• by Joe Mandese  @mp_joemandese, June 27, 2006

WPP Group, one of the world's largest advertising and media agency holding companies, continues to transform itself, becoming far more media-centric, especially in the area of new media. At least that's the picture drawn from a financial update issued this morning by WPP Chairman-CEO Martin Sorrell for the first five months of 2006.

"Media investment management, as in 2005 and the first quarter of 2006, continues to show the strongest growth of all our communications services functions, along with direct, Internet and interactive and healthcare communications," says Sorrell, noting that combined Internet, direct response and other interactive media buying services now account for "almost 18 percent of the group's revenues, up from 15 percent last year."

That's consistent with the strategic plan Sorrell mapped out last December during a presentation at UBS' Media Week conference in New York, where he said two words were governing WPP's future course: China and the Internet.

While the company's total revenues through the first five months are up 4.5 percent on a comparable basis with the same period in 2005, Asia Pacific continues to be WPP's fastest growing region, rising 8 percent. The U.S. gained about 4 percent during the period.

Sorrell also implied that WPP is growing more efficient in the way it conducts marketing services, including media buying, and that it now employs fewer people to handle more business. The company's "headcount" has risen only 3.4 percent during the first five months, he says, noting that has led to an "increase in revenue per head in the first five months."

Ironically, while media continues to be WPP's main growth engine, the company appears to be focused on boosting its headcount in the creative departments. "We continue to seek to improve our creative product in as broadly a defined sense as possible," acknowledges Sorrell, "by recruiting, developing and retaining excellent talent, acquiring outstanding creative businesses, recognizing and celebrating creative success."