Green shoots of recovery have emerged from the major holding companies in the first quarter of 2021.
A global pandemic sparked a year of uncertainty at WPP, Publicis, Omnicom, IPG and Havas. All have now reported their results from the first quarter of 2021 as lockdown restrictions lift in many of their key markets, painting a picture of an industry returning to growth as clients begin to spend ad budgets again.
Here’s a breakdown of the key numbers, growth areas and new business wins for the global holding groups.
How 2020 ended: WPP reported a pre-tax loss of £2.8bn for 2020 as like-for-like revenue fell 8.2% to £12bn. Its crucial US and UK markets logged declines of 5.7% and 7.4% respectively.
How 2021 started: WPP reported growth of 3.1% for the first quarter. The group highlighted a strong performance in China, which grew 18%, and the UK, which was up 6.5%. Less impressive was the US, which grew 0.7%. It called out key agencies including its media arm GroupM, which grew 5.8% year-on-year, and VMLY&R. Total revenue for WPP in the quarter reached nearly £2.9bn, up 1.8% year over year.
Big wins: It won new business worth $1.3bn in the first quarter from key clients including Alibaba, HSBC, Intel, Uber and Unilever.
“WPP’s performance has been remarkably resilient. While revenue was significantly impacted as clients reduced spending, our performance exceeded our own expectations and those of the market throughout the year," said chief executive Mark Read.
“The demand from clients for simple, integrated solutions that combine outstanding creativity with sophisticated data and technology capability is only set to grow and, while uncertainties remain around the impact of the vaccine roll-out and economic growth, we continue to expect 2021 to be a year of solid recovery.”
How 2020 ended: Organic growth was down 6.3% for the year. However, like-for-like revenues were down just 0.9%, coming in at €9.7bn.
How 2021 started: The French ad giant reported growth of 2.8% for the first quarter. Unlike WPP, it saw a strong performance in the US with growth landing at 5.1% thanks to its digital offerings from Publicis Sapient and Epsilon, which grew 11.2% and 4.7% respectively. However, it struggled to match WPP’s numbers in China, where growth was just 3% for the quarter, while Europe limped into 2021 with a fall of 1.8%.
Big wins: L’Oréal’s media business in China, Infiniti’s global creative, AB InBev’s data business, Toyota’s entire advertising portfolio in Australia, Unilever’s shopper marketing and Samsung’s media in the US were all won in the first few months of the year.
Chief executive Arthur Sadoun said: “Of course, returning to growth earlier than expected raises even further the confidence we have in our model, and I would like to thank our people for their incredible efforts and our clients for their trust. Nonetheless, we remain cautious in what is a still very challenging environment.”
How it ended: Organic growth was down 9.6% in 2020 as like-for-like revenue plunged 11.9% to $13.1bn.
How it started: Omnicom has not got off to as strong a start as its rivals, with growth remaining sluggish at -1.8%. It’s struggling in the US, which continued to fall 1% in Q1, while Europe was down 3.2% in part due to the troubled performance of its UK agencies where growth fell 6.4%.
Big wins: Despite its struggles it has managed to land key accounts, including a multi-year agreement with finance company Allianz, and its creative shop BBDO won the creative account for Home Depot after sister agency OMD was named the brand’s US media agency of record. Avocados from Mexico hired GSD&M as its agency of record.
“It has taken some time to turn the corner, and we are now on a clear path to return to growth,” said Omnicom chief John Wren.
“We are at the beginning of the end of the pandemic. If 2020 taught us anything it’s to expect the unexpected, and we will continue to move forward with vigilance.”
How 2020 ended: IPG’s like-for-like organic net revenue fell 4.8% in 2020. Like-for-like sales were down 6.5% to $8bn in 2020.
How 2021 started: It reported organic revenue growth of 1.9% in the first three months of the year, compared to 2020. It struggled in its key market of the US (commanding a 65% share of its business) where organic revenue declined 0.2%. However, a 12.4% growth in continental Europe helped deliver an overall growth of 6.3% internationally. APAC grew 3.4% organically thanks to strong gains in Australia and Singapore, but China and India’s revenue declined.
Big wins: Initiative won T-Mobile’s $2bn media business in a major coup for the group. It landed HBO Max’s business for Latin America as the network prepares to launch in the region, while New Balance hired Mediahub to manage its media business in the UK.
“Our strong start to the year reflects the quality of our talent, across the organization, and underscores the successful evolution of our offerings at a time of accelerating, transformational change,” chief executive Phillipe Krakowsky said.
“Our ability to create marketing and media solutions that bring together outstanding creativity with the benefits of technology, and an ethical approach to data management, positions us to address higher-order business opportunities.”
How 2020 ended: Like-for-like net revenue was down 9.2% to $2.46bn, according to owner Vivendi.
How 2021 started: Like Omnicom, Havas has not got off to a strong start post-pandemic. It reported an 0.8% decline in organic growth in the first quarter of 2021.
Big wins: New business of note include the customer experience accounts for both Volkswagen and Aesop thanks to its new CX division. In the US and Canada, it won Keurig Dr Pepper’s estimated $230m media business, while Havas Media won the Micromax account in India.
“Our encouraging results, supported by flourishing new business activity, also show us that all the new offerings and initiatives we decided to launch in the middle of the pandemic – such as Havas CX and Havas Market – are truly game changers,” said chief executive Vincent Bollore in an email to staff.
Dentsu will report its 2021 figures in May. Covid-19 has hit Dentsu hard. The Japanese-headquartered holding group had already suffered losses amounting to $503m in 2019. The pandemic compounded this and by the end of 2020 losses had doubled to a record net loss of $1.5bn. Sales fell 10.4%. It announced 6,000 staff would be let go.
Growth from the upstarts
Smaller, nimbler and without the legacy systems and debt, holding groups like S4 Capital and You & Mr Jones can’t be fairly compared to the big holding groups. However, their growth in the face of the same pandemic-induced adversity has been noteworthy.
Sir Martin Sorrell’s S4 Capital reported an impressive 19.4% rise in gross profit to £295m in 2020, while revenue rose 15% to £343m. It landed major new business wins including Google and BMW’s account in Europe.
Meanwhile, You & Mr Jones’ organic net revenue grew 27% in 2020.