* WPP's Sorrell says October a bit better
* American growth to slow, other regions to compensate
* Publicis CEO Levy says to continue outperforming market
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BARCELONA, Spain, Nov 17 Leading advertising
agencies WPP (WPP.L) and Publicis (PUBP.PA) said positive trends
bode well for end-of-year ad revenues but customers continued to
drive hard bargains and U.S. strength seemed unsustainable.
They said although U.S. and European companies had been
reporting strong results, boosting their ability to invest in
marketing, they were still reluctant to commit to spending,
meaning ad growth may slow next year as comparatives harden.
WPP Chief Executive Martin Sorrell said October had been
marginally stronger than the preceding months. "I would describe
it as a smidgeon of sequential improvement," he told an investor
conference in Spain on Wednesday.
Publicis CEO Maurice Levy said: "The indications we have for
November and December are relatively good."
He said Publicis should continue to outperform the market
until at least 2013 -- thanks in part to its leading position in
digital media, which is growing faster than most other media.
But he added, speaking by telephone to Morgan Stanley's
annual technology, media and telecoms conference in Barcelona:
"As always, we know that some clients can cancel last minute in
order to adjust their final result and their balance sheet."
Sorrell tweaked his 2011 sales forecast higher, saying WPP's
operational businesses now expected growth of 3-4 percent, at
the upper end of a previous range of 2-4 percent -- which would
still be below this year's growth to date of about 4.5 percent.
"America cannot continue at this rate of growth," he said.
Although Sorrell said other, fast-growing regions would
compensate for any slowing in the U.S. market, he said customers
were still extremely cost-conscious.
"We still see procurement as aggressive as it was," he said.
"Uncertainty is still there."
Levy said that as far as Publicis could see 2011 would
continue the growth trend, but he declined to say what rate of
growth he expected.
FAST, SLIM AND STRONG
Both agencies said they were raising compensation for staff
after two savage years of cuts, as employees regain confidence
in the possibility of finding jobs elsewhere and advertising
companies have to compete again for talent, their main capital.
Levy said Publicis was reinstating bonuses, while Sorrell
said WPP was hiring again after slashing its workforce by 12
percent last year, although he would be watching the numbers
very closely in relation to revenue growth.
Sorrell also said WPP would give more consideration to
dividends, acknowledging that investors cared more about payouts
in such times of lower growth.
"There's obviously some room for us to increase the dividend
and I think we'll probably put greater weight on that than we
have in the past," he said, adding that WPP would continue to
seek out small, targeted acquisitions.
Levy said Publicis, which is still absorbing the digital
agency Razorfish it bought from Microsoft (MSFT.O) last year,
would also consider returning cash to shareholders, though it
would prefer to use its cash for acquisitions.
"Obviously the best use of the money would be to make the
right acquisition, but I would not make an acquisition for the
sake of making an acquisition," he said.
"Being fat is not an objective; being slim, fast and strong
-- that is an objective."
(Reporting by Georgina Prodhan; Editing by Erica Billingham)