Campaign India Team
Mar 09, 2011

WPP consolidates top spot with US$15bn in 2010 revenue

Holding companies WPP, Publicis, Omnicom and Interpublic firmly put the recession behind them in 2010, all returning positive growth in annual revenue of up to 19.8 per cent

WPP consolidates top spot with US$15bn in 2010 revenue

Holding companies WPP, Publicis, Omnicom and Interpublic all returned positive growth in annual revenue of up to 19.8 per cent in 2010.

WPP has raised its target for new media revenues after making a strong recovery from the advertising recession, with a 28.5 per cent rise in annual pre-tax profits to US$1.4 billion.

The company, headed by chief executive Sir Martin Sorrell, admitted it had entered 2010 "with fingers crossed", but reported a "violent turnaround" over the year, culminating in double-digit in December.

Like-for-like revenue growth accelerated consistently, from zero in the first quarter to 8.5 per cent in the fourth quarter, the fastest rate since the fourth quarter of 2000.

This momentum, combined with small acquisitions, drove annual revenue up 7.4 per cent to US$15.1 billion.

The company is closing in on its target to make a third of revenues from new media – which it defines as direct, digital and interactive.

The discipline accounted for 29 per cent of revenue in 2010 and the company wants to take this to 35 per cent to 40 per cent, although it did not set a deadline other than "as soon as possible".

Asia, excluding Australia and New Zealand, grew at 13.6 per cent, which was the same as the third quarter. Mainland China and India continued their strong growth with revenue up over 18 per cent and almost 15 per cent respectively in the final quarter. Other major markets in Asia also showed strong growth, including Korea, Singapore, Indonesia and more surprisingly Japan, driven by Ogilvy, GroupM and Kantar.

Hiring also bounced back after a 12 per cent reduction in staff during 2009, with the number of people in the group, excluding associates, up 4.5 per cent to 104,052.

Meanwhile the Publicis Groupe, parent company of MSL, has announced an increase in revenue of 19.8 per cent to US$7.5 billion for 2010.

Organic growth rose 8.3 pr cent for the year and 12.5 per cent in the fourth quarter.

The group reported a net income of US$735 million during the year, a rise of over 30 per cent.

At the start of the year, Matthew Freud bought back Freud Communications from the group. Now Maurice Lévy, chairman and CEO of Publicis Groupe, hinted at future acquisitions.

He said, "Our financial situation is extremely robust and enables us to look ahead to the future with serenity. Investment will be aimed first and foremost at consolidating our two growth pillars: the digital sector in which we intend to strengthen our leadership position, and high-growth countries in which we must increase our presence even more rapidly."

Lévy continued, "For some years now we have regularly out-performed the market, and I am convinced that we shall continue to forge ahead in the years to come. There are several reasons for this: our asset profile perfectly matches the needs of advertisers, particularly in the field of digital communication, our well-balanced business portfolio, our culture based on client service and cost control, and – though I hardly need to say it – the exceptional motivation of all our staff."

Omnicom, the holding company behind DDB and OMD, reported worldwide revenue of US$12.5 billion in 2010, up from US$11.7 billion in 2009.

The group's profits increased by 4.4 per cent to hit US$827.7 million last year after a 7 per cent increase in revenue over 2009.

The group stepped up the pace in the fourth quarter with a 7.4 per cent jump in profits to US$246.5 million after a 9.8 per cent increase in revenue to US$3.6 billion.

In further results released earlier this year, Interpublic doubled its net income in 2010 to US$281.2 million from US$143.4 million in 2009.

Net income at the company in the three months to December was also up by nearly half from US$159 million in 2009 to US$222 million in 2010.

The group's revenue for the whole year grew by 7 per cent to US$6.53 billion from US$6.03 billion in 2009 and fourth quarter revenue grew by 11.2 per cent year-on-year, from US$1.80 billion to US$2.01 billion.

The US generated the most growth for the company in the fourth quarter growing by 13.1 per cent compared with 9.4 per cent for the rest of the world.

The group, which owns creative agencies Lowe and McCann Erickson along with media networks Initiative and Universal McCann (UM), said its increase was due to its "ability to deliver integrated and increasingly digital solutions to its clients".

The group posted operating income for 2010 at US$548.7 million, compared to operating income of US$341.3 million in 2009. It was also up from US$268 million to US$330.7 million in the fourth quarter.

Michael Roth, Interpublic's chairman and chief executive, said, "The dividend and share repurchase programmes that we are announcing today are important milestones for us. They signal confidence in the sustainability of our competitive offering, which is further supported by very strong 2010 results.

"Organic growth at the top end of our peer group reflects the strength of our agencies and our ability to deliver integrated and increasingly digital solutions to our clients.

"We saw contributions to this performance from across the portfolio, led by our companies in the US and in emerging international markets. All indications are that the economy in 2011 will continue to be positive and we expect to deliver competitive organic revenue growth and aggressive margin expansion."

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