How the WPP and Interpublic Group fared in 2011

07 Mar,2012

By A Correspondent


WPP reported record profits of more than $1.45 billion for 2011, up a whopping 43 per cent from the year prior, and the holding company expects to see continued momentum in 2012 due to increased ad spending for the US presidential election and this summer’s Olympic games, according to Ad Age.


Reported revenue for WPP, the biggest ad holding company in the world and home to creative agencies such as Ogilvy, JWT and media-buying behemoth Group M, was up 11.4 per cent year-over-year to $16.05 billion. However, WPP’s CEO-Executive Director Martin Sorrell is less optimistic about 2013, as there are no big events to bolster ad spend, and political ad dollars will drop off following the election.


“We think 2012 looks similar to 2011, maybe at a slightly reduced level,” said Mr Sorrell. “But the one big cloud on the horizon we feel the need to address in 2013 is deficit reduction after the US election.”


WPP said North America performed well, and in Europe the debt crisis is impacting growth, but overall the company said it still fared well in the region thanks to strong growth in the UK and acquisitions in Western Continental Europe.


The company reported that Austria, Germany, Switzerland and Turkey, all showed strong like-for-like growth for the year, but France and especially Greece, Portugal and Spain remained affected by the Eurozone debt crisis. In 2011, nearly 30 per cent of WPP’s revenue came from Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe.


The company said that emerging markets in Asia, Latin America, Africa and Eastern Europe represent the highest growth regions for WPP. The company plans to spend between $470 million and $630 million on acquisitions this year, Mr Sorrell said. The focus will remain on small and medium-sized agencies, particularly those in new markets or specialising in digital work, data analytics and technology.


The past year saw a number digital agency acquisitions, including: F. biz and Gringo in Brazil; Rockfish and Lunchbox in the US; Who Digital in Vietnam; Promo in Russia and A4A in China. The company made a total of 38 acquisitions and 10 investments in 2011.


The Interpublic Report-Card 2011

US-based ad holding company Interpublic Group of Cos has reported that it nearly doubled its net income for 2011, up 96 per cent to $551.5 million, up from $281.2 in 2010, according to Ad Age. The company’s annual revenue was up 7.8 per cent, to about $7 billion.


“Building on a very good 2010 result, we continue to show organic revenue growth that is at or near the top of our peer group,” said Interpublic CEO Michael Roth. “This performance keeps us on track to deliver on our goal of fully competitive profitability in 2014.” Mr Roth added all of the company’s regions grew in terms of organic growth in 2011, except for Europe, which is in the midst of a debt crisis.


For the full year, continental Europe was down 0.1 per cent. The best region for organic growth last year was Latin America, which was up 17.8 per cent. For the fourth quarter, US organic growth was up 2.2 per cent, Latin American was up 30.4 per cent and Europe was down 3.2 per cent. Interpublic’s digital agencies, MRM, part of the McCann network, Huge and R/GA, significantly contributed to the company’s growth.


In 2012, the company is targeting 3 per cent organic growth, noting “significant macro uncertainty on the global level.” Interpublic agency networks McCann Erickson and DraftFCB both saw major accounts defect in 2011. McCann Erickson lost Nescafe and other accounts, while DraftFCB lost SC Johnson and is now having to share Miller Lite with Publicis Groupe’s Saatchi & Saatchi.


Source: The Economic Times

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