Interpublic was the top performer of the global agency holding companies on the stock market in 2021, with a 59% rise in its share price.
A Campaign analysis of Bloomberg data shows a strong recovery from the pandemic drove up share prices by double-digit percentages across the agency sector last year after the advertising slump in 2020.
IPG, which reported organic revenue growth during 2021 that was well ahead of 2019 levels, saw a 59% increase in its share price to $37.60 and the US-listed group ended the year with a valuation of about $14.75bn (£10.8bn).
IPG’s total shareholder return (TSR) – a key measure for investors because it also includes dividend payments – rose 65% during Philippe Krakowsky’s first year as chief executive and Michael Roth’s final year as chairman.
Publicis Groupe was the next best performer as its share price rose 45% to €59.20, valuing the French company at €15bn ($17.1bn or £12.6bn). TSR was up 51%.
WPP was close behind as its share price rose 40% to £11.20, giving the British company a valuation of £12.9bn ($17.7bn). TSR was up 44%.
Publicis and WPP’s share price performances were almost identical at constant currency levels, which take into account the euro’s decline of about 5% in value against sterling in 2021.
Omnicom, which suffered the steepest organic revenue declines in 2020 and recovered more slowly than its three biggest peers in 2021, saw its share price increase by 17% to $73.70 and TSR by 22%.
Omnicom’s relative weakness resulted in the US-based holding company losing its crown as the world’s most valuable agency group as it slipped to third place by stock market capitalisation during autumn 2021 and ended the year with a $15.6bn valuation.
Publicis Groupe and WPP overtook Omnicom by market cap during autumn 2021 – with WPP pulling ahead as the biggest by stock market capitalisation by the year-end.
Overall, the combined value of the big four agency groups – WPP, Publicis Groupe, Omnicom and IPG – increased by more than one third to reach $65bn, 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 slump, also did better in 2021 as its share price rose 34%.
Havas, the smallest of the big six agency groups, does not have a stock market listing because it is a subsidiary of French media giant Vivendi.
S4 Capital, one of a new breed of digital-focused “challenger” groups, saw its stock price rise 26% in 2021, after a strong 2020 when it increased about 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 dogged the company for nearly 18 months. Vin Murria, the top shareholder, subsequently made a takeover approach at the start of this year.
Many investors were bearish about traditional agency holding companies in the run-up to the pandemic and at the start of the crisis, but revenue from advertising and marketing services held up better than expected and agency groups were able to speed up restructuring, simplify operations and cut costs.
In an interview with Campaign in December, Krakowsky said of IPG's sustained growth: “Our performance in the last few years has been the indicator that there might be a way forward [for the agency holding company model].”
Agency groups will report their full-year revenue numbers during the forthcoming Q4 earnings season.