• by Steve McClellan , October 31, 2016

WPP CEO Martin Sorrell lambasted the two companies behind the ANA’s transparency report and recommendations Monday, saying both firms were essentially drumming up business for themselves in the wake of the report, which found rampant non-transparent activities occurring in the U.S. media-buying market.

On a call with analysts, Sorrell said the report boiled down to “an attempt to create a flourishing audit industry” in the U.S. market -- an attempt he described as “inappropriate” and a conflict of interest. However, it appears to be working, as audits are up in the region, Sorrell added.

Sorrell’s comments came just a few after days after GroupM CEO Irwin Gotlieb made similar comments at the Digital Place Based Ad Association.

Sorrell said the conflict is compounded by the fact that the U.S. is a “relatively transparent” market where rebates as a practice donot exist. If the marketing industry is as concerned about exposing transparency as it claims, it should be focused on markets in the Middle East and Japan, Sorrell said. Japan has been problematic from a transparency standpoint for years and well before the recent Dentsu scandal emerged, as has the Middle East, where measurement is a particular problem.

Sorrell also noted that the firm’s recent $300 million deal to acquire Triad Retail Media, which is being combined with Xaxis is designed to bolster the company’s strength in shopper marketing and ecommerce and general business transformation efforts, which are a growing focus for clients. In part that deal was also a response to the growing power of Amazon which now reaches some 40% of the U.S. population.

Xaxis and Triad combined generate about $2 billion in programmatic media buys, which compares to the $16 billion estimated size of the U.S. programmatic market currently, Sorrell said.

Helped in part by the continued weakness of the British pound WPP reported a 23% revenue gain in the third quarter to 3.611 billion pounds, or about $4.4 billion at today’s exchange rate. For the first nine months revenues were up 15.8% to 10.147 billion pounds (approximately $12.3 billion).

Q3 organic revenue growth (which excludes currency fluctuations and the impact of acquisitions and divestitures) was up 3.2% while organic net sales growth (which also strips out pass-through and principle buying revenue) was up 2.8%.

For the first nine months organic revenue growth was up 3.9% while net sales growth was 3.4%.

By comparison, Interpublic Group last week reported organic growth of 4.3% for the third quarter and 4.8% for the first nine months, while Omnicom reported third-quarter organic growth of 3.2% and nine-month growth of 3.4%.

Publicis Groupe reported third-quarter and nine-month growth of 0.2% and 1.9% respectively.  Havas organic growth in the third quarter was 2% and 2.7% for the first nine months. 

WPP is currently the only major ad holding company to break out its organic net sales results.

The company reported net new business for the first nine months of $5.374 billion, up from $4.979 billion in the prior year period. Third-quarter organic revenue growth in North America was 2.6%, which the company said was stronger than the previous quarter.

Growth slowed in the UK, “perhaps the first signs of Brexit anxiety,” the firm noted, referring to the pending exit of the UK from the European Union. Organic revenue growth was 2.1% in Q3, versus 3.5% in the second quarter.

Organic growth in Western Continental Europe slowed to 5.4% (versus 6.2% growth in Q2), while Asia-Pacific, Latin America, Africa, the Middle East and Central and Eastern Europe posted combined organic growth of 3.2% in Q3.

In response to the WPP results, Pivotal Research analyst Brian Wieser raised his rating on the company from hold to buy “as the gap between our target and current trading levels exceeds 15%,” he stated in an investor note. “We continue to believe that WPP remains best-positioned strategically vs. peers and their long-term growth should slightly outperform given the company’s business and country mix,” Wieser added.

The company’s full-year 2016 targets are essentially unchanged with a forecast of 3-plus percent revenue and net sales growth and 0.3 operating margin improvement.