Google threat to agencies is ‘unwarranted’

Investor concern about the threat of disintermediation by the likes of Google is generally unwarranted, according to Pivotal Research Group. The search giant is unlikely to pose a real threat to big ad agencies such as WPP, the company’s latest report says.

Pivotal remains sceptical that Google, Microsoft and Facebook will ever actively compete with agencies. “While agencies are unlikely to ever see operating margins like those of the media owners given the fragmented and highly competitive nature of the industry, their ability to adapt should not be underestimated,” the report says.

Pivotal initiated coverage on WPP, IPG and Omnicom today. In a lengthy report, Pivotal talks about WPP’s long-term exposure to China, its independent digital platform and its dominant media services business. “We believe there is also significant upside in Interpublic, as the company continues to build confidence with the investor community about its ability to bring operating margins up to peer levels and sustain competitive organic revenue growth,” the report adds.

Read the full paidContent.org article here.