WPP CEO says "less worse" trend unchanged in Oct

BARCELONA Nov 18 (Reuters) - Martin Sorrell, chief executive of top ad agency group WPP (WPP.L), does not believe the recession is over and has seen little change in business trends in October, which he described again as "less worse".

Sorrell reiterated on Wednesday he expected flat revenues for WPP next year, with likely positive comparisons in the second quarter over this year's weak second quarter, and described price comparison in media buying as "vicious".

Asked at an investor conference whether he had seen a change in October, Sorrell said: "We have not seen that. We've seen pretty much a continuation of what we've seen before. Things are less worse ... I do not believe we are out of recession."

WPP, which owns a stable of agencies including Ogilvy & Mather and Hill & Knowlton, said last month a decline in ad spending was moderating, with like-for-like revenue falling 8.7 percent in the third quarter after 10.5 percent in the second.

Sorrell said an excess of inventory, or space for ads both online and offline, had led to sometimes extreme price discounting by smaller rivals trying to grab market share.

"There is very significant price competition in media buying," he told the Morgan Stanley Technology, Media and Telecoms conference in Barcelona. "There is vicious price competition."

Sorrell, who has cut staff at his companies roughly in line with revenue declines, said he hoped the group's cost-cutting phase was largely over. Staff account for the vast majority of variable costs at ad agencies.

"We will continue to have significant flexibility in the cost base. Having said that, I hope we have done the bulk if not all of the cost reduction we have to do," he said. "I think now it's pretty much in balance."

Sorrell said WPP was still interested in acquisitions, and predicted that British and French agencies Aegis (AEGS.L) and Havas (EURC.PA) would merge in 2010 -- having previously predicted they would merge in 2008 and then again in 2009.

"Our acquisition appetite is still there: it's in new markets, new media, consumer insight. Most of them are small, most of them are private," he said. (Reporting by Georgina Prodhan; Editing by Jon Loades-Carter)