WPP sees speedier ads revival

THE WORLD'S third-largest communications company, WPP Group, signalled that the revival in global advertising was gathering pace, today reporting its first organic sales growth for two and a half years.

America and the Far East - with China as the 'engine' - are leading the recovery in advertising spending while WPP's UK business 'continues to be most affected by the recession'.

'We are climbing further out of the bath,' said WPP's chief executive Sir Martin Sorrell. He famously said last year that the advertising recovery would be 'bath-shaped'.

WPP delivered a 1% increase in the group's like-for-like revenue excluding currency variations for the three months ending 30 September.

'Prospects for 2004 remain better,' Sorrell added. He pointed in particular to a pick-up in American public spending ahead of the November 2004 Presidential elections and an array of sporting events from the Athens Olympics to the European football championships.

Group underlying quarterly growth was, however, hampered by expected decline in revenues at UK's Cordiant Communications, the former Saatchi & Saatchi advertising agency, bought earlier this summer. Excluding Cordiant-WPP's like-for-like quarterly growth hit 2%.

Underlying growth over the first nine months reached 0.4%, up almost 1%. Total reported group revenue was up 10.9% to £1.03bn over the quarter, boosted by acquisitions across the globe from advertising and media investment management to public relations and public affairs.

Stripping out currency variations and the picture of growth varied across the world with Asia and Latin America showing a 17% increase in quarterly revenues to £182.9m, continental Europe up 11.1% to £255.9m and North America up 8.1% to £424.4m.

Sorrell said he expects the contribution to group revenue from Asia and Latin America to rise from its current 20% 'to around a third within the next five to 10 years'. The UK market was a relative laggard with £166.4m of revenue, a 6.5% increase over last year.

'The pick-up in the US market must eventually feed through to the UK,' Sorrell said, adding that the North American market 'has not only stabilised but shown muted growth'.

There was continuous like-for-like American growth over the 13 months to the end of September, 'albeit low single digit', he said.

Strongest divisional growth came from media planning and buying, including WPP's Mediaedge: CIA and Mindshare businesses, followed by advertising, including J Walter Thompson. Quarterly revenues from these grew 13.9% to £483 million.

Revenue declined slightly in WPP's public relations and public affairs divisions, down 1.3% to £106.5m, 'although the third quarter was less worse', Sorrell said. Net new business billings of £402m were won in the third quarter.