NEW YORK: PR firm holding companies reported across the board recession-induced declines in their earnings reports for Q1 2009 this week.
Omnicom Group PR revenues declined 17.4% to about $260 million for Q1 ending March 31, 2009 compared to the same period last year. PR makes up 9.5% of the holding company's overall earnings. Omnicom is the industry's largest holding company by revenues with agencies including Fleishman-Hillard, Ketchum, and Porter Novelli, among others.
Companywide, Omnicom reported net income of $164.5 million on revenues of about $2.75 billion for the quarter, which is more than a 21% drop in profit, but it beat some analysts' predictions.
“The decline correlates closely to industry sectors in distress,” said Omnicom CEO John Wren, who noted the largest decline occurred in the automotive sector, as its client Chrysler reduced spending.
First-quarter revenue decreased 13.8% at Interpublic Group's (IPG) Constituency Management Group (CMG) division, which contains the holding company's PR agencies including Weber Shandwick and GolinHarris, and non-PR agencies such as KRC Research. Revenues dropped to $210 million from $244 million during the same period one year ago, a 7% organic decrease during the period.
Overall, the holding company's revenues declined about 11% in total from $1.49 billion to $1.33 billion for the first quarter, year over year, but still surpassed analyst expectations, according to a Reuters report. Frank Mergenthaler, CFO of IPG, also revealed during the earnings call that the holding company cut about 2,800 jobs, or about 6% of its workforce, during the past six months.
The WPP Group reported that like-for-like revenues for PR and public affairs dropped 6.1% in the first quarter of 2009, while overall like-for-like revenues for the London-based holding company were down by 5.8% for the same period. However, “reportable” earnings rose 36% to about $3.1 billion, which reflected currency exchanges and the company's acquisition of TNS.
Revenues for the PR and public affairs unit were $295.9 million for the first quarter of 2009, compared to $245.5 million in 2008. Each of the three other disciplines saw a drop in like-for-like revenue as well, with the branding and identity, healthcare and specialist communications unit slumping by 7.9%.
WPP's PR and public affairs firms include Hill & Knowlton, Burson-Marsteller, Ogilvy Public Relations Worldwide, and Cohn & Wolfe.
Publicis Groupe reported a revenue increase of 1.3%, a total of about $1.42 billion, but its organic growth declined 4.4%.
In its earnings release, the company said its results were “cushioned” by the growth of its US digital activities, which accounted for 20.5% of total revenue for the quarter. The Specialized Agencies and Marketing Services Group (SAMS), which houses the communications businesses including MS&L Worldwide, accounted for 41% of total revenue, including 100% of digital activities.
While Publicis Groupe chairman and CEO Maurice Levy has said that Publicis' PR business is down, Jim Tsokanos, president of MS&L North America, points to recent hires the firm has made, including Joe Carberry who will be Western regional president effective May 18, and the growth possibilities in public affairs, corporate, and digital where the firm will continue to invest.