Despite Elections, Olympics, Holding Co. 2012 Revs Drop

by Steve McClellan, Oct 15, 2012, 4:47 PM

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Usually, presidential election and Olympic years, like 2012, provide a boost to Adland's financial performance. But it looks like the shaky economy will negate that boost this year. According to new projections from Pivotal research, the big agency holding companies will have somewhat deflated revenues and earnings compared to last year.

Pivotal Senior Research Analyst Brian Wieser is forecasting a 2.5% revenue dip for Dublin-based WPP for 2012 to approximately $15.7 billion, with a 2% dip in net income to a little over $1.4 billion. By comparison, WPP reported an 11.4% revenue gain for 2011 to $16 billion with profits of $1.46 billion -- up 43%.

Full-year 2012 revenue for the Interpublic Group, Wieser estimates, will be essentially flat with last year at a little more than $7 billion, while net profit will fall to $366 million -- down about one-third. In addition to the tough economy, IPG executives have acknowledged that the company faces financial “headwinds” this year due to client losses in 2011, including a big S.C. Johnson assignment.

For 2011, the company reported a nearly 8% revenue gain, while profits nearly doubled.

Omnicom will also show stunted revenue and profit growth this year compared to last, according to Wieser. He predicts that the holding company will grow revenue this year by about 3% to just over $14 billion with a 2.8% gain in net income to about $953 million. Last year, Omnicom reported a nearly 11% gain in revenue, while net income was up 15%.

On the media owner side, Google and Facebook will continue to show robust top-line growth, while Yahoo will stop hemorrhaging red ink, per Wieser.

The search giant is predicted to post nearly $46 billion in revenue this year, up 21%, with a profit gain of 16% to $11.3 billion. Last year, Google revenue soared 29% with a 14% profit bump.

Facebook will grow its revenue by 32% for the full year to $4.9 billion, although profits will fall 45% to $549 million. Last year, the company’s revenue skyrocketed 87% while profits were up 65%.

Yahoo will show a 3% revenue dip this year to nearly $4.9 billion -- a significant improvement over last year’s 22% revenue decline. And Wieser believes the company will show a slight profit this year (+1%) after a 15% profit drop in 2011.

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