Revenue by communications services sector and brand
The pattern of revenue growth also varied by communications services sector and company brand. The table below gives details of the proportion of revenue and revenue growth by communications services sector for the first six months of 2011:
|Communications Services Sector||Constant |
a % of Total
Media Investment Management
|Public Relations & Public Affairs||9.1||3.0||5.8||5.0|
|Branding & Identity,
Healthcare and Specialist
- 1Constant currency growth excludes the effects of currency movements
- 2Like-for-like growth excludes the effects of currency movements and the impact of acquisitions
- 3Gross margin like-for-like growth 3.2%
- 4Gross margin like-for-like growth 6.8%
By communications services sector, each sector continued to show very similar constant currency growth, as they did in the first three or four months, but there has been a slight up-tick in growth in branding and identity, healthcare and specialist communications (including direct, digital and interactive), with like-for-like growth of almost 8% in the second quarter compared to almost 7% in the first quarter. In the first six months, on a constant currency basis, advertising and media investment management continued to be the strongest sector, with constant currency growth of 12.1%, followed by branding and identity, healthcare and specialist communications (including direct, digital and interactive), up 8.5% and public relations and public affairs up 5.8%. Consumer insight revenues were up 2.6%, with gross margin up 3.0%, a reduction from the first quarter as indicated in the AGM statement, with slower growth in the US, the UK and Japan in April and May, with a partial recovery in June. Consumer insight revenues in Latin America showed particularly strong growth in the second quarter, followed by Asia Pacific and Africa.
In the first half, direct and digitally-related activities accounted for 28.1%, or $2.101 billion (an annual run rate of $4.4 billion) of the Group’s total revenues, which are running at the rate of almost $16 billion per annum. This is against last year’s proportion of 27.6% and a Group target of 35-40% in three to four years. To give an indication of the Group's industry-leading direct, digital and interactive position, a leading independent research firm recently rated three of the Group’s interactive agencies (OgilvyInteractive, VML and Wunderman) amongst seven 'digital leaders'. No other competitor has more than one. The Group’s global digital agencies, Wunderman and OgilvyOne, rank as the two largest digital and interactive agencies in the world, with annual revenues of over $950 million and almost $900 million respectively.
In the first half of 2011, over 59% of the Group’s revenues came from outside advertising and media investment management, a similar percentage to last year against the Group’s strategic objective of two-thirds, again within three to four years.
Quantitative disciplines (digital and consumer insight), now account for 47% of Group revenues, compared with the Group’s strategic objective of over one-half.
Advertising and Media Investment Management
On a constant currency basis, advertising and media investment management revenues grew by 12.1%, with like-for-like revenues up 8.1%. Reported operating margins increased by 0.5 margin points to 12.3%, as revenue and cost growth were again well managed.
These businesses generated estimated net new business billings of £874 million ($1.398 billion).
On a constant currency basis, consumer insight revenues grew by 2.6%, with like-for-like revenues up 2.3%. Constant currency gross margin was up 3.0% and like-for-like up 3.2%. Reported operating margins improved by 0.3 margin points to 7.5% and gross margin margins improved 0.5 margin points to 10.3%, as the benefits of the continued integration of TNS custom research and Research International and the other operations of both TNS and Kantar, in media, healthcare, retail and their related panel activities were realised.
Public Relations and Public Affairs
In constant currencies, the Group's public relations and public affairs revenues grew by 5.8%, with like-for-like revenues up 5.0%. Reported operating margins improved 0.7 margin points to 15.5%.
Branding and Identity, Healthcare and Specialist Communications
The Group's branding and identity, healthcare and specialist communications (including direct, digital and interactive) constant currency revenues grew by 8.5%, with like-for-like revenues up 7.3%. This service sector showed a strong recovery in reported operating margins, across all businesses, up 1.3 margin points to 10.7%.