Will WPP be celebrating on Friday?
The observation that follows is not for the eyes of Omnicom – that solid and well regarded global group that for some years has also been the biggest.
A few weeks ago we read formal confirmation that since 2009 Omnicom had no longer been the biggest global group when measured by revenue. And, any day now, we may discover that it is no longer the greatest performer when measured by profit either. Friday is the day to await, because then we shall learn whether WPP has achieved what is certain to have been one of Sir Martin Sorrell’s ambitions (admitted or not), namely to become the most profitable marketing group in the world.
So far the results published by the Big Four for last year have been influenced less by the effects of recession and more by recent acquisitions (or lack of).
Publicis put on a big spurt after acquiring Digitas and Razorfish whereas Omnicom’s acquisition activities have been more modest. WPP bought, among other things, 24/7 Real Media some while back and the overall effect was to outflank Omnicom’s revenue performance in 2009. Will it have done the same thing in 2010 with profits?
As the chart shows, by using the average currency exchange rate applicable to each year, WPP was very close to overtaking Omnicom in 2009. WPP’s post-tax profit was $770.5 million and Omnicom’s was $793 million. Indeed if last year’s average exchange rate were to be applied retrospectively to 2009, WPP would already have outperformed Omnicom. But that comparison would be a little unfair.
Of course, the achievement of a bigger profit in absolute terms does not necessarily imply that WPP is either more or less efficient in the way it uses shareholders’ capital or employee hours, but it would be worthy of genuine congratulations nevertheless. In three more days we shall know whether this will be Sir Martin’s year or not.
Bob Willott is editor of “Marketing Services Financial Intelligence” at www.fintellect.com.