WPP Preliminary Results: PR and Public Affairs Down 7%
From wire shopping baskets manufacturer to the world’s largest communications services group in terms of revenue in only 16 years sounds like the plot of a business fairy tale, but WPP is the proof that everything is possible. Yet, even giants like this had to face the financial ups and downs of the recession. WPP announced its preliminary results , a year that brought a 7.4% drop in revenue for the group’s PR and public affairs branch. But keep in mind that PR and public affairs only account for 9.2% of the total revenue for the Group. The strongest branches, as expected, are advertising and media investing management, and branding & identity, healthcare & specialist communications.
The in-depth report is indicative of a larger global picture, where it becomes obvious how important marketing, advertising, branding and PR are for the success of a business, even in harder financial times. To understand, you need to take a look at WPP Group’s list of companies in all these sectors. Suffice to mention a few, and you get the picture: WPP has a vented interest in about everything that moves under the sun.
WPP advertising is represented by Grey Group, Ogilvy & Mather Worldwide, Young & Rubicam, JWT, ADK, Advetures, Bates 141, BrandBuzz, Dawson, Enfatico, Soho Square and many others. The PR holdings include Hill & Knowlton, Ogilvy Public Relations Worldwide, Burson-Marsteller, Cohn & Wolfe, Sonic Boom Creative Media, Wexler & Walker Public Policy Associates, etc. And with names like Warwicks, Young & Rubicam Brands, Always Marketing, All, B to D Group, and Bisqit in branding, WPP is a sure winner. These are just random mentions from a list comprising more than 250 companies.
For customers who hire these companies, the fact that they are part of WPP Group remains a mystery. Often, there is no mention of an affiliation with the Group on their sites – it takes a good digger to bring all the behind the scenes affiliations to light. Not that WPP keeps things secret, after all, the complete list of companies is public, on their site. But it’s perhaps a better marketing strategy for Ogilvy & Mather to operate as an independent company (no mention that the company is owned by the WPP Group on the Ogilvy site, for example).
Sure these are the subtleties of the business, and we will not discuss them this time. What matters is that WPP is for communications what Google is for the internet, with the only difference that WPP’s name doesn’t come so often in the media – and how would it, when all its troopers dominate the headlines? It’s in the Group’s best interest to let its companies operate under their own brands – a matter of credibility and tradition. WPP’s only role is to manage most of the administrative work, and naturally, the financial matters (budgeting, reporting, control, treasury, tax, mergers, acquisitions, investor relations).
What many critics of the PR and public affairs industry fail to understand, (and same goes for advertising and branding) is that without powers like WPP the global economy would have suffered more because of the recession. Its subsidiaries were employed by business to identify new markets, less affected by inflation, to keep the money flow going. Not that this was an easy task for the Group, but it’s indicative that the knowhow still has business value.
Public relations and public affairs improved in the second half, with like-for-like revenues down 6.7% compared with -8.2% in the first half and particularly in the United States and the United Kingdom. The final quarter showed a more marked improvement with revenue down less than 5%, which was the least worst quarterly decline of the year. All of the Group’s businesses in this sector improved in the final quarter, particularly Burson-Marsteller, Hill & Knowlton and the Group’s specialist public relations businesses. Operating margins fell by 1.2 margin points and remained strong, as action was taken to reduce costs, with average headcount down significantly.
2009 was a difficult year for almost everyone in any known business. It had a rough start, and many companies had significant improvements by the end of the year. WPP’s report is a mirror of a global trend in fact, and if you study it carefully, it’s also a valuable intel for business management. For the PR, marketing, advertising and communications industries, 2010 will be full of events. The Winter Olympics are a matter of the past already, but many businesses already reported significant wins for the period. The other events that follow (Asian Games in Guangzhou, the FIFA World Cup in South Africa, the World Expo in Shanghai, the mid-term Congressional elections in the United States) represent as many business opportunities. For the smaller companies, attempting to keep up with WPP’s subsidiaries is a bold challenge. But if you keep an eye on what they do, there’s always something to learn: from Mindshare’s brilliant advertising campaigns for customers like AXE, to Maxus’ BT planning and media account, these guys know their business, and they definitely deserve to be called market leaders.