WPP Group, the world’s largest ad agency holding company, reported its Q2 2012 results and the revenue breakdown shows a complete reversal of fortunes for North America: When previously growth was strong in the U.S. and Canada, now it is contracting; and where growth in Europe was anemic, now it is robust.
Here’s WPP’s chart:
The key metric is “LFL,” or like-for-like” revenues. Note that North America declined 0.6% in Q2 while Europe grew between 0.8% – 3.5%.
The U.S. ad economy is now doing worse than Belgium, Italy and Japan:
As usual, ad agency revenue growth has continued its strong correlation with U.S. GDP as a whole. As the U.S. economic growth slowed, ad revenues matched the retraction, step for step:
Photo: Company disclosures, BEA
Ad agency revenues hinted at the retraction back in Q1, also. Ad agency revenues are—arguably—a good proxy for economic growth as a whole because they come from a wide variety of consumer-facing companies who often adjust their spending as a percentage of total sales.
- DANGER: This Ad Agency Indicator Shows Global Slowdown In Corporate Spending Growth
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