The four largest ad agency companies have all reported their Q3 numbers, and all of them agreed on one thing: The economics of media spending and the macro-economic picture generally don't look good
The pattern is ominous: Revenue growth at Interpublic Group just went negative for the first time since the last recession. All the other companies are trending down. GDP growth is anemic — and that number isn't the government's final estimate. The final number may be worse.
This chart plots "organic" (like for like, year-on-year) revenue growth at the four largest ad agency holding companies and compares it to sequential growth in U.S. GDP.
Those companies are WPP Group (which owns Ogilvy, Y&R and JWT, among others), Omnicom (BBDO, DDB and TBWA), Interpublic Group (DraftFCB, McCann and Deutsch) and Publicis Groupe (Saatchi & Saatchi, Leo Burnett and Digitas).
We believe it is interesting because advertising revenues are a good proxy for economic growth globally. They represent a broad range of companies with revenues that come from both the U.S. and foreign countries, and companies signal their optimism via their willingness to spend on ads.
The obvious caveat: The sequential vs. y-o-y numbers are apples vs. oranges.
So is this anecdotal trend real, or a mirage? Let's examine the evidence.
This is Interpublic's 'Powerpoint From Hell.' We're basically right back at 2008, according to IPG's numbers. The only reason IPG's organic revenue is shown here as positive is because it represents the trailing 12 months. IPG's growth was negative in Q3.
It doesn't matter where you look at IPG, everything is trending negative.
Publicis Groupe's Q3 earnings contained these grim surprises: It expected 6.6% growth in September but got -1.6% instead. Its clients appear to be frozen in the headlights. (Red emphases added.)
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