Media Remains WPP Growth Engine, Report Says Sorrell Probing Carat's 'Volume Discounts'

A day after Chairman Martin Sorrell described the media industry as being in a "certain amount of panic" over the Internet, WPP Group reported a 26 percent growth in third quarter revenues thanks in large part to the Internet. Advertising and media services were the fastest growing sector with in WPP, growing 31 percent in the third quarter, and 28 percent through the first nine months. Internet and interactive services were one of the strongest operations within that.

On a so-called "like-for-like" basis, accounting for the impact of acquisitions, joint ventures and currency fluctuations, WPP's revenues grew at a much less pronounced rate - nearly 5 percent, and the company faces declining revenues from advertising services following a recent succession of major account losses, including Gillette, Coca-Cola Co. and Samsung.

Meanwhile, Sorrell confirmed that WPP is "continuing to mull" an offer for Aegis Group, but that WPP and its takeover partner U.S. private equity firm Hellman & Friedman, have not yet gotten enough information to decide on a formal offer. While WPP has been buying and selling small amounts of Aegis shares, it is possible Sorrell is using the opportunity to gain market intelligence on a potential rival. Citing unnamed sources, Reuters Friday morning reported that WPP and Hellman & Friedman are "seeking more information about the volume discounts received by Aegis agencies like Carat, Europe's biggest media buyer."



The report seems to imply that Aegis' media buying units might be profiting from volume discounts made on behalf of its clients, a practice that generates mixed thoughts in the ad industry. Such practices, in fact, are one the reasons why Aegis precursor agency, Carat Espace, was driven out of France, which deemed its buying practices illegal. Interpublic Group also recently disclosed potential illegal activities by some former employees at its agencies, which may have been related to how they handled volume discounts.

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