Interpublic was the best performing global agency holding company on the stock market in 2021, rising 59% in its stock price.
A campaign analysis of Bloomberg data shows that a strong post-pandemic recovery pushed stock prices up double-digit percentages in the agency sector last year following the 2020 advertising crisis.
IPG, which recorded organic revenue growth in 2021 well above 2019 levels, saw its stock price rise 59% to $37.60 and the US-listed group ended the year with a valuation of around $14.75bn (£10.8bn).
IPG’s total shareholder return (TSR) – a key metric for investors as it also includes dividend payments – rose 65% in Philippe Krakowsky’s first year as CEO and Michael Roth’s last year as president.
Publicis Groupe was the second best performer as its share price rose 45% to €59.20, valuing the French company at 15 billion euros ($17.1 billion or £12.6 billion). ). The TSR is up 51%.
WPP was close behind, with its share price rising 40% to £11.20, giving the British company a valuation of £12.9 billion ($17.7 billion). The TSR is up 44%.
The stock market performance of Publicis and WPP was almost identical at constant exchange rates, which takes into account the fall of around 5% in the value of the euro against the pound sterling in 2021.
Omnicom, which suffered the steepest organic revenue declines in 2020 and recovered more slowly than its three largest peers in 2021, saw its share price rise 17% to $73.70 and its TSR by 22%.
Omnicom’s relative weakness caused the US holding company to lose its crown as the world’s most valuable agency group as it slipped to third place by market capitalization in the fall of 2021 and ended the year with a valuation of $15.6 billion.
Publicis Groupe and WPP overtook Omnicom in terms of market capitalization in the fall of 2021, with WPP becoming the largest in terms of market capitalization at the end of the year.
Overall, the combined value of the big four agency groups – WPP, Publicis Groupe, Omnicom and IPG – grew by more than a third to $65 billion, according to Campaign estimates.
“A way forward for the agency holding company model”
Japan’s Dentsu, the fifth-largest agency group, which struggled in the run-up to the pandemic and during the 2020 crisis, also fared better in 2021, with its share price rising 34%.
Havas, the smallest of the six major agency groups, is not listed on the stock exchange as it is a subsidiary of French media giant Vivendi.
S4 Capital, one of the new digital-focused “challenger” groups, saw its stock price increase by 26% in 2021, following a strong 2020 where it rose around 150%.
M&C Saatchi was one of the best performing small agency groups last year, doubling its share price to 168.5p, after drawing a line under an accounting scandal that has plagued the firm for nearly 18 months. Vin Murria, the leading shareholder, then made a takeover bid at the start of the year.
Many investors were bearish on traditional agency holding companies on the eve of the pandemic and early in the crisis, but advertising and marketing services revenues held up better than expected and business groups agencies were able to accelerate restructuring, simplify operations and reduce costs.
In an interview with Countryside in December, Krakowsky said of IPG’s continued growth, “Our performance over the past few years has been an indicator that there may be a way forward. [for the agency holding company model].”
The agency groups will report their annual earnings in the upcoming fourth quarter earnings season.