Madison and Wall: Saturday Summary For April 20, 2024

Results from marketers including P&G and L’Oreal, Netflix and CTV’s high ad spend-ad time ratio and new agency industry data + Omnicom’s latest results analyzed

Firstly, as I wrote last week, Madison and Wall is hiring! For more information, please check out https://madisonandwall.com/join-us or email brian@madisonandwall.com.

With the first full week of earnings from companies covering the period between January and March of 2024, we can see the positive advertising trends I’ve been expecting in most of the results from marketers which have come out so far, including P&G, L’Oreal, JP Morgan Chase and others. 

As I noted, L’Oreal’s shift of e-commerce activity in China from Alibaba’s Tmall to Bytedance’s Douyin was particularly interesting, especially given read-throughs for Amazon and TikTok in other markets – or if TikTok eventually gets banned, then with other social platforms offering e-commerce solutions.

Among media companies posting earnings results this past week, Netflix showed a significant amount of overall revenue growth, too, although new data points provided help us quantify the still-small percentage of subscribers who now access the company’s ad-supported tiers.     Relatedly, the limited ad inventory provided by Netflix (or anyone else, for that matter), means that connected TV’s share of total TV ad revenue is now nearly 4x connected TV’s share of total TV ad inventory, which I explored more fully here.

Looking at the agency sector, I provided an update to an annual data set on the state of the global agency holding companies, with new data on the industry’s profit margins from 2006 to 2023 (they hit a record high in 2023). As well, I also established new historical data on working capital, capital expenditures, buybacks, dividends and many other financial metrics from over the same extended period of time.  

Relatedly, Omnicom published its 1Q24 results on Tuesday, which showed a solid 4% organic revenue growth rate – although as this number is posted against gross revenues (including pass-throughs such as principal-based media costs) rather than net revenues (excluding those pass-throughs) it remains difficult to identify exactly how well they are doing vs. the rest of the agency sector.