WPP's Outlook Modest: Upside Is U.S., Downside Is Europe's Economy

Paul-Richardson-A

Call 2013 a modest growth year for Adland. Executives at the two biggest industry holding companies -- WPP and Omnicom -- indicated this week that they’re expecting organic revenue growth for the coming year to be in the range of 2% to 3%.

Paul Richardson, the group finance director at WPP, the largest ad holding company by revenue, said the company’s organic growth this year would be weighed down by its sizeable exposure to struggling Western Europe, where many signs point to a continuing tough economic environment.

“The industry will be challenged to grow business” in the region, he said. Advertising is a discretionary spending item, and in a “cautious environment people will cut back.”

The prospects for the U.S. are somewhat more promising, Richardson said. While no one is expecting a huge growth spurt, there is a sense of “pent up demand” by consumers and marketers. “The downside risk in our numbers is Western Europe. The upside [potential] is the USA.” Growth will remain higher in markets in Asia and Latin America, said Richardson.

Richardson made his remarks at the Citi media conference in Las Vegas.

Earlier in the week at the same conference, Randy Weisenburger, the CFO of number-two ranked holding company Omnicom, provided his 2% to 3% organic growth estimate for the company in 2013. Weisenburger also cited economic issues in a related Media Daily Newsstory.

Richardson said there were “no big surprises” in the results for the WPP’s fourth quarter, to be reported soon, unlike the third quarter, when September ad spending dropped sharply. It rebounded in October to more normal levels. Contributing factors to the falloff may have been the looming U.S. fiscal cliff issue, combined with companies holding back spending for the holidays and moving it up for the Olympics.

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