WPP Reports Weak Quarter, Says 'Jury' Remains Out For Ad Recovery

Signaling some doubts about the U.S. marketplace. WPP Group Tuesday reported relatively weak results for the third quarter of 2004. Revenues rose only 3.7 percent due to $1.962 billion due to weakness in the U.S. dollar, as well as weaker than expected performance in its advertising and media investment management units. WPP is the parent of Mindshare and Mediaedge:cia, and has agreed to acquire Grey Global and its MediaCom unit in a deal expected to close early next year.

"The jury remains out on 2005," said WPP in a statement issued to shareholders early Tuesday morning. "There are still concerns about the prospects for the United States economy after the presidential election, with its fiscal deficit, weak dollar and rising commodity prices, including oil, although the weakness in some of the major markets in Western Europe is ameliorating."

WPP, which recorded a growth rate of 5.2 percent during the first three quarters of 2004, said "industry growth rates" for calendar 2004 would range between 3 percent and 4 percent, but would probably range between 2 percent and 3 percent in 2005.



WPP termed that "slight reduction," but it is one that reflects a far more conservative view of the 2005 U.S. and global ad economies than portrayed by others including Aegis Group, Universal McCann and Zenith Optimedia Group.

However, WPP did note that "any slowdown in the United States, may be tempered by continued growth in Asia Pacific, after a Chinese soft-landing and continued recovery in Western Europe and Latin America."

While advertising and media investment services continue to lag, WPP did report strong growth within its research division. WPP owns Kantar Media Research, a major supplier of syndicated media and marketing research worldwide, which has announced plans to form a joint venture with VNU.

Branding, identity, healthcare and specialist marketing communications services also continue to show healthy growth.

WPP Group Results By Marketing Communications Sector

Q3 1st 9 Months
Advertising/Media Investment Management +0.7% +4.8%
Information/Insight/Consultancy +10.9% +4.2%
Public Relations/Public Affairs -0.3% -0.8%
Branding/Identity/Healthcare/Specialists +6.0% +9.4%

Total +3.7% +5.2%
Total Revenues $1.962 bil $5.682 bil

Source: WPP Group.
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