WPP more or less matched rivals Publicis Groupe and Havas, beat Interpublic but lagged Omnicom with growth of 2.9 per cent in 2012, according to its full year accounts released today.
Billings fell slightly to around £44bn (blamed on the weaker pound) while pre-tax profits increased 3.5 per cent to £1.3bn on revenue of £10.4bn. WPP boss Sir Martin Sorrell (left) is forecasting three per cent growth in 2013, which is decidedly cautious.
He would say there’s no big event like the Olympics, European football championships or a US presidential election in 2013 but none of these did that much to boost revenues in 2012.
By geography Europe is still in the (relative) doldrums although improving slightly (that may change with the two comedians in Italy, of course) while by activity market research (or insight as WPP likes to call it) remains sluggish and PR, where the company has invested heavily, particularly in the US, is becoming a worry (the worst-performing activity in 2012).
WPP’s shares have stormed ahead in recent months, which is rather odd when you look at these unspectacular numbers. But that may reflect a lower than merited price at the start of the year and WPP’s status as a kind of investment trust for advertising, marketing and media. If the world economy is, finally, on the turn then WPP should benefit.
“What does the 2012 reporting season tell us about our world and the four dominant global players?
The global marketing communications world is pretty flat but, as always, averages inherently sweep away the insights. It might be flat globally but this ranges from (i) one per cent organic growth backdrop (discounting acquisitions and foreign currency effects) at IPG attributed to major client losses in 2011 biting in 2012, (ii) to four per cent at Omnicom, (iii) with both Publicis and (iv) WPP growing at three per cent.
So what can other agencies learn?
It looks like healthcare isn’t quite the safe bet that it has been in recent years, with Omnicom, Publicis and IPG all reporting soft or shrinking healthcare verticals.
If you’re looking at overseas expansion from wherever you’re reading this, then markets to avoid are those using the Euro where revenues have shrunk between 0.3 per cent and nine per cent for the Big 4 over the last 12 months. If that doesn’t seem like rocket science, then perhaps the fact that UK revenues are up between two and six per cent is at least a pleasant surprise.
Less surprising is the return to modest growth in the US, which we’ve all been reading about and the boom-time growth rates in “Rest of World”.
WPP grew 11 per cent in Latin America last year while Publicis’ BRICs+MISSAT region was up ten per cent so, if you can find that on a map, it could be worth setting up shop there, whilst the various definitions of Asia used by the Big 4 point at this being the Holy Grail for growth in this decade with revenues up as high as 15 per cent.
And what services should you be opening in your shiny new BRICs+MISSAT hub operation? Digital (not defined) and advertising (including digital presumably) are two hot disciplines that if you could actually cut through the definitions being used in the stock exchange reporting, would seem to be worth focusing on.
Clearly there’s more than a slim chance that your agency might not have quite the balance sheet or client list to open in Beijing later this year, so what closer-to-home operational insights or solace can you draw from the Big 4? Do you frequently beat yourself up for not hitting 20 per cent margin and not keeping staff costs below the golden 55 per cent of revenues? You’re in good company. Publicis tops the pile at 16 per cent margin while IPG came in last year at ten per cent. Staff costs averaged around 60 per cent of revenues across the board.
What else can the Big 4 teach us? A bit of well-considered early stage ad tech investment can pay off, witness Buddy Media (WPP) and Facebook (IPG) sales adding the odd hundred million or two to profits and the bank account last year.”