Short ad agencies? | Blogads

Short ad agencies?

by henrycopeland
Friday, October 14th, 2005

I’ve been arguing that anyone who thinks the “old media” model is a gonner should stop theorizing and just short newspaper stocks.

“Newspaper” is an oxymoron. Nowadays, anything on paper is either history or a novel. Though newspaper companies are buying and building online extensions, the revenue gains will never offset the scale of losses coming as subscribers and advertisers defect to cheaper, faster tools AND as individual papers lose their monopoly pricing leverage in their respective markets.

Another idea: the more I see of big ad agencies, the more I understand that they are a siamese twin of mass media, each a command and control hierarchy built to achieve economies of scale at the cost of human voice and intimacy. In a mass market environment, the model works wonderfully. Will it stand up in the age of DIY and p2p and conversational markets?

My bet: 1000 smart people in a line are not smarter than 10 smart people in a circle.

Anyway, here are two big agencies to consider shorting to test this hypothesis:
Omnicom (OMC) today at $79, a P/E of 19
WPP (WPPGY) today at $49, a P/E of 27

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