WPP expects more client 'caution' going forward as it reveals 5.9% revenue growth for Q3

WPP, the world's largest advertising services network, said it expects further 'caution' by clients as it announced a 5.9 per cent growth in reported revenue to £2.927bn for its third quarter.

The network, which counts GroupM, Grey, Ogilvy & Mather and AKQA amongst it's group companies, announced the reported revenue growth in sterling but also revealed that there was a 1.6 per cent decline in dollars.

For the three quarters of the year so far revenue was up by 6.5 per cent at £8.766bn. New business brought in during the third quarter was reported to be worth $3.057bn, bringing the year total so far to $5.139bn.

Revenue in North America was reported up by 15.3 per cent for the nine months £3,255bn, followed by the UK which increased by 9 per cent to £1,295, Western Europe fell by 5.4 per cent to £453bn and Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe grew by 4.9 per cent to £2,521bn.

In discussing the risk aversion that clients have been showing when it came to spend, disruptor brands such as Airbnb and Uber were singled out by chief executive, Sir Martin Sorrell during his outlook summary, claiming that there was a focus on costs rather than revenue growth.

"If you are trying to run a legacy business, at one end of the spectrum you have the disrupters like Uber and Airbnb and at the other end you have the cost-focused models like 3G in fast moving consumer goods, and Valeant and Endo in pharmaceuticals, whilst in the middle, hovering above you, you have the activists led by such as Nelson Peltz, Bill Ackman and Dan Loeb, emphasising short-term performance. Not surprising then, that corporate leaders tend to be risk averse," he stated, adding that the rise of procurement and finances had taken the lead over marketing and and investment suppliers as a result.

"At best, clients focus on a strategy of adding capacity and brand building in both fast growth geographic markets and functional markets, like digital, and containing or reducing capacity, perhaps with brand building to maintain or increase market share, in the mature, slow growth markets. This approach also has the apparent virtue of limiting fixed cost increases and increasing variable costs, although we naturally believe that marketing is an investment, not a cost. We see little reason, if any, for this pattern of behaviour to change in the last quarter of 2015 or 2016, with continued caution being the watchword."

WPP has also completed 38 acquisitions during the year so far.

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Stephen Lepitak

Stephen Lepitak is editor of The Drum, with responsibility for overseeing the day-to-day running of the content produced for the various platforms run by the publication. Over the years he has interviewed agency network bosses such as Sir Martin Sorrell, Maurice Lévy and Arthur Sadoun, as well as Cindy Gallop, Kim Kardashian, film directors James Cameron, Spike Jonze, Richard Curtis and Lord David Puttnam. With a keen interest in media and breaking news, Lepitak has been with The Drum since 2005 and is based across its UK, US and Asia operations.

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