WPP’s revenue surge boosts hopes of UK economic recovery

Advertising giant WPP today stoked hopes for the economic recovery as quarterly revenues surged 8.1 per cent in the UK and 5 per cent worldwide, driving the shares to a record high.

City analysts hailed the results from the world’s biggest marketing group, as advertising is seen as an economic bellwether, with the Government due to publish quarterly GDP figures tomorrow that are expected to show the fastest growth in three years.

WPP chief executive Sir Martin Sorrell said: “Things are generally better. Whether you agree with austerity or not, it’s beginning to have a positive effect. Some people are talking about GDP growth in the UK next year of 3 per cent.

“I think people will be pleasantly surprised by what happens next year,” he added.

Adding to the optimism, the Advertising Association and research body Warc upgraded their forecast for UK ad growth to 3.3 per cent for 2013 and 5.2 per cent in 2014, when they expect expenditure to hit an all-time high of £18.4 billion.

Sorrell said: “If you agree with the proposition we lag the upturn and we lead a downturn, then this should be good news.”

All of the major ad groups have had strong UK growth, but WPP, home to agencies Ogilvy & Mather, Grey and AKQA, has been the best of the “big four”. Publicis and Omnicom, which are merging in a £23 billion tie-up to overtake WPP in size, only grew by 3.5 per cent and 4.1 per cent worldwide respectively against WPP’s 5 per cent like-for-like rise to £2.68 billion.

WPP shares, already up 45 per cent this year, climbed as much as 36p or 2.7 per cent to touch 1349p, giving the group a stock-market value of almost £18 billion.

New business wins were up sharply, although Sorrell noted comparisons were favourable as last year was tough after the Olympics. He added that macro-economic threats have receded. The US deficit remains his prime concern amid rising optimism over the eurozone, Middle East and a slowdown in emerging markets.