Impact of the True North Acquisition

A Closer Look at the Numbers

Published on .

Its acquisition of True North Communications propels Interpublic Group of Cos. to the top of the ad agency revenue chart (see main story). It also makes the firm more dependent on the U.S. market as its competitors reduce their dependence on that market. At the same time, Interpublic and True North draw more of their revenue from advertising and media buying than their competitors. Here are the numbers:


Ad Agency Chart:
2000 Revenue


Interpublic 1$7.15 billion
WPP Group 2$6.3 billion
Omnicom$6.15 billion
Havas 3$2.3 billion
Publicis 4$2.2 billion
Grey$1.25 billion
Cordiant$780 million

Notes:
1. Includes True North full-year revenues
2. Includes Young & Rubicam full-year revenues
3. Includes Snyder Communications full-year revenues
4. Includes Saatchi & Saatchi full-year revenues
Source: Company reports


While its competitors reduce their dependence on the U.S. market, the True North acquisition increases Interpublic's concentration in the U.S.
Split by Region
RegionTNIPGIPG/TNOMCWPP
North America76%55%59%57%45%
UK/Europe15%30%26%36%38%
Asia Pacific/
Australia/
Latin America
9%15%13%7%17%
Source: Interpublic presentation, company reports


Merged Company Breakdown:
2000 Revenue

InterpublicTrue NorthBoth
SegmentRevs. ($M)% of totalRevs. ($M)% of totalRevs. ($M)% of total
Advertising$2,58846%$96762%$3,93149%
Media Buying$73113%$413%$40511%
Promo/Event/Direct Marketing$1,23522%$36524%$1,60022%
Public Relations$4618%$16611%$6279%
Marketing Intelligence$6029%$121%$6149%
Source: Interpublic presentation; may not add up due to rounding


Interpublic and True North together last year generated 60% of their revenue from advertising and media buying. By comparison, its major competitors are increasingly drawing revenue from fast-growing non-advertising sectors.
Competitors' Revenue Sources, 2000
OMNICOM
Segment Revenues% of RevenueGrowth
Advertising44%12%
Public Relations15%24.6%
Direct Response17%28.6%
Sales Promotion14%27.9%
Specialty Advertising11%20.4%
WPP GROUP
Advertising47%33.8%
Consulting17%19.8%
Public Relations11%75.6%
Specialist Communications25%27.6%
Sources: Omnicom, WPP Group, Merrill Lynch & Co. reports. May not add up due to rounding.

Copyright March 2001, Crain Communications Inc.

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