Print Published 19th Aug 2012, 21:31

Global marketing agencies show revenue and profit growth

Last year saw further growth in revenues and profits among the largest publicly listed marketing groups around the world despite the fragile economic environment, according to a new report published by Marketing Services Financial Intelligence today and available free to subscribers (see below).

Revenues grew by 8.1% while post-tax profits grew impressively by 29.5%.

The biggest global marketing group WPP held on to its leading position with further revenue growth of 7.9%, but it may come under threat from Omnicom Group which increased its revenue by 10.6% last year and boosted its profit after tax by 15.1%.

“Doubtless WPP will be hoping that its recent acquisitions of AKQA and Press Index will help to keep it ahead of its arch rival”, the report says.

The report also shows a big gap between the two leading groups and the rest of the companies surveyed: “Publicis Groupe is little more than half the size of WPP or Omnicom and only slightly larger than The Interpublic Group of Companies”, the report says, adding that the Japanese group Dentsu will be of a fairly similar size following its forthcoming acquisition of Aegis Group.

Other findings in the report include:

  • Operating profit margins have improved for the third year running and are getting closer to the industry’s 15% benchmark.
  • Borrowing costs continued to rise and absorbed 10.8% of operating profits, although in aggregate that proportion fell slightly from the 11.8% figure in the previous year.
  • Some of the fastest growing companies, measured by revenue, achieved very poor profits or even large losses.
  • If WPP had contained its staff costs at the same percentage of revenue as Publicis Groupe, its operating profit would have increased by $261 million.
  • The biggest post-tax profit improvement was achieved by digital agency LBi International (up by 3400%), followed by Acxiom Corporation (up 434%), Aegis Group (up by 298% after including a $136 million gain from the sale of Synovate before itself succumbing to a sale to Dentsu) and Creston (up 288% from its previous year’s profit that was dented by a loss on the sale of advertising agency DLKW).