In today’s episode, I will be discussing the idea of investing in advertising holding companies. My guess is that many of you have never even considered investing in an advertising holding company. I hope that this podcast will introduce you to advertising holding companies as a possible investment candidate.
Key Points:
List of Advertising Holding Companies
- WPP
- Publicis
- Omnicom
- Interpublic
- Havas
- Dentsu
Business Models of Advertising Holding Companies:
- “Mad Men” = Creative agency
- These are really “brand management” companies. Services offered include:
- Creative advertising
- Public Relations
- Customer relationship management
- Mature – Low Growth industry
- Low Competition Industry – No competition based on price. The only competition is based upon fellow creative professionals.
- High Retention rate (>95% per year)
- Margins/Earnings Stability
- Negative Working Capital -> Growth is free
- High Free Cash Flow business – able to allocate capital to acquisitions, dividends, and share buybacks
- Omnicom is my favorite Advertising agency because they focus on share buybacks and not acquisitions or dividends. (Shareholder friendly management)
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You can find out more information by listening to episode 11 of this podcast.
Show Notes available at DIYInvesting.org
The full show notes for this episode, including my outline for today’s podcast, are available at https://www.diyinvesting.org/Episode15
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