At Giant Ad Companies, Down 6 Percent Is the New Flat

It’s now conventional wisdom to expect advertising declines of 20 percent or more as the big media companies deliver this season’s earnings reports. But the giant ad holding companies that make and place those ads aren’t getting beaten up quite as badly. And they’re all delivering remarkably similar results.

Yesterday, for instance, Omnicom (OMC) reported that “organic revenue”–an accounting term that factors out wildcards like currency fluctuation and acquisitions–dropped 6.6 percent in the last quarter.

Today we hear from heavyweights Interpublic Group (IPG) and WPP (WPP) which have similar tales to tell. Interpublic reports a 5.6% decline in organic revenue; WPP says 5.8 percent.

Not mentioned in WPP’s three-month update: Any info about its sensational lawsuit against ad start-up Spot Runner, which it accuses of being a privately held pump-and-dump scheme. While the Spot Runner imbroglio is sexy, it has no impact on the company’s top or bottom lines.

But Omnicom management made hopeful noises yesterday about a recovery that might appear by the end of the year, and WPP has the same supercautious optimism: “The first half of 2009 will clearly be very difficult, with the second half, although continuing to be tough, likely to improve relatively. Any recovery, of sorts, will probably come in 2010.” Small comfort, but I’ll take it.

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Comments

[HerrHansa]

Omnicom might be in a worse off position in the future:

www.aphotoeditor.com/2.../

There are almost no content producers who can survive more than one quarter without steady cash flow. That Omnicom thinks they can pass on payment liability might show that they anticipate future financial trouble. Hopefully they will back down on their stance. What they stand to loose is that no top content producers will work with them, implying that the quality of their work for their clients stands to suffer.

The other way to look at this is that IPG and WPP are not taking this stance with content producers. They stand to benefit by sticking with the accepted ways of doing business.

2009 Apr 28 02:31 PM

[chleoku]

What does 'organic revenue' means? I think one of the contributing factors is that lots of advertisers are switching adveritising from offline to online (more ROI focus and budget-efficient):

www.wealthalchemist.co.../

this drives down the total ads $

2009 Apr 28 08:05 PM

[Lee Eugene Munson]

So, what is your take on this? I see the numbers, but do you think the big media firms are going to be the first to turn? Do you think they have value? Are firms going to change the way they spend on adds in a post Google world?

2009 Apr 28 11:37 PM