WPP Revs Up 6%, Enjoys Increased Ad Spend Worldwide

by , Aug 30, 2012, 9:55 AM
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Arrowup-Money-AAA1WPP, the largest marketing services holding company by revenue, posted a nearly 6% revenue gain for the first half of the year to just under $8 billion -- a 17% gain in profits to almost $490 million. The company released the numbers early Thursday.

Organic revenue growth (ORG), which excludes the impact of acquisitions, asset sales and currency fluctuations and a key performance metric for the industry, was 3.6%. That was in the middle of the pack, versus other ad marketing holding companies.

Omnicom, the second-ranked holding company, for example, reported first-half ORG of 5.1%. Media specialist Aegis Group posted 8.6% ORG for the period, while MDC Partners reported 7% growth. Publicis and Interpublic reported first-half ORG of 2.8% and 1.7%, respectively.

In March, WPP said the outlook for full-year 2012 ORG was 4%. Now the company believes full-year ORG will be a slightly lower 3.5%. For the remainder of this year and beyond, WPP said it would focus on margin growth by improving its staff-cost-to-revenue ratio.

WPP said its data showed “increased advertising and promotional spending…across most of the Group’s geographical and functional sectors.”  The company noted that the rapidly moving consumer goods category was particularly robust from a spending standpoint.

While corporate balance sheets are “much stronger” than they had been even prior to the last recession, the company stressed that Euro Zone economic woes, a softening economy in China and the looming U.S. deficit uncertainties “demand caution.”

By region, WPP’s fastest-growing cluster was Asia-Pacific, Latin America, Africa, the Middle East and Central and Eastern Europe, which posted combined revenue growth of 8.5% to more than $2.2 billion.

North American revenues were up 6% to $2.7 billion, although the company said growth slowed in the second quarter, due to reduced client spending in parts of its healthcare business, custom research operation and other units.

Revenues in the UK were up nearly 6% to $937 million. Western Europe revenues were up 1% to $1.9 billion.

WPP said its media operations, overseen by GroupM were “consistently strong” in the first half of the year, with revenue growth of 14% and organic growth of 12%.

First-half net new business (by billings) for the advertising and media division totaled nearly $4 billion in the first half versus close to $2 billion for the same period in 2011.

Acquisitions were highlighted by the $540 million purchase of independent digital shop AKQA. That deal was completed in July. WPP also said it gained $50 million on its equity in Buddy Media, which was sold earlier this year to Salesforce.com.

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