Holding Companies: Out of the Woods?

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. Still, based on what clients are telling holding company CEOs, 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.WPP GROUPQ3 Revenue: +6% ($3.49 bil.)First 3Qs Organic: +6% ($10.25 bil.)Q3 Organic: +8%First 3Qs Organic: +4%"I'm certainly more optimistic about 2011, but . . . the levels of uncertainty from clients are probably greatest in terms of the outlook for the U.S economy [and] Euro contagion," said CEO Martin Sorrell.OMNICOM GROUPQ3 Revenue: +6% ($2.99 bil.)First 3Qs Organic: +6% ($8.95 bi.)Q3 Organic: +7%First 3Qs Organic: +5%"Increasingly, every single client is interested in increasing its market share, and that's where the focus is in the conversations that I've been having," said CEO John Wren.PUBLICIS GROUPEQ3 Revenue: +26% ($1.83 bil.)First 3Qs Organic: +18% ($5.37 bi.)Q3 Organic: +9%First 3Qs Organic: +7%"Regarding 2011, yes, we see some early signs that are very positive. But we have ... nothing that can tell us exactly what the year will be," said CEO Maurice Levy.INTERPUBLIC GROUPQ3 Revenue: +9% ($1.56 bil.)First 3Qs Organic: +7% ($4.51 bil.)Q3 Organic: +9%First 3Qs Organic: +5%Major clients "are going to spend those marketing dollars to support their brands. Although it's early for 2011, I think absent a hiccup in the overall economy, we're going to continue to see that kind of spend," said CEO Michael Roth.HAVASQ3 Revenue: +13% ($512 mil.)First 3Qs Organic: +7% ($1.52 bi.)Q3 Organic: +5%First 3Qs Organic: +3%"For the industry prospects in 2011, I'm cautious but optimistic. 2010 turned out to be a better year for the industry than [expected]. But I don't think the global economy is back to full recovery yet," said CEO David Jones.MDC PARTNERSQ3 Revenue: +33% ($178.6 mil.)First 3Qs Organic: +22% ($484.4 mil.)Q3 Organic: +8%First 3Qs Organic: +5%"We would hope to see at least 7 to 10 percent organic topline growth and 10 to 12 percent bottom line organic growth throughout the business [next year], based upon what we see on a preliminary basis," said CEO Miles Nadal.DOWNLOAD THIS STORY AS A PDF

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Holding Companies: Out of the Woods?

Andrew McMains

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