WPP says clients still shy on spending

By Cyril Altmeyer

CANNES, France (Reuters) - Clients are becoming more confident but this has yet to result in increased advertising spending, the chief executive of British advertising group WPP (WPP.L) said on Thursday.

April and May have been tougher for business than the first quarter, especially in Western Europe, Martin Sorrell, who heads the world's largest advertising group by revenue, told Reuters.

"Today CEOs are more confident. But that's in the head and in the heart. It has not extended to them writing checks," he said on the sidelines of the Cannes Lions 2009 ad festival.

WPP, whose advertising agencies include Ogilvy & Mather and Young & Rubicam, competes for budgets with the likes of France's Publicis (PUBP.PA) or Omnicom (OMC.N) of the United States.

Earlier this month, WPP said like-for-like revenue fell 6.7 percent in the first four months of the year, compared to a 5.8 percent fall in the first quarter.

Sorrell did not give indications for June on Thursday.

To counter the fall in revenue, WPP's headcount fell by almost 4,300 people or 3.7 percent in the four-month period, with over half leaving on a voluntary basis.

Headcount would "match what happens on revenue," Sorrell, said, when quizzed about the rest of the year.

A DIFFICULT YEAR

In April, Sorrell said WPP would not meet its full-year forecasts as firms cut marketing budgets amid a global downturn and on Thursday did not discuss financial goals.

Sorrell, who in May had predicted a "recovery of sorts" in global markets in 2010, said "2009 as a whole will be a difficult year."

"The first half is very difficult, the second half is looking a little bit better. That is more cosmetic than real because of the comparatives."

"Next year will look even better because the comparatives are even easier, but the underlying tone is still going to be difficult," he added.

Trading conditions remained "tough" in the United States while Britain continued "to be relatively less negative" than France, Germany and Spain, he said, adding "If anything it got tougher in Western Europe in April and May."

Signs of recovery were more likely to be found in Asia than