5 Publicly Traded Ad Companies

The United States is the largest advertising market in the world, with $240 billion spent annually. That’s three times the amount spent in China.

Since the world got tossed upside down a couple of years ago, ad spending patterns changed and the numbers failed to hit analyst estimates. U.S. advertising fell below $140 billion in revenue in 2020. Digital media survived, but a large portion of the industry temporarily fell into a hole as people quarantined.

Now that ad spending is expected to return to previous growth levels, it’s time to consider which advertising companies to invest in. Billboards, live events, and other investments (along with other forms of advertising) are sure to make a comeback.

1. Alphabet Inc

Alphabet Inc (NASDAQ:GOOGL) is the largest online advertising company on the planet.

While many associate Google with search and YouTube with videos, it is advertising that drives the company’s revenues.

That revenue experienced 50 percent growth in each quarter over the past year, which should catapult the company’s top line to over $200 billion this year.

Most of that money comes from Google AdSense, although it does have other profitable businesses, such as Google Cloud. It also earns money from its Play Store, Chromecast, Chromebooks, Android, as well as its suite of apps.

The company nearly tripled in value from 2020 crash lows, and remains one of the largest corporations in the world by revenue. With all the heat from Capitol Hill focused on competitor Facebook (NASDAQ:FB) and legal battles focused on rival Apple (NASDAQ:AAPL), Alphabet may have a smoother road to sustained growth over the next decade.

Google is an advertising powerhouse but is not the biggest spender of advertising dollars – that crown goes to tech giant Amazon.com (NASDAQ:AMZN).

2. Clear Channel

Clear Channel Outdoor Holdings (NYSE:CCO) is one of the largest outdoor advertising companies in the world. In addition to its presence in the U.S., it also has holdings in Europe, Singapore, and Latin America. This gives it a wide footprint of billboards in major markets, including at airports and other public venues.

The return to work and play means a return to rush hour and drive time. This has fueled double-digit revenue growth for Clear Channel in the Americas and over 100 percent growth in Europe.

Clear Channel’s 450,000 outdoor advertising displays in 31 countries earned over $900 million in the first half of the year. Unfortunately, the company hasn’t had a profitable year since 2016 and hemorrhaged cash in the past six quarters.

If it can get a handle on its over $5 billion in debt (and rising), this $1 billion-plus “penny stock” could provide attractive returns for investors. But that debt load is going to be a problem for diligent investors who fear balance sheet fragility.

3. Omnicom Group

Omnicom Group Inc (NYSE:OMC) is a New York City-based communications agency that specializes in global media, marketing, and communications. It encompasses all aspects of advertising, marketing, and public relations through five major agency networks that oversee over 1,500 agencies.

The company took a 20 percent revenue hit in 2020 compared to the prior year. But it recovered by 2021, reporting a 27.5 percent increase in the second quarter alone from $2.8 billion the prior year to $3.57 billion. Its biggest bump was in advertising, but CRM, PR, and healthcare revenue also grew.

That helped the company increase profits for the quarter to $568.4 million, up from $62.5 million in the prior year’s quarter. This healthy growth has investors feeling confident about the firm’s growth prospects, and an added attraction is the firm’s healthy dividend. 

Omnicom pays a $2.80 annual dividend yield and a solid payment history. The dividend rises slowly though, so don’t expect an increase any time soon. Still, it’s a solid publicly traded advertising company for dividend investors bullish on the continued growth of the ad industry.

4. The Trade Desk

The Trade Desk Inc (NASDAQ:TTD) debuted in a 2016 IPO and has grown exponentially since then.

The company’s software platform is used by digital ad buyers to reach audiences across platforms and formats. It reached a historic high of $97.28 per share in December 2020 but TTD share price has had a rocky road from then on.

The enormous share price growth since the IPO debut catalyzed the company’s 10-for-1 stock split in June. Stock splits like these generally bode well for the future of a company. Though in reality nothing changes (more shares are issued and the price declines commensurately so valuation is unaffected) the practical history of companies that engage in stock splits regularly is often positive. Look no further than Apple as an example.

The company earned $499.8 million in the first half of the year, compared to $300 million in the same period last year. This led to $70.3 million in net income (or $0.14 per share), compared to $49.2 million in the prior year’s period.

The company attributes its growth to strong customer retention and strong industry support for its Unified ID 2.0 (UID2) advertising and privacy standard.

5. Interpublic Group

Interpublic Group of Companies Inc (NYSE:IPG) joins Omnicom Group as one of the “Big Four” advertising agencies. It was founded in New York City in 1930 as the largest ad agency at the time. 

The company is a conglomerate with the businesses organized into six groups, all of which focus on global marketing and advertising needs.

Although the company took a massive hit in 2020, IPG share price soared in 2021, turning Interpublic into a $15 billion company.

It’s easy to see why – net revenue in the first half of the year totaled $4.76 billion, compared to $4.38 million the prior year. Meanwhile, it shaved $100 million in operating expenses, which in turn fueled $355 million in net income for the period, compared to a -$40.9 million loss in the first half of 2020.

Still, the company’s $3.47 billion debt means investors should keep an eagle eye on its balance sheet strength. For income investors, it pays a reasonable $1.08 annual dividend.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.