WPP paints mixed picture

29 April 2009

LONDON: WPP Group, the marketing services conglomerate, posted revenues of £2.12 billion ($3.1bn; €2.4bn) in the first quarter, down by 11.1% on an annual basis at constant prices, while like-for-like revenues also fell by 5.8%.

It has been argued that the advertising downturn could put pressure on the centralised model favoured by advertising holding groups, but WPP's ceo, Sir Martin Sorrell, ceo of WPP, has predicted the current slump will actually work in their favour.

However, while reporting its latest quarterly results, the company stated that "cuts in client spending in reaction to the global financial and economic crisis" remain a key feature of the market. 

Similarly, the "cyclical and structural pressure on traditional media" has continued, while digital media "grew faster, although at lower rates."

This "economic pressure" was most pronounced in North America, where revenues totalled £784.9m, a decline of 0.9% at constant prices.

UK sales rose 16% to £251.1m when excluding currency fluctuations, but the country's share of revenue fell by 2% to 11.9% overall.

Continental Europe suffered an ever bigger decline in share, down from 45.1% to to 28.7%, but regional revenues did increase by 24.6% to £608m.

Sales in emerging markets were described as showing "some resilience," including an upturn of 15% tp £472.6m in Asia Pacific, Latin America, Africa and the Middle East, the combined share was also up slightly to 22.3%.

More specifically, while markets including Australia and Japan were "difficult," China and India both delivered like-for-like expansion, as did Brazil, Argentina, Mexico and Colombia.

The UK-based corporation's advertising, media and investment management division saw revenues fall 3.5% to £812.1m, with branding, healthcare and specialist communications, at £550.9m, also sliding by some 5.1% in Q1.

PR and public affairs, at £201.6m, was down 4.3%, while sales through information, insight and consultancy more than doubled to £552m, largely boosted by the company's takeover of TNS.

As the first half of 2009 will be "very difficult," with a relative improvement in the following six months, WPP's short-term focus will be "balancing the likely fall in revenues against staff costs and headcount."

Data sourced from WPP Group/Wall Street Journal; additional content by WARC staff