You'd think the world was coming to an end judging by the media's reaction to WPP (WPPGY) CEO Martin Sorrell's comments that he was revising down his revenue forecast for the year from 5.9 percent to 5 percent. Reuters cited "weaker growth," The Telegraph noted that "the prospects of a double-dip recession will inevitably take its toll," and an "economic slowdown in the U.S. and Europe hurts marketing budgets," Bloomberg said.
In fact, Q3 2011 results from the first few ad agency holding companies to file are looking rather rosy. And with the 2012 Olympics and the presidential election around the corner -- and all the extra adspend that will entail -- it's tough to see what all the jitters are about.
WPP posted a 4.7 percent organic revenue gain, to 2.5 billion GBP. Among the other ad agency holding companies, Interpublic (IPG) posted an 8.7 percent organic revenue gain to $1.7 billion, Havas posted 7.3 percent, and Publicis (PUB) 6.4 percent. Previously, Omnicom (OMC) had chalked up a 7.2 percent increase. (WPP has yet to report.)
With the Bureau of Economic Analysis reporting a preliminary "advance" estimate of 2.5 percent growth in GDP in Q3, the indication is that economic growth will continue into Q4, which contains the heavily advertised Christmas and gift-giving season:
In fact, IPG CEO Michael I. Roth said he expected growth to continue despite the increasing difficult "comps" he has to face from last year's healthy numbers:
Fourth quarter has strong headwinds, and obviously, if we continue to perform the way we are, we're hopeful to see a good performance in the fourth quarter. But it's just very difficult for us to go quarter-to-quarter. But the tone is very solid. And the key there, of course, is our project business, and we haven't seen any pullback in the project business. And if you recall, 2008, we really didn't see that pullback until the end of November and December, so. And you've heard me say this. This doesn't feel like 2008. Our clients have a fair amount of cash on their balance sheets. They have access to the capital markets, and we don't get a sense of any big pullback in the fourth quarter. So all of that leads to the conclusions we stated in terms of our goals for the full year.So there it is: ignore the headlines. Ad agencies and their corporate clients say this ain't 2008. Full speed ahead!
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