下面是小编为大家整理的聚焦2020年展望广告行业入门,供大家参考。
Media
Advertising
101:
A
Primer
with
a
Focus
on
the
2020 Outlook
Comprehensive
overview
of
the
advertising
industry.
In
this
primer,
we examine macroeconomic trends, the domestic and international markets, and the major media that participate in this industry. An analysis of key industry trends, including: the drivers of slower industry organic
revenue
growth,
with
a
review
of
cyclical
and
structural
factors including overcapacity, in-housing, pressure in the FMCG vertical, and impact of consulting firms. We also provide a deeper look the evolving strategies of the major holding companies in the face significant industry change. Close
look
at current
macro
trends
and health
of the
ad market in
2020. We detail
advertising
patterns through
economic cycles,
highlighting how
we expect 2020 to shape up on a global and regional basis. Detailed
examination
of
the
business
model
of
an
ad
agency
(advertising and
marketing
services company).
We discuss the structure of an ad agency holding
company,
study
the
growth
drivers
behind
the
agencies
and
other businesses, and highlight current trends that influence its outlook. Company-specific
outlooks. We
provide
pertinent
financial
information
and investment summaries for five of the top advertising agencies that we cover in the
industry:
Interpublic,
Omnicom,
WPP,
Publicis,
and
Dentsu,
including
an overview of each company’s business mix and client base. Recession
weighs
on
stocks,
but
fundamentals
likely
to outperform
other traditional
media. The
highly
diversified
business
models
of
the
advertising and marketing services companies and variable cost structures provide a buffer to
earnings
in
weak
economic
periods.
Good
balance
sheets
and
limited exposure to any one vertical also minimizes risks in these unprecedented times. While
ad
spending
historically
has
lagged
an
economic
downturn,
we
don’t necessarily see that to be the case with national advertising in this cycle given the unique nature of this disruption and could see declines lessening a bit in Q3. We also believe the agencies will weather the storm better than most companies and expect the stocks to outperform while the economic climate remains weak. For
U.S.-based
names,
we
like
IPG
and
OMC,
both
rated
Overweight.
In Europe,
we
prefer
WPP
(Overweight)
to
Publicis
(Neutral)
as
it
trades
on an EV/NOPAT discount. In Japan, we rate Dentsu Neutral. Global Equity Research 03
May
2020
Media
Alexia
S.
Quadrani
AC
(1-212)
622-1896
alexia.quadrani@jpmorgan.com
Bloomberg
JPMA
QUADRANI
<GO>
J.P.
Morgan
Securities
LLC
David
Karnovsky,
CFA
(1-212)
622-1206
david.karnovsky@jpmorgan.com
J.P.
Morgan
Securities
LLC
Anna
Lizzul
(1-212)
622-6139
anna.lizzul@jpmorgan.com
J.P.
Morgan
Securities
LLC
Zilu
Pan
(1-212)
622-6522
zilu.pan@jpmorgan.com
J.P.
Morgan
Securities
LLC
European
Media
&
Internet Daniel
Kerven
AC
(44-20)
7134-3057
daniel.kerven@jpmorgan.com
Bloomberg
JPMA
KERVEN
<GO>
J.P.
Morgan
Securities
plc
Marcus
Diebel
AC
(44
20)
7742-4447
marcus.diebel@jpmorgan.com
Bloomberg
JPMA
DIEBEL
<GO>
J.P.
Morgan
Securities
plc Internet,
Games,
Media Haruka
Mori
AC
(81-3)
6736-8632
haruka.mori@jpmorgan.com Bloomberg
JPMA
MORI
<GO> JPMorgan
Securities
Japan
Co.,
Ltd.
See page 116 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com
Table of Contents Executive Summary
........................................................................ 3 The Advertising Market
................................................................ 14 International Trends
..................................................................... 24 Dissecting Advertising Spending
............................................. 26 The Advertising and Marketing Services Company
............. 50 Advertising and Marketing Services Company Growth Drivers
.............................................................................................. 61 Industry Trends
.............................................................................. 65 Compensation Structure
............................................................. 75 Financial Outlook
.......................................................................... 76 Valuation
.......................................................................................... 79 Company Profiles
.......................................................................... 81 WPP Group (Overweight)
............................................................ 82 Omnicom Group (Overweight)
................................................... 88 Interpublic Group (Overweight)
................................................. 93 Publicis Groupe (Neutral)
........................................................... 98 Dentsu Group (Neutral)
.............................................................. 103 Appendix I: Billings
..................................................................... 110 Appendix II: Working Capital Changes
................................. 111 Appendix III:
Glossary
.............................................................. 112
Executive Summary
Agencies
saw
a
moderation
in organic
growth
in
2019
following a
year
of
acceleration
2019 was another volatile year for agency holding company stocks. Organic growth for the industry slowed to the lowest levels of the cycle, and sentiment remained negative sending valuations to their lowest levels in recent years. The challenges for the industry and bear case which continue to have momentum include: 1) overcapacity and reduced client conflict have provided greater leverage to clients in terms of both pricing and service; 2) marketers are moving more commoditized functions in-house in an effort to lower costs, sometimes with the help of consultants or ad-tech service firms; 3) client verticals such as FMCG remain under pressure, which is translating into a reduced scope of creative work; and 4) holding companies are burdened by underperforming non-core businesses which they are still in the process of divesting. We dig into each of these deeper below; however, we note that even amid this disruptive environment, we"ve seen significant divergence in organic growth, with some agencies outperforming and even thriving. This demonstrates, in our view, that the agency model is hardly broken, and that a well-executed offering can continue to provide substantial value-add to marketers. Furthermore, while creative remains an area under clear pressure, full service agencies are benefitting from stronger demand for media, events, and other marketing services disciplines.
Table 1: Big 4 Agencies Stock Performance vs. S&P 500 & MSCI Europe
Year
Big
4
S&P
500
MXEU
2020
YTD
-32.8%
-13.1%
-19.3%
2019
7.0%
28.9%
22.4%
2018
-11.4%
-6.2%
-13.1%
2017
-17.0%
19.4%
7.3%
2016
9.0%
9.5%
-0.5%
2015
7.2%
-0.7%
5.5%
2014
2.2%
11.4%
4.1%
2013
53.0%
29.6%
16.4%
2012
21.0%
13.4%
13.4%
2011
-8.6%
0.0%
-10.9%
Source:
Bloomberg.
Note:
Big
4
is
average
performance
of
IPG,
OMC,
PUB,
and
WPP.
Agency Organic Growth in 2019 Aggregate agency organic growth was 0.2% in 2019, decelerating from 1.6% in 2018, and was the lowest level of growth in the economic cycle despite ongoing robust ad spend. In Q4’19, the industry went negative for the first time since 2009. Across seven holding companies that we track, growth decelerated in 2019 for all with the exception of Omnicom (2.8% from 2.6% prior), which saw notable improvements in advertising and healthcare offset softer CRM. IPG was again the best performing group on an annual basis, though it saw a slowing to 3.3% (from 5.5%), largely driven by new business losses (FCA, VW, US Army) at the end of 2018. Consistent with the theme of competition and pricing pressure described
above, we did not observe the account losses translate to equivalent growth at winning agencies. We saw a similar dynamic for WPP (organic moved to -1.6% from -0.4%), where losses from Ford appeared to outpace gains to Omnicom; outside of GTB (dedicated Ford agency), WPP cited softness at other specialist agencies
(AKQA, Geometry). At PUB, organic moved to -2.3% from 0.1%, with management calling out a 200bps impact from attrition (i.e. existing clients spending less), media losses, and a repositioning at Sapient. Dentsu"s International business (Dentsu Aegis Network) saw a significant deceleration last year (organic was -1% from +4.3% in 2018), driven by headwinds in the APAC region where the network announced a restructuring at the end of 2019. For agencies that disclose it (WPP, OMC) PR moved from positive to negative.
Figure 1: Ad Agency Aggregate Organic Growth Historical by Year
Source:
Company
reports
and
J.P.
Morgan
estimates.
Note:
Total
includes
IPG,
OMC,
WPP, PUB,
HAV,
MDCA
(from
Q1’12;
excludes
ACCENT),
and
Dentsu
Aegis
Network
(from
Q4’14).
Figure 2: Ad Agency Aggregate Organic Growth Historical Quarter
Source:
Company
reports
and
J.P.
Morgan
estimates.
Note:
Total
includes
IPG,
OMC,
WPP, PUB,
HAV,
MDCA
(from
Q1’12;
excludes
ACCENT),
and
Dentsu
Aegis
Network
(from
Q4’14).
Figure 3: Organic Revenue Growth by Company, 2019
Source:
Company
reports
and
J.P.
Morgan
estimates.
Looking by region, North America industry growth, measured as an average of the Big-4 holding companies, moved to firmly negative territory (-0.9%) after two straight years of flattish performance. International markets decelerated to +1.8% (from 3.0% the year prior). While this gap could be partly explained b...
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