Global marketing agencies enjoy resurgence as revenues rise by 8.9% and profits rise by 23%

June 14, 2011 - PRLog -- Revenues earned by the largest publicly listed marketing groups around the world recovered by nearly 9% last year, and post-tax profits grew by 23.3%, as agencies began to emerge from the latest recession.

According to a survey of the most recent accounts of companies that between them generated revenues of $57 billion, two-thirds of those companies reported a profit rise or a reduction in loss.  Operating profit margins before amortisation charges improved to 13.3% from 12% in the previous period.

The survey, published by the online research publication Marketing Services Financial Intelligence (www.fintellect.com) today, points out that a large part of the reported revenue growth arose from acquisitions made in 2009 or thereabouts, reflecting opport-unities seized during the recession to absorb weaker competitors.  

The acquisition activity contributed to a $100 million rise in interest costs (or 11.5% year-on-year).  Nevertheless that increase was more than absorbed by the expanding operating profits.

One of the best performers in the survey was the French based Publicis Groupe.  “While still little more than half the size of WPP or Omnicom in terms of revenues, it delivered a much  
better operating profit margin than its bigger rivals with the result that its post-tax profit for the year of $725 million was only 12% behind that of Omnicom”, commented editor Bob Willott.

“Publicis is now firmly ensconced as the third biggest group, leaving Interpublic quite a long way behind.”

WPP reinforced its position as the world’s biggest marketing group with a 33.9% rise in post-tax profit in 2010 on a 7.3% increase in revenue..

In profit terms WPP, Omnicom and Publicis are now almost three times the size of their nearest rivals that include Valassis Communications and Interpublic in the US and Dentsu in Japan.

Other findings include:
•   Despite the increased revenues, the average propertion absorbed by staff costs remained virtually unchanged.
•   Staff costs appear to have been contained to better effect in the Far East than in Europe and the US.
•   Among the biggest groups, WPP was more reliant on borrowings than Omnicom or Publicis, with finance costs of $277.7 million eating into 15% of operating profits.
•   The biggest post-tax profit improvement was achieved by Valassis Communications (+477%), followed by Huntsworth (+303%), Hakuhodo (+256%), and Cello Group (+154%).   In most cases the big rise was due to exceptional costs depressing the results in the previous year, often resulting in a loss.

Copies of the full report “The Global Greats 2011” are available from Marketing Services Fi¬nancial Intelligence (www.fintellect.com)

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Dedicated 24/7 online publication providing financial news, analysis and commentary on the marketing communications industry, edited by industry expert Bob Willott, an accountant and former special professor at the Nottingham University Business School