WPP Reports Weakening Results, Especially For Media

WPP Group, the world's largest buyer of ad-supported media, this morning reported modest third quarter results, reflecting the impact of weakening U.S. dollar currency exchanges, and lagging performance for its media buying and advertising operations. On a bright note, revenues for WPP's brand and identity, healthcare and specialist communications operations soared 16% during the quarter thanks to increasing direct, Internet and interactive media spending in the U.S. and Europe.

Revenues for WPP's advertising and media investment management operations rose just 1.1% during the quarter. For the first nine months of 2007, the sector's revenues rose just 0.7%. Overall revenues for the company, the parent of MindShare, Mediaedge:cia, MediaCom, Maxus, and agencies like JWT, Ogilvy & Mather and Y&R, rose 4.9% to $3.033 billion for the third quarter of 2007.

WPP insiders say relatively stronger results for WPP's GroupM unit are masked by its inclusion with other advertising services operations in its division.

Moreover, the division's "like for like" revenues, adjusting for currency differences and other anomalies, shows the advertising and media investment management operations rising 3.7% in the quarter, and 5.2% for the first nine months.

In the near-term, WPP said prospects look better for early 2008, as the effects of quadrennial Olympic and U.S. presidential election cycles begin to have an impact. On a longer term note, the company expressed concerns about the impact of a new U.S. presidency.

"We continue to believe that 2008 will be a good year for the industry, better than 2007, reflecting the positive combined impact of the maxi-quadrennial events of the U.S. presidential election, the 2008 Olympics in Beijing and, on a relatively more modest basis, of the European football championships," WPP stated, adding the caveat, "We also continue to believe that a more important concern should be the impact that any new U.S. administration will have on 2009 - when they have seen the government's books and will be tempted to dispense any politically unpleasant medicine to the electorate, early in the potential eight year political cycle."

While emerging markets continue to play an increasing role in the WPP's fortunes and the overall advertising economy, the company added, "it is still true that when the U.S. sneezes the rest of the world catches a cold."

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