AGENCY REPORT: U.S. AGENCY REVENUE JUMPED 7.7% IN 2010

1. AGENCY REPORT: U.S. AGENCY REVENUE JUMPED
7.7% IN 2010
Agencies Are Hiring and Agency Stocks Are Back to Pre-
Recession Prices. But U.S. Ad Spending May Not Get Back to
2007 Levels Until ... 2013
Published: April 24, 2011
The agency business has come back to life, with U.S. revenue jumping 7.7% as the domestic market led a
2010 worldwide rebound in advertising and marketing services.
The standout performer: digital marketing, which accounted for 28% of U.S. agency revenue.
Related Stories
Tweet This: Agencies Get 28% of Revenue From Digital
Mad Ave Better Take Note -- You Are Digital, or You Are Very, Very Unimportant
Plot line of this recovery: The recession officially ended in June 2009, U.S. measured-media spending
turned northward in first-quarter 2010 (according to WPP's Kantar Media), and U.S. advertising and
marketing-services firms have added 23,100 jobs since ad industry employment hit bottom in February
2010 (according to Bureau of Labor Statistics data).
The Big Four agency holding companies -- WPP, Omnicom Group, Publicis Groupe, Interpublic Group of
Cos. -- in 2010 added 11,000 jobs (including acquisitions) after slashing 22,000 jobs in 2009.

2. 2010 worldwide revenue for world's 15 largest agency companies. Some figures are Ad Age estimates. Some U.S. figures reflect North America.
See expanded information on these companies: AdAge.com/agencyfamilytrees2011.
Source: Ad Age DataCenter.
Shares in WPP, Omnicom and Interpublic in first-quarter 2011 reached their highest levels since pre-
recession 2007, a sign of investors' optimism about the sector. Publicis shares this year reached their
highest point since 2000.
U.S. 2010 revenue for marketing-communications agencies -- including advertising, marketing services,
media, health care and public relations -- rose 7.7% to $30.4 billion, according to the Ad Age Agency
Report, which tracked the performance of more than 900 U.S. agencies. (Ad Age DataCenter adjusted
agency revenue figures for acquisitions to show revenue growth on an apples-to-apples basis.)
Every major agency discipline rebounded last year, with U.S. revenue growth in the range of 6% to 7% for

3. most disciplines (including advertising, promotion, health care and public relations). Revenue for digital-
specialty agencies (essentially digital pure-play agencies) surged 16.3%.
The U.S. was the world's star performer in 2010 for advertising and marketing services, exceeding
expectations and outpacing growth in most other regions.
To be sure, some of the U.S. advertising market's recovery reflected what WPP Chief Executive Martin
Sorrell has called a "dead cat bounce": The ad business fell so sharply that it wasn't surprising to see
decent percentage gains when the economy began to recover after the longest recession (December 2007
through June 2009) since the Great Depression.
1. Digital-specialty agencies.
2. CRM/direct agencies had $4.75 billion in revenue including $2.00 billion from digital services.
Numbers rounded. Source: Ad Age Agency Report 2011.
Remember how bad things were: U.S. ad spending as a percent of gross domestic product in 2009
slumped to its lowest level in decades, and U.S. agencies in 2009 saw the sharpest revenue drop (7.5%)
since Ad Age began the Agency Report in 1945.
Ad spending and employment remain well off their peak. Publicis' ZenithOptimedia says U.S. ad/marketing-
services spending won't break its 2007 record until 2013. U.S. ad and marketing-services firms employ
76,500 fewer people today than at the industry's pre-recession, late-2007 peak. (See AdAge.com/adjobs.)
But there is no denying the turnabout in ad spending last year as key advertising sectors including
automotive rebounded from their Great Recession lows.
Omnicom in 2010 reported 8.7% U.S. organic growth (revenue growth after factoring out
acquisitions/divestitures and the impact of foreign exchange), beating its 6.4% worldwide organic growth.
In 2010, Interpublic reported robust 10.1% organic revenue growth in the U.S., and Publicis posted 9.9%
organic growth in North America, better in both cases than any other single region except Latin America.

4. Source: Ad Age Agency Reports.
Revenue for the world's 50 largest agency companies totaled $62.2 billion in 2010, up 9.4%. U.S. revenue
for those firms jumped 11.4%. (Ad Age DataCenter did not adjust agency company total-revenue figures,
so the high growth rates last year in part reflect acquisitions.)
The U.S. accounted for 42% of the top 50 agency firms' worldwide revenue.
With the economy and financial markets back on track, marketing-communications companies have
returned to merger-and-acquisition mode, doing a lot of buying -- and some selling.
Omnicom is undertaking a global review of operations with the aim to reorganize or dispose of what
President-CEO John Wren has termed "non-core, low-growth, low-margin businesses ... generally in
smaller markets." As of April 2011, Omnicom had disposed of units with combined annual revenue of about
$120 million.
OUT WITH THE OLD, IN WITH THE NEW
Agency firms over the past year announced numerous fill-in acquisitions but no blockbusters. Among the
deals and agency realignments:
WPP (No. 1) in April 2011 agreed to buy Commarco Holding (No. 37), a German agency group controlled
since 2003 by a private-equity firm. WPP completed 25 small and midsize acquisitions in 2010, including
Canadian agency Taxi; I-Behavior, a U.S. database marketing firm; Marketing Direct Inc., a U.S. marketing-
services company; and U.S. digital agencies Blue State Digital and Digitaria. WPP also rolled up four WPP
shops into Possible Worldwide, a global digital agency.
Omnicom (No. 2) took majority ownership of Clemenger Group, an Australian agency company in which
Omnicom's BBDO Worldwide had been a minority investor since 1972. Omnicom also purchased
Communispace, a digital market-research-services firm; bought The Modellers, a market-research
company; acquired The Core, a U.K. design and branding agency; bought Sales Power, an in-store
promotion company in China; and purchased a majority stake in Maslov PR, a PR agency in Russia.
Omnicom disbanded pioneering digital agency Agency.com, splitting its offices among TBWA Worldwide
network agencies. Omnicom sold a majority stake in U.S. PR firm Brodeur Partners.
Publicis (No. 3) made two deals in Brazil, buying digital shop AG2 and a 60% stake in agency firm Talent
Group. Publicis also acquired PR firms Eastwei Relations (now Eastwei MSL) in China and Interactive
Communications Ltd. (now ICL MSL) in Taiwan. Publicis bought U.K. integrated/digital-marketing firms
Airlock, Chemistry Communications Group, Holler and Kitcatt Nohr. Publicis this month agreed to sell its
56% stake in U.K. PR firm Freud Communications back to Chairman Matthew Freud.
Interpublic (No. 4) bought U.K. shop Delaney Lund Knox Warren from agency firm Creston, making the
renamed DLKW Lowe the U.K. hub of Lowe Worldwide.Interpublic increased its stake in Brooklyn-based
digital agency Huge to 75% from 51%. The company did two deals in Brazil, acquiring digital shop Cubocc

5. and merging McCann Erickson's Brazil operation with local agency W/Brasil. Interpublic sold U.S. PR
agency MWW Group.
Dentsu Inc. (No. 5) bought U.S. digital ventures Innovation Interactive (360i) and Firstborn. The Japanese
company set up Dentsu Network West as a New York-based network for its agencies in the Americas and
Europe.
Aegis Group (No. 6) bought Mitchell Communication Group, an Australian agency firm.
InVentiv Health (No. 21) was bought by a private-equity group that is expanding the venture through
acquisitions.
LBi International (No. 27) merged with a private-equity-backed European search-engine firm, making
Amsterdam-based LBi a bigger force in digital.
George P. Johnson, the nation's biggest event-marketing firm, reorganized under a new agency holding
company, Project WorldWide (No. 29). Project is on the hunt for deals.
Rosetta (No. 30) bought Level Studios, the fast-growing digital agency's latest acquisition.
Cossette, a Canadian agency company that went private in 2009, took the new name Vision7
International (No. 35) as it looks for more global growth.
GSI Commerce (No. 36), an e-commerce and interactive marketing-services firm, agreed to be acquired
by eBay.
ICrossing (No. 44) was acquired by Hearst Corp., which followed Meredith Corp. (No. 39) as a media
company making a play in the agency business.
See more ad industry jobs data: AdAge.com/adjobs
Source: Bureau of Labor Statistics data.
Copyright © 1992-2011 Crain Communications | Privacy Statement | Contact Us