- WPP (NYSE:WPP): Q3 Revenue of £3.76B (-0.8% Y/Y).
- Shares -19% PM.
- Naturally there are good reasons behind these declines and these have been well articulated. They are suffering from competition provided by management consultant companies such as Accenture (ACN). They are having to spend extra money on suppliers such as The Trade Desk (TTD) and Adobe (ADBE) to help them manage technology advertising. And there is the risk that companies wishing to advertise can cut out the middleman(例如WPP, OMC) and advertise directly with Facebook (FB) and Alphabet (GOOG, GOOGL) without the need for an advertising agency.
- I believe advertising agencies can still look forward to a successful future. First, year-to-year client retention is extremely high, around or perhaps even over 95%. Second, they provide other specialised functions to help their clients that competitors cannot offer, such as public relations. Third, to reach suppliers many clients require specialty communications that advertising agencies provide. An example of an industry that requires specialised communications is healthcare. Simply put, if a healthcare client wishes to advertise a new treatment to insurers or doctors, Facebook and Google are not of much use. Fourth, with their multi-agency model, advertising agencies can acquire gaps in knowledge and expertise. If a large agency's problems are a result of lacking expertise in digital advertising, they can adapt by buying smaller agencies that hold expertise in that specific field. Indeed, this is now the trend amongst the largest advertising agencies.