From The Editor

Last Monday, anyone who invests in the market watched the Dow cascade 554.26 points as 7.2 percent of its value quickly evaporated. That day, Interpublic's share price fell some $2.56 to close at $45.25. Omnicom was down about $5.44 to close at $66. True North was off $0.75 to close at about $22.56. Meanwhile, on the Nasdaq, WPP Group's ADRs were down $0.50 to $45.75, CKS was off $1.875 to $33.5 and Grey Advertising fell $36.50 to $322 per share. On Tuesday, the pendulum swung the other way. The Dow surged 337.17 points to close at 7498.32, a 4.71 percent gain. Agency holding-company stocks recovered. By early Wednesday afternoon, things were calmer. [This column closed last Wednesday. Who knows what has happened since?] But that's missing the point. In the two days of boomerang market activity, the mercurial aspects of being publicly traded were manifest. Agency stocks came through well--at least early last week. In the next few weeks, two or possibly three agency stocks will enter this volatile world. With its demerger behind it, Cordiant will go from being one publicly traded company to two: one new stock, but two new companies. Shares in Saatchi & Saatchi PLC and Cordiant Communications Group will be on the market next month. While no one at Young & Rubicam Inc. is commenting, that private holding company lined up Bear Stearns and Donaldson, Lufkin & Jenrette to be the lead underwriters for its IPO, according to sources. This is the strongest indicator yet that Y&R intends to move forward with its offering early next year. Those at Cordiant don't have the option to choose being private versus being public. Those at Y&R still do. Was last week's market volatility something that should give Y&R pause? Will agency holding-company shares retain value in an economic downturn when their clients' first act of defense is to cut marketing budgets? As one stock analyst said, it depends on what your goals are. "It's a big game. There are definite benefits in being a public company," says Michael Bungey, who will lead Cordiant in its emergence as a publicly traded communications group. He points to the recent success enjoyed by IPG, Omnicom and WPP Group and notes that a big part of their revenue generation is based on acquisitions. "They have been out there playing a very different game than their private competitors." During the late 1980s and early 1990s, when WPP Group and Saatchi & Saatchi were having financial difficulties, those who were then at Y&R were among the staunchest defenders of the privacy doctrine for ad agencies. At that time, the global game was still agency network expansion--not positioning yourself as a holding company and global marketing communications resource. There will always be a place for an ad agency--public or private, large or small. But if Y&R Inc. management decides that its competition is holding companies, then its course seems to be to get a glove and get in the game. Stock blips, and all else that goes with shedding the cloak of privacy, are the price of admission to the stadia of publicly traded holding companies. --Kevin McCormack

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