SIR MARTIN SORRELL, chief executive of WPP, predicted yesterday that Britain’s struggling advertising market would start to stabilise this year and growth would pick up in 2007.
The UK was WPP’s worst-performing regional business in the six months to June 30, recording revenue growth of 1.2 per cent. This compared with growth of 9.4 per cent for Asia-Pacific, Latin America and the Middle East, 4.5 per cent in North America and 4.5 per cent in continental Europe.
Sir Martin, however, said he saw some hope for the UK market. “(It) will stabilise until the end of the year and growth is likely to be a bit stronger next year,” he said.
His comments came as WPP, the world’s second-biggest marketing services group, reported a 30 per cent jump in pre-tax profit to £287 million for the first half of 2006, boosted by increased advertising spend during the World Cup and exposure to the booming Asian and Latin American markets.
Sir Martin predicted a strong 2007 for the industry, with the build-up to the Olympics in Beijing and a US presidential campaign likely to boost advertising spend. He told The Times that he had identified Russia as “a very strong growth market”. Indonesia also offered strong potential.
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WPP, the parent of advertising agencies Ogilvy & Mather and JWT, said like-for-like revenues across the group in the six months to June 2006 were up 5 per cent.
WPP’s results, which exceeded analysts’ expectations, were underpinned by large contracts from companies such as Cadbury Schweppes and Macy’s.
While Sir Martin said that its internet advertising business in the UK had been particularly strong, Britain’s television market had been weak.
As evidence, he pointed to a report by GroupM, WPP’s media planning and buying arm, which forecast that by November internet advertising in the UK is set to account for 14 per cent of all ad spend — overtaking the share held by national newspapers. He said: “The UK television market has been awful this year. We’ll have to see what happens next year with the changes at ITV.”
The group’s shares rose 2.27 per cent to 653p. Numis Securities said in a research note: “Asia Pacific is the engine for growth, while continued US momentum is encouraging.”
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Rising revenues
Like-for-like revenue growth in WPP’s regions for first half of 2006