WPP Posts Profit, Revenue Gains

Group Reports Jumps of About 15% as Holding Companies Continue to Perform

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NEW YORK (AdAge.com) -- Despite a looming recession, holding companies are continuing to stand financially strong, with WPP Group today posting a 15% boost in profit to $387 million for the first half of 2008.

Revenue at the world's second-largest marketing organization leapt 14% to $6.2 billion, as the fast-growing markets of Asia Pacific, Latin America, Africa and the Middle East saw revenue increase more than 17% in the first six months of the year. Growth in the U.S. and the U.K. was much slower, with revenue in the first half up between 5% and 6%.

The London-based parent of agency networks including Ogilvy & Mather and JWT attributed its performance to strategic investments in international markets and diversification of marketing disciplines -- much like its competitors Omnicom Group, Publicis Groupe and Interpublic Group of Cos.

String of acquisitions
An uber-aquisitive player, WPP has made a string of acquisitions in high-growth countries such as the Ukraine, Netherlands, Chile, Malaysia, China and India this year. It also earlier this month made a $2.28 billion hostile-takeover bid for market-research firm Taylor Nelson Sofres in an effort to create the second-largest company of its kind after Nielsen.

The company also noted its increasingly diverse business mix. Direct and digitally related activities now account for 25% of WPP's total revenue, according to the company, while almost 55% of its revenue came from outside advertising and media investment management in the first half of 2008, compared with more than 53% last year.

Additionally, WPP estimated it has netted more than $2.5 billion worth of new-business billings via assignments for existing and new clients.

Continued growth
The company, as part of its earnings statement, predicted that the back half of 2008 should ensure continued growth due to marketer spending around the Beijing Olympics and U.S. presidential election, but in the wake of those events, prospects for the ad business are less certain.

WPP remained conservative about performance looking ahead, particularly in early 2009, though the financial markets could rebound thereafter and 2010 could be more promising, given events such as the FIFA World Cup in South Africa and the Winter Olympics in Vancouver, British Columbia.