WPP: Digital Will Be Two-Thirds Of Our Business In Three Years

WPP has pledged that new media services will make up two-thirds its revenues in “three or four years” and that it expects 2010 to be a stable year, as it reported an 11 percent drop in profits to £663 million ($1 billion) after a “brutal” 2009 and a particularly low second quarter. The company reported a 16 percent increase in revenues to £8.6 billion ($13 billion) for the year to December 31, in today’s earnings report. New media sales accounted for 27 percent of the advertising and marketing group’s revenues, or $3.6 billion. This is already a big step: to compare, one competitor, Havas, last month said that digital accounts for 16 percent of its revenues to account for one-fifth of its revenues by the end of 2010. WPP appears to be pegging its own digital revenue share to stats that are coming out on how much time people are spending online. Sir Martin Sorrell pointed out that recent figures show that this too is currently hovering around the 27-28 percent mark.

Read More: PaidContent.org

Digital Agencies Get Back To Business

Jeff Dachis may have been ahead of his time. Back in February 2000, the then-Razorfish CEO sat down with 60 Minutes II and, in a moment he’d live to regret, struggled to answer correspondent Bob Simon’s simple question about what Razorfish actually did. “We’ve asked our clients to recontextualize their business,” he stammered. That answer came to symbolize the hype of the dot-com era. The Web-shop vision of acting as management consultant and innovation expert, using technology not just to help clients communicate with customers but also to invent new businesses, fell short of reality. To many it seemed like a grandiose aspiration for businesses that mostly built Web sites. The dot-com crash appeared to validate those critiques. But over a decade later, two of the largest digital agencies, Razorfish and R/GA, have slowly returned to this vision. They’re betting that a combination of the recession and march of digital to the forefront of corporate challenges gives them an opportunity to move beyond selling Web sites and banner ad campaigns to create new digital products — and, possibly, new revenue streams for the shops themselves.

Read More: AdWeek

AOL/Yahoo!

Back in 2004 the commonly held wisdom was that Yahoo’s prospects were much brighter than those of Google. It’s hard to imagine now but every article mentioned the ‘diversity’ of Yahoo’s revenue streams which came from multiple streams of advertising and also fees. Terry Semel, the company’s former CEO, used to tout how he was going to make Yahoo a more balanced company with fee revenue (never mind they used to count Hotjobs under fees, which was misrepresenting the line item). I thought to myself back then that if I bought Google stock and shorted Yahoo stock it would capture how I felt about that commonly held wisdom. If they both went down, then Yahoo would go down more. If they both went up, Google would surely go up more in my mind. I didn’t make that trade and so all you have is this pathetic blog post where the greatest trader Wall Street has ever seen, “Should’ve”, is featured. I think I’m ready to make another pair trade and one grand headline-grabbing statement: That AOL ($2.9bn) will be worth more than Yahoo ($22bn) in 5 years. The trade, buy AOL, short Yahoo, makes money even if AOL doesn’t surpass Yahoo’s market value, of course.

Read More: HomeThinking