Hey, Big Four: In Digital Realm, Integration's Better Than Hype

An Ad Age Editorial

Published on .

Publicis Groupe says digital work now kicks in about 15% of revenue. WPP Group says it gets 9% of revenue from digital. Omnicom Group won't even offer a guess on its digital dollars. Says Omnicom CFO Randy Weisenburger: "We just don't have a way of breaking out the numbers accurately."

The prize for most candid, admirable response goes to Omnicom.

There's certainly incentive to hype interactive results to the Street, which lavishes a premium on anything digital. Consider that aQuantive, the top independent digital-marketing organization, has a market cap more than five times revenue and a price/earnings ratio north of 50. Omnicom, strongest of the Big Four (Omnicom, WPP, Interpublic, Publicis), sells for 1.5 times revenue with a P/E of 20. Imagine if it were Omni.com.

Omnicom has a reputation for having its financial act together. Its decision not to float a lofty digital figure is a positive, not a negative.

Interpublic Group of Cos., too, doesn't reveal digital dollars, in large part because it's not confident such figures would be accurate.

WPP Group Chief Executive Martin Sorrell admits that determining just what counts as digital is "very, very difficult," but he told analysts earlier this year that WPP is doing it to show digital's importance and benchmark how well WPP is doing.

Mr. Sorrell says digital/interactive, using a "narrow definition," last year generated 9% or nearly $1 billion of WPP revenue. Publicis, factoring in its Digitas acquisition, says digital/interactive "should represent approximately 15% of our revenues." By 2010, Publicis CEO Maurice Levy wants to get one-fourth of revenue from "digital-associated technologies."

Omnicom has a strong digital play with stand-alone shops such as Organic and marketing-services agencies such as Rapp Collins. But Mr. Weisenburger says "well more than half" of its digital work is integrated in other agencies; that helps explain how Goodby, Silverstein & Partners became Ad Age's 2006 Digital Agency of the Year.

Agency firms are aggressively doing deals to expand their digital capabilities. That makes sense. But in the end, marketers need smart integration of traditional work and digital. As Mr. Weisenburger says: "From a business perspective, we think long term we're going to see more and more complete integration." That's what matters.
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