Holding company media agency billings have doubled over the past 10 years to more than $286 billion, representing a nearly 7% annual compounded growth rate during the period.
That’s according to a new report by Pivotal Research Group senior analyst Brian Wieser.
Wieser based his analysis on figures supplied by billings tracker RECMA, which recently issued final numbers for 2011. He compared RECMA’s most recent numbers with data the Paris-based research firm collected for 2001.
Wieser also found that with few exceptions over the decade, most agencies moved up or down in billings rank by no more than one position. Exceptions included Interpublic’s Initiative, which slipped from the top spot to 10th place in 2011, while Publicis Groupe’s ZenithOptimedia rose from 6th to 3rd place and WPP’s MediaCom climbed from 9th to 5th.
Still, he called the level of industry stability “remarkable given the intensity of competition between different holding companies.”
Wieser also postulated that the industry’s consistent record over the past decade “serves to reinforce the durability of the media agency business model.” The growth and profit levels of the media shops also reinforce their growing importance to their parent companies, he stated.
a former Magna Global ad revenue forecaster, added: “As media choices continually fragment for marketers, the importance of media agencies increases. As there are no signs of this underlying
trend abating, these businesses will easily drive much of the industry’s growth for another decade and more.”
In 2011, billings at the holding company media shops tracked by RECMA grew by 9% over 2010. Those agencies -- owned by WPP, Publicis Groupe, Aegis, IPG, Omnicom and Havas -- have consistently grown billings faster than the broader media industry, largely at the expense of independent agencies serving a single market, Wieser surmised. One notable exception was Horizon Media, which has sustained growth equal to or better than holding company shops in recent years, he said.
Helping holding company media agencies maintain their marketplace advantage is the widely held belief by marketers that bigger agencies hold more clout at the negotiating table, resulting in cheaper ads, he noted, adding there is no empirical evidence supporting that belief. But perception is key and “the simplicity of a message such as scale equals better pricing will remain difficult to beat.”