Ad Industry’s Q2 May Not Be as Good as Expected

Pivotal lowers organic growth estimates

The ad industry’s second quarter may not be turning out as well as expected. That's the view of at least one financial observer: Brian Wieser, senior research analyst, Pivotal Research Group, says he is revising his organic revenue growth estimates downward, which he believes have been above consensus.

While he says that Pivotal’s new expectations for full-year result levels remain within previous corporate guidance, Wieser voices concerns particularly about a short-term misalignment between agency growth trends and the broader media economy which he thinks will correct itself over subsequent quarters. But Wieser warns: “The ‘fiscal cliff’ and ongoing risks associated with the European economy could make the likelihood of this correction somewhat more challenging.”

The revision also includes diminished longer-term growth expectations in many of the world’s fastest-growing ad markets like China and India.

In looking at industry holding companies, Wieser noted that currency foreign exchange also impacted results, particularly at U.S.-based Omnicom.  Pivotal has now changed its second-quarter organic growth rate expectations accordingly: WPP Group will grow 3.9 percent, down from Pivotal’s previous forecast of 4.7 percent; Omnicom should increase 3.7 percent, as opposed to 5.6 percent and Interpublic will grow 2 percent, down from 2.3 percent.

Nonetheless, Wieser said he remains “very positive” about the mid-term and long-term prospects for agency holding companies.

Wieser, who at one point in his career was evp, global director of forecasting at Interpublic's MagnaGlobal, has recently been in the news. He warned his clients about not buying Facebook shares during the social network's initial public offering, saying the stock was overpriced when it began trading.


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