Ciesco: holding companies struggle in the US but growth remains robust in the UK

By Ciesco


WPP, the world’s largest marketing group, reported revenue growth of 13.3 per cent to £7.40bn ($9.33bn) for the first half of 2017. However, this was largely due to an 11.4 per cent gain from currency, and a 2.2 per cent growth from acquisitions. Organic revenue growth over the period fell by 0.3 per cent.

The recent trend provides a starker picture for the firm with Q2 organic revenue falling by 0.8 per cent, with a heavy 4.1 per cent fall in July alone. Net sales, the most meaningful and accurate reflection of WPP’s top line growth, decreased by 1.7 per cent in the second quarter, and by 0.5 per cent in the first half. Growth was fairly weak across all geographic markets, with a fall of 2.2 per cent in North America, the company’s biggest market. UK performance was one of the few bright spots for the company, with the region showing growth in net sales of 3.8 per cent over the half-year.
WPP suffered from the loss of key clients, including the end of a 19-year relationship with Volkswagen, plus telecoms giant AT&T. Moreover, client spending pressures, particularly in the FMCG sector, further hindered growth.


New York-based Omnicom Group reported a fall in revenue of 0.1% to $7.38bn, comprising a comparatively strong underlying organic growth of 3.9 per cent, a decrease in revenue from the negative foreign exchange impact of 1.3 per cent and a decrease in acquisition revenue, net of disposals, of 2.7 per cent. Apart from the North American region, which saw a 0.6 per cent growth for the six months ended June 30, 2017, Omnicom saw strong growth rates in all other markets. Latin America grew by 5.2 per cent, the UK along with other Euro markets all grew at above eight per cent and the Middle East and Africa region grew by 28.7 per cent.

Out of its four fundamental disciplines, Omnicom’s advertising division was the best performing, experiencing growth of 5.2 per cent, while CRM increased 2.9 per cent, PR by 0.7 per cent, and speciality communications by 2.7 per cent.


Publicis posted reported revenue for the half of €4.8bn ($5.2bn), up 1.9 per cent from €4.7bn a year earlier. Organic growth however was negative -0.2 per cent over the period, with a poor Q1 performance where organic growth fell by 1.2 per cent. Q2 performance was stronger with 0.8 per cent organic growth coming from a number of recent client wins including McDonald’s, Bel and HSBC. Growth from acquisitions over the period was 0.5 per cent while growth from foreign exchange increased reported revenue by 1.6 per cent.

While North America saw a fall in organic growth of 2.4 per cent over the half, account wins helped the group return to positive growth in the region (0.2%) over the most recent quarter. Moreover the expectation is that these gains will continue into Q3, and the second half of the year. Aside from the recent turnaround in North America, the group continues to show solid organic growth in its home region of Europe (+4.3 per cent) over the first half of 2017, with the UK (+7.8 per cent) and Italy (+10.5 per cent) being the standout markets.


Interpublic Group reported first half revenue of $3.64bn, a 0.6 per cent decrease from the $3.66bn reported in the first half of 2016. Organic growth of 1.5 per cent was reduced to 1.1 per cent by currency fluctuations and one per cent by net acquisitions and divestures.

This comprised an organic increase of 1.7 per cent in the US, which was 1.8 per cent excluding the impact of lower pass- through revenues, and no organic change internationally. Revenue growth was hit negatively by acquisitions (-1.1 per cent) and foreign exchange (-1.0 per cent).

These results were not as strong as the growth shown by IPG in the recent quarters, where they exceeded their expectations. In terms of their agencies, Mediabrands, McCann Worldgroup, Hill Holliday, and Huge all showed positive growth momentum while, in terms of client sectors, strength was seen in healthcare along with growth in the auto and transportation, retail and government fields. These increases were offset by declines in tech and telecoms, and also a fall in financial services and consumer goods.

Ciesco is a boutique corporate finance advisory firm, specialising in the digital, media, marketing and technology sectors. Ciesco advises clients on mergers & acquisitions and corporate strategy.


All data obtained from WPP, Omnicom, Publicis and Interpublic Group of Companies’ H1 interim reports and presentations.

Organic Growth: the year-on-year increase or decrease in revenue from the prior period, excluding the FX impact and net acquisition revenue

For WPP, net sales figures and organic net sales growth are used rather than revenue and organic revenue growth, as they reflect the increase in both online media buying as principal together with pass-through costs for data investment management.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.