Top Agencies To Enjoy The Fruits Of Recovery

This will be driven by economic growth, a strong car product pipeline and positive impact from the Olympics and the US presidential election (see Forecasts). Beyond that, Lehman believes marketing expenditure will continue to see secular growth, with growth through the cycle 0.5% ahead of GDP. However, during the upturn this could be closer to 7%.

WPP in the ascendency WPP, the world’s third largest advertising group, is performing within the industry. Revenues and profits were down in the first half of 2003 but better advertising conditions and the integration of Cordiant Communications should boost the group’s bottom line in 2004 (see City News).

Having seen on of the biggest slowdowns during the downturn, the firm’s organic revenue growth is improving the fastest and it seems to be coming out of the recession the earliest. This is shown by the fact that WPP sits at the top of the Lehman Brothers New Business League (see below)

Lehman asserts that despite the lag effect, WPP is likely to see 4% organic revenue growth in 2004 and should hit its 13.8% margin target. This will result in 18% earnings growth next year and 15% in 2005.

Publicis boosted by acquisitions The French-based giant Publicis appears to be performing well with profits up by 18% in the first half of 2003 (see Publicis Bullish As Profits Jump 18% In First Half). However, it is still integrating agencies and has lost some accounts of late.

Lehman analysts believe that Publicis will achieve its targets of 15% margin in H2 2003 and 15% for the full year next year. The position is confused by restructuring provisions and earnings before interest and tax are predicted to fall this year. However, the acquisition of Saatchi & Saatchi and BCom3 have strengthened the group and the long term prognosis is good.

WPP holds the lead in the 2003 year to date New Business Scorecard with net new billings totalling $385 million. Omnicom is in second place depite a net loss of $160 million in September while Grey Advertising has moved into third place after three account wins and no losses last month.