• by Paul Gough , January 4, 2004

What aren't as high as they used to be, had a topsy-turvy 2003, yet are worth more than they were a year ago? The stocks of advertising agency holding companies.

No doubt executives and stockholders are happy to see 2003 pass, just as they were hard-pressed to find a whole lot of good news since the global advertising market slumped in 2000. But there were some bright spots. The holding companies' planning and buying agencies in the United States, buoyed by a strong upfront for the second year in a row, led growth. Most companies have said they expect 2004 to be even better, with a boost in marketing spending by once-skittish advertisers and more money being pumped into the market thanks to the Athens Olympics in the late summer and a hard-fought political campaign that will culminate in November 2004.

Another sign that 2004 will be better is the way that Wall Street looks at - and values - the holding companies. After a tough few months in 2003, the stocks didn't finish the year that badly: By Dec. 31, all five stocks - WPP Group PLC, Omnicom Group Inc., Publicis Groupe SA, Interpublic Group of Companies Inc., and Havas SA - closed ahead of where they opened on Jan. 2, 2003, the first day of trading in the new year. But that doesn't mean that the stocks had an easy time getting there. None of the five had a pleasant spring, with most reaching yearlong lows in March and April as fears spread of a war in Iraq that would end up killing a fledgling recovery in the media and advertising industries. But each of the stocks had shaken off the worst of those worries by the summer. Several even hit yearlong highs in December, showing that Wall Street seems to think even better things lie ahead in 2004.

For comparison, the Dow Jones Industrial Average rose 28.88 points to close 2003 at 10,453.92, which is the highest it's been since March 2002. Blue-chip stocks in the Dow Jones jumped 25.3 percent in 2003, the highest annual increase since 1996. The Standard & Poor's 500 index was also at the highest level since April 2002, and it rose 26.4 percent in 2003 for the biggest gain since 1998. The Nasdaq was up 50 percent, for the largest increase it's seen in four years. WPP and Interpublic are on the Nasdaq, while the other three holding companies are listed on the New York Stock Exchange.

Omnicom, the New York-based holding company that owns media agencies OMD and PhD, was typical of the kind of year stocks in the advertising sector had in 2003. The stock opened at $65.30 a share on Jan. 2. It closed Dec. 31 climbing to $87.33 a share. But it hasn't been a steady climb for Omnicom, which dipped in the spring with the rumor of war in Iraq. Omnicom's low was March 12, when it traded as low as $46.50 before closing the day at $48.98.

Omnicom climbed back into the $50 range two days later, hit $60 in mid-April, passed its opening level on May 12, and soon passed $70 a share. It flirted with $80 a share around Labor Day before faltering slightly, although investors pushed the stock over $80 on Dec. 2, where it stayed for the rest of the year. Omnicom's stock closed Friday, the first trading day of 2004, at $87.10, down 0.26 percent from its year-end close.

WPP Group PLC, the London-based company that owns media agencies mediaedge:cia and MindShare, opened the year at $37.65. But by the second week of January, WPP's stock price had started to slide. It fell to $25.93 on March 12. The stock price hovered between $26 and $30 through mid-April, before rising to $34 in late April, $44 by early October, and $49.30 by Dec. 31. WPP's stock on the Nasdaq closed at $49.50, up 0.22 percent, in trading Friday.

Publicis is the French company that owns Starcom MediaVest Group and Zenith Optimedia, and in 2002 saw the absorption of Bcom3. The stock saw a range of prices in the last year, from $15.47 to $32.75. Publicis opened Jan. 2, 2003 at $21.25. But by March 11, Publicis stock had fallen to $15.47 a share. It recovered relatively quickly, passing the $20 mark on April 16 and climbing through the $20 range during the summer. It reached $30 a share around Labor Day, faltered, then returned to stay on Oct. 13. Its high for the year, $32.75, was reached Dec. 18. Publicis closed the year at $31.67. It closed the first day of trading in 2004 at $32.40.

Interpublic, which owns media agencies Initiative Media and Magna Global, opened at $14.08 on Jan. 2, 2003, before falling to a low of $7.20 on March 7. Yet it began to climb almost immediately and was back to $14 a share in early June, fell slightly, and then moved around a bit before hitting a high of $16.50 a share on Nov. 7. It closed at $15.60 a share on Dec. 31 and ended trading Friday at $15.52. Havas, which traded around $4 a share in January 2003, dropped to a low of $2.26 on March 5 and reached a high of $5.86 a share on Dec. 31, the last day of the year. Its first day of trading in 2004 saw it fall slightly to $5.82 a share by the end of Friday.

While the holding companies managed to turn in a better 2003, their performance was nowhere near the highs they reached in previous years. In November 1999, before the tech-stock bubble burst and the 9/11 attacks, WPP and Omnicom both traded above $100, WPP with a high of $134.50 in November 1999 and Omnicom with a higher of $107.27 a month later. The most recent high for Havas was $11.41 in July 2001. Interpublic traded at $86.62 in July 1999. Interpublic, Havas, and WPP all saw their lows in 2003.