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July 17, 2015
Wall Street Concerned with Account Reviews?
 
When account reviews climb into the billions, more than just a few casual observers start to take notice. The recent call for all of these media account reviews has been the talk of the industry. We can trace this situation back to several months ago, when Mondelez decided to put on its big boy pants and declared that it would essentially pay the agencies it works with almost any time it feels like it. Other companies, like Unilever and Proctor & Gamble, thought that was a brilliant idea and followed suit.

And then, more recently, the P&G powers announced that it is shedding $500 million dollars worth of agency revenue to streamline its marketing services. 

Naturally, then, since most of the agencies affected are owned by publicly traded companies, investors are starting to pay a little more attention to the wonderful world of AdLand.

One writer in particular has covered the buildup. Nathalie Tadena of WSJ's CMO Today chronicled the summer's happenings with the stock prices for the big 4: WPP, Omnicom, Publicis, and Interpublic. Earlier in June, when the media account reviews reached $26 billion dollars, she compiled how much revenue is being defended, and how much revenue is out there that could be gained. We don't touch too much upon the business dealings and stock price of the holding companies, so we found this to be pretty interesting.

Nathalie followed up with reports that investors are getting more anxious as the account review costs have just hit $30 billion dollars and as companies like Johnson & Johnson and Coca-Cola have decided to toss their media agencies into the fun.

With second-quarter earnings reports due to come out, analysts are projecting slow organic growth with the holding companies. For Omnicom and Interpublic, slow growth would be fantastic news, since both companies' stocks are down and have been on a negative trend since April. 

No one really knows exactly what is going to happen with these media reviews and those intrigued investors. But we know this — this isn't a party you want to leave early. The fun is just about to get started.

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Dwayne W. Waite Jr. is partner and principal at JDW: The Charlotte Agency, a marketing and advertising shop in Charlotte, NC. He enjoys consumer behavior, economics, and football.
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