Holding Co's Say Advertisers Pulled Back in September, And 2013 Looks Rough

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Agency holding companies met stronger headwinds last quarter, as clients postponed or cancelled campaigns in Europe and North America. This statement from WPP Group sums up the picture at the three global agency groups that reported Q3 results this week:

"Each quarter in 2012 has ratcheted down from a relatively strong first quarter. Provisional forecasts for the fourth quarter show a similar pattern. Clients seem to be increasingly cautious and this has impacted most geographies and functions."

Digital was a bright spot as usual, although on the media side clients are increasingly using it to drive efficiency -- a do-more-with-less mindset rather than a cause for increased investment. From a sector standpoint, holding company CEOs cited strength in auto and finance verticals and weakness in pharma/healthcare and retail.

Below we've aggregated highlights from each company's results. For further details on revenue and net income, check out the earnings releases (WPP, Publicis, IPG)

IPG's Roth: 'Confusion is Good'

Interpublic reported growth in its media and digital agencies, including Mediabrands, R/GA, and HUGE. CEO Michael Roth said the push for media efficiency -- brought about in part through the rise of digital optimization -- is working both for and against the company:

"Our clients are looking to us to make sure that they get better reach, more effectiveness with less expenditure. And I was waiting to use this phrase in this call and I'll use it and that is, that confusion is good... They're looking to see more earned than paid, and it's incumbent upon us to have the tools and resources to do that." (SeekingAlpha transcript)

Roth said the efficiency drive has helped IPG media agency Initiative win a big chunk of Unilever's media spend away from Mindshare.

And he called out the Mediabrands Audience Platform trading desk: "We'll stay focused on adding to our capabilities through hiring and training, as well as incubation of new capabilities, such as MAP, our digital audience platform and automated trading desk. "

The shout-out for MAP is especially interesting in light of Omnicom's recent name check of Annalect and Accuen in its own earnings call (AdExchanger story). This could it be a sign of greater revenue contributions from media trading units, or maybe just an acknowledgement that investors are thinking about programmatic stuff more.

Publicis Digital M&A

Publicis was busy with M&A, as evidenced by its acquisitions of digital agencies in Asia --Resultrix in India and Arachnid in Malaysia. The French company also reached an agreement to buy all outstanding shares of LBi.

CEO Maurice Levy cited marketer caution, especially in Europe:  "since the end of the summer, (European) advertisers have increasingly adopted a wait and see attitude, canceling or postponing campaigns."

As with IPG, Publicis said September was the roughest month in recent memory – absorbing the "full brunt" of budget cuts. The holding company had forecast 6.6% growth for the month, but actually ended with -1.6%. Canceled or postponed campaigns in Europe received most of the blame.

WPP: Fear 2013

From WPP's point of view, the September hurt was badly timed indeed – and the remainder of the year looks no better. Improvement is expected in Asia and Europe, offset by a weakness in North America and Latin America.

"In a way, the September softness could not have come at a worse time, as clients, most of who budget on a calendar year basis are preparing their estimates for 2013," the company said.

In short, 2013 may be a year of austerity in marketing services.

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