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
PROMOTED VIDEO
Life and Style
Sainsbury's could roll the lorries out across its whole fleet if they are successful
tech
Arts and Entertainment
tv
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmHe was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
Arts and Entertainment
'Old Fashioned' will be a different kind of love story to '50 Shades'
film
Life and Style
fashionHealth concerns and 'pornified' perceptions have made women more conscious at the beach
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Tracey Emin's 'My Bed' is returning to the Tate more than 15 years after it first caused shockwaves at the gallery
artTracey Emin's bed returns to the Tate after record sale
Arts and Entertainment
Smart mover: Peter Bazalgette
filmHow live cinema screenings can boost arts audiences
Environment
Neil Young performing at Hyde Park, London, earlier this month
environment
News
i100
News
Prince Harry is clearing enjoying the Commonwealth Games judging by this photo
people(a real one this time)
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Project Manager (HR)- Bristol - Upto £400 p/day

£350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...

Graduate / Trainee Recruitment Consultant - IT

£25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...

HR Business Partner - Banking Finance - Brentwood - £45K

£45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...

PA / Team Secretary - Wimbledon

£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz