Media, Interactive Services Propel WPP Growth: Social Nets Prove A Boon For PR, Not Advertising

Media investment management, as well as digital and interactive media services, continued to show the strongest growth of any of U.K. ad giant WPP Group's marketing and communications services during 2007. According to year-end results released early this morning, media services revenues rose 14% over 2006, outpacing WPP's overall reportable revenue growth rate of 4.7%.

"This makes it four years in a row, when like-for-like revenue growth in media investment management was 14% or over, almost three times the average for the group, as a whole, of 5-6% over the same period," CEO Martin Sorrell wrote in his year-end update for shareholders.

WPP does not break out is interactive media revenues, which are partly accounted for under the company's "specialist communications" services operations, which also includes direct marketing, but Sorrell said direct and "digitally-related activities" now account for more than 23% of WPP's revenues.



"In 2007, our broadly-defined internet-related revenue was almost $2.8 billion or 23% of our worldwide reported revenue and our narrowly-defined internet-related revenue was almost $1.5 billion or 12% of our worldwide reported revenue," Sorrell said. "These are both more than the 10% for online media's share of total advertising spend both in the United States and worldwide. The new media continue to build their share of client spending."

Sorrell singled out the positive impact "new technologies" also are having on WPP's public relations operations, due to increased demand from clients for "editorial publicity through fast-growing new applications of new technology such as MySpace, YouTube, Facebook, Flickr and Wikipedia."

He said this was compounded by the fact that social networks are having trouble developing traditional advertising revenue models, citing Facebook's "Beacon" debacle.

WPP reported that its GroupM media agency holding unit, which includes MindShare, Mediaedge:cia, MediaCom, and Maxus, as well as the interactive media units within them, generated estimated net new billings of $7.188 billion, thanks no doubt to sizeable contributions from the agencies' AT&T consolidation and Dell Computer wins.

Total billings for WPP were up 5.1% to $63.5 billion, most likely making it the largest buyer of media in the world.

Sorrell said WPP so far has been immune from the economic instability caused by the sub-prime credit crisis and shaky regional economies, and noted that its positive 2007 results come despite the lack of any incremental stimuli from extraordinary global media events. He predicted even stronger contributions from the elections, Olympics, in 2008.

Communications services

Revenue as a % of Total Group

Revenue growth % +/(-) 07/06

Operating profit as a % of Total Group

Like-for-Like Revenue growth % +/(-) 07/06

Advertising, Media Investment Management





Information, Insight & Consultancy





Public Relations & Public Affairs





Branding & Identity, Healthcare & Specialist Communications





Total Group





Source: WPP Group.

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