Facebook discovers cost of factory-farming users 12 Jan 2018 The $550 bln social network’s success harvesting ad dollars from mass-appeal content made it very profitable. The snag is that users are increasingly unhappy. Mark Zuckerberg’s return to focusing more on their welfare may limit short-run profits but should improve sustainability.
WPP rebrands its weak Tokyo defence 21 Nov 2017 The advertising giant is selling into a $1.4 bln buyout it has argued “significantly undervalues” Japanese partner ADK. That reveals a weaker-than-billed negotiating position. One small consolation may be a flimsy plan to stick around by re-investing in the Bain-led deal.
Facebook’s long-term problem just got shorter 1 Nov 2017 Mark Zuckerberg vowed to do more to combat fake content in response to the fallout from Russia-backed ads. He warned profitability will take a hit just as the social network added almost $5 bln to the bottom line. As government scrutiny grows, the $500 bln firm has little choice.
WPP woes cement Mad Men bargain-basement valuation 31 Oct 2017 The group may cut targets for the third time this year. Advertising firms are grappling with frugal customers and online sales. Investors rate them as lowly as media dinosaurs like newspaper sellers. M&A options look tricky. Their best bet is to hope clients start spending again.
Publicis pick-up the exception to ad land gloom 19 Oct 2017 The French group reported higher revenue, defying rivals WPP and Havas which binned growth targets this summer. That’s cold comfort for advertising bulls. Publicis seems to be taking a bigger share of a still-challenged market. Past underperformance makes it a poor barometer.
Facebook could do with more Sheryl Sandberg 12 Oct 2017 Mark Zuckerberg's right-hand woman deftly fielded questions about Russia-backed ads and the social network's broader role in society. It was a notable contrast to the bumbling way her boss handles the limelight. Sandberg may be better placed to oversee Facebook's next phase.
WPP handed lucky exit from Japanese jam 3 Oct 2017 The British ad group, which owns 25 pct of Asatsu-DK, reckons Bain’s $1.3 bln offer for the Asian company is stingy. But WPP is already a winner. CEO Martin Sorrell will either profit from the private equity group’s margin-boosting clout or get the best terms in a decade to exit.
Bain has advantage on WPP in Japanese ad-land spat 3 Oct 2017 The U.S. buyout firm wants to buy Japan’s third-largest ad agency for $1.3 bln. That would let Asatsu-DK escape a disappointing tie-up with major shareholder WPP. The UK giant may not like it, but WPP has little room to extract a better price and may have to sell eventually.
Facebook owners ignore Russian affair at own peril 22 Sep 2017 The $500 bln social network's alleged role in election meddling has legislators flapping, regulators gearing up and even roiled Mark Zuckerberg from paternity leave. Yet Facebook's valuation, at 27 times forward earnings, remains robust. There's a risky disconnect at work here.
Uber hops in driving seat to serve ad firms notice 20 Sep 2017 The ride-sharing firm sued a digital advertising agency claiming fraud and seeking some $40 mln in damages. Clients rarely, if ever, take Madison Avenue to court. Already under pressure to prove their value, the case is another sign ad middlemen need to clean up their act.
Ad world’s bling days may be over 13 Sep 2017 The likes of WPP, Omnicom and Publicis risk a low-growth future. Revenues are stagnant and they are over-exposed to slow-growing developed economies. Agencies may be forced to copy the austerity already practised by their consumer-goods clients and pay more attention to margins.
Facebook’s fuzzy math blurs its TV picture 6 Sep 2017 A claim to reach 100 mln younger people in America doesn't square with U.S. census figures, an analyst found. Despite a growing list of number blunders, advertisers have limited sway over the $500 bln titan. As Facebook pushes into streaming, though, it'll find tougher pushback.
Europe’s consumer giants are overindulging on ads 1 Sep 2017 Companies like Nestlé and Danone spend twice as much on marketing than U.S. peers relative to sales. They defend such profligacy by pointing to superior revenue growth. True, sales are better, but not by much. With activists circling, plump ad budgets are ripe for cuts.
WPP underestimates pinch from corporate austerity 23 Aug 2017 The ad group cut its 2017 net sales guidance, blaming lower spending by consumer-goods giants which make up about a third of revenue. Boss Martin Sorrell reckons this will reverse. The danger is that zero-based budgeting and shareholder activism make frugality the new normal.
Viewsroom: Citi lays out path to mediocrity 27 Jul 2017 CEO Mike Corbat pledged a huge earnings boost at the bank’s first investor confab in nine years. But Citi’s enduring crisis hangover will still leave it trailing most rivals. In China, HNA’s shadowy ownership may be a big problem for U.S. M&A. Plus: Google keeps clicking.
Facebook quest beyond ads should top itinerary 26 Jul 2017 The social network beat profit estimates as more brands sought to reach its 2 bln users. Yet revenue growth is easing and mobile’s dominant share of advertising has limited upside. For a company near the top of its game, it’s a good time to explore alternatives to Madison Avenue.
New York Times could risk all-digital bet 26 Jul 2017 Online subs surged with Trump’s rise. But print-ad revenue is down a quarter in two years, adding to job-cut angst. Ending printing would be radical but not absurd. Breakingviews estimates the company would need 1.4 mln, or 50 pct, more paying digital users to end up even.
Alphabet opacity hinders Google’s antitrust fight 24 Jul 2017 Despite huge efforts outside online search the $685 bln juggernaut still looks like a one-trick pony dependent on ad sales. Shedding more light on its autonomous vehicle, YouTube, biotech and other ventures might comfort investors about the looming risks of antitrust regulation.
WebMD gets second opinion on rollup strategy 24 Jul 2017 Back in 1999, the online health-information publisher united with another fledgling rival in a deal backed by Microsoft and Intel. KKR is now buying WebMD for $2.8 bln, far less than the earlier stock-swap valuation. This fresh merger with other websites may work out better.
Publicis pleasant surprise flags ad world’s plight 20 Jul 2017 The French ad group’s top line grew 0.8 percent. But even that looks good: in the previous two quarters Publicis’ organic revenue shrank, and analysts were expecting it to do so again. The challenges to media buying make the industry’s low valuation look justified.