Things are looking up.
WPP, Publicis Groupe and Interpublic Group of Cos. all reported positive worldwide organic growth in first-quarter 2021, signaling a turnabout from a bleak 2020. Omnicom Group’s organic revenue fell in the first quarter, but it expects a return to organic growth this quarter.
U.S. advertising, public relations and related services employment—a broad grouping including ad agencies, PR agencies and other services—is growing again after hitting its pandemic low point in January.
Agency stocks have rebounded as part of a broader bull market as investors bet on the recovery, with Interpublic, Omnicom, Publicis and WPP all scoring 52-week highs in April. Interpublic last week reached its highest level since 2002.
U.S. real (after inflation) gross domestic product is on track to grow 6.2% in 2021, the economy’s fastest growth since 1984, according to IHS Markit. The forecaster expects total U.S. employment to climb back to its pre-pandemic peak in late 2022.
Joel Prakken, chief U.S. economist at IHS, last week said President Biden’s American Jobs Plan, as proposed, would push the unemployment rate down to 2.8% in the second quarter of 2024, the lowest level since 1953. (The unemployment rate in March was 6.0%. That’s a drop from 14.8% in April 2020, which was the highest level since 1939.)
It’s morning again in America ... maybe.
But this is Ad Age Agency Report, so we must interrupt that hopeful view to dredge up some bad news: 2020.
Overall U.S. agency revenue tumbled 6.8% in 2020 as fallout from the COVID-19 pandemic pushed the economy—and agencies—into a deep, though remarkably short, downturn. That was the second-biggest drop since Ad Age began publishing the Agency Report in 1945. The sharpest decline (-7.5%) came in 2009 amid the Great Recession.
The agency revenue growth rate is based on Ad Age Datacenter’s bottom-up analysis of organic growth for major agency companies and stated or estimated pro forma growth for other agencies in Ad Age Agency Report 2021. Organic growth strips out acquisitions, divestitures and the effects of exchange rates.