Organic Growth Forecast Dips For WPP, Omnicom, IPG

Pivotal Research Group, the media and communication research company, has lowered its organic revenue growth estimates for WPP, Omnicom and Interpublic Group for both the soon-to-end second quarter and full-year 2012. Organic revenue growth is considered a key performance indicator across the advertising industry.

The downgrade from Pivotal comes just weeks after several influential ad-spend forecasters, including ZenithOptimedia, Magna Global and Barclays, lowered their estimates for 2012 ad spending growth.

Pivotal Senior Research Analyst Brian Wieser cited macroeconomic worries, including ongoing concerns about Europe, as well as the slowing growth in “important advertising markets” such as China and India.

For Omnicom, Wieser now believes the holding company will deliver just 3.7% organic growth in the second quarter, reduced from his previous estimate of 5.6%. For all of 2012, Wieser now says Omnicom will post organic growth of 4.2%, down from his previous estimate of 5.5%.

Organic growth for Interpublic this quarter will reach just 2%, he reports, which is down from a previous estimate of 2.3%. Full-year organic growth for the firm will reach just 2.8%, not the previous prediction of 3.0%.

For WPP, Wieser now estimates the firm will post 3.9% organic growth for the second quarter, down from the previously expected 4.7%. The holding company’s full-year growth will drop to 4.3% from the earlier anticipated 5.5%.

Wieser reported that despite near-term concerns, “we remain very positive about the mid-term and long-term prospects for agency holding companies.”

He also indicated that WPP “remains our preferred name in the sector, given its "diversified exposure to the marketing services industry, its dominance in China and faster-growing markets …and its dominant media agency division, GroupM.”

That said, Wieser did not change the ratings he has on any of holding companies, maintaining “buys” on both WPP and Interpublic and a “hold” rating on Omnicom.



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