Despite a tumultuous year for stocks, thanks to the European debt crisis and an American debt freakout of its own, the major stock indexes ended 2011 virtually unchanged. The same cannot be said
for the media advertising industry. Whether it was agencies or media companies, many publicly traded media businesses had a year they would rather forget.
Advertising
agencies. Fears of a double-dip recession and reduced spending on advertising hurt agency shares in 2011, leaving all of the major holding companies in the red for the year. WPP (-15%),
Publicis Groupe (-12%), Havas (-18%) and MDC Partners (-21%) all suffered double digit percentage losses. The Omnicom (-2%) and IPG (-8%) losses were somewhat less severe.
There was reason to
be optimistic about agency performance going forward, however. Most agency stocks were up sharply in the fourth quarter of 2011. Some of the big agency holding companies have a significant footprint
in growth markets like China and India are well positioned for the future. And 2012 will likely see an increase in ad spending, thanks in part to the Summer Olympics and U.S. presidential
election.
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Media companies. Unlike the agencies, there were some media companies that had a standout year. CBS was up a whopping 42%, Viacom up 14%, Time Warner up 12% and
Google up 8%. Even News Corp., which battled an insidious phone hacking scandal for most of the year, was up 10%.
But for every gainer there were a number of losers. The companies behind the
three major internet portals, AOL (-36%), Yahoo (-3%), and Microsoft (-7%), all suffered in 2011. More traditional companies like Scripps (-18%), Gannett (-11%) and The New York Times (-22%) also got
clobbered.
IPOs. Despite some initial euphoria around LinkedIn’s initial public offering, most of the media companies that floated in 2011 were down for the year.
LinkedIn (-33%) Demand Media (-70%), Pandora (-42%), GroupOn (-21%) and Zynga (-1%) were all off their initial listing price.
The good news is that next year we will see the most successful
startup created in the last decade, Facebook, finally go public. Also, Glam Media, which acquired social network Ning in 2011, is well positioned for an IPO during 2012. And Yelp, which filed for its
IPO in November, will likely float during the first half of this year.
M&A. Despite the trouble with agency and media stocks this year, the mergers and acquisitions market
proved profitable for a number of media and ad tech startups. Google bought Admeld for a whopping $400 million, while AOL bought The Huffington Post for $315 million and Yahoo picked up Interclick for
$270. These three acquisitions not only said a lot about each acquirer, but they also put a billion dollars into the pockets of founders, employees, venture capitalists and their limited partners.
2011 also marked the announcement that Donovan Data Systems and MediaBank would merge to form the world’s largest operating system for advertising. Currently pending Department of Justice
approval, this merger could streamline how agencies plan and buy media.
While 2011 was a down year for most publicly traded agencies and media companies, the signs appear better for 2012.
Let’s hope so -- a strong industry and M&A market depend on it.