A dreary 2009 set a low bar for the ad holding companies to hurdle this year, but, based on their most recent results, there’s reason to be hopeful. Clients, particularly in the automotive, financial services and packaged-goods sectors, are generally spending more as they seek to grow market share.
Questions remain about how tightly consumers will pull their purse strings—particularly if unemployment remains high but, based on what clients are telling holding company CEOs (see below), marketing spending should rise next year. “Generally, companies are flush with cash; the one thing they don’t have is revenue growth,” said JPMorgan analyst Alexia Quadrani. “One of the strongest drivers of revenue growth is advertising. So, I don’t see why things will change as long as the economic recovery continues.”
For the holding companies, Quadrani projects low- to mid-single-digit organic growth in 2011.