Sorrell Set To Signal Start Of Advertising Recovery
WPP chief executive, Sir Martin Sorrell, is expected to signal the end of the worst advertising downturn in living memory when he announces the marketing group’s full year results later this week.
Sorrell is usually reluctant to be overly upbeat when predicting the industry’s fortunes and has so far refused to call an end to the slump, insisting that any recovery in the economic climate would be gradual.
However, a report in the Observer suggests that he will take a more bullish stance when WPP, the world’s largest advertising and marketing group, unveils its results on Friday. Lehman Brothers predicts the company will post pre-tax profits of £454 million on annual revenue of more than £4 billion.
The US economy grew strongly in the second half of last year. Sorrell expects the Olympics, the high-profile European 2004 football championships and the forthcoming American presidential elections to further boost spending.
Recent indicators also suggest the UK outlook is improving and the latest Bellwether report from the IPA reveals a rising tide of corporate optimism that could see adspend climb to levels not seen since the dotcom boom (see Bellwether Reveals Increasing Optimism For Advertisers).
A study from the Chartered Institute of Marketing also predicts that marketing spend will increase by around 3% this year. However, it casts doubts over the Government’s ambitious forecasts for economic growth and warns that the economic recovery will not be as swift as first thought (see Marketing Spend Expected To Grow By 3% During 2004).
WPP owns three of the top companies in advertising – J Walter Thompson, Ogilvy & Mather and Young & Rubicam – which account for more than half of the group’s overall revenues. It is understood that around 65% of WPP revenue comes from the US, 35% from Europe and 20% from Asia- Pacific.
Shares in WPP rose by 3.29% last week to close at 628˝p after rival advertising network, Omnicom, which owns BBDO Worldwide and TBWA, announced that its net income jumped by 10% to $221.3 million in the fourth quarter of last year (see Sharewatch: Reuters Rises After Positive Results).
Omnicon said the US market is recovering well, with increased client spending and merger activity expected to have a positive impact. The UK, Asia and South America are showing signs of modest recovery, whilst Continental Europe is stabilising, but has not yet reached the point of recovery (see Omnicom Posts 18% Revenue Rise As Markets Improve).
WPP: 020 7408 2204 www.wpp.com
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