How WPP chief executive Sir Martin Sorrell must have enjoyed that Friday back in May. As Publicis and Omnicom scrambled to explain why theirmerger failed, Sir Martin could sit back. WPP would remain the world’s largest advertising agency by revenues, and his two biggest rivals had been distracted for almost a year by a now-defunct tie-up. And over the 10 months that Publicis and Omnicom fiddled around trying to close the deal, WPP shares outperformed them both. Delicious.
Operationally, too, WPP did well in the period. Its first-half revenues (before currency fluctuations) rose 11 per cent, with a decent organic performance and 36 acquisitions. Revenues at Omnicom and Publicis – on the same basis – rose at less than half that rate. WPP won work off both. Organic growth at Publicis was particularly weak. (Of course, just how much of this was down to merger distractions is hard to know).
What is clearer is that consolidation in the advertising industry is unlikely to end with the failure of Publicis/Omnicom. The drama now moves toInterpublic, the world number five by market capitalisation, where hedge fund Elliott has taken a 6.7 per cent stake and may push for a sale.