There’s a Test for That.

Over the last couple of weeks, WPP’s stock has risen considerably.

Its share price, which was down in the low-teens six months ago, is now in the mid-to-high twenties. Its market-cap, which had plummeted to about $3 billion from a high of about $16 billion has climbed to almost $6 billion.

Much of that rebounding comes after WPP’s latest earnings report which financial people regard as encouraging. Mind you, encouraging has as many shades to it as sewer water mixed with motor oil and a soupçon of PCBs. The encouragement here for WPP as reflected in their stock increases isn’t that they are winning business, increasing revenue or making money. It’s that they are decreasing revenue less quickly and losing money less slowly.

To quote the British journal “The Observer,” "The embattled advertising group appears to be easing its revenue slide.”

Easing is revenue slide is not the same as making money. As written above, this boost in share price stems from many things one of which is “losing money less slowly.” To be a bit of a dick about it, if you took the words “easing its revenue slide” and ported that description over to someone with a severe drinking problem, you might be saying, “My embattled friend appears to be easing his alcohol dependency problem. He now has just twelve martinis a day, down from a high of sixteen.” Progress as it's reported here is relative. And no, not my relative.

Or as Mark Twain and or Benjamin Disraeli are said to have said, “There are lies, damn lies and statistics.” Or in the similarly astute words of a WWII German tank commander destroying more Soviet tanks than he was losing—but still unable to replace his losses, “We need to stop this blood-letting if we do not intend to win ourselves to death.”

Win ourselves to death.

There’s a lot of that going around.

I’m not a financial person. I have a good head for numbers and for a “creative” person an extraordinary sense of how business works, but I don’t read financial tables, SEC filings and the like. I seldom consider "diluted EPS,” "Adjusted operating cash flow pre WC,” or "Adjusted operating cash flow before working capital.”

I do like this boilerplate, however. 

And that WPP, though it’s about seventy-percent shrunk from its 2017 size, uses the word “growth” as a bludgeon. Which might be appended to their “cautionary statement regarding forward-looking statements."

Years and years ago when advertising people still had a hand in running advertising agencies, I was forced to serve on a committee with Chris Wall on creating an HR-endorsed 360-review form that would serve as a basis for evaluating the value of creative people across Ogilvy.

As you might expect, there was a lot of hot air in that tea-kettle, none of it of any value. We were arguing about semantics and as usual missing much of the point. Does so-and-so “partner well,” or how can we evaluate how “collaborative” they are.

Finally Chris had had enough.

“Look,” he 6’10”-ed. “There’s one way to evaluate the worth of a creative person. It’s Friday night, the pitch is Monday. Do you want them here over the weekend?”

You can do essentially the same thing with financial data—especially financial data as it pertains to holding companies and ad agencies.

You can ask salient, revealing questions.

Questions that numbers can’t obscure.

1. Do clients pay you the fees you ask for?

2. Do clients come back?

3. Do clients recommend you to other clients?

I could really give a rat’s ass about who’s up 2.3% YOY on an LFL basis. A lot of these numbers are, frankly, phonus balonus so someone can get his bonus.

For instance:

John Wren of Omnicom for instance had a 2025 salary of just $1. He wound up taking home $69,000,000 ($191,000/day or $400/minute) in part because he slashed billions in Omnicom salaries and Omnicom costs. Slashing those costs says nothing about Omnicom’s actual viability. But everything in how they choose to pay their top-most executives. Will $1,000,000,000 in cost reductions lead to a better holding company, or just a better pay day for one person?

Again,

1. Do clients pay you the fees you ask for?

2. Do clients come back?

3. Do clients recommend you to other clients?

Between plastic trophies, phony accolades and various Order of the British Empire citations, the ad industry has all sorts of ways to show off and reward a small portion of their people.

The bigger question is the simplest question.

Can you charge what you believe you’re worth for the services and products you provide and create?

If you can’t, you’re not really in business.