WPP Group was in typically downbeat mode Thursday as it posted a 3% fall in revenues for the third quarter, warning of further difficulties for the media sector.
“Although the rate of decline for like-for-like revenues in the third quarter was lower than that seen in the first half of the year, the recovery was less than that anticipated a few months earlier,” the group warned.
“Falling share prices in the summer on both sides of the Atlantic and increasing unemployment has had an impact on consumer confidence, suggesting a potential ‘double-dip’ recession.”
Such caution is hardly surprising. WPP boss Sir Martin Sorrell has become one of the most pessimistic forecasters in the ad industry – regarded by some cynics as a case of under-promising before over-delivering.
Indeed, Sorrell repeated his prediction that the ad industry as a whole would not recover until 2004. He also forecast 2003 revenue growth for WPP would be flat or 1% to 2% maximum.
Third-quarter underlying revenues fell to £928.5 million ($1.44 billion; €1.47bn) from £956.3m a year earlier. Its second-half operating margin is now expected to be lower than the 13% in the first half.
Hardest hit were WPP’s North American operations, where revenues slumped almost 7%. The marketing sector faring worst was public relations, down almost 8%, while advertising and media slipped 1.9%.
Nevertheless, there were some positives, not least a total of £700m in new business for the quarter, adding to the £1.2bn pulled in over the first six months of the year.
Data sourced from: multiple sources; additional content by WARC staff