Markets crisis could prompt new spending dip, says Sorrell

The world's largest advertising group, WPP, has warned the latest stock-market crisis could hit client spending in 2012, as emerging-market and digital services helped it to post a surge in first-half profits.

WPP's chief executive, Sir Martin Sorrell, also expressed his concern that stock exchanges are "rarely wrong" about what lies ahead for the global economy. But he pointed to the boost the advertising industry will receive from the US presidential election and major sporting events, including the London Olympics, next year.

Pre-tax profits at WPP, whose agencies include JWT and Ogilvy & Mather, rose 37 per cent to £334m, on revenues up 6 per cent to £4.7bn during the six months to 30 June. However, this was characterised by strong differences in its sales growth across different regions, with Brazil, Russia, India and China, the so-called Bric countries, leading the way.

Sir Martin said that last year America and "traditional media" contributed strongly to its growth but "this year it is about China and India and the internet reasserting itself".

In terms of its like-for-like revenues, WPP's Asia-Pacific, Latin America, Africa and Middle East and central and eastern Europe division was the star performer, delivering a 10.5 per cent sales growth. This compares with a lowly 2.9 per cent in western continental Europe, though the UK fared better by posting a 5.1 per cent sales growth and an 8.5 per cent rise in margins. Sir Martin said: "The world is moving at different speeds."

Investors gave its results the thumbs-up as shares in WPP jumped by 43p, or 7.4 per cent, to 623p. Its shares had fallen by around a quarter since it upgraded its 2011 outlook in April. The company said: "So far, so good in 2011, with forecasts in reasonable heart, but there are storm clouds and we still have to see how the latest stock-market crisis affects consumer and client thinking and actions."

WPP warned that the "impact may not be felt until 2012", as most client budgets and plans are based on the calendar year. But Sir Martin struck an upbeat note on the boost in worldwide demand for advertising and marketing of between 1 and 2 per cent that the US presidential elections, football's European Championship and the London Olympics and Paralympics bring. Political spending for the US elections alone may reach $4bn.

However, Sir Martin said a key concern was the impact that a divided election result could have on the US economy and its deficit-reduction strategy in 2013. This could occur if President Obama gets re-elected, but the Republicans get control of Congress. He said: "There would be deadlock again," in a reference to the recent negotiations between the Republicans and Democrats to raise the country's debt ceiling.

WPP's digital revenues surged in the first half to account for 28 per cent, or $2.1bn, of the group's total revenues.

The group also increased its targeted acquisition spend from £200m to £400m in 2011. The group said: "There is a very significant pipeline of reasonably priced small and medium-sized potential acquisitions.

"As a result, deals done continue to be of small and medium-sized companies, focused on new markets, new media and consumer insight, and will not now be limited to £100m per annum, but will more likely total around £400m this year."

LuV letters

* Sir Martin Sorrell, the chief executive of WPP, has never ceased to fascinate his followers with his colourful descriptions of paths expected for global economies. Yesterday, he was sticking to his earlier theory of the LuV - and LuVVy-shaped recovery, but said it was "battered". The V recovery is for Brazil, Russia, India and China, and the "Next 11", or the non-Bric countries, including Bangladesh, Indonesia and Mexico. Meanwhile, the US was on a U- or V-shaped path and Europe was flat or L-shaped.

* This year, he used football to describe the "Premier League", which comprised the Bric countries and the Next 11, as well as the Civets – Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. Of course, the Championship – England's old second division – was dominated by Germany and the US.

* Back in 2005, he was also in full flow with bathroom metaphors to describe his outlook for the advertising sector. He told a rather bemused bunch of analysts: "We're definitely out of the bath – but watch out for the shower."

Suggested Topics
world cup 2014
Mick Jagger performing at Glastonbury
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
Arts and Entertainment
Chocolat author Joanne Harris has spoken about the financial struggles most authors face
Arts and Entertainment
Characters in the new series are based on real people, say its creators, unlike Arya and Clegane the Dog in ‘Game of Thrones’
tv'The Last Kingdom' is based on historical events
Arts and Entertainment
filmSir Ian McKellen will play retired detective in new film
Life and Style
Justin Bieber performing in Paris earlier this year
Arts and Entertainment
Martin Freeman and Lauren O'Neil in Jamie Lloyd's Richard III
theatreReview: The monarch's malign magnetism and diabolic effrontery aren’t felt
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
'Molecular Man +1+1+1' by Jonathan Borofsky at Yorkshire Sculpture park
Glamour magazine hosts a yoga class with Yogalosophy author Mandy Ingber on June 10, 2013 in New York City.
newsFather Padraig O'Baoill said the exercise was 'unsavoury' in a weekly parish newsletter
people'She is unstoppable', says Jean Paul Gaultier at Paris show
Alexis Sanchez and apparently his barber Carlos Moles in Barcelona today
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Financial Accountant-IFRS-Gloucester-£300/day

£250 - £295 per day + competitive: Orgtel: Financial Accountant - IFRS - Glouc...

SharePoint/C# Developer - Aberdeen - Circa £40K + benefits

£30000 - £40000 per annum + excellent benefits: Deerfoot IT Resources Limited:...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

HR Advisor - 6 months FTC Wimbledon, SW London

£35000 - £40000 per annum + Benefits: Ashdown Group: HR Advisor - 6 Months Fix...

Day In a Page

The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

Hollywood targets Asian audiences

The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

Grindr founder Joel Simkhai: 'I've found love on my dating app'

Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

Is it time to ditch autocorrect?

Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
10 best girls' summer dresses

Frock chick: 10 best girls' summer dresses

Get them ready for the holidays with these cool and pretty options 
Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

Westminster’s dark secret

Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

A History of the First World War in 100 Moments

Dulce et decorum est: a life cut short for a poet whose work achieved immortality
Google tells popular music website to censor album cover art in 'sexually explicit content' ban

Naked censorship?

The strange case of Google, the music website and the nudity take-down requests
Howzat! 8 best cricket bats

Howzat! 8 best cricket bats

As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

David Luiz falls from leader figure to symbol of national humiliation

Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil