It's a year of shake-ups in APAC adland

All the major agency groups have now reported their full-year 2024 results, with WPP the last to do so—and the most impactful in terms of share price movement. There is much to digest for the agency holding groups in general, but what do the results tell us about the Asia-Pacific region in particular?

For the region as a whole, results were mixed across agencies, generally mirroring their overall global performance. As has been the case sector-wide, Publicis posted the strongest Q4 performance, with 5% organic revenue growth driven by high single-digit growth in Southeast Asia—led by Malaysia and the Philippines—and mid single-digit growth in Australia and New Zealand. Havas also performed well, with 4.9% organic revenue growth for its combined Asia-Pacific and Africa division (with the former likely making up the bulk of revenues). Meanwhile, Omnicom reported 1.8% organic revenue growth. However, as noted previously, Omnicom’s organic revenue figures include principal trading pass-through costs, making direct comparisons with other groups difficult.

The other holding groups fared less well. Dentsu saw an improvement in Q4 trends, with its Asia-Pacific region (excluding Japan) reporting a 3.9% decline in organic revenue—better than its -7% for the full year. However, WPP reported a steeper 7.2% decline, while IPG performed even worse, falling 7.9%. Both groups had been reporting weak numbers in the region (WPP’s full-year organic revenue decline was 5.5%, while IPG’s was 6.5%), but the Q4 downturns were still significant.

A key takeaway from these varied performances is the growing divergence between agency groups in terms of organic revenue growth. Traditionally, the sector has seen agency performance ebb and flow in the same direction, but that has not been the case for some time. This appears to be a structural rather than cyclical shift—driven by differences in agency capabilities and a self-reinforcing virtuous cycle. There is no reason why Asia-Pacific should be any different in this regard. For all the holding groups, the region still represents a relatively small percentage of overall revenues.

The China factor

The elephant in the room is China. For WPP—whose presence in China is the largest among the global holding companies—the country remains a significant challenge. The group’s Q4 revenues in China fell 21.2% year-on-year and declined 20.8% for 2024 as a whole. This shortfall also contributed to WPP missing its group-wide financial targets. WPP has made it clear that China will remain difficult in the first half of 2025, with only a relative improvement expected in the second half—though a return to healthy growth appears unlikely in the near term.

WPP’s troubles in China have been exacerbated by the fallout from the arrest of several executives, which may have led some clients to shift their budgets elsewhere for political reasons. That said, challenges are not unique to WPP—most major holding companies are struggling in the market. Even Publicis, which had a strong Q4 overall, made no mention of its China performance in its financial statement, suggesting results were neither particularly strong nor catastrophic.

It is increasingly clear that China will not be a major source of growth for holding groups in the foreseeable future. The country’s well-documented economic struggles and cautious consumer spending trends have taken a toll. Additionally, many Western companies appear to be re-evaluating their approach to China, potentially leading to a shift in strategic priorities.

India and Australia: A mixed bag

Beyond China, India and Australia were two other key markets in Q4. In India, the situation was reminiscent of Sherlock Holmes’ observation about the “dog that didn’t bark.” WPP reported modest full-year growth of 2.8% in the market, but a 5.4% decline in Q4, attributed to a strong prior-year comparison. However, other agency groups made little mention of India in their earnings calls—surprising given its perceived importance as a future growth driver. This omission may indicate that, apart from WPP, agencies are still struggling to generate significant profitability in the market.

Australia, a long-standing key market for the industry, presented a more mixed picture. Publicis posted solid Q4 growth in the country, while Dentsu reported challenges due to its business transformation efforts. Australia is likely to follow the broader trend of performance divergence seen across the holding groups.

The European perspective

While Asia-Pacific remains a key focus, Europe has recently come under the spotlight due to geopolitical developments—including the situation in Ukraine and policy shifts under the new Trump administration. A potential side effect is that some long-discussed structural reforms aimed at boosting European economies may finally be gaining traction. With many companies experiencing revenue declines in China, European consumers are once again a focal point—particularly as spending levels remain relatively resilient.

This raises an interesting question: Might agencies begin to view Europe as a more attractive growth market than Asia-Pacific? If China continues to falter and profitability in key APAC markets remains elusive, some groups may begin shifting their strategic focus westward.

Outlook

Overall, Q4 results in Asia-Pacific were mixed. While some agencies posted solid performances, others struggled—particularly in China. Until a significant turnaround in China’s economy and consumer spending materialises, holding groups are likely to prioritise growth in other markets.

As always, this is not investment advice.

Ian Whittaker is the founder and managing director of Liberty Sky Advisors. He writes regularly for Campaign about the advertising landscape from a financial standpoint.