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WPP to miss targets as ad market struggles

Nick Clark
Wednesday 29 April 2009 00:00 BST
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The parlous state of the advertising market was underlined yesterday by WPP, the largest group in the industry, which admitted it would not hit forecasts this year and failed to see a recovery in the market before 2010.

The advertising giant saw like-for-like revenues fall 6 per cent in the three months to the end of March as clients cut spending in response to the global economic meltdown.

This is worrying news for WPP's rivals, as the group's diversified portfolio means it is among the best protected against the downturn.

The group, which owns companies such as the advertising agency Ogilvy & Mather and the public relations firm Hill & Knowlton, said: "The first half of 2009 will clearly be very difficult, with the second half, although continuing to be tough, likely to improve relatively. Any recovery, of sorts, will probably come in 2010."

It would be "difficult to maintain operating margins at the level achieved in 2008," WPP said, adding that the margins would not be the 14.3 per cent predicted. WPP also expects full-year revenues to fall by more than the previously expected 2 per cent. It said that this year "the short-term focus will continue to be on balancing the likely fall in revenues against staff costs and headcount". It reduced its staff numbers by 2,280 to 109,408 in the first quarter.

The research group ZenithOptimedia has warned that global ad spend would fall 6.9 per cent this year. To further highlight the challenge, the US group Omnicom reported a 23 per cent drop in first-quarter net income yesterday.

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