WPP’s sales growth accelerates in third quarter

WPP, the world’s largest advertising company, reported a solid 5.9% rise in revenues to £2.93bn (€4.07bn, $4.49bn) in the third quarter, despite a “softening” in the United Kingdom marketplace.

WPP reported third quarter revenue at its PR and public affairs operations climbed 6.5% to top $351M while revenues overall at the marketing conglomerate rose 5.9% to $4.5B on the strength of North American operations. Despite all the hand wringing, Mr. Sorrell said Monday that ad blocking concerns so far have been “manageable” and noted that even if ad blocking is successful, the end result will be an increase in the price of content for consumers. “September was less good but it’s still good overall”.

In North America WPP’s growth remained strong with revenue up 6.8% on a like-for -like basis to £1bn. That would have equated to a 2.3% decline if the company had been reporting in USA dollars. “But broadly the US remains pretty strong”. Similarly western continental Europe performed well with revenue growth up 6.1% to £552m.

Asia Pacific, Latin America, Africa and the Middle East, and Central and Eastern Europe together grew 2.9% in the third quarter, bringing in $1.3 billion and 29.1% of group revenues.

This focus on costs is the “new normal”, as clients face a low growth environment and limited pricing power, Mr. Sorrell said, adding that he has seen “some very aggressive moves” on pricing in this year’s round of pitches.

“The world’s economy depends on the United States and even this year the biggest growth will come from the U.S.”, Sorrell said.

“The initiatives taken by the parent company in the areas of human resources, property, procurement, information technology and practice development continue to improve the flexibility of the group’s cost base”.

While like-for-like revenue was encouraging in the third quarter, WPP warned that business leaders remained cautious about a number of global risks, including slowdowns in Brazil and China – despite Sir Martin Sorrell previously remaining bullish on the region.

But other factors are also at play. He added, “Cord cutting, the debate about the impact of new media on television, measurement issues, bots issues, potential fraud issues – all those issues raise the temperature and raise issues about the complexity of media choices. That obviously impacts the complexity of those reviews and… compounds the anxiety”.