Media Buying Briefing: What holding companies’ 2023 earnings (so far) tell us about their future
This Media Buying Briefing covers the latest in agency news and media buying for Digiday+ members and is distributed over email every Monday at 10 a.m. ET. More from the series →
With four of the Big Six holding companies having released their 2023 financial results (still waiting on Dentsu and Havas), it’s safe to say that Publicis and Omnicom fared better last year than IPG or WPP. And though most analysts will gauge that hierarchy of success on organic revenue growth, it has more to do with the directions each holding company chose to go in with investments and types of clients won over the last few years — some of which paid off, and some that didn’t.
Omnicom and IPG formally presented their 2023 earnings over the course of the week, while Publicis and WPP revealed topline results a few weeks ago when they announced AI strategies and investments. (Publicis did hold a call with analysts this past week.)
In short, both WPP and IPG indicated they expect little to no growth in 2024, while Omnicom and Publicis forecast growth of 3.5-5% and 4-5%, respectively. Independent media analyst Brian Wieser, said he thinks all four are being a bit conservative in their expectations.
“To the extent that guidance is intended to convey a low bar each company expects to beat (and presuming that technology advertisers will stop cutting) growth should likely look better for this group in the year ahead,” Wieser noted in an installment of his Madison and Wall newsletter.
Client roster had something to do with the pecking order, since both IPG and WPP are more heavily stacked with tech clients — Google at WPP and Amazon at IPG — and tech as a category cut back on ad spending, as they also laid off thousands of employees.
“The share of tech [clients] across those two holding companies is larger than that of Omnicom or Publicis,” said Jay Pattisall, vp and senior agency analyst at Forrester. “The cutbacks in the tech sector, in marketing and advertising, are clearly at play here.”
IPG CEO Philippe Krakowsky acknowledged as much in his comments. “The strength of our capabilities in media, healthcare and specialty marketing services was once again evident, as was the impact of macro uncertainty and challenges due to clients in the technology sector. These cross- currents continue to be in effect as we move into 2024,” said Krakowsky.
Conversely, noted Pattisall, Publicis and Omnicom have a greater share of clients that have increased ad spend since the pandemic, such as consumer packaged goods and fast moving consumer goods, which have “doubled down on their advertising spend to justify premium prices for brands.”
If one thing is clear for all holding companies concerned, media has become more central to growth than ever before — as each holding company pointed to media as a strong core of their results.
“Media is the new marketing, in the sense that everything that is important to marketing — from data to tech stacks to measurement and analytics, to the placement of communications, all the way to like things like corporate communications, or AI — all those things that are just so important to marketing, are driven by media,” said Pattisall.
It’s actually one reason it seems the holding companies — whether their 2023 results were solid or weak — don’t have to worry as much about the consultancies as rivals anymore. And it could have something to do with Publicis Groupe CEO Arthur Sadoun’s shade throwing in his comments — when he said “we [are not only] substantially outperforming our holding company peers, we are also growing twice as fast as the main IT consulting firms.”
“The size of the media business inside the consultancies is an inhibitor — it’s a limitation to their ability to serve some of the full broad spectrum of of needs for marketing clients,” added Pattisall.
Finally, there’s the investment in “principal-based trading models,” as Wieser pointed out in his newsletter. With media agencies returning to the practice of investing in media, then selling it at a markup to clients — a practice that flourished 15 years ago then faded under scrutiny from clients and industry organizations — it seems clients aren’t as wound up this time around.
“To the extent that agencies are used to working with longer sales cycles with their clients vs. media owners who have shorter sales cycles (and more immediate impacts) I think this helps explain one of the key reasons why principal-based trading models are capturing a growing share of spend from marketers,” explained Wieser. “Not coincidentally, Publicis and Omnicom have been the most aggressive in this field in the past year while IPG and WPP have been the least aggressive, and each company’s organic growth trends mirror these orientations.”
Stay tuned as Dentsu announces its 2023 earnings on Feb. 14, and Havas on March 7. And beyond the Big Six, Stagwell issues its earnings on Feb. 27, while Media.Monks’ owner S4 Capital brings up the rear on March 27.
Color by numbers
More marketers are trying to diversify their ad spending to not be overly reliant on the big tech platforms, so they are growing their affiliate activity this year, according to a survey from marketing platform Awin and Forrester Consulting. Many are attributing this trend to ongoing cookie deprecation issues and other measurement challenges. —Antoinette Siu
- 46% of marketers invest in emerging technologies as they try to stay ahead with tech advancements, like AI.
- 45% are shifting to first-party data strategies for customer retention due to changing cookie and privacy rules.
- Diversifying ad spending away from Big Tech platforms is a top priority for 30% of respondents – with 68% saying they are frustrated with the lack of personalized strategic guidance. Another 67% cited insufficient reporting, inhibiting the ability to forecast results.
- Respondents said affiliate/partner marketing was in their top three channels for effectiveness at 92%, behind content marketing/blogs at 96% and paid search at 93%.
Takeoff & landing
- GroupM underwent considerable change in China last week, with its CEO Patrick Xu stepping down in the wake of a bribery scandal that resulted in the arrest of some GroupM execs there. It was also reported that three accounts within GroupM’s agencies went into review, including Dyson, Swatch and Yum Brands. Replacing Xu is Rupert McPetrie, currently CEO of EssenceMediacom APAC who will do double duty. Taking over Xu’s role as WPP China president is Chris Reitermann, currently head of Ogilvy in APAC.
- Stagwell’s Assembly continues to build out its European leadership: It hired James Wilde as head of growth and marketing, from Wavemaker UK, where he was head of growth. Assembly also hired Lizzy Herbertson as commercial director, coming over from Astus, where she was international agency and client lead.
- Independent The Mars Agency expanded into New Zealand with the purchase of The In Group, a brand activation agency there. The move establishes a bigger presence in that part of the world, following The Mars Agency’s 2022 acquisition of Australian retail activation shop XPO Brands.
- Fellow independent Exverus Media hired Lisa Lindsay as media director on the media agency’s Premier Nutrition Company accounts, overseeing media planning and buying for brands Premier Protein and Dymatize. She was most recently associate media director at RPA.
“Hard core sports fans, who this is likely intended for, have already figured out a package to get the sports they need. So, is there a pricing an advantage that would have them cancel cable or an MVPD (e.g., YouTube + Live TV) that already serves them the sports they desire? As it is today, this platform is not offering anything that can not be found on the linear feeds, so it may come down to pricing. As an NFL fan, one will still need Amazon, Paramount+, and Peacock… so is the price they pay now an advantage over a price that this new platform will offer to get it all?”— A major sports media buyer on Fox, Warner Bros. Discovery and Disney’s announced sports streaming service, which is expected to launch in 2025. Here’s Digiday’s take on this story.
- I wrote about a new ad-tech company, Adfidence, which aims to help marketers and their media agencies tackle brand safety and fraud issues before campaigns roll out.
- Antoinette Siu covered some of the challenges agencies face in finding the right alternatives to replace cookies in the search for effective data.
- A team of reporters stepped back to take a macro look at ad trends for 2024, finding that there might be more cause for optimism as marketing spend crawls its way back to pre-pandemic levels.
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