It’s becoming a tale of two continents among the big ad holding companies: Interpublic has just announced another stellar set of quarterly results – organic revenue up a whopping 6.4 per cent in Q1 2019 – following on the heels of bigger US rival Omnicom’s 2.5 per cent (although Omnicom’s global numbers were blitzed by exchange rates) – against London-based WPP’s fall of 2.8 per cent and Paris’ Publicis, down 1.6 per cent.
North America has been identified as the problem for both WPP and Publicis. WPP’s sales fell 8.5 per cent there.
Both WPP and Publicis have invested heavily in prime US brands over the years: creative agencies JWT (now part of Wunderman Thomsom), Ogilvy and Y&R (now VMLY&R) at WPP, Leo Burnett and Saatchi & Saatchi at Publicis. These, though, appear to be losing share to their American rivals.
Publicis and WPP (belatedly perhaps) have moved hardest into consultancy, promising their clients business “transormation” services. Publicis has just coughed up $4.4bn for data business Epsilon despite acknowledging it had problems bedding in $3.7bn Sapient which it bought three or so years ago. But its size and sales have hardly moved.
Interpublic and Omnicom had mostly desisted apart from small acquisitions until Interpublic boss Michael Roth decided to buy $2.2bn Axciom last year, very likely Roth’s last major move at Interpublic (unless someone buys it) and one which may define his tenure.
Are WPP and Publicis barking up the wrong tree? Have US clients, who account for about 40 per cent of the ad market, decided they prefer the more traditional offerings of their home-based agencies? Interpublic’s include McCann and FCB, Omnicom owns BBDO and DDB. Are WPP and Publicis finding it difficult to manage huge parts of their business from afar?
In all the discussion of the ad holding groups’ travails nobody much mentions media agencies these days but they’ve been bringing in most of the growth and profit in recent years and there are some signs that this is slowing in a digital world dominated by Amazon, Facebook and Google.
WPP has its GroupM unit which oversees Essence, MediaCom, Mindshare and Wavemaker (a merger of Maxus and MEC, prompted by MEC losing the giant At&T account) while Publicis has a baffling array including Digitas, Starcom, Blue449 and Spark Foundry, the former MediaVest which seems determinedly unwilling to spark.
WPP’s Wavemaker took a powder in the recent Campaign/Nielsen UK billings table with a drop of 20 per cent.
Media agencies are still grappling with the consequences of the US Association of National Advertisers’ report in 2016 that purported to reveal undisclosed media rebates although no one company was named. Interpublic’s Mediabrands, smaller than the others, seems to be doing best.
Maybe the problem for WPP and Publicis, as they navigate their states of permanent revolution, is that US clients don’t trust them as much as they used to.