WPP pips Omnicom to top world’s ad agencies

by Lalitha Srinivasan, Senior Assistant Editor, The Financial Express

Mumbai: London-based WPP Plc has swept past Madison Avenue, New York-headquartered Omnicom Group to become leader in the global advertising arena. The WPP Group posted $13.6 billion in revenues for 2008, while Omnicom’s revenue, according to its Website, stands at $13.4 billion for the same year. The change at the top is quite dramatic, as the Omnicom Group has remained the global leader from 2001 to 2007.

In a response to a questionnaire from FE, WPP chief executive Martin Sorrell said, “The full-year results (for the group) show billings up 16.6% at £36.929 billion, or $67.381 billion.” This is an almost 21% rise in reportable revenues according to Sorrell.
“The full-year results (for the group) show billings up 16.6% at £36.929 billion, or $67.381 billion... We are committed to our six operating objectives”

Martin Sorrell, CEO WPP

The changes will also impact the India operations of both the two global advertising giants. WPP’s major Indian subsidiaries and joint ventures include JWT, Ogilvy & Mather, Contract, Grey Worldwide, Bates and 141. Omnicom’s India subsidiaries and joint ventures include BBDO India, RK Swamy BBDO and TBWA India.

According to Sorrell, despite the overall slowdown in the growth rate of the advertising industry as a result of the international financial crisis and its aftermath, three engines of relative growth remained. These include Asia-Pacific, Latin America & Africa, which formed one group; the Middle East was another growth area, while Central and Eastern Europe also continued to grow relatively quickly and now represented almost 27% of the group’s total revenues, Sorrell added.

On WPP’s plans for 2009, a difficult year for the advertising industry, Sorrell said the group would place increased emphasis on pushing operating margins in conjunction with operating profit growth. The other objectives would continue to include improvements in staff costs-to-revenue ratios and qualitative group objectives, including coordination, talent management and succession planning.

“We are committed to our six operating objectives—to continue to raise operating margins to the levels of the best-performing competition; to continue to increase flexibility in the cost structure; to improve total shareowner return by maximising the return on investment on the company’s free cash flow; to continue to enhance the parent company and build unique integrated marketing approaches for clients; to continue to place greater emphasis on revenue growth; and, finally to improve still further the quality of our creative output,” he added.

Meanwhile, WPP’s arch rival, the Omnicom group, has begun strengthening its presence in India in a big way, a strategy embarked upon in 2008. As part of its growth strategy, the group set up BBDO India and hiked its stake in TBWA India last year. WPP has been narrowing the gap with Omnicom since 2007. According to advertising industry figures, the combined WPP-TNS total touched $12.4 billion, compared with $12.7 billion for Omnicom.

© The Financial Express

This report was originally published in The Financial Express on March 12, 2009.

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