WPP pinning its hopes on a right Christmas

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The Independent Online

Sir Martin Sorrell, the chief executive of the advertising giant WPP, is confident that the soft UK advertising market will not hurt its short-term growth prospects despite the woes at the broadcaster ITV and the increasing strength of internet advertising.

WPP suffered weak September trading in the UK as a result of ITV's plummeting audience share and a large proportion of advertising spend moving online and away from newspapers and television. Its UK revenue fell 1.7 per cent on a like-for-like basis in the third quarter dragging the world's second-largest advertiser's overall revenue below market expectations and slicing 2 per cent off its share price.

Despite the third-quarter blip, Sir Martin stuck to his forecast of 5 per cent revenue growth for the year and an improvement in margins to 14.5 per cent, aided by a strong Christmas and final quarter.

Richard Hitchcock, an analyst at Numis Securities, said he expects WPP to derive 27 per cent of its revenue and a greater proportion of its full-year profit in the fourth quarter. "There is all to play for in the last quarter - the biggest of the year," the analyst said.

Sir Martin said that ITV has suffered as a result of rampant competition in the UK media sector as well as company-specific issues. "There is the BBC, Freeview, the internet and ITV is still looking for a chief executive - that cannot help," he said.

He also pointed to the rampant growth in internet advertising in the UK, which is expected to account for 14 per cent of the overall advertising spend this year in the region, double the global average. Sir Martin shrugged off WPP's slower growth in Eastern Europe during the third quarter. "These are high-risk, high-reward markets. This does not dim our ardour," he said.

WPP owns the advertising agencies J Walter Thompson and Young & Rubicon as well as the public relations firm Finsbury and marketing company Hill & Knowlton. The company has invested in high-growth markets, including China and India, as well as new marketing techniques. It recently purchased a minority stake in Big Idea Group that puts inventors in contact with companies on the lookout for new ideas.

Sir Martin said he was still keen on purchasing Synovate, the market research arm of Aegis, but that any deal was dependent on Vincent Bolloré, Aegis's largest shareholder, who is seeking to nominate two representatives to its board.

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