The stock market is on fire.
So, why are advertising agency stocks are languishing on the vine?
According to The New York Times, WPP, which owns agencies including Y&R and Ogilvy & Mather, said annual net sales may be flat or grow up to 1 percent as it reported that the measure shrank in the first half of the year. The company’s stock tumbled 11 percent in London and its closing price was the lowest in more than a year.
WPP said that consumer packaged goods companies, which account for a third of its revenue, cut spending in response to pressure from digital competition and activist investors.
“To the extent that we’re seeing growth in the total advertising market, we’re seeing a substitution of the Dollar Shave Clubs of the world for the Gillettes of the world,” said Brian Wieser, a media analyst at Pivotal Research Group. “It’s the digitally native brands that are taking share, both from a consumer level and also when it comes to their spending on advertising.”
The Times does not go on to say, “One man gathers what another man spills.”
In other words, traditional advertising expenditures are down, meanwhile investment in other forms of brand storytelling is skyrocketing. For example, global content marketing revenues grew 14% in 2016 to $28.1 billion—and the sector is poised for 14% growth again this year.
