Interpublic joins WPP on the Ad Holding Company Naughty Step

Interpublic joins WPP on the Ad Holding Company Naughty Step

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When the lockdown ended, all the advertising holding companies rebounded at roughly the same pace. However, a gap has since emerged between the stronger performers—Publicis (currently leading) and Omnicom—and the struggling WPP, Interpublic, and Dentsu (with the latter two yet to report their final numbers for 2023, though they are not expected to be strong).

Interpublic actually regressed in 2023 in terms of organic growth, declining by 0.1% for the year, although performance slightly improved as the year went on, with Q4 organic growth at 1.7%. WPP is expected to report a 0.9% growth for the year (Publicis saw a 6.3% increase, and Omnicom 4.1%).

CEO Philippe Krakowsky stated, “We are pleased to report growth in the fourth quarter ahead of expectations, during our seasonally largest quarter and across each of our segments. The strength of our capabilities in media, healthcare, and specialty marketing services was once again evident, as was the impact of macro uncertainty and challenges due to clients in the technology sector. These cross currents continue to be in effect as we move into 2024.”

Looking ahead, Krakowsky expressed confidence in the company’s foundational strengths and anticipated that the most consistent growth areas would continue to perform well. He mentioned ongoing strategic investments, including the development of data-powered tools, retail and performance media, and media buying models, alongside current and prospective investments in AI to enhance the company’s offerings.

This is a message similar to what WPP CEO Mark Read conveyed at WPP’s recent Capital Markets Day. Some may interpret this as a focus on more technology alongside potential job cuts. In the UK, it seems some employees from Wunderman, now merged into VML, are moving to other companies, despite Wunderman’s perceived strong performance.

Questions about leadership are likely to arise. Read is credited with stabilizing WPP after the unexpected departure of founder Sir Martin Sorrell six years ago, but progress appears to have stalled. At Interpublic, CFO Krakowsky, who succeeded the long-serving Michael Roth in 2021, was seen as a safe choice due to his experience as Roth’s lieutenant. However, CFOs often face challenges leading growth businesses, unlike Publicis, which has successfully capitalized on its investments in tech consultancy Sapient and data business Epsilon.

Many companies are grappling with a weakening global economy and rising political risks. While Read and Krakowsky and their respective companies appear secure for now, there is little appetite for risky media deals following Elon Musk’s troubled takeover of Twitter. However, there will undoubtedly be speculation about potential takeovers or breakups of either company.