WPP expects flat 2010 revenues
LONDON (Reuters) - Martin Sorrell, the chief executive of the world's largest advertising group WPP (WPP.L), believes the recession has not ended but says trading is less worse than it was.
Speaking to the Reuters Global Media Summit via video link from New York, Sorrell said he still expects the group's 2010 revenues to be flat, with some like-for-like growth in the second quarter, after an initial look at the budgets.
"This is not a recovery, it's not the end of recession," he said, adding that clients were still very focused on taking costs out of the business and that there was "vicious" price activity going on in the market.
"Has the recession permanently impacted consumer behavior? I'm not sure it has but it's going to take a long time for consumer behavior to go back to where it was," he said.
WPP, which includes Ogilvy & Mather and Hill & Knowlton, has showed steady signs of improvement in trading this year, posting a fall in like-for-like third quarter revenue of 8.7 percent, compared with a drop of 10.5 percent in the second quarter.
The performance has beaten several of its peers and part of its success is linked to its fast move into emerging markets and digital products.
Asked what impact the recent debt woes in Dubai would have on the region, Sorrell said it was not helpful but said it would not undermine his long-term confidence in the area.
WPP is aiming to have a third of its revenues coming from emerging markets in the medium term and, asked if they could increase this figure further, he said they could look at it again.
"Once we've got to where I think we should be, I think we would raise the bar again," he said. "And I think that applies to new media too."
One area of excitement within new digital media is the growing popularity of electronic readers such as Amazon's (AMZN.O) Kindle, which Sorrell said had huge potential to carry advertising and added the only debate was over how long it would take.
The Chief Executive of Pearson's (PSON.L) Financial Times, John Ridding, told Reuters at the same summit that e-readers could provide "a fantastically high-quality expression of advertising."
Another traditional boost to advertising markets is major events, such as sporting occasions and elections and Sorrell said he had already seen significant investment in brands in Brazil ahead of the 2010 soccer World Cup in South Africa.
Brazil will host the next soccer World Cup in 2014.
Asked about the general level of pitching for new business, Sorrell said his businesses had performed well.
He said the level on the creative side was limited, market research had seen no major difference but the media side was seeing strong activity.
(Reporting by Kate Holton; Editing by David Cowell)
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