WPP revenue growth is the 'best in a decade'

Click to follow
The Independent Online

The advertising giant WPP shrugged off the downturn to post the largest quarterly revenue boost in a decade, as traditional media advertising and its operations in the US "bite back".

The world's largest advertising group posted a 12 per cent rise in revenues between July and September to £2.2bn. It marked the highest quarterly rise since the end of 2000.

Sir Martin Sorrell, the chief executive of WPP, said revenues had been strong across its businesses, but traditional advertising stood out as revenues grew 9 per cent, following a 10 per cent decline a year earlier.

The return of car advertising, as well as travel and financial services has helped bolster its revenues.

The advertising industry was hit hard in the downturn and especially in the wake of the collapse of Lehman Brothers. He added: "If you had told me a year ago that we would grow at this level I would have thought you were crazy." This year advertising spending was up with events including the football World Cup, the Winter Olympics in Vancouver and the Shanghai Expo.

The UK's growth was robust in the third quarter, with revenues rising 7.4 per cent. Sir Martin cautioned, however that the advertising market was yet to see the effects of the Government's recent cuts.

The company highlighted the surprising strength in the US, which rose 10 per cent, saying its behaviour was "more like an emerging market" .

Steve Liechti, an analyst at Investec, backed the third-quarter statement, adding the "key debate now moves to 2011, and initial indications from WPP look reasonably positive".

While the company was bullish for the fourth quarter, the WPP chief was cautious . "America can't maintain this momentum; there will be some rebalancing next year," he said.

While he does not expect a double-dip recession in the UK, "it will be a bumpy nine months, but the private sector should pick up some of the slack". Analysts said that given the uncertainty clients would be delaying budgets.

When the more developed markets slow, Sir Martin said the emerging markets of Brazil, Russia, India and China "will pick up the slack". In the third quarter, WPP's sales in China were up almost a quarter. India rose 15 per cent.

WPP announced it had made a $5m (£3.12m) investment in Buddy Media, a group that brings brands and marketers to Facebook. "There is no doubt that social networking gets a lot of interest," Sir Martin said. "The question is how do you make it pay."