one that was being reported or if you wanted to be especially sophisticated, you could look at the two year rolling growth rate.
And I thought the key point is that appears to have broken down. If we look over the last sort of six to eight quarters and this is not just you actually, it's more broadly, there's an almost unprecedented level of volatility in the quarterly growth profiles.
Even though I suppose we would be naturally expecting it to be less volatile because companies by and large are bigger, digital is meant to be more predictable and more sort more of an annuity revenue stream. So I just wanted to know whether you think this volatility is cyclical or is there something fundamental?
Is it just the new normal and something we should get used to?
Maurice Levy
Volatility is a new norm, but to a degree. So, I am not giving a very good answer, but it’s a very good question, because, this is the new world we are in.
There is three or four elements that we should point out. The first one which is extremely important is, all the new technology reply to analog as well as digital has changed the speed at which a client to make a reservation and can cancel ads.
Many, many years ago, it was most impossible to do it without at least three months of delay of notice and clients were not changing easily their plans. Today, within a week, you can change your plans, both analog and digital except for magazine and particularly, monthly magazines, or, maybe some outdoor campaigns, but normally, you can’t change TV almost overnights, digital by the minutes, so, radio also.
So we have a flexibility which is extremely positive because we can increase, we can change it is extremely positive for our clients if they are facing a difficulty. I remember some clients who had their factory burnt and their ads were still going on.
So this was quite dramatic or they had the huge strike and their ads were going on and this was also almost an insult to their employees. So, all this has changed quite dramatically.
The other aspect is that, macroeconomics have changed and we see that the world is moving at a fast pace. Reaction on everything is much faster, that’s what we had in the past.
So there is a new speed if I may say so and more volatility. Regarding digital, there is more predictability but at the same time, you can change your plan pretty quickly.
And there is now another factor which is disturbing always and creating another layer of complexity which is a new business. There was a time where when you were winning a new business pitch and including now in some areas for example when you are winning a media in your business page or an advertising agency in your business pitch, you had to wait three to six months to send the first invoice, because they had to unwind the ties with the previous agency.
We had to take a little bit of time to scale up and it was taking a lot of time, we had to invest ahead of the first invoice et cetera. These remain proof or part of the business, but when it comes to digital you can invest, you can invoice almost day one.
When you win something, you have immediately the possibility of invoicing. So I would say that our world has changed dramatically.
The changes are not finished and we are on the world or changing even more with the development of the RTB operations, our own desks, et cetera. So all this is something which will accelerate the change and which will add some volatility and at the same time it will add some acceleration in the wins of the – in the invoicing of the wins that we are having.
Sorry for not being more precise, but that’s the best I can do Tom.
Thomas Singlehurst - Citigroup
That's very clear. Thank you very much Maurice, thank you, Jean-Michel.
Operator
We are going to take our last question from Patrick Kirby from Deutsche Bank. Please go ahead.
Patrick Kirby - Deutsche Bank
Hi, good morning.
Maurice Levy
The last will be the first, you are the last, but you will be the first. Go ahead, Pat.
Patrick Kirby – Deutsche Bank
Right, I've actually got two questions just to finish off on. Firstly, just on the positive client response that you mentioned to the merger, I guess on the one hand there's the improved range of services that you're going to be offering your clients and then on the other hand, there's the value that you offer through those services.
So, my question is, is there an expectation as you've been talking to your clients that they will be sharing in the $500 million of synergies that you've highlighted to the extent that you are changing your view about how much of those synergies will drop through to the merged company's bottom-line? And then my second question is
Maurice Levy
That’s fine, because it’s very quick answer, no one client has raised that question today, maybe because they are fears, maybe because they are polite, but no one has said, okay, I am very pleased because now your fees will go down. Most have said, I am very pleased because, you will be much stronger, you will have a much broader range of services, you will have access to new operations that you don’t have, for example CRM and for some, that this will help us to consolidate our business within one single partner.
No one has said, that’s nice, congratulations Maurice, now go to the cashier, you have to pay us back share of your revenues.
Patrick Kirby – Deutsche Bank
Okay. So you're happy if we are assuming that that $500 million drops through to the merged company's bottom-line in year four - by year four?
Maurice Levy
I am optimistic. I hope this will be the case.
I am telling you that to your question which is have you started to have conversation and there are clients expecting that some of this will fall in their pockets. My answer has been clear.
Now, we have mostly spoken to CEOs. Obviously, I guess that procurement people are happy, they are thinking that there will be some good deals to make, because of the synergies and there will be a sharing.
These probably were they are thinking and my view is that with the level of synergies relatively low and conservative and that what we will be sharing is probably what will come on that.
Patrick Kirby – Deutsche Bank
Okay, that's clear and just one other question. You mentioned the integration committee is meeting later this month.
Maurice Levy
Yes.
Patrick Kirby – Deutsche Bank
Can you remind us what the structure of that committee is? Who is on it?
Who is in charge of it? Thanks.
Maurice Levy
The integration committee is co-chaired by John and myself and there will be in fact – I am not disclosing yet the names, because we have to do that appropriately and the two together. The only thing I can tell you is that it will be co-chaired by John and myself.
The second thing is that there will be a core team composed by called numbers coming from both. This core team will have three roles, one is, to look at all the areas of integration.
The second is to coordinate all the specific teams, because every time that there will be something identified, there will be – a team will be designated as specific to deal with that issue and they will coordinate and make sure that we are planning correctly and delivering what we need to deliver. So it’s something that we will be probably announcing shortly.
We have the first meeting at the end of this week and I think that we will make a public announcement right after.
Patrick Kirby - Deutsche Bank
Great, thanks very much.
Maurice Levy
Thank you. I think that we are done.
I would like to thank you all. It has been a relatively longer session for the quarter where we have to announce only organic growth.
I hope that you have got all the answers that you wanted to get and I am very conscious of your time and I thank you very much everyone. Thank you.
Bye.