Interpublic joins WPP on the ad holding company naughty step

When lockdown ended all the ad holding companies bounced back at more or less the same pace but now there’s a gulf between stronger performers Publicis (currently the leader) and Omnicom and struggling WPP, Interpublic and Dentsu (the last two have still to report finalised numbers for 2023 but they aren’t going to be great.)

Interpublic actually went backwards in 2023 if organic growth is the measure, down 0.1% for the year although its performance increased marginally as the year progressed, with Q4 organic growth of 1.7%. WPP is expected to report 0.9% growth for the year (Publicis was up 6.3%, Omnicom 4.1%.)

CEO Philippe Krakowsky says: “We are pleased to report growth in the fourth quarter ahead of expectations, during our seasonally largest quarter and across each of our segments. The strength of our capabilities in media, healthcare and specialty marketing services was once again evident, as was the impact of macro uncertainty and challenges due to clients in the technology sector. These cross currents continue to be in effect as we move into 2024.

“Looking ahead, we remain confident in the foundational strengths of our company. We anticipate that the strongest and most consistent growth areas of our business will perform well in the year ahead. We will continue to make strategic investments, including the ongoing development of our leading addressable capabilities, such as our data-powered tools, retail and performance media, and the expansion of our media buying models.

“Our current and prospective investment in AI ensures that this increasingly important technology extends to the full range of our offerings. Along with other strategic actions, this will allow us to continue to evolve our portfolio and asset mix.”

Which is more or less the message WPP CEO Mark Read gave at WPP’s recent Capital Markets Day. A cynic might say this really means more tech alongside more job losses. In the UK there already seem to be a number of refugees from Wunderman finding billets elsewhere. And we thought that Wunderman, now merged into VML, was doing OK.

Inevitably questions are going to be asked about leadership. Read is thought to have done a good job steadying the ship after founder Sir Martin Sorrell’s surprise defenestration six years ago but now things have stalled.

At IPG CFO Krakowsky succeeded long-serving Michael Roth in 2021, a seemingly safe choice as Roth’s lieutenant (Roth himself had been in financial services.) But many CFOs, raised and rewarded for their caution, often struggle leading growth businesses. Publicis, on the other hand, bet the ranch on buying tech consultancy Sapient and data business Epsilon and is reaping the rewards.

Many companies are struggling with a flagging global economy and political risks firing up all over the place. So Read and Krakowsky and their respective companies look safe for now. There’s little appetite for risky media deals in the aftermath of Elon Musk’s disastrous takeover of Twitter. But somebody, somewhere will be computing the juicy fees involved in a takeover or break-up of either.