After a protracted period of relative stasis, Madison Avenue is, in the words of an influential Wall Street analyst, “exhibiting increasingly outward signs of change.”
Citing Publicis’ “Power of One” initiative, Interpublic’s acquisition of the core of Big Data firm Acxiom’s marketing services, and WPP’s restructuring following the ouster of founder Sir Martin Sorrell, Pivotal Research Group’s Brian Wieser predicted “significant strategic activity is afoot” at the major agency holding companies.
“In general we think that these changes will be helpful for each of the holding companies and the industry more generally,” Wieser writes in a note sent to investors this morning. “We have written extensively about the very real concerns impacting the industry, including creative in-housing and reduction of reliance on AOR relationships by marketers, media in-housing, zero-based budgeting, enhanced contract scrutiny and competition from IT services firms. All of those issues are either constraining growth or contributing to perceptions of constraint.”
The analysis, which is a preview of second-quarter earnings reports, also included a downward adjustment in the valuations of Madison Avenue’s Big 3 -- Omnicom, WPP and Publicis -- but Wieser is maintaining a “hold” recommendation for agency stocks.