The Drum published an analysis of Adland’s Three
Stooges—Publicis Groupe, WPP, and Omnicom—examining Q3 earnings, the focus on
media, rethinking pitches, respective organizational maneuvers, etc.
Not
mentioned at all: the human beings inhabiting cubicles and/or remote
workstations for the corporations—as well as the thousands cast off from the White
holding companies and single White operating company.
Of course, DEIBA+ is not mentioned and not even
considered.
The image
illustrating the content (depicted above and likely rendered via AI) tells the
story. The new “Big Three” are Old White Guys and an Old White Gal.
What Q3 revealed about advertising’s new ‘Big Three’ – and where holdcos
go from here
By Barry Dudley
Publicis is powering ahead, WPP is steadying the ship and
Omnicom is finding its feet after a mega-merger. The Big Three loom large – but
the industry around them is in serious flux. Green Square’s Barry Dudley
examines what Q3 reveals about adland’s changing balance of power.
When I started out
in professional services there were ‘The Big 10’ accountancy firms, which at
the time felt quite a daunting gang. But I found my way into that gang with
Arthur Andersen. The Enron scandal came along, and the firm was taken over by
various of its peers around the world – in the UK we went to Deloitte. And roll
forwards to now, there’s just ‘The Big Four’.
Through that time my
expertise was always marketing services, media and production. In this world,
we are now down to ‘The Big Three’ – Omnicom, Publicis and WPP. So how are they
faring given their Q3 results and, more importantly, what does having a Big
Three mean for the sector more generally?
The Q3 results
Starting with
organic revenue, Publicis was up 6.9% in the quarter, WPP was up slightly at
0.5%, whilst Omnicom was up 7.2% based on its ‘core operations’. Not quite
apples and apples, as Omnicom’s numbers are on a different basis.
Looking at organic
net revenue (as opposed to total revenue), Publicis was up 5.0% and WPP was
down 3.9%. Omnicom doesn’t report at this level.
So, the initial
assessment is that Publicis continues to move along impressively, WPP is
clawing its way forwards and Omnicom is still finessing what its core
operations are since its mammoth coming together with IPG but seems to be
trading well.
But what did the
leaders of each business have to say? Publicis CEO Arthur Sadoun said: “This
was our 25th quarter of outperformance, and thanks to our unique ability to
connect data, technology and talent through the Power of One, we are confident
in confirming our full-year guidance for 2026 and in outperforming the market
for the eighth consecutive year in 2027”. Very firmly on the front foot and
riding a wave.
WPP CEO Cindy Rose
said: “We are on track to deliver phase one of Elevate28: stabilizing our
business performance and laying the foundations for a simpler, more unified
WPP. Our integrated client proposition and modern data solutions are gaining
traction with both new and existing clients.” The key word here is
‘stabilizing’. So Rose is, rightly, pleased to be settling the ship.
And Omnicom CEO John
Wren said: “As we approach the one-year anniversary of the Interpublic
acquisition, we continue to deliver the expected benefits of the combination.
We’ve strengthened our competitive position and are on track to deliver $900
million in cost-reduction synergies in 2026 resulting in stronger organic
revenue growth, operating margins, and earnings per share.” There is still a
little way to go with the integration, but progress has clearly been made with
the numbers.
There were two
things that stood out for me in the business lines: Media remains the engine
room for all of them – Publicis’ Connected Media grew by high single digits,
WPP Media was up 0.3% and Omnicom’s Integrated Media was up by over 10%.
Conversely, the performance of creative/advertising was not so pretty:
Advertising fell mid-single digits for Omnicom, WPP Creative was down 5.1% and
it was low single digits growth for Intelligent Creativity at Publicis. I’ll
come back to the creative theme later. Again, these comparisons aren’t quite
apples and apples given that Omnicom reports differently, but the directions
are clear.
Regionally there
were some consistencies across the three: US performed the best, the UK was
down and unsurprisingly, so was the Middle East.
And what of the
stock markets? I looked at the share price movement from the day before
announcement and compared it with the day after announcement, so a three-day
spread. All saw price increases: WPP up over 5%, Omnicom over 2% and Publicis
up over 1%. My reading is that the markets expect Publicis to do well so there
was no major jump in its favor, Omnicom was rewarded for delivering cost
savings and WPP has benefited from some strong leadership from Rose in starting
to turn the WPP tanker towards a new path.
The big themes beyond the results
1. The CEO, not the
CMO, is the buyer
Sadoun says AI
transformation “has to start from the top” and Publicis is “increasingly seeing
CEOs involved in what we do”. Rumor has it that PepsiCo’s move to Publicis was
led by its CEO. Cup half full view of this for the CMOs out there – they are
still highly important and relevant, arguably more than ever, but the CEOs are
right there next to them.
2. The pitch is
dying, or is it?
This is probably an
extension of the previous point. In the Publicis webcast Sadoun said clients
are increasingly appointing agencies without a pitch and that Publicis won “the
two biggest accounts of the year without a pitch” and “three material AI-led transformation
assignments this year outside of traditional pitch processes”. Speaking to The Drum, he
presents it as the new normal: “Those same clients increasingly consider it is
way more efficient to spend their time... digging deeper and actually kicking
the tires of the partner they are interested in, rather than organizing this
kind of big beauty contest for months.”
Two weeks later, in
the WPP results webcast, Rose stepped into this when responding to an analyst’s
question, referencing “this pitch-less, CEO handshake thing that I keep getting
asked about”. Rose continued with: “What can I say here? Look, nobody loves
pitching, right? You’re not going to find anybody that says: ‘I love pitching.’
The cost and burden of the process seems to be, you know, increasing. But I
think what’s really important to me is that my clients fully understand the
implications of the decisions they’re making. These are really high-stakes
decisions with material business consequences, and they deserve careful
consideration. I don’t think we do ourselves any favor as an industry of
professionals by encouraging clients to bypass proper due diligence, and I
think I’ll leave it at that.”
The pitching debate
continues to rumble on!
3. Aesop’s fable
Aesop told of a lion
and a bear who fought over a fawn until both lay exhausted, only for a passing
fox to carry it off. The Big Three aren’t exactly brawling, but between
integrating, restructuring and arguing over whether pitches still matter, they
are certainly distracted with each other right now. And there are plenty of
foxes about.
Take Stagwell for
example. Its CEO, Mark Penn, isn’t trying to build a fourth holding company,
he’s arguably trying to stop being an agency group altogether. But I do believe
Stagwell (along with many others) is becoming a very credible alternative.
Stagwell’s organic net revenue was up 7.4% in Q3, adjusted EBITDA up 25%, new
business is strong. And tellingly Penn said in the earnings webcast: “Well, I
think for us, we are continuing to win really high levels of creative accounts,
but there is still a lot of shrinkage, and movement, and CMOs being fired. I do
think there is a lot of turmoil in general. It is a great door for us.”
There’s that word
‘creative’. Just as the Big Three seem to be suffering in this area, the foxes
are out and about picking up significant creative work. I will be following up
with more thoughts on this; the Big Three will always have a Media and a Data capability
that only they can provide to certain clients, but creative is a whole
different ball game.
4. Creator economy
and sport
Publicis acquired
160over90 which it called ‘the premier global sports and culture agency’ and
Point d’Orgue, a Paris based influencer and creator agency. WPP announced
Devon’s Point, a 34,000 square foot production studio with dedicated spaces for
creators: live streaming studios, quick shoot-and-edit facilities and areas for
brands and creators to collaborate. And Omnicom’s Wren commented in their
earnings webcast: “And in sports marketing, where we manage $9.9bn in
sponsorships and talent and oversee one-third of global sports media
investments, we secured a major integrated assignment for the 2028 Olympic Games
in Los Angeles, spanning sponsorships, creative, and communications.”
New battlegrounds
that the lions and bears will be fighting over…
