It’s official!

In the face of rollercoaster stock prices, depressed profits, staff layoffs and SEC investigations, the agency holding company business model works.

“The model is not broken”, according to no less an authority than the chief financial officer of WPP Group, the largest global specimen of that archetype.

Addressing the CIBC World Markets Advertising and Marketing Services Conference Thursday, WPP’s Paul Richardson said the group’s main focus as a parent company is to build cooperation among its subsidiaries, particularly those in media and specialized communications.

“There is no single model for a successful holding company,” opined Richardson. Success depends on how such entities perform their functions – whether as a non-interventionist financial entity, or a tightly controlled structure to help networks work together. “If it wasn't of value, we’d break it up,” Richardson said.

David Doft, advertising analyst at the conference convenor, CIBC World Markets, agreed: “I not only think holding companies are viable, they’re necessary. The problem is in managing the pieces. That’s where IPG hiccupped.”

The holding structure allows public companies to deal with vendors more efficiently, Doft said, which in turn produces returns for investors. He cited investor Warren Buffet’s apparent endorsement of the model when he recently bought a 500,000 share slab of Omnicom [WAMN: 19-Nov-02].

The usual suspects rallied round the business model flag. The present accounting débâcle at IPG has “nothing to do with the kind of company you are,” insisted Maurice Levy, chairman/ceo of Publicis Groupe.

“It has to do with the management of the finance and the way things are counted. It has nothing to do with the concept of a holding company, [or] with the way it delivers service to the client.”

Data sourced from:; additional content by WARC staff