Holding Company Organic Growth Reaches 3.1% For 2013

Organic revenue growth for the major ad holding companies averaged 3.1% during 2013, up just a bit from their average 2.9% growth in 2012.

That’s according to an analysis by Pivotal Research Group senior analyst Brian Wieser. Organic revenue growth excludes the impact of acquisitions, divestitures and currency fluctuations.

The average growth for the fourth quarter was 3.4% and Wieser sees the momentum continuing into 2014—he’s currently forecasting 5% growth for the holding companies. His analysis includes results for WPP, Interpublic Group, Omnicom, Publicis Groupe and Havas.

The global leaders in 2013 were WPP and Omnicom, which both posted full-year organic revenue growth of 3.5%.

But Wieser notes that WPP’s results were held down somewhat by its research operations, which include Kantar. “On a more comparable basis,” he said, “if we looked at WPP excluding the Data Investment Management division (i.e. Kantar) that company would have posted 4.2% growth, well ahead of others within the industry. A 5.2% growth rate during [the fourth quarter of 2013] would also have led the global holding companies.”



IPG, said Weiser, “remains our favorite stock in the sector. During 2014 it should be the industry's growth leader, which paired with ongoing margin expansion and the potential for value creation associated with industry consolidation, yields a $22 target” at the end of 2014. On Tuesday IPG shares closed at $17.33, up 11 cents. 

"Financial Chart" photo from Shutterstock.

1 comment about "Holding Company Organic Growth Reaches 3.1% For 2013".
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  1. philip aronson from aronson consutling group, March 5, 2014 at 2:31 p.m.

    I disagree with WPP's assessment that they've achieved 3.1% "organic growth".

    Everyone in the industry knows WPP has had a drastic reduction in staff and has consolidated several agencies.

    Downsizing should not be considered in organic growth.

    If one factors out downsizing, it is very likely WPP's organic growth is negative.

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