All Holding Company Stock Prices Drop as Credit Suisse Cuts Media Budget Estimates

By Patrick Coffee Comment

The world’s biggest holding groups have yet to recover from the August implosion that saw WPP’s stock price drop more than 10 percent in one day.

Today, the stock prices for every major holding group with the exception of Dentsu dropped on the news that Credit Suisse had trimmed its estimates for media spends.

This was the same reason for the summer dip, which followed announcements by P&G and Unilever that they would be cutting their respective budgets for “ineffective” digital ads.

WPP, Publicis, Omnicom and IPG all saw their shares’ values dip, with the latter taking the biggest hit at around 2 percent.

From Seeking Alpha, this is happening “as the firm sees lower organic revenue growth and a risk in U.S. media buying (about 6% of IPG’s EBIT) where clients divert fees to targeted linear TV campaigns.”

In other words, the investment bank doesn’t see TV budgets recovering anytime soon, no matter how many internal debates we may have about the superiority of long-form creative.

Another key quote regarding Omnicom: “We believe OMC’s advertising business will continue to slow, despite easier comps, as client spending from key verticals including FMCG remains muted.” That means CPG clients, of course.

Interestingly, Credit Suisse did find a bright spot on the advertising horizon: Snapchat. One analyst tells Barron’s that the platform has done a better job in convincing clients and media agencies to spend money on its targeted ads, arguing that everyone is now more comfortable with the still-odd vertical format.

Oh, and Mark Zuckerberg is still the King of the World, no matter how lame his legless virtual Puerto Rican adventure turned out to be.